Aamir Khan is Jhingalala for Tata Sky

Khan has been in the news these days, heavily promoting his latest production, Jaane Tu… Ya Jaane Na, which is also his nephew, Imran Khan’s debut film. Recently, he has started endorsing Samsung and Parle Monaco. He has been the Titan brand ambassador for a while now.

 

Tata Sky is a joint venture between the Tata Group, STAR TV. In this venture TATA owns 80% and STAR TV owns a 20% stake. Tata Sky was incorporated in 2004 but was launched only in 2006. The company uses the Sky brand owned by British Sky Broadcasting.

Tata Sky, has roped in Aamir Khan as its brand ambassador. Bollywood star Aamir Khan has entered into a long-term contract with Tata Sky. Aamir Khan will be used extensively for communicating the benefits of Tata Sky to the Indian consumer. It is definitely a strategic move as the rival dish TV has signed Shah Rukh Khan. Tata Sky would use Khan to take the brand forward. He is not the first brand ambassador for the 21-month old DTH service provider. Hrithik Roshan was used during the Cricket World Cup in 2007 for select campaigns and other film stars like Kiron Kher and Paresh Rawal were also used for some campaigns which basically testimonial ads.

 

Khan will feature in all the Tata Sky ads in print, TV, outdoor and radio with the popular Tata Sky tag line Isko laga dala, to life jhingalala.

 

Rediffusion DY&R is the company’s creative agency.

Shah Rukh Khan The King of Endorsements

In 1993, Shah Rukh Khan first appeared in three ads for tea brand Brahmaputra. The ads heralded the arrival of Shah Rukh Khan as a brand endorser of some stature. The very next year, he ended up endorsing three more brands – Hero Puch, Cinthol and Mayur Suitings. The series of his hits not only established him as a super star of film industry but also positioned him as a bankable endorser.

In 1996 he was signed by cola giant Pepsi, which can be seen as the turning point of his endorsement career. Shah Rukh Khan since then, has endorsed Bagpiper, Hyundai Santro and i10, Top Ramen noodles, Jeanne Arthes, Clinic All Clear shampoo, Emami-Sona Chandi Chyawanprash, Lux, Omega, Airtel, Nokia, sunfeast, Compaq, Home Trade, Videocon to name a few.
The superstar Shah Rukh Khan has 34 brand endorsement deals for year 2008 which is down from 37 endorsement brand in year 2007. I believe that other celebrity like Hrithik Roshan, Salman Khan, Aamir Khan and Akshay kumar have not shown great interest in the endorsement market. In the given scenario it is important to understand what makes him the most popular celebrity brand endorser around?

Shah Rukh Khan has been around for a long time, and has become a bankable name. He is the only one who has proved to be consistent for last fifteen years (since the release of his first movie in 1992). In recent past we have seen that the actors like Hrithik Roshan, Salman Khan, Aamir Khan and Akshay kumar are also consistent and bankable name of the Indian film industry but they are not the corporate world darling. In my views corporate world not only look for these two factors there are something more than this. The other important factors are – corporate friendliness, image of celebrity, brand personality of celebrity.

Marketers claim that Shah Rukh Khan’s appeal cuts across age, gender, and class, and blends the characteristics that mirror multiple identities – the ordinary middle class guy who went on to became the King. The king is a traditional and family loving Indian.

The biggest plus about the actor Shah Rukh Khan is that he holds self-made man image. The common Indian man associates with him and aspires to become Shah Rukh Khan. In last few years Akshay kumar has also attained status of self-made man which is challenge to the king. The other plus about Shah Rukh Khan is his image of down-to-earth, approachable person and his ability of straddling the classes and the masses. He is not niche actor like Aamir, and not even a down market actor like Govinda. In this parameter also Akshay kumar has taken a lead. This new image of the Bollywood star Akshay kumar can be a threat to the Shah Rukh Khan’s endorsement kingdom.

