 As-Salaam-Alaikum-Khabati-Nuh-Hazrat. We have seen as and welcomes you to the virtual University of Pakistan in lecture number 27 of Brand Management, MKT 624. We have covered by now quite a few steps to be very precise, seven steps within the strategic brand management process and the last being the roles of the brand portfolios. Within the third phase of the process which is about developing strategies, we started with the understanding on the concept of positioning which we took us into with understanding what brands are all about and the first concept that we learned toward that understanding was about the brand extensions which took us into roles of the multiple brands meaning multi-brand policy and that is what we learned in the last lecture. After looking into the roles a multi-brand policy plays toward managing brands we now make transition to how those roles are offered to brands and what status brands can have within the management process relating to one company and what are the relationships which are developed between products and brands. The ones we have for the understanding of all that we can decide for our company the kind of brand names that we are going to have and the strategies that we should employ toward our branding policy meaning whether we are going to go for line extensions or we are going to go for brand extensions or we are going to have a portfolio of various brands. Now before I proceed further I would like to have clarity on your part regarding the one concept and that is that you are just going to draw a hard and fast line between different concepts of the branding meaning line extensions, brand extensions and portfolios of brands. In other words this is not to say that all these are mutually exclusive the meaning one excludes the other if you are working with line extensions you cannot work with the brand extensions and vice versa or if you are working for any one of these you cannot go for a portfolio of different brands it is not that. You generally end up with a hybrid kind of situation in which you may be working with a line extension you may also be working on the brand extension and at the same time you are managing a portfolio of different brands. How and why we end up with a hybrid kind of situation because we are going to talk about that during the lecture. Why is it that different companies could have different names for different products? Why is it that one company has just one name for all its products? Meaning the name of the company also is the brand name for all the products the company offers in so many different and diverse categories. Why is it that in certain situations the companies may not like to highlight their name on the packaging of different brand names that they offer? These are some of the questions that we have to look into and understand their answer in relation to certain strategic moves on part of the companies. Understanding toward all this becomes easy if we keep one thing in our minds and that is there is a certain relationship between a product and a brand. A brand distinguishes one product from the other in the market and that is how it facilitates the process on part of the customer to buy one brand or to differentiate one brand from the other. It is branding which again indicates the source of the product's origin. So unless we have a very clear understanding of the product-brand relationship we are going to be at a loss to start understanding the different strategies which companies employ in order to work with different kinds of branding policies and branding strategies. There are so many different situations in which companies behave in different ways. Generally what has been seen, companies involve themselves into six broad speaking different kinds of strategic frameworks or strategic moves in order to decide what kinds of brands they should be having for different situations or in order to satisfy different needs in different segments and hence in different categories. So in other words there is a system or there is a method that describes the relationship between a product and a brand. The system assigns to the one brand one particular role and one particular status and that is the system which basically lays foundation for a branding policy for a company. And that is the system that we are going to look into with the help of the findings that we already have on part of different companies that have been employing these different systems which get translated into different strategies. So like I said earlier there are six different areas which could be classified in terms of understanding this system of brand product relationship or in other words branding policy. The first strategy which is generally employed by different companies. One strategy which the companies employ toward their branding policy or toward the relationship between the product and the brand is what you may call the product brand strategy. Under this strategy you assign the one name to one particular product and which means this particular product occupies one particular positioning and this positioning is meant for the brand which you have created and to which you have assigned this particular role. So to summarize what I have said you can say that it is one product, one position and one brand. So in other words if you are wanting to introduce another product with differentiated features that may be within the same category in turn meaning another segment within the category you go for another brand name. You do not under this strategy go for an extension rather you go for another separate independent brand name. Now this is a strategy which is generally followed by very resourceful and huge companies because it goes without saying when you start having different brand names for different segments meaning when you are out to satisfy different needs with the help of different brand identities and different entities the exercise becomes too costly and it only is the resourceful companies that can afford that kind of an exercise because you are dealing with a different position it's a different brand name the position corresponds to a different product and vice versa. To give you examples from two different fields which are very illustrative of the brand management of the strategies detergents and soaps. You have three different detergents hypothetical situation one is positioned for overall neatness the other is the position for stain removal for example yet another is meant for best value for money. Same could be the case with soaps that you have the soaps products of soaps for three different segments one is that talks about the medicated nature of the product the other one is which is positioned for the energy and yet there is another one that talks about skin enhancement properties hence the beauty and the emotional value which you are trying to create with the help of that product so what you are doing is positioning all these products after detergents and soaps for six different segments three within the detergents category and three within the soaps category for different kinds of customers having different expectations with different brand names and these brands have their own territories and they enjoy independent