11 New Strategic Brand Management by Philip Kotler   4th Edition
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11 New Strategic Brand Management by Philip Kotler 4th Edition

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and in certain cases the attachment or even
loyalty to the brand that is the key to future
sales. Brand loyalty may be reduced to a
minimum as the price difference between
the brand and its competitors increases but
attachment to the brand does not vanish so
fast; it resists time.
The brand is a focal point for all the positive
and negative impressions created by the buyer
over time as he or she comes into contact with
the brand\u2019s products, distribution channel,
personnel and communication. On top of
this, by concentrating all its marketing effort
on a single name, the latter acquires an aura of
exclusivity. The brand continues to be, at least
in the short term, a byword for quality even
after the patent has expired. The life of the
patent is extended thanks to the brand, thus
explaining the importance of brands in the
pharmaceutical or the chemical industry (see
page 108).
Brands are stored in clients\u2019 memories, so
they exert a lasting influence. Because of this,
they are seen as an asset from an accounting
point of view: their economic effects extend
far beyond the mere consumption of the
In order to understand in what way a strong
brand (having acquired distribution,
awareness and image) is a generator of growth
and profitability it is first necessary to under-
stand the functions that it performs with the
consumers themselves, and which are the
source of their valuable goodwill. 
How brands create value for the
Although this book deals primarily with
brands and their optimisation, it is important
to clarify that brands do not necessarily exist
in all markets. Even if brands exist in the legal
sense they do not always play a role in the
buying decision process of consumers. Other
factors may be more important. For example,
Table 1.3 Brand financial valuation, 2007
Rank Brand Value (US$ billion)
1 Google 66,434
2 GE 61,880
3 Microsoft 54,951
4 Coca Cola 44,134
5 China Mobile 41,214
6 Marlboro 39,166
7 Wal-Mart 36,880
8 Citi 33,706
9 IBM 33,572
10 Toyota 33,427
11 McDonald\u2019s 33,138
12 Nokia 31,670
13 Bank of America 28,767
14 BMW 25,751
15 Hewlett-Packard 24,987
16 Apple 24,728
17 UPS 24,580
Sources: Brand Z, Milward Brown
research on \u2018brand sensitivity\u2019 (Kapferer and
Laurent, 1988) shows that in several product
categories, buyers do not look at the brand
when they are making their choice. Who is
concerned about the brand when they are
buying a writing pad, a rubber, felt-tip pens,
markers or photocopy paper? Neither private
individuals nor companies. There are no
strong brands in such markets as sugar and
socks. In Germany there is no national brand
of flour. Even the beer brands are mostly
regional. Location is key with the choice of a
Brands reduce perceived risk, and exist as
soon as there is perceived risk. Once the risk
perceived by the buyer disappears, the brand
no longer has any benefit. It is only a name on
a product, and it ceases to be a choice cue, a
guide or a source of added value. The
perceived risk is greater if the unit price is
higher or the repercussions of a bad choice are
more severe. Thus the purchase of durable
goods is a long-term commitment. On top of
this, because humans are social animals, we
judge ourselves on certain choices that we
make and this explains why a large part of our
social identity is built around the logos and
the brands that we wear. As far as food is
concerned, there is a certain amount of
intrinsic risk involved whenever we ingest
something and allow it to enter our bodies.
The brand\u2019s function is to overcome this
anxiety, which explains, for example, the
importance of brands in the market for spirits
such as vodka and gin.
The importance of perceived risk as a
generator of the legitimacy of a brand is high-
lighted by the categories within which distrib-
utors\u2019 own-brands (and perhaps tomorrow\u2019s
discount products) dominate: canned
vegetables, milk, orange juice, frozen pizzas,
bottled water, kitchen roll, toilet paper and
petrol. At the same time producers\u2019 brands
still have a dominant position in the
following categories: coffee, tea, cereals,
toothpaste, deodorant, cold sauces, fresh
pasta, baby food, beauty products, washing
powder, etc. For these products the consumer
has high involvement and does not want to
take any risks, be they physical or psycho-
Nothing is ever acquired permanently, and
the degree of perceived risk evolves over time.
In certain sectors, as the technology becomes
commonplace, all the products comply with
standards of quality. Therefore we are moving
from a situation where some products \u2018failed\u2019
whereas others \u2018passed\u2019, towards one where all
competitors are excellent, but some are \u2018more
excellent\u2019 than others. The degree of perceived
risk will change depending on the situation.
For example, there is less risk involved in
buying rum or vodka for a cocktail than for a
rum or vodka on the rocks. Lastly, all
consumers do not have the same level of
involvement. Those who have high
involvement are those that worry about small
differences between products or who wish to
optimise their choice: they will talk for hours
about the merits of such and such a computer
or of a certain brand of coffee. Those who are
less involved are satisfied with a basic product
which isn\u2019t too expensive, such as a gin or a
whisky which may be unknown but seems to
be good value for money and is sold in their
local shop. The problem for most buyers who
feel a certain risk and fear making a mistake is
that many products are opaque: we can only
discover their inner qualities once we buy the
products and consume them. However, many
consumers are reluctant to take this step.
Therefore it is imperative that the external
signs highlight the internal qualities of these
opaque products. A reputable brand is the
most efficient of these external signals.
Examples of other such external indicators are:
price, quality marks, the retail outlet where the
product is sold and which guarantees it, the
style and design of the packaging.
How brand awareness means value
Recent marketing research shows that brand
awareness is not a mere cognitive measure. It is
in fact correlated with many valuable image
dimensions. Awareness carries a reassuring
message: although it is measured at the indi-
vidual level, brand awareness is in fact a
collective phenomenon. When a brand is
known, each individual knows it is known.
This leads to spontaneous inferences. As is
shown in Table 1.4, awareness is mostly corre-
lated with aspects such as high quality, trust,
reliability, closeness to people, a good quality/
price ratio, accessibility and traditional styling.
However it has a zero correlation with innova-
tiveness, superior class, style, seduction: if
aspects such as these are key differentiation
facets of the brand, they must be earned on
their own merit.
Transparent and opaque products
At this stage it is interesting to remind
ourselves of the classifications drawn up by
Nelson (1970) and by Darby and Kami (1973).
These authors make the distinction between
three types of product characteristics:
l the qualities which are noticed by contact,
before buying;
l the qualities which are noticed uniquely by
experience, thus after buying;
l credence qualities which cannot be verified
even after consumption and which you
have to take on trust.
The first type of quality can be seen in the
decision to buy a pair of men\u2019s socks. The
choice is made according to the visible charac-
teristics: the pattern, the style, the material,
the feel, the elasticity and the price. There is
hardly a need for brands in this market. In fact
those that do exist only have a very small
market share and target those people who are
looking for proof of durability