Course of Brand & Marketing Communication from IULM University

Knowledge Mastered Through the Course

IULM università iulm Course of Brand & Marketing Communication IULM, 16th october 2023 227Knowledge that you will master throughout the course

• Cultural branding (sociology of brands, performativity perspective) Know how brands perform (see brands in action) Know how to build a competitive advantage through brands (5)
• Brand experience (retail brands, touchpoints, customer journey) Know how brands are built, the important brand models and how it is possible to measure them (4)
• Brand positioning (strategic positioning of the brand) Know the target of brands (i.e., consumers) (3)
• Brand building (the contents of the brand: brand identity, brand image, brand experience, brand measurement) Know the alternative ontology: a socio-cultural perspective on branding
• Consumers & brands (2) (consumer psychology, consumer behavior theories and how they relate to brands and branding)

IULM università iulm (1)

Course Schedule (Prof. Massara)

228Course schedule (prof. Massara) Date Place Topic Notes Course material (integrates content of PPTs)

25th Sept Room 502 10:30 - 13:30 Understanding the psychology of brands (1) Prof. Massara Schmitt

02th Oct Room 502 10:30 - 13:30 Brand building: brand functions, brand identity, image & positioning. (2) Prof. Massara Aaker Ch. 2, 3, 4 Kapferer Ch. 1, 2, 3, 7 Keller

09th Oct Room 502 10:30 - 13:30 Brand metrics: how brands are measured (2) Dr. Bernini, Global Research Director at Lavazza PPT file

16th Oct Room 502 10:30 - 12:00 Brand strategies: extension, artchitecture of brands, brands in traditional and creative industries (3) Prof. Massara Aaker Ch. 5 Kapferer Ch. 11, 12, 13

16th Oct Room 502 12:00 - 13:30 Brand strategies: the perspective of practice (3) Dr. Morini, Brand Director at Futurebrand

23rd Oct Room 502 10:30 - 13:30 Experiencing brands (4) Dr. Alfonso De Leon, Former VP at Estee Lauder Lemon & Verhoef (reading only)

30th Oct Room 502 10:30 - 13:30 Cultural branding: the alternative perspective (5) Prof. Massara Allen, O'Guinn

Brand Equity Exploitation

229 IULM università julmHow do companies exploit brand equity?

• We said until now that companies may invest in brands because they form strong and positive memories accomplishing three functions:
  • Identification
  • Warranty
  • Self-expression
• These properties can be applied to other, additional, new products and services, by practicing brand extension.

Differentiation Strategies

HIGH Extending the lenght of an existing line towards the top (or the bottom) of the price scale Vertical differentiation New Products Estending the witdh with a new line MOT Existing products New Products Existing products LOW HIGH Horizontal differentiation

Vertical vs. Horizontal Differentiation Cost

Question · Is it more expensive a vertical or an horizontal differentiation? a) Vertical b) Horizontal c) They cost the same

Callaway Golf: Horizontal Differentiation Example

Callaway golf Horizontal differentiation (extension of width of range) Callway golf made an investment of $180Ms to include Golf Balls into its product line which already included golf clubs and accessories. GOLF Callaway -Product Line Breadth/Width-> Woods & Irons Putters Wedges Golf Balls Accessories · HawkEye · Odyssey Brand ("White Hot" Putters) · Odyssey · Golf Bags ("Dual Force . Callaway (Rule 35 Brand) · Steelhead · Odyssey Brand ("Dual Force" Putters) . Hats & Visors · Little Bertha · Odyssey Brand ("Triforce" Putters) · Travel Items · Handy Items Line Length

BMW 1 and i Series: Vertical and Horizontal Differentiation

BMW 1 and i Series · In offering a product line, companies develop a basic platform and modules that can be added to meet different customer requirements and lower production costs. . Car manufacturers build cars around a basic platform. BMW 1 series in fact shares the mechanics of the product (engine, transmission, computer etc.) with the 2 and 3 series. Mein BMW Alle BMW Modelle Finanzieren & Versichern Großkunden & Behörden BMW Partner Q Suchen Home 1 2 3 4 5 6 7 X Z4 M BMWi Gebrauchtwagen Service & Zubehör Faszination Kontakt Willkommen bel BMW. > Login FINDEN SIE IHREN BMW. 37 Modelle (246 Motorisierungen) Filter > Filter zurücksetzen Budget Preis I Rate Listenpreis BMW 1er 3-Türer (13) ab 22.950,00 €* BMW 1er 5-Türer (13) ab 23.700,00 €* von 22.950 € bis 134.000 € + Motorisierung Bauform Eigenschaften BMW 2er Coupé (9) ab 27.650,00 €* BMW 2er Cabrio (5) ab 32.200,00 €* BMW 2er Active Tourer (9) ab 27.400,00 €™ BMW 2er Gran Tourer (5) ab 20.650,00 €* BMW 3er Limousine (16) ab 29.650.00 €* BMW 3er Touring (15) ab 31.400,00 €* BMW 3er Gran Turismo (13) ab 37.250,00 €" BMW ActiveHybrid 3 (1) nib 56.930,00 €* BMW ActiveHybrid 5 (1) ab 65.400,00 €* BMW i3 (2) ab 34.950,00 €* BMW i8 (1) ab 130.000,00 €* Vertical differentiation (line extension towards the bottom) and horizontal differentiation (line filling).

