Advertising and Branding

Advertising and Branding

TOPIC 1 – Foundations of Brand Management

What is the brand?

• the image of a company
• way of establishing differences
• it provides information and a lot of meaning

Is something designed to identify stuff, is about differentiation, about creating image

A brand is a name, term, sign, symbol, or design which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

From products to brands

• Products and services have a “core layer”: all the things you need in order to make the product
• Expected layer: things the product could exists without, but customer expect it (the phone now has all this extra stuffs)
• Augmented layer: customer don’t expect them but there are a powerful way of differentiation (car: extended warranty)

When the brand is really strong it represent an augmentation, a powerful source of differentiation → ex: if you are attracted by iPhone you are going to wait for the next one iPhone 6

Sources of differentiation are typically functional or emotional. Some brands may be differentiated among rational and tangible elements (Gillette); but other brands among emotional elements (Coca-Cola, Chanel)

Never take maturity of a market as granted, there is always an opportunity to innovate.

Branding commodities

Banana product →  is very little you can do with the product, but yet even in this industry there are company that differentiate itself, such as Chiquita. Even in category that are commodities there are some leaders.

How much would you pay for a toilet?

How can you differentiate toilet paper? They repositioned their product as part of a bathroom (colourful) → they managed to create a brand that is designed around a very different positioning. In pretty much any industry, if you have a good idea and create a brand that is different from customer you can succeed.

Never take maturity and commodization of a market as granted, there is always an opportunity to innovate.

De Beers: A diamond is forever

They came up with an idea that is the engagement, that a poor guy buys a diamond for this girl in order to make her say yes.

“A diamond is forever” → people will buy only one, and that is not good with sales

create occasioans is what they did → anniversary

Why do brands matter?

The customer’s perspective: they benefit customers, we need them

The firm’s perspective: they are useful for the company

The customer perspective

Is a risk reduction mechanism, they simplify purchases for customers, we like brands because they make things easier for customers

Selective attention/retention→ we filter out all the messages that we don’t like or don’t want to consider.  We forget it really quickly, because we don’t care less.

The consumer decision making process

1. Need recognition
2. Prepurchase search
3. Evaluation of alternatives
4. Purchase
5. Postpurchase evaluation

We have a need, we look around, we evaluate alternatives, we purchase and then we make a post purchase evaluation

→ we need to increase the experience the customer have

→ evoke set: list of acceptable brand

→ minimize the risk

Experience and brands

Because the brand carries a promise, then what it does is to create a relationship to make customer increasing the experience.  

In Lugano we say 3000 messages every day, and we don’t pay much attention at them; we also develop the mechanism of selective attention and selective retention. If you will buy a laptop, it happens that then you will see laptop advertising everywhere.

Ex: Cobra beer

Purchase risks

Brands reduce risks, they tae away some risk associated with the purchase:

• Functional: will the product work? It is performing well? → making an assumption on the brand
• Physical: is dangerous? Are you more likely to put something on your face for a known brand or not?
• Financial: how much will cost to me if the products fail or doesn’t work?
• Social: the choices of brands is driven by a desire to minimize social risks; choosing brands that do not exposing to risk - conform within a specific social group, fitting within a social network
• Time: if something goes wrong, then you need the time to rectify it back

Video Apple 1999

The brand was about reducing functional risk, very important business situation that is socially exposed → Apple was very much about minimizing functional, social an time

Video 10-15 years later – Apple

They are stressing very much on social risk

A brand that has consistency over time and within the message is a key element.

Properties of goods and services

→ Search attributes: assess the quality very easily; ex: pen

→ Experience attributes: you can’t assess the quality of the product; you first have to buy it and try it; others brands are much more en the experience attributes; ex: a restaurant meal, after the meal I can assess if it was good or not

→ Credence attributes: even after you have experiences the product or services you can not still assess the quality, for example: the doctor → you have to believe him. In this case, the brand is the only element of differentiation.

Brands and product quality

Brands become increasingly importance when we move away in these attributes. If we have experience goods or credence goods sometimes the brands is the only assets that is going to differentiate the product. Sometime the brand is the only promise to differentiate.

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