 As Salaam Aleykum Khabateena Huzoorat, welcome to lecture number four, brand management, MKT624. I was talking about brand fundamentals in the last lecture and I hardly could finish the first fundamental when the lecture came to an end. I would therefore pick up the threads from where I left and now start talking about fundamental number two, which is brand characteristics. Anyone in his layman's mind could might think that brand entity is a minor issue. Developing a brand may not be as serious as it may look. These are the kind of thoughts which non-marketing people or non-brand managers may conjure up in their mind. For the sake of argument, we might think to ourselves, create a product, make it a little differentiated, package it well, price it right and sales are guaranteed. Well, as the argument goes, it makes sense and it looks like a pretty easy job but that's not where it is. We need to understand the whole process very comprehensively. Let me state that all brands when introduced start as kind of undifferentiated products on the marketplace and their differentiated features come to the surface only when brands are given meaning, when they make sense to their target market and when they have made the mark, people start feeling the differentiated features in terms of attributes the brands carry and in terms of the benefits they make use of. Therefore, we can say that brands are acknowledged and recognized on the basis of their functionality. And on that basis, some brands become powerful and some do not become powerful. Some may become very powerful. Those that are powerful needs to be maintained and sustained and those which are not powerful may go into oblivion, may disappear or may remain kind of minor small players on the market scene. Not really disturbing of the brands, not really having the potential to make a dent into the sales of those which are very powerful. The powerful brands, like I said, are under everyone's scrutiny on the marketplace and when I say everyone, I mean competitors and those powerful brands remain under threat and continuously face challenges and therefore they are things which are very, very essential for the success of a company and therefore they need to be understood in all their subtleties and complexities. The subtleties and complexities are so important to the basic architecture of brand and brand management that McKinsey, one of the very well-renowned consultants in the world have said that not everyone has the right to brand their products. For products to qualify as the branded products, there are three criteria according to those consultants and these are all very important. Number one is that a brand must offer a superior value proposition. We have been talking about superior value proposition and we shall keep talking about this all along the course. This is one of the common denominators you will find as we go along the course. Second criterion is that a brand must deliver that superior value proposition. First it should be able to offer and second it must be able to deliver that. And third criterion is that a brand must maintain a relationship with its customers. This can be further explained. How does a brand maintain relationship with its customers? How does it keep itself alive? How does it survive and sustain itself? To work that we can say that brand management is a strategic process and it extends well beyond the limits of marketing department. All departments must get together in order to be able to offer the superior value proposition that I talked about. How do they do that? Marketing is as much an internal process as it is external. And internal marketing is very interactive where you interact with your colleagues, with your peers in other departments, but of course within your company. You've got to be able to convince them about the efficacy, the utility of the brand, the significance it plays, it has toward creating value for the company and in the process having the potential to offer the same value to its customers. So you must be able to convince your peers and colleagues about the importance and significance of your brand and they must be sold onto the concept. Once they are bought in, then they must be willing and they must be committed to delivering that value in consumer terms. How do they deliver that value in consumer terms? They do that, meaning the whole company, all the departments of which marketing is a part, without question. They do that by delivering superior technology, by delivering quality, by offering good price. Good price doesn't really mean it has to be very low and it doesn't mean it has to be very high. It could be anywhere between the lowest possible and the highest possible range. And remember one thing, when it comes to pricing, in any given category, consumer consumables or consumer durables, people or consumers in the target segment you are trying to reach, have a very strong perception about the lower and the upper limits of the price. And therefore, your price has got to be within that range. If you are outside of that range, your target market is not going to accept that. If it is on a lower side, meaning on a lower side, they might think that the product does not really fulfill the need or the product doesn't really satisfy them in terms of its appearance, in terms of the promise it carries. If it falls outside the range on the upper side, they may not be willing to buy it because they might think it is too expensive and it is not worth the price it carries. Apart from price, delivering value on part of the company could also be improved distribution systems and all kinds of possible supports when it comes to logistics for example. So the point here is that management of the company has got to be committed so that the superior value proposition that is offered by the brand could be delivered the way it is envisaged by the marketing department. As long as your capable colleagues or peers are not satisfied, you may not be able to deliver a superior value proposition. Having said that, we can also say that the company must be sensitive to all the changing needs and preferences of your consumers whenever you think the needs have changed because in response to the marketing dynamics, they will keep changing and you have got to make sure that you are sensitive to those changes and preferences so that you can fulfill those changed needs. The brand must be able to adapt to changes and yet meaning the same in response to fierce competition. What does that mean? It means that you do not have to bring about radical changes in the brand architecture, the way it looks like or the way it fulfills needs of your consumers. You have to bring about changes but you also have to keep the brand or