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Creating Powerful Brands
This page intentionally left blank
Creating Powerful Brands
Fourth Edition
Leslie de Chernatony, Malcolm McDonald and Elaine Wallace
AMSTERDAM BOSTON HEIDELBERG LONDON NEW YORK OXFORD PARIS
SAN DIEGOSAN FRANCISCO SINGAPORE SYDNEY TOKYO
Butterworth-Heinemann is an imprint of Elsevier
Butterworth-Heinemann is an Imprint of Elsevier
The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, UK
30 Corporate Drive, Suite 400, Burlington, MA 01803, USA
First published 1992
Reprinted 1993, 1994, 1995, 1996, 1997
Second edition 1998
Third edition 2003
Fourth Edition 2011
Copyright Ó 2011 Leslie de Chernatony, Professor Malcolm McDonald and Elaine Wallace. Published
by Elsevier Ltd. All rights reserved.
The right of Leslie de Chernatony, Professor Malcolm McDonald and Elaine Wallace to be identified as
the authors of this work has been asserted in accordance with the Copyright, Designs and Patents Act
1988.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior
written permission of the publisher.
Permissions may be sought directly from Elsevier's Science & Technology Rights Department in Oxford,
UK: phone: (+44) 1865 843830, fax: (+44) 1865 853333, e-mail:
[email protected]. You may
also complete your request on-line via the Elsevier homepage (http://elsevier.com), by selecting
‘‘Customer Support’’ and then ‘‘Obtaining Permissions.’’
Recognizing the importance of preserving what has been written, Elsevier prints its books on acid-free
paper whenever possible.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
A catalog record for this book is available from the Library of Congress.
ISBN: 978-1-85617-849-5
For information on all Butterworth-Heinemann publications
visit our Web site at elsevierdierct.com
Printed and bound in Great Britain
11 12 13 10 9 8 7 6 5 4 3 2 1
Dedication
This book is dedicated to my wife, Carolyn, daughter, Gemma and son, Russell,
with love
- Leslie de Chernatony
Dedicated to all my academic colleagues who have helped me over the years,
with thanks
- Malcolm H.B. McDonald
Dedicated to Seán and Ann Wallace, with love
- Elaine Wallace
This page intentionally left blank
Contents
ABOUT THE AUTHORS ............................................................................ xiii
PREFACE ................................................................................................... xvii
HOW TO USE THIS BOOK ........................................................................ xxi
ACKNOWLEDGEMENT ........................................................................... xxv
Part 1 Foundations of Brand Management
CHAPTER 1 Why it is Crucial to Create Powerful Brands................... 3
Summary ......................................................................................... 3
Confusion about What Marketing is............................................ 4
The Growing Importance of Intangible Assets .......................... 6
Shareholder Valuedadding Strategies ...................................... 13
What is a Product? ....................................................................... 13
The Importance of the Brand...................................................... 16
Conclusion..................................................................................... 24
Building Successful Brands......................................................... 25
Book Modus Operandi ................................................................. 26
CHAPTER 2 Understanding the Branding Process............................. 27
Summary ....................................................................................... 27
Brand Success Through Integrating Marketing Resources .... 27
The Concept of the Brand ........................................................... 29
Characteristics of Brands ............................................................ 34
Brands as Relationship Builders ................................................ 37
Historical Evolution of Brands .................................................... 39
Brand Evolution: Distributors’ Brands and Generics .............. 43
Brand Categorisation................................................................... 45
Brand Consumerisation Spectrum ............................................. 53
The Value of Brands to Manufacturers, Distributors
and Consumers............................................................................. 54
The Importance of Brand Planning ............................................ 56
The Issues Influencing Brand Potential .................................... 58
Conclusions................................................................................... 63 vii
viii Contents
Marketing Action Checklist ........................................................ 64
Student Based Enquiry................................................................ 66
Part 2 Brand Management in Different Sectors
CHAPTER 3 How Consumers Choose Brands..................................... 71
Summary ....................................................................................... 71
Brands and the Consumer’s Buying Process ............................. 72
Extended Problem Solving .......................................................... 74
Dissonance Reduction ................................................................. 79
Limited Problem Solving ............................................................. 82
Tendency to Limited Problem Solving....................................... 85
Consumers’ Low Involvement with Brands.............................. 85
Consumers’ Need-States ............................................................. 87
Differential Brand Marketing ...................................................... 89
Consumers’ Perceptions of Added Values ................................ 91
Brand Information: Quality or Quantity? .................................. 96
Clues to Evaluate Brands............................................................ 97
Brand Names as Informational Chunks..................................... 98
The Challenge to Branding from Perception ............................ 99
Naming Brands: Individual or Company Name?.................... 103
A Strategic Approach to Naming Brands................................ 106
Brand Name Alternatives Generated ...................................... 107
Issues Associated with Effective Brand Names .................... 108
The Brand as a Risk Reducer ................................................... 111
Conclusions................................................................................. 113
Marketing Action Checklist ...................................................... 115
Student Based Enquiry: ............................................................ 117
CHAPTER 4 How Consumer Brands Satisfy Social
and Psychological Needs ............................................... 123