Brand Development Strategies

Brand development strategies Product category Existing (Vertical differentiation) New (Horizontal differentiation) Existing Vertical extension of the line (BRANDED HOUSE) M Horizontal ext of the line (BRANDED HOUSE) Callaway V Brand Name New Multiple brands (HOUSE OF BRANDS) New brands (HOUSE OF BRANDS) Source: Kotler 2007

Brand Architecture Models

Three Common Types of Brand Architecture Models Branded House House Blend/ Endorsed House of Brands Virgin Marriott P&G Virgin america mobile COURTYARD Residence Marriott Tide Pampers Virgin MEGASTORE Virgin trains ThwnePlace SUITES :: FAIRFIELD INN money Marriott Marmott DAWN Luvs Crest Branded House: all sub- brands use the same master brand and only differentiate in their descriptions. House of Brands: consist of various brands, each sub- brand operates independently and obtain separate market share and profits. Aretcon 1 L Page · 9 Endorsed: some companies combine the two types, such as Coca Cola and GE. This type enjoys the advantages of both; however it requires higher brand management standards and more resource inputs. Swiffer Bounty always Virgin HOLIDAYS Virgia media SPRINGHILL SUITES Marriott BONUX Marriott Virgin

Decathlon: From Branded House to House of Brands

Decathlon From Branded House To House of Brands DECATHLON After a reduction in sales per square meter, the management realized that the use of a single brand strengthened identification, but it gave the impression of an "undifferentiated" assortment. Until 1999, after 23 years of uninterrupted growth Decathlon was the only brand existent in the chain. After 25 years of "monobrand" policy Decathlon decides to build a portfolio of brands segmented by sport, which are called "passion brand" (because sport is a passion and passion is shared), targeting sport communities or "tribes". B'TWIN ARTENGO INESIS Quechua DOMYOS TRIBORD DESIGNED BY WATER Caperlan 237

Vertical Differentiation at GE Appliances

Vertical differentiation at GE Appliances Brand Target Result Monogram. Luxury NEGATIVE Profile® Top Range - High Earners POSITIVE GE Appliances Middle market - Sensitive to quality POSITIVE Hotpoint Low end market POSITIVE · The choice of tarteting luxury segment (designers and architects) with a sub-brand (Monogram) has proven wrong. · Choice of targeting a top range profile (Profile) worked well because the segment was actually different and the stretch didn't «ask> much to the brand. · Choice of targeting a low range segment with a different brand (Hotpoint) has proven right (it protected the brand in the higher segments of the market from being eroded).

Vertical Differentiation at Marriott

Vertical differentiation at Marriot TARGET RESULT Luxury POSITIVE Marriott HOTELS . RESORTS . SUITES City center - short stay POSITIVE Marriott. Residence Inn. Close to city - longer stay POSITIVE COURTYARD Marriott Suburbs - business traveler POSITIVE FAIRFIELD INN & SUITES Marriott Suburbs - family POSITIVE . Brand architecture at Marriot commits Marriot as a warrant but distinguishes Marriot as an «organization> from Marriot as a «hotel chain». · Brands are tied together (except for the luxury extension) and extensions avoid dangerous stretches. Aaker e Joachimstaler 2001 BRAND BVLGARI HOTELS & RESORTS MILANO

Downward Extension and Brand Value

Downward extension and the value of the brand Old M A Class Benefits V = Costs/sacrifices Benefits - V1= 1 Costs/sacrifices Ø There must be no cannibalization (the target of the extension must be different - and it would be better if the extension would take place in different channels). Ø In general, B1 consumers will be unhappy to see that their brand has become more accessible. V2= Costs/sacrifices Let's assume the existence of 2 brands, B1 and B2, where B1 is the up-market brand (V1 and V2 are the values associated to B1 and B2 respectively). If B2 is the new downward extension of B1 (e.g., Mercedes A-Class) then it will be necessary to consider that: > B1 will lose value, therefore such a loss must be compensated by the value generated by B2 Benefits 1 > The perception of the benefits and costs of B2 could be higher than the segment average (e.g., higher than other cars in the city van category). 240

Upmarket Extension and Brand Value

Upmarket extension and the value of the brand VW Arteon Benefits V = Costs/sacrifices If B1 is the new upward extension of B2 (e.g., Wolkswagen Arteon) then it will be necessary to consider that: Benefits - V1 = 1 Costs/sacrifices Benefits V2= Costs/sacrifices > The value of B1 will be anchored to the performance of B2 so that the upward extension must be credible. Ø If V1 is a premium / luxury there will also be repercussions on the perception of V2, which may now appear too expensive. > In general, B2 consumers will be happy to see that their brand has become more "elite". > The perception of value and cost of B1 may be lower than the segment average (e.g., lower than other cars in the luxury sedan category). 241

Let's assume the existence of 2 brands, B1 and B2, where B1 is the up-market brand (V1 and V2 are the values associated to B1 and B2 respectively).

Limitations to Horizontal Differentiation

Limitations to horizontal differentiation PIEWY DRAGHIS mentos® mint . There are boundaries for brands, delimited by the brand essence concept (brand mantra). . For example, for brand Mentos the brand essence could be: - Emotion FRESH - Description COOL - Function CHEWING CHOCOLAT BLANC CARAMEL BONBONS TENDIES CARAMEL ET CHOCOLAT BLANC mentos ODOHD . Then a stretch like Mentos Choco, which is surely not a promise of freshness, is a stretch which goes a little beyond what the brand can afford.

Model of Brand Extension

A model of brand extension No-go area Threats of brand's capital asset Extension zone Latent potential Outer core Spontaneous associations Inner core Kernel line extension One can think of the brand as a set of embedded "rings" that gradually move away from a central core, each of these delimiting: • Spontaneous areas of associations (those that emerge from simple interviews) · Latent areas of associations (can be discovered only through in- depth qualitative investigations, eg Focus group) . Incompatible areas, where the brand should not venture. 243