the character of the brand, the personality of the brand the same as it was perceived yesterday so that it is perceived the same way today and it should be perceived tomorrow. This is how a brand maintains its relationship with the marketplace that it remains a little dynamic in response to changing market forces so that a relationship could be maintained. Further discussion on this, how changes take place in the market and what kinds of responses should be prepared by the brand managers and how those responses are to be fulfilled in practical terms meaning in consumer terms is going to be the topic of later discussion under brand contract which will be a couple of lectures down the line. Having said that, we can now discuss fundamental number three which deals with layers of brands. There are so many layers, not always. A brand can be just one brand and a brand can be a family of brands. A brand can have so many different levels. Why a brand has different levels and layers? This again is something which we shall be talking in detail when we talk about brand extensions but in order to have a very macro understanding what kind of layers there could be under one brand or under different brands that we are going to talk a little bit today. What is important to understand is regarding layers and levels of brands this situation under which you create those layers. Basically, you create different layers of brands in response to, like I said earlier, fierce competition. When competition makes life difficult in the marketplace and brand managers really start scratching their heads what should be the response. Generally, the response is, okay, introduce one more brand and by having another brand, we can satisfy another need or this very need in a changed way and thereby having an appeal for one more segment or a few more segments and thereby in turn having an appeal which goes across the segmental lines. These are the kind of situations which brand managers have got to be sensitive to and they should be able to understand and in response to those changing situations or in response to those cropping situations they have to make their decisions. Now let us talk about the levels which a brand may have in the market. We have different levels, like I said earlier and with the help of this chart, I can explain these one by one. First of all, we may have what you call product brands. We can also call them stand-alone brands. Product brands relate to different products maybe within the same product line. For example, if a company has a line of detergents it may have three or four brands and they are all different brand names brand X, brand Y, brand Z. Why that happens, we shall talk about that later. And this is what you call stand-alone brands. They are different entities. They may have identities which differ a little bit as a matter of fact they should have different identities but the point is they are within the same product line. The next we have what we call line brands. Line brands is that one brand name represents one product line. If a company has again a line of detergents for example and the company has like four brands all those four brands will be brand X and under that X they might have sub-brands but the main brand which appears on the package and which is bought and which is sold that is brand X. Line brand when it comes to another line which for example could be personal care products different kinds of creams, you know, shave cream could be cold cream could be anything relating to your personal nurturing you can have another brand say with brand Y and brand Z and so on and so forth. Then we have range brands. Now range brands are not very different from line brands when the range is a little bit broader when you have so many different lines you can say that we have a range of products or product lines and you can have different brand names given to that range or given to all the product lines which form that range. And then we have umbrella brands. Umbrella brands is a terminology which could be interchanged with range brands meaning you know well I shouldn't say that umbrella let's put it this way that umbrella brand is one brand it is brand A and under that umbrella you have different lines and those lines could be very diverse meaning you have a product mix you have detergents, you have toiletries you have personal other personal care products you have some eatables, line of food items so whatever those are they are under one umbrella and that umbrella brand is one brand name. I can summarize it this way that product brands and stand-alone brands which was the first category I discussed are different from other three categories which are line brands, range brands and umbrella brands. The next category that we have or the next layer which we have could be company brand or family brand as the name suggests these brands are named after the companies or after the families if a company happens to be a family business and you can very well guess that situations which necessitate naming your products this way are those where companies have very good reputation and past history very convincing and well-known history of branding and delivering value proposition to consumers so you like to capitalize on the strength that you have already in the marketplace and name your brands after your company name like company X, brand X, company Y, brand Y then we have another category which is name brands now this is a little tricky a name brand is different from a brand name the brand name could be any name it can also be in the name brand but when we use the terminology name brand it means it is named after someone and that someone mostly is a designer and this is what you see in terms of clothing nowadays cosmetics nowadays there may be few other items which I cannot think of at the moment but I leave that to your imagination well-known designers when they become successful and well-known like I said like to carry the value into other lines of businesses this is one of the properties or one of the strengths which we discussed in one of the lectures early that strong and powerful brands have the potential to take business for one category to another to another and to another not only to other categories but also to other regions of the world so successful designers name their brands after their names and that's what you call name brands I don't really have to name the designers you can think of so many nowadays because all of you are users in one way or the other of the designer goods that completes our discussion on layers of brands and in the hope that we are clear about different layers we now move on to the fourth fundamental which is a brand owner's commitment or in other words the management