The fact that Shah Rukh Khan has been so overexposed by advertising leaves little room for credibility among consumers. I can’t imagine Shah Rukh Khan driving Huandi Santro or i10 but the fact that the Shah Rukh Khan’s fans still associate him with the products is doing wonders for him.

Idea of Positioning and Differentiation

The two different books positioning and differentiation says the same thing. The book by Jack Trout on differentiation – Differentiate or Die is repackaging of his book coauthored with Al Ries on positioning – Positioning: The Battle for Your Mind. In my views when Jack Trout separated from Al Ries wrote Differentiate or Die to position Trout & Partners Ltd. Truly a positioning genius. I strongly believe that it hardly matters what you call the activity of buying share of consumer mind – positioning or differentiation you are doing same thing.

Brand managers across globe are busy differentiating their products or say working hard to position them. However, the major problems with most of the companies are that they don’t understand the concept of differentiation or positioning. In most of the cases they work on differentiation for the sake of differentiation. The situations in a few cases are so grim that some brand managers really don’t know the difference between a name and a brand. Addressing similar situation, Sergio Zyman, and Armin Brott says that If you don’t keep giving customers reasons to buy from you, they won’t. Awareness is absolutely worthless if it doesn’t lead to sales. In my views one can’t blame the brand manager solely for the problem. The problem of positioning also depends on the proliferation of me-too products. Today any company can come out with almost similar product that their competitors have within a few days.
The brand managers of successful brands take their brand for granted. They don’t work on them regularly and as a result the charisma of brand goes down. It is vital to remember that even the strongest brands don’t stay their way without working on them regularly. They need repositioning or for your convenience you may call it brand maintenance. The brand needs to be renewed or redefined constantly, else it will die.

The market analyst firm also correlate branding with the data analysis and ROI of marketing; and few other marketers believe that it’s advertising which position products. In my vies branding is not only about advertising and data analysis – it’s also about understanding how consumer lives are changing and how is it impacting consumer preferences. I believe branding is also about developing and implementing strategy which is grounded on a deep understanding of consumers that connects companies. Authors, Sergio Zyman, and Armin Brott in their book The End of Advertising as We Know It says that Advertising is a lot more than just television commercials – it includes branding, packaging, celebrity spokespersons, sponsorships, publicity, customer service, the way you treat your employees, and even the way your secretary answers the phone.

Marketing in a new world

Marketing is the invention of the 20th century, and for last 80 years, its goal has been to infiltrate consumers’ mind and change their thinking. Since the beginning marketing’s goal has always been to build the relationship between buyer and seller. This relationship is more important in this ever dynamic business environment. Today, technology is playing an important role in building a better buyer and seller relationship.

Caught in the interlacing Web of interrelationships, traditional marketing is evanescing for simple reason that its tasks are being automated and assumed by the mysterious and hidden power of information technology. All traditional marketing functions are replaced by the technological functions by creating an impression that marketing has turned out to be a technology.

Origin of Marketing
Marketing as an element of business originated in early 20th century, but its roots reach back to the industrial revolution. It idealized the importance of relationship between producer and consumer. McKenna says development of marketing has gone through three distinct ages viz., the age of reach, age of push and age of total access.

Age of Reach and Age of Push
No one knows who first coined the term ‘marketing’. In early 20th century, marketers identified the term with distribution, wholesale and retailing. Later in 1920s Procter and Gamble established ‘Brand management system’, which can be identified as a period of branding at very same time Edward Bernays was working on the concept of ‘Public Relation.’ The 1950s has established and popularized the concept of 4Ps which was followed by segmentation, mass production and mass marketing.

Role of Technology in Marketing
Technology has always played an important role in the development of marketing. In early 20th century, development of rail-roads and Henry Ford’s invention of ‘model T’ has helped companies reach their customers better and faster. In 1920s, Radio emerged as the major technological breakthrough to create a perception that marketing as a function can change consumer behavior. It remained an efficient broadcast medium for two American generations. Post World War, Television came in as a new technological development changing the marketing landscape. Post 1950s, advertisers relied more on television than radio; This new push medium has consistently influenced viewers with a repetitive, consistent and entertaining message. This helped marketers change consumer behavior from ‘I need factor’ to ‘I want factor.’