communication campaigns because one is not related to other at all it just happens that all those brands are owned by the same company but in terms of their marketing properties or the marketing relationships so to say they do not derive any from each other that also becomes kind of a disadvantage which I will talk about later but let us be done first with the kind of advantages which this product brand strategy offers to companies I would like to show you before I start talking about the advantages in detail the graphical illustration of the concept of the brand product or product brand strategy as you can see from the screen three different products could have three different positionings and hence these three products could happen to be three different brands the illustration is self-explanatory in the sense that you do not see any interface between three different segments you do not see any commonalities so to say as far as the segmental boundaries are concerned they do not have contiguous borders they are far apart and it is just like saying these three different products or brands so to say could have been introduced by three different companies now why is it that these three brands are offered by the same company and the company is taking a lot of pains and is investing an awful amount of money in order to establish these brands knowing that the exercise is risky it is costlier it is going to take more energy and time and everything still companies could offer that well like I pointed out earlier this is the strategic game which is played by strong companies it is not something which is undertaken by companies that are not very strong in terms of their resources because all resources financial resources human resources marketing resources the reason these companies like to get into different segments with the help of different brands because they like to follow the principle of multiplication of players within the overall category to energize the market to create an aggregate effect which can be created only by having so many different players and then having those players talk about different points of difference and telling the total market about their respective products and customers in the process gaining total exposure to the market in its entirety so these companies being very resourceful and powerful think to themselves why shouldn't we be the one to get into different segments by not highlighting our name and introducing different brands and thus creating the effect of multiplication of players and thus at the end of the process dominating various segments of the category so this is how these companies if successful in which they are in many instances dominate most of the segments of the category with the result that there are many a situation in which strong companies end up dominating the whole category and they occupy so many different meaningful segments of the category without naming such companies I would leave it to your imagination the kind of companies that are involved in this kind of practice they are basically within the consumer consumables and well there are companies that also are in consumer durables and the reason is just about the same the rationale is common to whatever these different manufacturers do to their brands these companies think that they can really the preempt different segments by keeping competition off limit and they may not succeed to get 100% by keeping their competition off limits but the competition which eventually makes the inroads into their territories they may not be that successful as these companies may be because of the resources and because of the experience they have gained over the years and decades in this kind of strategic moves okay, having said all that about the strength of the companies and the resourcefulness which really actuate companies into framing these kind of strategic moves we now talk about a few more advantages which this strategy offers to customers customers are in a better position to differentiate between different brands I mean it becomes less difficult for or rather easy for the customers to seek the one brand from the other conversely if you have the brand extensions the graphics or the external manifestations of those extensions do have a lot of similarities and it is just like the offspring of one family having so many similarities in terms of their features the brands can be identified immediately that this is the one which has been extended out of this parent and therefore should be very much like the one which we already are using so in order to overcome that kind of a limitation on the part of the line extensions manufacturers who are resourceful like to get into different brands so different brands could make it easy for customers to differentiate the one from the other different brands could also help customers to differentiate the points of difference in a better way and the fact of the matter is that it is because of this ability of portfolio of the different brands that it enables customers to start appreciating the concept of positioning much better than it could be otherwise meaning it is only because of a better appreciation of this concept that you start realizing a very strong and distinct position of a detergent having the properties of removing certain kinds of stains it is because of this that you start appreciating certain properties of a soap in terms of it carrying the medicated properties or it carrying an element of beauty enhancement and therefore giving to some emotional the linkage with the brand so it is one of the advantages of having a portfolio of the brands and within that portfolio the reason I am talking about that is within that portfolio having different brands by the same company don't forget that we are talking about one position, one product and one brand and when you put all together because they all belong to one company so that becomes a big portfolio and within that portfolio you have those three different brands or six different brands you can also say that you have six different portfolios within the parent portfolio of that particular company and that is what you may also call portfolio of management portfolio of marketing management because you being the brand manager are responsible for just one brand or else for another brand so different managers are handling different portfolios and together that is subject of the portfolio of management within the scope of this discussion at the moment but to facilitate your understanding we are talking about one brand one product, one position and together in the process I started giving examples and related examples with portfolio and all that because we are trying to learn why I said that the companies could have one strategy which deals with the portfolios and then the same company starts dealing with another strategy which is not a product brand relationship but it is something else because the name of the company is not really highlighted on the different brands and the brands are very independent entities and identities it helps these companies in case of failure if a brand fails it does not affect other brands within the portfolio within the overall portfolio so companies think