commitment owners of brands are not only brand managers owners of brands are all those who have stakes in the brands and stakeholders are people from within the company there could be shareholders there could be members of the trade also and all those people who are associated with the company and whose influence can matter when it comes to making a difference between success and you know not success I don't really want to use the word failure but all those influencers they're all stakeholders and they all own the brand and the brand must have total support of all those people so we can sum it up this way that consistent dimensions the right characteristics and the right layers are absolutely essential for brands to offer superior value to consumers what really constitutes that superior value is a deep understanding a deep understanding of consumers meaning their needs, their behavior their preferences, their biases their experiences so that that understanding could be shared by the top management and all the stakeholders meaning all the brand owners to make sure that the brand is a success in the market in the absence of total support effort cannot be very fruitful for branding decisions this is a statement to be underlined this is to be underscored there has to be total support for good branding decisions the company must stay very committed to providing good quality as wanted by the consumers whenever we talk about quality it means good quality and good quality also is relative when you talk of good quality in a certain category of automobiles it may mean one thing and while you talk about good quality relating another category which is not that expensive so that applies to all the categories and all the segments within the categories the point here is that the brand owners and the management of the company must stay very committed to good quality that is provided to consumers the companies must also provide differentiation nothing works more in the market than offering a point of difference and I have been talking about this factor again and again and I shall be talking about this factor again and again because brand management is all about differentiation one of the authors has said to the extent that it is the point of difference on which all the resources of the organization must converge because the total resources of the organization are deployed to create that point of difference and that's the point of difference which really matters in the market that's the point of difference which brings your consumers and that's the point of difference which keeps your consumers loyal to your brand they come by your brand over and over again day in day out months years and years the companies must stay very consistent in maintaining their brands and yet prepared for evolution this is the same point which we discussed earlier also that with the changing times with the changing needs the companies have got to stay very sensitive to fulfilling those needs in accordance with the changing needs the companies must also support the brands through advertising the market research and improved distribution support having said all that this concludes our discussion on the four fundamentals of brand management which I started talking about in the last lecture and with that discussion I would now like to move on to another topic of very high significance which is brand value brand value is another topic macro understanding about which has got to be developed in order to be able to put together all the building blocks of brand management so that when I start talking about the strategic brand management process in detail component by component you do not really have any problem understanding what I am talking about so for your benefit on to the topic brand value what is brand value brand value has two fundamental elements which you must remember these are so important the elements you can machine them one is that brands offer value to its consumers and number two is brands generate value for their companies let us talk about brand value in terms of their consumers the consumers while using brands must feel that they are getting full value for their money this is kind of a slogan that you must have heard so many times and this is a phrase which so many companies use and it is very very common what does that mean that means that the money you spend on the brand what you get in return should be full of value in terms of your satisfaction so that you feel the money that you spend was worth spending customers must also feel that their decision to buy a brand has optimized their decision to buy the best brand this has a psychological side whatever brand a consumer is using may not be the real best brand available on the market but a consumer has got to have the feeling that his decision was right in buying the best brand that is important and that is the kind of feeling that consumers must generate through creating the right identity of the brand which we discussed earlier so that the right image could be transmitted and the consumer thinks that he has made just about the best possible decision he could make to go for something which is the best on the market and as a continuation of this kind of feeling I can also say that consumers must get a confirmation of the self image they want to portray to others now what is hidden is the psychological need which people want to have about the self importance this is why I could have so many people like to think that they are different from others their image in their own eyes is so big that they think they are reinforcing that by buying and using something which really has optimized their decision if we go step back what I talked earlier that a buyer must have the feeling that the decision to buy one particular brand has optimized his decision to buy the best brand I can say a few words in support of this statement that the reason your friends and your peers keep suggesting to you rather keep advocating why don't you use this brand why don't you buy it for the simple reason that I bought it if they are using a certain model of car they would like to see to it that you also buy the same car if they are using one particular brand of electronics they would like to see to it that you also buy the same brand and that is a reconformation of their decision that it was the most optimal decision to have gone for the brand I am using and I have talked about that advocated that to so many different friends and they are all buying it so this is how brands get more popular and this is kind of a feeling which must be fulfilled by brands consumers must also get satisfaction out of the attractiveness of brands and this relates the styling feature we keep talking about