Total Access
Just like an era of reach and push, new technology, new marketplace, new consumer and competition are once again changing the assumptions of customers and marketers. Now customers are telling what they want companies to do instead of companies suggesting their customer what they need. Total Access is not a broadcast model. Rather, it is an environment where consumer experiences multiple and simultaneous competitive buying opportunities. Internet is seen as one of the greatest technological innovation of the last century. It has made availability of information easier and cheaper. Internet has successfully laid the seeds of Total Access which flourished with mobile technology. Mobile market has improved customer’s comfort level and once again changed the customer behavior. These two technological break throughs have not only changed customer behavior but also changed the way market behaves. It is evident from the changed classification in era of Total Access. In the era of Total Access, customers can be divided by four parameters—the information explorers, the information active, the information followers, and the information passive. Technology has changed at an unprecedented pace in the past few decades. It has changed business landscape many a time in last twenty-five years. It has enabled farsighted business to outpace their competitors by creating new products and services, by managing business process and by operating business more efficiently. Law governing these technological innovations is also seen as the law of new marketplace.

Every business is wired today, marketers and academicians in this increasingly networked business environment is writing the new rule of marketing. These new laws of marketplace are playing on important role in developing marketing strategies.

Branding Lost its Meaning!
The marketing function disappears into a network of relationships and responsibilities between man and machine throughout the value chain. For marketers, the end goal changes from creating brand awareness to satisfying customers. In today’s network economy, brand itself becomes a ‘persistent presence’ which sustains the customer dialogue whenever the customer chooses. Branding is all about customer loyalty. It is always seen as a result of customer-producer relationship. In the era of total access, this relationship is becoming more transactional than personal. In total access environment, many consumers will choose a brand for pragmatic reasons rather than emotional. The ever changing marketplace and shifting consumer loyalty is creating challanges for producers. Few of the challenges for producers are:

Changing Symbol: Technology has changed the way people perceive things, which in turn, has changed business practices. Today, ATM has emerged as a symbol of trust in consumers’ conscious mind replacing old economy bank infrastructure.
Impact of Technology: Building brand in technology business is building alliances and relationship. It is seen that in technology market, developing brand is all about developing industry standard.
Hidden Choices: The component of the end product is mostly unknown to the end consumer. Consumers often do not know with which producer they are dealing with. Intel and Visa are the diffusion distributors of Dell, Compaq, and Bank of America. The erosion of brands has evolved from technology, social and cultural influences. An easy access to information and power of choice has converted one-time “brand loyal” to “brand switcher”. Today, consumers have choice to select from wide variety of offerings, hence user preferences vary from situation to situation. In the last two decades, consumer preferences have changed.

Few people confuse preferences with values. Preferences change with time and vary widely with the changing social and economic context of a particular market. It changes with changing technology, but values do not. These changing preferences give marketing a new dimension of mass customization and self service. The business is looking for lasting market presence and sustaining brand. There are two keys to it: Point of access and marketing architecture network.

Persistent presence
Market is changing its dimension at the speed of thought. This dynamic change is changing consumer’s preferences and perceptions. Today, every business has persistent presence. In fact, in this competitive market, it is a must for the very survival of any business. Persistent presence is consumers, consistent and reliable experience with the producer or retailers. A logistical system that focuses on operational system and communicational system of any company is the backbone of the persistent presence. Natures of business, market condition, company’s competitive position are few of the factors which help any company in achieving persistent presence. It is possible in many ways:
• Presence through digital network e.g., ATM, e-broking
• Physical presence: Location, Access e.g., Starbucks has more than 3,000 points all over the world.
• Embedded presence e.g., Intel
• Presence through services e.g.,E*TRADE, Yahoo!, Citibank