Summary ..................................................................................... 123
Added Values Beyond Functionalism...................................... 124
Brands and Symbolism .............................................................. 127
Self-concept and Branding ........................................................ 131
Brand Values and Personality................................................... 133
Brand Personality and Relationship Building ......................... 140
The Contribution of Semiotics to Branding ............................ 143
Conclusions................................................................................. 147
Marketing Action Checklist ...................................................... 149
Student Based Enquiry: ............................................................ 152
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Contents ix
CHAPTER 5 Business-to-Business Branding..................................... 155
Summary ..................................................................................... 155
Brands and Organisational Marketing .................................... 156
The Unique Characteristics of Organisational Marketing .... 163
Nature of Brands in Organisational Markets.......................... 166
Who Buys Brands? ..................................................................... 167
Anticipating the Role of Buying Centre Members................. 169
The Organisational Buying Process......................................... 171
Brand Values in Business-to-Business Branding ................... 174
Brands as Relationship Builders .............................................. 177
Factors Influencing Brand Selection ........................................ 182
Providing Organisational Buyers with Brand
Information.................................................................................. 188
The Company as a Brand.......................................................... 192
Varying Receptivity to Branding .............................................. 196
Conclusions................................................................................. 197
Marketing Action Checklist ...................................................... 199
Student Based Enquiry: ............................................................ 201
CHAPTER 6 Service Brands................................................................. 205
Summary ..................................................................................... 205
New Ways of Thinking about Services ................................... 206
The Challenge of Services Branding........................................ 208
Intangibility................................................................................. 209
Heterogeneity ............................................................................. 213
Inseparability of Production and Consumption ...................... 214
Perishability ................................................................................ 216
Moving Beyond the Fast-moving Consumer
Goods Model ............................................................................... 217
The Process of Building and Sustaining Powerful
Services Brands .......................................................................... 219
Branding to make Tangible the Intangible ............................. 223
Consistent Service Brands through Staff ................................ 225
Service Brands with the Optimum Consumer
Participation................................................................................ 229
Building Service Brand Equity.................................................. 233
Conclusions................................................................................. 234
Marketing Action Checklist ...................................................... 235
Student Based Enquiry.............................................................. 236
CHAPTER 7 Retailer Issues in Branding............................................ 241
Summary ..................................................................................... 241
x Contents
The Store as a Brand ................................................................. 242
Retaining Customer Loyalty and Building
Engagement................................................................................ 244
The Internationalisation of Retail Brands ............................... 246
Store Brands................................................................................ 247
Success Factors of Store Brands e Consumer Behaviour
and Economic Cycles................................................................. 248
Retailer Support for Own Label................................................ 250
The Arrival and Demise of Generics........................................ 253
The Increasingly Powerful Retailer.......................................... 254
The Responses of Weak and Strong Manufacturers.............. 255
Whether to Become an Own Label Supplier........................... 258
How Retailers Select Own Label Suppliers ............................ 262
Prioritising Brand Investment through Different
Retailers ...................................................................................... 264
Winning with Brands rather than Own Labels ...................... 267
Understanding the Balance of Power ...................................... 269
Category Management .............................................................. 272
Using Information in Category Management ......................... 275
Efficient Consumer Response (ECR)........................................ 277
The Evolution of ECR ................................................................ 278
How Firms Implement ECR ...................................................... 280
How Firms Measure the Success of ECR ................................ 282
Conclusions................................................................................. 283
Marketing Action Checklist ...................................................... 285
Student Based Enquiry.............................................................. 288
CHAPTER 8 Brands on the Internet ................................................... 293
Summary ..................................................................................... 293
Moving into a Virtual Environment ......................................... 293
Reconceiving the Concept of ‘Brand’?..................................... 296
The Importance of the Online Brand Experience................... 298
The Evolving Role of the Internet in Brand Building............. 303
The Challenges Facing Brands on the Internet ..................... 307
Brand Equity of Online Brands................................................. 310
Conclusions................................................................................. 311