they are kind of secure in terms of failure on part of the one brand they introduced a brand because not a success they will make another effort and do something else with that product with the help of some other brand name so on and so forth having talked about the properties or the advantages this product brand strategy carries this also has certain drawbacks because there is nothing which is without disadvantages or drawbacks drawbacks basically are economic what are the strengths automatically become drawbacks also because what is the upside of a situation that also gets translated into a downside so if we say that different brands have different identities and if one fails it does not really because we can now say that every launch of a new brand is a new launch it is not a question of extending your product and thereby economizing on so many different costs within the operations and the more so on the advertising and promotions front so each launch is a new launch and it entails a lot of expenditure you will recall from one of the previous lectures on brand extensions that the cost of introducing a brand extension is one fifth of introducing a stand alone brand and in the developed markets of the world meaning the United States Japan and the European market the cost of making one brand meaning a stand alone brand is one billion dollars so you can well imagine the costs involved however I would hasten to add here that this may not be the same level of cost which we incur in our market but one fact is for sure that the cost of launching a separate independent brand is very high in relation to launching and launching. Other drawback could be retailers resisting stalking of a new brand they are skeptical because they are not very sure of the success of the new brand and thereby not offering a lot of shelf space meaning overall their receptiveness to the brand is not very high and this in a way brings in the factor of resourceful companies the companies being powerful and resourceful that is why this strategy is undertaken by companies that are very powerful because because of that power they enjoy the marketplace they are in a better position to negotiate whether the retailers and distributors the stalking and the movement which they require be given patronage by members of the trade better than those companies which are not very powerful multiplication of product brands only because we want to be in segments which are narrowly defined but nevertheless have different brands something which requires a quick return on investment and I think it is obvious that the quick return on investment is required because you end up investing an awful lot of money into introducing and launching that independent brand and that is possible only if you happen to launch your products in those markets which are new which are emerging meaning the markets from which you can generate small volumes with high margins if you wait for huge volumes you have to wait for that and it is not all that easy because bigger markets are saturated markets and if not saturated they are intensely competitive markets and therefore when you follow this kind of a strategy you like to enter markets which are new and emerging because the chances of recovering your investment from those kind of markets are higher than getting into those markets which are very competitive and you start fighting head on with your major competitors well if you happen to enjoy the total category and you have got the 100% share of the market which generally is not the case that is something else but the competition is there when I say that dominating the category or dominating the various segments of the category that should not mean 100% of the market alright the disadvantage which this strategy carries with it is the impenetrable divisions you know all those brands have defined independent territories to themselves and which means the one just cannot enter the other I said that earlier there is no interaction there is no interface and therefore the success of one brand does not ensure success of another brand because of no connection whatsoever and the last I would say disadvantage relating this strategy is that distributors do not really offer the patronage to new products because of these skepticism they have I talked about retailers and it automatically meant the members of the trade the distributors and wholesalers if you are working in markets where you have a very extensive chain by resisting stocking because they are not really sure of the success so by the same tokens they are not only resisting stocking they also are not in a mood generally to offer the patronage which in most of the cases they do the ones they assess that the brand has a lot of potential and they can really move pretty fast in the market but then again this is something which is related with the power of a company it enjoys in the marketplace so it becomes relative it is not a hard and fast thing but this is relative generally speaking you should not really overlook this factor well that's all about the first the strategy which is the product brand strategy and which resourceful companies employ toward their branding policies let us not talk about the second strategy which deals with line extensions and you may call it line brand strategy dealing with extensions this makes the whole concept very understandable because I have talked so much about extensions and I am sure that your understanding about extensions is very clear it generally deals with getting into those products which are basically complementary and which have a fit across the emotional values of the same kind of clientele or the customer base to give you an example of line brand strategy suppose a manufacturer has launched a brand of lipstick once the brand is successful it doesn't take a genius to guess that that manufacturer should get into other products which have an element of complementarity and fit the two elements that we talked about earlier and he should get into things like maybe mascara or cleansing cream these are the products which are going to be used by the same customers and they run across those emotional values that the customers have and the associations that they have developed with that particular brand of lipstick in summary I can say that the effort under this strategy is to create products which are coherent and which are very logical in terms of their relationship with the first product which the manufacturer launched and because of which he is getting into extensions to make this understanding a little clear I would like you to take a look at the screen which shows the graphical presentation of this line brand strategy you can take a look at the cosmetics of the market I mean the cosmetics line which the manufacturer is trying to develop the manufacturer started with the lipstick which is the first product and then the line is being stretched he has the three products which he is selling in the market there is every chance that he will make better use of this strategy and get into the couple of more products until the time he must start realizing that the stretch is not infinite it will break somewhere along the line that is one thing that we must keep in mind all