Company can establish persistent presence in many ways. It all depends on the nature of the business and environment the company is operating in. McKenna suggests a few key points to establish persistent presence:
• Market Architecture Approach to Total Access e.g., Dell, Wal-Mart
• Beef up your customer’s support infrastructure e.g., Coca-Cola
• Think Total Access e.g., AOL as a total Internet venture to AOL as an entertainment and media company which provides total access option.
• Invest in Time, Money are customer Relationship e.g., CRM initiatives

The Market Architecture
Market architecture is the functional relation of inbound and outbound functions. In transactional working environment with shortened product life cycle, changing technology and shifting channels, and increased competition, marketing architecture has become dynamic. Apart from technological innovations, human interactions also play the key role in defining marketing architecture.

Shared Creativity: In the B2B market place, to gain market share, companies work closely with their customers to know their needs and demands better. Few of the innovations driven by customer needs are Apple II personal computer, Microsoft MS-DOS.

Keeping Customer Trust: To build or sustain customer trust, marketing architecture must perform as per acceptation of the customer and respond consistently to their queries and problems. Business earning customer trust can retain it either by meeting or exceeding expectations.

Nurturing Change: The Organic Factor- Marketing architecture is dynamic. The ability to respond to the new customer information and changing business and social need is yet another important aspect of marketing architecture. IT is playing an important role in the development of dynamic marketing architecture, and also in the relationship development between the producer and consumer. In a situation, when information related service has shifted from retailers or distributors to producers enterprise architecture approach in marketing becomes important. Marketing architecture by learning how to better interact with itself in response to the environment and in connection with the customers’ needs and wants. The important factors for successful marketing architecture are: Customer satisfaction, developing different channels for different needs, identifying value of connected partners, and developing the strategic framework.

Total Global Access
Internet has changed the definition of the market infrastructure. Effective communication and transport methods have narrowed down the gap between the supply and demand time giving a new dimension to the global marketing. Growth in market economies, deregulation, privatization, and new global consumers has all created a new global market.

The focus in this wired world is changing from ‘think globally but act locally’ to ‘act globally connect locally’. World Wide Web helps business in connecting all channels. It also connects people across border and helps them come closure to market and increase their interaction. Internet has helped developing total global access environment. With total global access, it is felt that the world has become more culturally diverse. In this changed business circumstances, marketing executives need to take a comprehensive world market view to respond to increasingly competitive environment where customers have access to all possible information and are looking for local source and solutions. This global connectivity has increased with mobile commerce giving birth to a new set of consumers, ‘mobile global consumer’. The global e-commerce is focusing more on establishing global persistent presence and developing global brands.

Roles and Responsibilities
The rise of Internet and total access has created a self service model for marketing known as ‘production by masses’. This model works by providing customer with information database and allowing them to design their expectations consistently and reliably.

The rise of Internet and total access has made marketing as everyone’s job. It is the matrix of responsibilities shared by—CEO who is seen as chief strategist, who also work as a chief marketing executive of the organization. He integrates all the resources that enterprises need to invest and design to build a global infrastructure strategy.
• CIO is seen as chief total access architect. He possesses required skills, to be the interface between the customers’ needs and company’s response.
• Director of R&D is seen as the chief novelty officer. Customer preferences change fast in total access era and it is the duty of the Director, R&D to come up with innovative products.
• Vice president of operations and logistics helps meet customer delivery expectations.
• Vice president of marketing takes care of demand and supply factors and other traditional marketing functions.

Corporate Creativity
Market impatience, competitive intensity, volatile market reaction and high expectations from customers and investors are few of the factors which have created competitive environment. In this competitive environment, to gain edge over other players, companies have to work on corporate creativity. More creative the company is throughout its entire enterprise, the more successful the company will be in sustaining the growth.