Marketing Actions Checklist .................................................... 312
Student Based Enquiry: ............................................................ 315
Part 3 Winning the Brands Battle
CHAPTER 9 How Powerful Brands Beat Competitors ..................... 321
Summary ..................................................................................... 321
Contents xi
Brands as Strategic Devices ..................................................... 322
Cost-driven or Value-added Brands? ....................................... 324
Value-added Brands with Cost-driven Characteristics ......... 330
Identifying Brands’ Sources of Competitive Advantage ....... 333
Focusing Brands’ Competitive Advantages ........................... 336
Sustaining a Brand’s Competitive Advantage........................ 337
Sustaining a Service Brand’s Competitive
Advantage................................................................................... 340
Anticipating Competitor Response.......................................... 343
The Meaning of Brand Share .................................................... 346
Striving for Profitable Brands ................................................... 349
Characterising Successful Brands............................................ 351
Need for Promotional Support .................................................. 355
Should a Company build Brands or buy Brands?................... 357
Extending Brands....................................................................... 358
Conclusions................................................................................. 363
Marketing Action Checklist ...................................................... 364
Student Based Enquiry.............................................................. 366
CHAPTER 10 The Challenge of Developing and Sustaining
Added Values .................................................................. 371
Summary ..................................................................................... 371
Positioning Brands as Added Value Offerings ....................... 372
Noticeably Different, Relevant and Welcomed Added
Values .......................................................................................... 378
Identifying Added Values ......................................................... 381
Adding Value through Consumer Participation ..................... 389
Adding Value through Customisation ..................................... 391
Adding Value through Building Relationships ....................... 393
Protecting Brands against Counterfeit Brands....................... 395
Conclusions................................................................................. 399
Marketing Action Checklist ...................................................... 401
Student Based Enquiry.............................................................. 402
CHAPTER 11 Brand Planning ................................................................ 407
Summary ..................................................................................... 407
Understanding the Meaning of Core Values .......................... 408
Maintaining the Brand’s Core Values...................................... 409
Bridging the Brand’s Values ..................................................... 413
Defining Brand Dimensions ...................................................... 415
The de Chernatony e Mcwilliam Brand Planning Matrix..... 418
Determining Brand Performance.............................................. 424
xii Contents
Managing Brands Over their Life Cycles ................................ 424
Rejuvenating ‘Has Been’ Brands.............................................. 434
A Systematic Approach for Revitalising Brands .................... 435
Conclusions................................................................................. 438
Marketing Action Checklist ...................................................... 440
Student Based Enquiry.............................................................. 442
CHAPTER 12 Brand Evaluation............................................................. 447
Summary ..................................................................................... 447
Growing Brand Equity............................................................... 447
Commercial Models of Brand Equity Growth......................... 452
Measuring Brand Equity ........................................................... 454
Methods of Measuring the Financial Value of a Brand ......... 461
Conclusion: Financial Implications for Brands....................... 466
Marketing Action Checklist ...................................................... 467
INDEX......................................................................................................... 471
About the Authors
Professor Leslie de Chernatony
Professor of Brand Marketing, Università della
Svizzera Italiana, Lugano, Switzerland and Aston
Business School, Birmingham, UK. Managing
Partner, Brands Box Marketing and Research
Consultancy.
The Chartered Institute of Marketing cites Prof
Leslie de Chernatony as one of the 50 gurus
who have shaped the future of marketing. This is
because of his pioneering work on Brand Manage-
ment for which he has an international reputation.
His cutting edge work on strategically building brands has helped many
organisations to develop more effective brand strategies.
With a doctorate in brand marketing, Leslie has a substantial number of
publications in American and European journals, in addition to frequent
presentations at international conferences. Several of his papers have won best
paper awards. His books have been translated into Chinese, Russian, Polish,
Czech and Slovenian. He has several books on Brand Management, a recent
one being ‘From Brand Vision to Brand Evaluation’, published by Butterworth-
Heinemann and backed by online videos from Oxford Learning Lab. Winning
several major research grants helped him and his team progress projects on
factors associated with brand success, services branding and the future of brand
management.
Leslie is Visiting Professor at Thammasat University in Bangkok. He is a Fellow
of the Chartered Institute of Marketing, Fellow of the Market Research Society
and Liveryman of the Worshipful Company of Marketors.
Leslie's work has resulted in TV programmes and radio broadcasts. He is
a frequent speaker at management conferences. xiii
xiv About the Authors
A firm advocate of the need for managers to benefit from his work on brand
marketing, he has run many highly acclaimed management development
workshops throughout Europe, the USA, the Middle East, the Far East, Asia and
Australia. His advice has been sought by numerous organisations throughout
the world on developing more effective brand strategies. On several occasions
he has acted as an Expert Witness in court cases over branding issues.