the time so in other words this kind of a strategy exploits the success of the concept basically it exploits the success of the concept which the manufacturer introduced with the first product and then extending the brand while staying very close to the central concept this is what the strategy is all about and I think we also know that every company and every manufacturer starts with one product which is one brand and it is that standalone brand or that one product which subdivides itself into the subspecies and it is the success of that which may lead you into thinking about so many different categories and so on and so forth eventually giving you the complexion and the character of a marketing company that really has a combination of so many different strategies at work in order to address different kinds of needs so much for the time being I will wrap this up talk about the ones I have talked about all the strategies which companies have to themselves there are certain benefits as far as this strategy is concerned and the first benefit is economic the cost of extension is very marginal the only costs that the companies have to bear the distribution which again are in a way direct costs which you cannot escape and the costs in terms of the packaging which again is not an indirect or fixed cost so the costs are I would say just marginal it reinforces the selling power of the company by extending the base of the customers who are the same customers or it may also attract more customers because you have more than one product to offer and hence all the associations and emotional values and the kind of emotional framework that I talked about earlier in relation to brand value pyramid it leads to ease of distribution distribution is not that difficult when you are dealing with so many different brands within a portfolio you are dealing with different distributors and that is on purpose because you don't really want to have the conflict I will talk about that also in relation to one of the strategies it reduces launch costs so these are the few benefits which of course are very economic and these are the ones which actuate to get into line brand strategy the only drawback is that you have to stay very close to the existing product it does not offer you the power immediately and instantaneously to distance yourself from the central concept by a great margin the third strategy which companies generally use is the range brand strategy range brand strategy is all about just one brand having one promise but at the same time having a range of products I don't want to make it confusing and that is why I am trying to explain every concept with the help of graphics but in order to make it clear before I show you the graphics think of for the suitcases and it answers everything you have a bigger size of suitcase a smaller size of suitcase and a small size of suitcase and you also have briefcases of different kinds you don't really have different brand names for all those you do not even call them extensions because they are not these subspecies in terms of having different names if the parent brand is brand A whether you do not call them A1, A2, A3 no everything is known by the same name look at the market of soups or the market of sauces range brands mostly are popular among food items and luggage for the manufacturers there is one range of course having different positions but the promise is the same if a luggage manufacturer promises durability and ease of handling then that is the promise it carries all through the range that is the beauty of this concept it is easy it is pretty straight forward communication takes place in just one name and it promotes the whole range brand in other words communicates in a generic manner by developing a unique concept the concept is pretty straight forward but it also happens to be unique because it covers the whole range let us take a look at the graphics of the concept you have the brand at top and that brand addresses the one concept that is common to the whole range and within the range you have different products product A, product B C and D that is the product formation nothing complicated about the concept itself let us now move on to another strategy which is a very important strategy and is employed by so many different huge companies making so many different products and this is what you may call the umbrella brand strategy this is a strategy about which so many students have a lot of questions it is when the same brand supports several products in different markets you call that an umbrella brand if you really scratch your brains and start looking at big manufacturers on the international level you will think to yourself that there is a manufacturer who is into motorbikes and it also is into musical instruments like pianos and guitars and it also makes generators it may also be in a few other categories but I am not aware of that then you see there is a manufacturer which is into manufacturing of electrical bulbs electrical systems of different kinds and then television sets and other appliances which you use in the kitchens this manufacturer is dealing in so many different categories meaning in so many different markets under the same name and that name is the umbrella and you have a company that makes ships the company also makes cars and the company also happens to be the foods area and the company also is into banking every product that the company makes is made under the same brand name so the company may be having diverse products meant for different markets not having any relationships among themselves yet the product carries the same name now what are the advantages by having this kind of strategy before I start talking about that let us take a look at the graphics which illustrates the concept and absolute clarity as you can see from the screen we have the umbrella brand right on top and this umbrella brand is getting into so many different areas and I am showing here four different markets so the brand is getting into markets with four different products one could be ships, one could be motorbikes cars, the other could be guitars or whatever the important thing here is that it is the same brand name but in every case it is a different product and it is a different concept if you are into car making that is one concept and if you are into foods that is another so one product one concept and one market if you take a look at the first one on the left hand side which I call market A it becomes very obvious that the market is having one brand by this company and therefore the total communication effort relating this brand is going to revolve around this particular market which market does not really have any relationship with the next market which is market B having concept B and product B this market also is going to have its own set of communications we are dealing with different markets we are dealing with different products but the brand name happens to be the same now the question is why is it that companies get into this practice well there are certain benefits one of the benefits is that the companies like to capitalize on the strength they already have created with the help of brands that are successful it may be just