BOOK SUMMARY
Book: Total Access, Giving Customers What They Want in an Anytime, Anywhere World,
Year: March 2002
Author: RegisMcKenna
Pages: 240
Publisher: Harvard Business School Press

A New Brand World – Book Summary

Bedbury, who headed advertising and marketing divisions of Nike and Starbucks during their phenomenal growth, argues that now is the time to build a brand that evokes trust among its customers. In A New Brand World, Bedbury draws from his extensive experience and provides practical advice to develop brands to their full potential and build lasting value. Bedbury sets out the principles that helped these companies become leaders in their respective industries and offers battle-tested advice for keeping any business at the top of its game.
Scott Bedbury was instrumental in developing global brands like Nike and Starbucks. A New Brand World extensively covers inside stories on Nike and Starbucks and presents lively anecdotes from the experiences with most of the global brands like Harley-Davidson, Microsoft, Disney, and Pepsi.
Bedbury’s book is a solid refutation to The Fall of Advertising and Rise of PR written by Al Ries and Laura Ries. Ries partners argue that so many ad dollars yielding such uninspiring results mean that advertising is ineffective; however, Bedbury has a different idea on creating and developing a brand.
He says, “Unless your brand stands for something, it stands for nothing.” Bedbury’s words effectively convey the fact that it is time to build a strong brand that evokes trust from customers. Brand building is more than a responsibility of marketing managers or CEOs. Bedbury says that building and supporting a brand is everyone’s job—from CEO and down. Brand building becomes more important in current business environment for three reasons:
• To win customer trust and love.
• Brand is the only asset which can’t be copied and outsourced.
• Recognition in society.

Bedbury proposes eight principles for ‘A new brand world’.
Principle 1: Relying on Brand Awareness has Become Marketing Fool’s Gold Brand awareness and recognition have lost their significance in the changed business environment. Bedbury believes that brand has a karma, which in his view, will emerge as the ultimate definition of brand strength in future.
What we experience in our daily lives is the idea of that thing, which gives it lasting meaning—this is the fundamental essence of branding. A brand is the result of a psychological process. Branding is about taking something common and improving upon it in ways that make it more valuable and meaningful. Today, who doesn’t know of Nike and Starbucks? Sneakers were sneakers until Phil Knight came along to brand them as a sports and fitness product and coffee beans were just coffee beans until Howard chuitz branded them. These brands stand successful even today because they consistently evoked (and are still evoking), positive feelings with each new product, service, or marketing campaign. Bedbury says, “Brands are living component that we hold in our mind for years. What goes into them is both logical and irrational.” He adds to it by saying, “Products and services will continue to come and go. But, the residual experiences of customers who consume them will ultimately define the brand.”

The journey of most of the successful brands started with the focus on building a profitable product or service and an organization that can sustain the product. If the product or the service in offer has no great attribute, no amount of advertising will help. Bedbury comments on the situation, “Even the best advertising cannot create something that is not here.

Table 1
Brand Brand Mantra
Nike Authentic athletic performance
Disney Fun family entertainment
Starbucks Rewarding everyday moments
Chrysler An engineering company
Apple Computer Daring to be different