the brands being stylish and not being stylish because it is stylish and not buying a certain brand because it is not stylish we even talk about good quality of brand but since it is not appealing in terms of its style in terms of the attractiveness it carries we either buy it or don't buy it so this is a pretty straightforward feature or a straightforward value which brands must fulfill for their consumers brands must also generate another value for consumers which is very different from the ones I have talked about this is kind of an intangible value consumers must get the feeling that brands are environmentally friendly and this relates all those brands which have the potential to litter the environment so many different examples can be given toward expressing this aspect and I am sure you must be having a lot of thoughts in your mind at this very moment let's talk about a product which is being sold in a plastic bag and all of a sudden the package is changed by the manufacturers in a very attractive paper bag which is very easy to dispose of and you feel very satisfied and happy about the new package style because the first thing which comes to your mind is that this company is very ecology friendly this company really cares about the environment and they are making something very disposed of and it can be torn into pieces and properly disposed of as part of the trash another example could be the area of automobiles for example it could be in the area of motorbikes for example what if the manufacturers start telling you after getting out a very meaningful innovation which gives their brand a very strong point of differentiation and that point is about low emission meaning the burned gases which your automobile or your bike is emitting in the shape of carbon monoxide or whatever they call it the moment you find out or the moment you see this knowledge is imparted to you remember we talked about that in the last lecture which is imparted that your bike the one you are going to buy emits lesser amount of poisonous gases you immediately think to yourself that company is really environmentally friendly and the brand really has a very very tangible point of difference which attracts so many consumers to go buy that so this is one of the feelings or one of the values rather which brands must satisfy for their consumers having talked about the values different kinds of values which brands generate for their consumers now let us talk about the value with which brands that have the potential to generate brands well in the first place brands keep strong brands when I talk about brands I think it goes without saying that we are talking about the brand which is strong, which has a lot of value and which has a lot of customer which has a big customer basis having had an understanding how the brands create value for their consumers let us now talk about the value for their companies well in the first place it goes without saying the brands generate revenues and revenues lead to good cash earnings and profitability and it is that profitability which creates a lot of power for the brand in the first place and then for the company brands generate future demand with lasting attractiveness for consumers in times to come brands keep competition at bay if you have strong brands you have a big customer base and very good following and chances are that competitive brands are going to have a hard time catching up with your sales or cutting into your sales in other words so brands meaning powerful brands create and erect barriers for competition brands carry value into other areas meaning brands have the potential to carry their company into other markets and those markets could be part of your country and those markets could be part of the world you can go international if your brand is strong enough it may carry you into different regions brands also offer value to the companies to go into other product categories if your brand in one category is very strong you feel tempted to offer the same brand into other lines and therefore what you can do is you can generate for the company economies of scale in terms of all the variables of marketing mix one concept that we talked about in the very first or maybe the second lecture when you have the same brand which cuts across different segments and which cuts across different categories the amount of advertising the amount of total communication that you carry out is much more economical in comparison with what it would have been if you had different brands for different lines so that's what I mean by economies of scale in terms of the variables of marketing mix I've just given you one example now having understood how brands create value for the consumers and how they generate value for the companies we must not lose sight of one factor and that is that brands also generate value for themselves because unless they generate value for themselves they cannot offer the value to their two beneficiaries who are consumers and the companies the question is how brands create value for themselves well it is through commitment of brand managers you are back to the same factor which we talked earlier commitment by management is a very very significant factor to give meaning to brands so that they become powerful and if they are powerful they have value and if they have value to themselves they certainly will offer value to consumers and they will offer value to their companies let us try to understand this concept by way of a value interface which is graphically illustrated right there you can see these three circles at the very bottom we have the blue circle which says management commitment and this is the factor which I talked last with the brand management has to give meaning to the brand so that it can create value for itself to be able to offer value to its two beneficiaries because if the brand does not have value to itself it cannot offer anything and when it has a lot of value when it has the value base it offers value to consumers the which you can see in the circle on the right inside yellow color company on the left and these three circles which is obvious from the illustration have an interface and this is the interface which is important to understand it is an interaction which takes place continuously perennially as long as the brand exists in the hope that this is now very clear to all of us let us now summarize by saying that management that are committed to maintaining and adding value to the brands never take the eyes of that strategic goal they are so committed and they are so focused on that that they are glued to it and when you have something in that sharp focus you never lose sight of anything which requires your attention there are many brands