one brand or it may be a combination of brands it may be a large portfolio so strength in one market or in a combination of markets makes it very tempting for these companies to use the same brand name for another market which they are targeting and very closely related with this benefit is another benefit which you may call instantaneous goodwill companies can gain instantaneous goodwill if they launch a good product again we have to keep in mind that it is only huge companies which get into this kind of practice and to go further on this concept I would say mostly is the Japanese companies that really specialize in umbrella branding not to say others are not into umbrella branding there are companies about Japanese really have a lot of expertise in this area when they enter a new market they enter with a lot of know how technical expertise a lot of resources on all fronts and see to it that product succeeds and when the product succeeds it adds to the goodwill not only it creates instantaneous goodwill because of the past history that new product which is a success also creates goodwill and that adds to the image capital so in other words when an umbrella is attractive because you want to capitalize on that umbrella because it has so many different strong products it's the same brand mind it it has so many different strong products it attracts you toward itself and when you introduce something new that also becomes a success it adds to the strength of the umbrella so this is a two way process and this is very much the same concept that we discussed in relation to brand extensions you like to go for extensions because of the image capital a brand has image capital you are affected you have access to that capital but once you have the access and you make the new entry also successful you add to that capital so this is a common feature between the brand extension and that extension which takes place under the same name this also is something which is taking place under the same name although it is operating in so many different markets that's where the catch is and don't forget that another benefit which is huge benefit is awareness companies could have to invest a lot of money in order to create awareness because without awareness there is just no way that your products are going to be tried in the marketplace and it is that stage of the communication process which I shall be discussing later that involves a major chunk of the communication investment when you have for the umbrella brand you do not really have to invest that much into creating awareness and therefore you achieve scale economies on that front with the help of the strength of the brand which is all pervasive and all encompassing people know that brand and it is a part of their lives in one way or the other wrap up the benefits that this strategy of umbrella branding offers to the companies I would say it once again that the only companies where the huge reputation in the marketplace are in a position to go for umbrella branding I mean just think of the manufacturer who is new to the market and whose capital in terms of image and awareness and reputation is not all that great the umbrella branding is not going to be very helpful because the people do not even know about that so it is only that once you have developed a certain level of reputation in the market that you start getting into umbrella branding and the companies that specialize in umbrella branding they also started with one product at one time meaning there was a time in the history when these companies were just one product and one brand companies so it is the overall capital in relation to all the factors that I have discussed that the companies got more and more motivated in terms of getting into different markets with the help of the same brand name which was very strong and which still is very strong one of the largest constraints that the strategy of umbrella branding has is that under this concept you have to compete against specialists the meaning if you are into cars you are competing with a company that is just making cars if you happen to be into electronics which is one of your divisions under the same brand name you are competing against that company that is only into electronics so the ability to compete with specialists calls for a very high level of technical expertise and the diversity of knowledge which is as good as that of the specialists and if you are a company that can overcome this constraint then nothing is stopping you from becoming successful in the marketplace and that is why I said it is only the huge companies with a lot of resources that can give the character of an independent company or independent corporation to their divisions I mean even the divisions are so huge that they are better than so many independent companies and if you are in a position to give to your company and to your brands that kind of a character you are successful in introducing and sustaining umbrella brands there is another constraint which is an extension of the one that I have just talked about and that is about the product relevance you have to produce such a good quality that your product is considered relevant by the customers because customers also know that there are specialists in the marketplace and why should we go for a brand that are made by the company which is into so many different markets and hence they may not have the level of expertise which specialist has so you have got to prove to the marketplace that you are very relevant and that relevance must resonate all over the place only then customers are going to take you seriously and that again proves to the one fact that only companies with huge reputation and a great pool of resources that can be successful in this kind of a strategy and not others while you are getting into different markets there again is a limit to it and that is the limit which some experts call the rubber effect the rubber effect is that it has a lot of elasticity and if you extend that there is a point where it snaps and before you see it breaks because you have got to make sure what are your limits and despite all the that your disposal despite to see the huge brand capital that you have at your disposal because of your being so successful in so many different markets shouldn't mean that you automatically get into any market that you may think of or you may wish to get into because the rubber is going to break the rubber effect is something that these companies have to keep in mind this is what marketing experts and business experts say there is a lot of relevance to this concept that is one of the constraints these companies or umbrella brands might run into and they have got to be very mindful of such constraints having said that I would like to wrap my today's lecture and talk about the remaining strategies at the disposal of different companies in the next lecture but what we have to keep in mind is the different situations offer themselves with different variables and different dynamics it is upon the companies to look into those situations in a very strategic manner and then see which strategy really is the one that suits its circumstances in the next lecture Allah Hafiz until that time