Principle 2: You Have to Know it Before You Can Grow it No two brands are alike. Every brand has in its core a substance that gives it strength. The management needs to understand the core substance —‘Brand-DNA’ before they grow the brand. Brand DNA defines the source of strength of the brand. Better understanding of DNA helps to grow the brand in future. Brand DNA is not the only key; every brand has brand mantra—an essence and ethos which defines product and company to the core customer. It is the touchstone that helps companies in shaping products and services, how they conduct their business. It has provided a useful mechanism which concisely expresses brand’s ‘generic code’. The wonder term ‘Brand Mantra’ was originally coined at Nike. At Nike, brand mantra is ‘Authentic Athletic Performance’ (Refer Table 1).
Branding must start inside the company before taking the flight to the undisclosed horizon of the turbulent world. If everyone in the company knows and understands what the brand is all about, then it will become easier to communicate that message to the world at large. Bedbury comments, “Though it is important to demonstrate consistently to the outside world that you know what A New Brand World your brand is (all) about, ultimately, it is even more important first to demonstrate this internally and to continue to do so at every opportunity.”
Principle 3: Just Because You Can, Doesn’t Mean You Should To survive in the market, business needs to grow. One of the ways to grow is to broaden the company’s brand portfolio. This calls for striking the right balance between the necessity of growth and the need of brand preservation and conservation. Brand preservation and conservation in this changed environment have become the main challenges of all brand managers. The managers should always be diligent about assessing the impact of additional ‘brand-width’. Bedbury proposes six methods for building intelligent brand-width:
• Co-branding and strategic alliances
• Brand extensions
• New distribution channels
• Excel product categories
• Sub-branding
• Acquisitions
Growing and nurturing any brand is a continuous process. Bedbury proposes three things, which the managers should avoid while growing a brand. First, he suggests that the marketplace in this era is dominated by customers who are information seekers. This has increased the competition in the marketplace, where if you lose sight of your customer’s changing needs, you are out of market. Second, never ignore the impact of “profit improvement programs” on your brand. And third, it will be foolish on the part of companies to expect success in one business field to guarantee success in another (Refer Table 2).
Principle 4: Transcend a Product-only Relationship with Your Customers Harley-Davidson owners don’t just buy a Harley; they have also become the proud owners of the HOG (Harley Owners Group), which is bound by ethos and shared set of values that cross many social and economical strata. Emotional potency gives the proud owner of any great brand (not only Harley-Davidson) opportunities to leverage a brand. It has been proved, time and again, that the great brands always fulfill the emotional needs of their customers. It is believed that the more skillfully marketed product captures a better emotional state of the target group. In fact, there are arguments that the successful brands are ranked higher on Maslow’s scale of needs, like Volvo uses security and BMW focuses on status.
Principle 5: Everything Matters “Brand environmentalism means accepting the responsibility to protect your brand and present it in the best possible light whenever and wherever it may be found. It means undertaking a commitment to constantly improve and safeguard the integrity and associative value of everything that surrounds the brand in all phases of development,” says Bedbury. Brand environmentalism is of critical value to any organization. At Starbucks, brand environmentalism is seen as its greatest strength.
Principle 6: All Brands Need Good Partners The human form of branding is reflected very well in the growth of branding. Both brands and small children flourish in an inspiring and learning environment where they are appreciated, respected, protected, and sometimes rejected, when not performing as per acceptation. Brands are not only influenced by people, they also influence people.
Table 2
Strategies Examples
Co-branding and strategic alliances
• Pepsi-Yahoo!: In this high profile co-branding effort, Pepsi agreed to promote Yahoo! on 1.5 billion bottles and displays at some 5000 stores nationwide. In turn, Yahoo! agreed to promote Pepsi’s product on the all-new co-branded website, ‘Pepsistuff.com’.
• Starbucks-United Alliance.
Brand extensions have proved lucrative in many situations (Today, it is a separate here is that every brand has its limitation).
• People initially emerged as a section of (The point to remember Time Magazine publication).
• Frappuccino, bottled and blended in the café, ‘Starbucks’.
New distribution channels—The catch is analyzing core product positioning before taking a brand in new distribution channel.
• Starbucks started selling its own branded line of espresso.
Excel product categories—Leveraging core brand strength.
• Caterpillar licenses its brand to the shoemaker Wolverine WorldWide, which markets Caterpillar boots.
Sub-branding takes a subset of the qualities of the original brand to establish a new brand.
• Miramax, a sub-brand of Disney.
• Lexus, a sub-brand of Toyota.
Acquisitions to acquire company’s brand value.
• Success: Chrysler acquired Jeep.
• Hiccups: Daimler acquired Chrysler.