Leslie can be contacted at [email protected]
Emeritus Professor Malcolm H.B. McDonald,
MA (Oxon), MSc, PhD, D.Litt. FCIM, FRSA
Malcolm, until recently, Professor of Marketing
and Deputy Director, Cranfield School of Manage-
ment with special responsibility for E-Business, is
a graduate in English Language and Literature from
Oxford University and in Business Studies from
Bradford University Management Centre. He has
a PhD from Cranfield University. He also has an
Honorary Doctorate from Bradford University.
He has extensive industrial experience, including
a number of years as Marketing Director of Canada
Dry.
He is Chairman of Brand Finance plc and spends
much of his time working with the operating boards of the world's biggest
multinational companies, such as IBM, Xerox, BP and the like in many coun-
tries in the world, including Japan, the USA, Europe, South America, ASEAN
and Australasia.
He has written forty three books, including the best seller ‘Marketing Plans;
how to prepare them; how to use them’ and many of his papers have been
published.
His current interests centre around the measurement of the financial impact of
marketing expenditure and global best practice key account management.
He is Professor at Cranfield, Henley, Warwick, Aston and Bradford Business
Schools.
Malcolm can be contacted at: m.mcdonald@cranfield.ac.uk
About the Authors xv
Dr Elaine Wallace
J.E. Cairnes School of Business & Economics,
National University of Ireland Galway.
Dr. Elaine Wallace is Lecturer in Marketing and
Associate Head of Development and Promotion at
the J.E. Cairnes School of Business & Economics,
National University of Ireland Galway. Elaine has
developed programmes in Brand Management and
Branding Strategy at undergraduate and post-
graduate level.
Having graduated with an honours degree in
Commerce, Elaine worked initially with Siemens
Limited on corporate marketing and then with
Unilever as a trade marketer for brands including Persil and Timotei. She
subsequently worked as Panadol Product Manager for Glaxo SmithKline and
was a member of the European launch team for NiQuitin CQ. Elaine also
worked as Nurofen Brand Manager in Boots Healthcare and managed the
launch of Nurofen for Children into the Irish market.
Elaine completed her doctorate at the University of Birmingham, working with
Professor de Chernatony. Her subsequent research has explored the anteced-
ents and components of service employee performance, the role of the front
line employee as brand champion and the nature and management of brand
sabotage. Elaine adopts qualitative and quantitative methodologies in her
research, has published in international journals and presented at international
conferences. Her research activities to date, have been supported in part by
funding from the Irish Research Council. Elaine is also interested in brand
building, as well as exploring the relationship between consumers and brands
and the impact of controls and compliance requirements on brand orientation.
Elaine can be contacted at [email protected]
This page intentionally left blank
Preface
As we look forward with confidence that this new edition significantly benefits
students and managers, we look back to how this book became a well estab-
lished core text in many business schools internationally and amongst a lot of
managers. It seems not that long ago when we embarked on this project, yet as
our publisher attests, the first edition of this book appeared in 1992. That was
the year when the European Union offered the potential for developing brands
that could cross frontiers without too much hindrance. Cries were heard about
identities being lost as corporations sought to consider how more standardised
approaches could be followed in their brand strategies. Yet today we see a loose-
tight approach being followed that helps different communities to celebrate
their diversity, but at the same time allows them to conform to societal norms.
Successful brands did not adopt the “one shape fits all” mantra. Rather, they
evolved using a loose-tight approach. They are tight in so far as there are a core set
of brand values that are not transgressed, yet loose since country managers have
the latitude to enact the brand values in a manner more suited to their country.
The changing environment makes this new edition even more relevant. Having
a good foundation in the principles of brand management is essential if
resources are to be wisely used to grow brand value. One only needs to look at
league tables to appreciate the significant financial value of brands. It is
becoming more common to see organisations monitoring brand equity and
brand value and then to assess how different brand strategies are contributing
to changes in brand equity and brand value .
A passive view about the role of customers in branding used to be the norm. In
other words customers were viewed as the end of the value chain consuming
the value of brands. Brand managers who believe in this notion are cutting their
brands’ life expectancies. Customers are part of real or virtual communities and
they expect to be able to shape the nature of brands. The result is that customers
are increasingly both co-creators of brands and brand publics. The internet not
only levels the playing fields between large corporates and SMEs, but also
empowers customers to make brands better fit their needs.
xvii
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