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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us that advertising and marketing are
the key levers of sales. However, their effects
on market share and the ability to charge a
premium price (two indicators of brand
strength) are not direct but are mediated by
brand reputation (or esteem). In fact, as
shown by the path coefficients of Figure 1.3,
brand reputation is created by familiarity
(I know it well, I use it a lot) and by brand
perceived uniqueness (this brand is unique, is
different, there is no substitute). Advertising
does play a key role in building sales, but it
has no direct impact on gaining both market
share and premium price. This is most inter-
esting: in brief, it is only by building a reputa-
tional capital that both a higher market share
and price premium can be obtained.
Reputation also adds to the impact of adver-
tising on sales. It is well known from evalua-
tions of past campaigns that the more a brand
is known, the more its advertisements are
noticed and remembered. It is high time to
stop treating brands and commerce as
opposing forces.
Corporate reputation and the
corporate brand
In 2003 Velux, which had become known as
the number one brand for roof windows in
the world, realised it needed to create a
corporate brand. It felt that merely to compete
through its product brand was not enough to
Figure 1.3 Branding and sales
Reprinted from the Journal of Advertising Research, copyright 2002, by the Advertising Research Foundation
Number of
Brand sales
Market share
Relative price
All other paths p<0.5
protect it against the growing number of me-
toos all over the world. In addition, its brand
equity was stagnating. When any brand
reaches a level of 80 per cent of top-of-mind
awareness in its category, part of its \u2018stag-
nation\u2019 is certainly due to a ceiling effect:
there is not much room for improvement.
However, the company felt that emotional
bonding with its brand was not strong
enough. Could the product brand alone
improve the bond? The diagnosis was that it
was high time to reveal \u2018the brand behind the
brand\u2019 (Kapferer, 2000) and start building a
corporate brand.
In fact many companies that based their
success on product brands have now decided
to create a corporate brand in order to make
company actions, values and missions more
salient and to diffuse specific added values.
Unilever should soon develop some kind of
corporate visibility, as Procter & Gamble does
in Asia at this time and will probably do every-
where soon.
There is another reason that corporate
brands are a new hot managerial topic: the
defence of reputation. Companies have
become very sensitive about their reputation.
Formerly they used to be sensitive about their
image. Why this change? Isn\u2019t image
(perception) the basis on which global evalua-
tions are formed (and thus reputation)? It is
likely that the term \u2018image\u2019 has lost its
glamour. It seems to have fallen into disrepute
precisely because there was too much
publicity about \u2018image makers\u2019, as if image
was an artificial construction. Reputation has
more depth, is more involving: it is a
judgement from the market which needs to be
preserved. In any case reputation has become
a byword, as witnessed by the annual surveys
on the most respected companies that are
now made in almost all countries, modelled
on Fortune\u2019s \u2018America\u2019s most admired
companies\u2019. Reputation signals that although
the company has many different stake-
holders, each one reacting to a specific facet of
the company (as employee, as supplier, as
financial investor, as client), in fact they are
all sensitive to the global ability of the
company to meet the expectations of all its
stakeholders. Reputation takes the company
as a whole. It reunifies all stakeholders and all
functions of the corporation.
Because changes in reputation affect all
stakeholders, companies monitor and manage
their reputation closely. Fombrun has diag-
nosed that global reputation is based on six
factors or \u2018pillars\u2019 (Fombrun, Gardberg and
Sever, 2000):
l emotional appeal (trust, admiration and
l products and services (quality, innova-
tiveness, value for money and so on);
l vision and leadership;
l workplace quality (well-managed, appealing
workplace; employee talent);
l financial performance;
l social responsibility.
Since companies cannot grow without advo-
cates and the support of their many stake-
holders, they need to build a reputational
capital among all of them; plus a global repu-
tation, because even specialised stakeholders
wish the company to be responsive to all
stakeholders. There is a link between repu-
tation and share performance.
As a consequence of this growth of the
reputational concept, companies have
realised they cannot stay mute, invisible,
opaque. They must manage their visibility
and that of their actions in order to maximise
their reputational capital \u2013 in fact their
goodwill, to speak like financiers. The
corporate brand will be more and more
present and visible: through art sponsorship,
foundations, charities, advertising. As such it
addresses global targets. The corporate brand
speaks on behalf of the company, signals the
company\u2019s presence. Now companies are also
developing specialised corporate brands such
as \u2018You\u2019 (the recruiting brand of Unilever), or
specialised campaigns (such as semi-annual
financial roadshows).
Corporate brands have therefore taken a
new importance since they speak on behalf of
the company, signal its presence and actions:
in fact they draw the company\u2019s profile in the
eyes of all those who do not have direct inter-
actions with it. In our world people react more
and more to names and reputations, to
rumours and word of mouth. They do not see
the headquarters or the factories any more.
Often delocalised, corporations appear
through the press, publicity, PR, advertising,
financial reports, trade union reports, all sorts
of communications, and of course their
products and services. Managing the corporate
brand and its communication means
managing this profile. The methods to do so
are not specific: they rely as do all brands on
identity. They also rely on the markets.
What then is the difference between
corporate brand methods and the product brand
methods developed in this book? Companies do
have an internal identity, core values that bear
on the profile they wish to, or can, express
outwardly. Companies and corporations are
bodies with a soul (from the Latin, corpus). (They
are enacted by people.) Product brands are more
imaginary constructions, relying on intangible
values which have been invented to fulfil the
needs of clients. Ralph Lauren\u2019s or Marlboro\u2019s
intangible values are pure constructions. It
cannot be the same for companies. Reality leaves
fewer degrees of freedom.
Second, since brand management is both
identity and market oriented, corporate
brands must tailor their profile to meet the
expectations of multiple publics. The core
value must be tailored for this global audience,
which symbolically has to \u2018buy\u2019 the company,
as a supplier, an employee or an investor.
Managing the reputation of the name,
through (among other methods) the commu-
nication of the corporate brand, is aimed at
making the company their first choice.
As to the very hot topic of the financial
value of reputation, a conceptual distinction
must be made: at the corporate level, this is
called goodwill (the excess of stock value over
book value). Now, the larger part of this
goodwill is attributable to the financial value
of the brand as commercial brand. This
financial value is usually measured by the
discounted cashflow method. This