As brands evolve over time, they absorb the environment and karma of any organization. If developed and nurtured well, they can be the only constant in the organization development. The responsibility of developing brand can be shared by the CEO and front-line employees. Though the importance and layer of operational efficacy is different in both the cases, the contributions are equally important. The CEO represents the brand at higher level of business pyramid i.e., investors, stockholders, and media. Front-line employees hold strongly the bottom of pyramid, i.e., the customers. They come face-to-face with customers and, in many ways, they epitomize and personify the brand for most people.
Though the committed CEO and frontline employees do their part of job sincerely, the creative staff remain critical for the customer mind penetration. The creative staff like product designers and copywriters should work on three key attributes:
• Concise—No more than two pages; one, if you are really good.
• Tight—Containing two separate focused statements, of where the A New Brand World business and the brand are today and where they must be tomorrow, in order to achieve success.
• Loose—Let them figure out how to get there. Though branding is the responsibility of everyone in the organization, there should be someone (preferably one) accountable for brand strategy. The company should have, preferably, one promotion department and one agency to deliver the promotional needs of brand (Refer Table 3). In the current situation when companies run more complex operations than their predecessors, the role of the CEO is more critical and challenging. It calls for the new position—Chief Brand Officers who manage the branding initiatives and coordinate with the CEO.
Their job includes:
• To review brand-sensitive research and insights.
• To review the status of key brand initiatives.
• To review brand-sensitive projects.
• To review new product and distribution strategy.
• To resolve brand-positioning conflicts.
Bedbury comments, “In the New Brand World, companies that aspire to distinguish themselves above all others must spare nothing in their leadership effort to make everything tie together, to make everything they do a refreshing extension of something timeless and valued, and to do it where it matters most—even if it means turning the entire enterprise upside down.”

Table 3

Brand Brand Form of Emotions
Kodak Idea of family
Disney Idea of family
Guinness Place of heart; culture
PepsiCo Emotions and Necktie products
Snackwell’s A mother and child are only an emotion away
Montblanc Writing instruments
MasterCard Priceless emotional relationship
Nike Forging emotional ties with women to expand the business

Principle 7: Big Doesn’t Have to be Bad The bigger the business grows, the more it is subjected to scrutiny—from the justice department, other anti-monopoly regulators, and media. The rule applies not only to companies, but also to the big brand. Big brand is perceived as the Goliath of its industry and attacked for everything it does. Today, consumers are looking for real deal—they are looking for substance, not hype; and, honesty rather than hypocrisy.
Customers are looking for:

• Purity in message: The idea is not to create a false image; instead, it is about building a quality product and gaining customer acceptance. Nike didn’t set out to become cool or hip—much less admired by young urban teens—but, it simply set out to provide the best possible footwear to champion athletes.
• Grass-roots marketing: Nike sponsored athletes instead of becoming the official sponsor of the Olympic Games. It never evoked the word ‘Olympic’ in its marketing efforts, but the company gained recognition as one of the most visible sponsors of the 1984 Olympics.
The advocating organization acquires a heart and soul by investing money on social cause: For example, Nike supports kid’s sports; Starbucks supports a cultural literacy program; and Pfizer supports AIDS drug donation. Moreover, alter-image is dangerous— when cool becomes too hot to handle.
Principle 8: Relevance, Simplicity and Humanity—Not Technology—will Distinguish Brands in the Future Technology is not changing the meaning of branding completely—it is about altering the value of branding.
The core values of any brand are:
• Simplicity
• Patience
• Relevance
• Accessibility
• Humanity
• Omnipresence
• Innovation
Some of these seven core values have already benefitted from new technology and some are undermined by it. In any case, it is unlikely that the new technology will change the value of a brand. These seven core values can be applied to any company regardless of the size and structure.
Large corporations have enormous influence on our personal life. They also influence our quality of life. A great brand foundation is built with many different bricks by many different people over many years. It gives employees a common understanding, not just for what they do for a living, but also for how they must do it. Over a period of time, a brand that is universally understood, inside and outside the company, will create a spirit whose value to the company cannot be overestimated. Bedbury says, “Let’s all become better, more respected, more meaningful, and more trusted brands—not just bigger and better.