which you might think of in the national market and also on the international market which have a tremendous level of longevity longevity relates to the number of years or the age of the brands there are brands that have been around for decades and there are brands in the international market which have been around for more than a century now I mean this is no exaggeration but that's the way it is the question is how do they maintain this kind of longevity this is not an accident it happens through a program that we started talking about in the very first lecture and which of course is a starting point of the brand management process you give meaning to the product and you keep on doing that your effort spans over years and then decades and decades turn into a century can you imagine those kind of brands if we are dealing with a brand maybe we do not have the objective to take that brand into the next century but we should have the objective to sustain that brand for a long time to come and in order to be able to do that so that the brand remains valuable like I said earlier we have got to be very sensitive to changes that keep taking place in the marketplace which is very dynamic so the longevity of brands is a result of relentless efforts over the years and decades this is the way we can summarize now the next question is how do companies maintain value of brands in a way that brands create for themselves the kind of longevity I am talking about that happens through two different modes one is by investing into manufacturing and the other is by investing into the market when we talk about investment into manufacturing we are talking about basically improvement of product quality and that means investment into new technologies investment into new plants new machines, new equipment so on and so forth and if you look at it very carefully it is a big area which we are talking about and this is that part of the strategic management and that part of the strategic vision which we shall be talking about later when we start talking about different components of brand management one by one investment into marketing what does that mean I will leave it to your imagination for a while let me now state investment into markets essentially means advertising and all the communication campaigns, promotions everything that goes on into the marketplace in order to communicate with the consumers what the brand is all about and the benefits the features, the attributes the brand carries because you want to convey to them the value which the brand carries for them so that they can conjure up the right image or if they already have the right image which they should have they can reinforce that so this investment is which is carried out from time to time while you will be working in the companies you will hear this thing from time to time people talking about the need for kicking off another campaign the managers to talk you know every now and then now is the time that we should start talking about the brand all over again because this silence I think has been for too long and in order to give consumers a reminder that we do exist not only that we do exist but we exist in a very vibrant way let us start talking with them once again so that we can create a lot of noise so to say to keep competition at bay to reinforce whatever the brand carries and whatever you say I have talked about investment into marketing can also mean improving distribution systems distribution systems are one of the lifelines of the overall marketing and improvement relating distribution is something that I touched upon earlier also it could be wider coverage more intensive meaning wherever you are you want to be there in a more intense way and it could be extensive which means that you really want to expand and you want to cover a larger area so investment into distribution means the markets which you want to improve you have to talk with the existing distributors in terms of bringing about the strengths which you envision and which you envisage and in doing so maybe you have to train them from certain points of view maybe you have to train their sales force from certain standpoints which essentially means that you are investing because all those efforts means money the more companies invest into brands the more powerful the brands become and better leadership roles and positions they attain in the market we can relate this with the findings of the PIMS study which I talked about in one of my earlier lectures you remember I talked about the differential between the two brands in terms of the returns both of those bring to their companies the brand which is the market leader having a market share of like 40% may bring to its company a return which is three times as much as that of the other brand bringing to its company and it is because of that differential that companies strive so hard and they invest so much money into making their brands more and more valuable and more and more powerful it is precisely for that reason that companies are willing to pay prices for brands much higher than their market value remember this point we talked about in the very first lecture that in the new era of brand management companies are running after wrong brands and acquisitions taking place only for the purpose of owning powerful and valuable brands because the companies know that powerful brands are going to solve many of their financial problems so having talked about that I can I think state if you think of the whole thing that you have talked about thinking of fall into a very proper perspective in terms of the brand value and with that I would like to wind up today's lecture and before I wind up I'll give you the recap we started talking about the brand fundamentals which we continued from the previous lecture number three and after completing we started talking about brand value and brand value being a topic of very high significance we have devoted quite a bit of time on how the brands generate value for consumers and how they create value for the companies and once they become powerful and valuable the why companies run after strong brands in order to own them wrapping up this discussion I also would like to add that in the next lecture I would like to talk about brand challenges because I did point out this factor earlier that no matter however powerful the brands may be they are not immune from attacks they are under attacks the competitive onslaught carries on all the time and brands face a lot of challenges and threats what those challenges are what those threats are and how they emanate what are the sources from where they stem we shall talk about that in the next lecture I will look forward to talking with you and for the half