Title: A New Brand World: Eight Principles for Achieving Brand Leadership in the Twenty-First Century
Authors: Scott Bedbury, Stephen Fenichell
Publisher: Penguin (Non-Classics) (February 25, 2003)
Language: English

Business Finance-Oriented Brand Valuation Models

There are many finance-oriented-brand valuation approaches such as capital market oriented valuation approach, market-oriented valuation cost-oriented valuation, brand valuation based on the concept of enterprise value, earning capacity-oriented brand valuation, license-based brand valuation and customer-oriented brand valuation to name a few.

“The market value-oriented brand valuation” approach is the method in which, the value of a brand is established by referring to the fair market prices of comparable brands. The other approach “capital market-oriented brand valuation model” was pioneered by Simon and Sullivan. They defined brand equity as the present value of all future earnings attributable solely to branding. Thus, from a financial markets perspective, brand value can be calculated from a company’s stock market capitalization or market value. But, this valuation method can be useful only for stock exchange-listed companies as the model is based on the idea that the stock price of a company will perform to reflect the future potential, its brands provide.

In the case of a single-brand company, brand value will therefore consist the company’s capitalized or realized market value. Brand value of a company can be calculated by using simple formula:

Brand Value = (stock price x number of shares) – (tangible assets + all remaining intangible assets)

If a company has more than one brand, the calculation is done pro rata for each brand’s share of total revenues or profits.

Brand valuation can also be based on the idea of the net asset value approach that is frequently drawn upon in the field of corporate valuation, which is called “cost-oriented brand valuation”. In net asset value approach, depending on the time perspective chosen, the assets may be valued either at their historic cost or at replacement cost. Brand valuation with the replacement cost method is done on the principle—what it would cost today to build up an equivalent brand from scratch. Whereas historic cost assumes that brand is an asset-based on resources that have been invested in it. Not only net asset value but enterprise value is also seen as a base to value brand equity. It also involves the aggregation of marketing and R&D expenditure relating to a brand. This method is used by Cadbury Schweppers for brand valuation. Historic Cost method, involves the aggregation of marketing and R&D expenditure relating to a brand. The problem is the isolation of costs specific to the brand alone, which may require the capitalization of costs incurred decades ago. Sander, Crimmins and Herp have proposed models based on price premium. In price premium-oriented approaches, the brand is seen as generating an additional benefit for the customer, for which they are willing to pay a little more. Sander proposed “Hedonic brand valuation method”, which is based on hedonic price theory. It explains product prices in terms of various product characteristics, or rather the extent to which they are present. On the other hand, Crimmins points out three dimensions of brand value: Actual amount, band breadth, and content of brand value. Herp builds upon the brand valuation model on conjoint measurement. In this model, brand value is defined as the sum of all incremental revenues earned as a result of branding a company.

It is seen that advertising support varies hugely from industry to industry. BBDO’s brand valuation model also considers the advertising in brand valuation, which most of the other models do not considers and present a distorted picture. The Brand Equity Evaluation System is a multi-phase factor model of brand valuation, which takes into account the differences between industries and solves the basic problem of the advertising support. This model also takes forward-looking variables to establish brand’s development potential. The model identifies eight determinants of brand equity.

The constituents of brand environment—sales performance, net operating margin and development prospects are aggregated into a joint factor of brand quality. The new brand quality factor is channeled together with the remaining four weighting factors (international orientation, advertising support, brand’s strength within its industry, image) to form an overall factor value. It is subsequently used as a multiplier of earnings before taxes. The monetary value of brand equity is the product of the average pre-tax earnings in the last three years and this combined the weighting factor. The detailed processes involved in implementing the BEES model are summarized in Figure.

There are few other methods to calculate brand value like “customer-oriented brand valuation model”, which is based on customer contribution margins. “Kern’s x-times-model” which is based on earning capacity, establishes the monetary value of a brand by capitalizing the value of potential earnings. License-based brand valuation proposed by Consor is yet another model which values a brand on the basis of the license rates typical of the industry and earned by comparable brands. It focuses on brand licensing, and the value calculated is the sum of money, another company would be willing to pay either to purchase the brand outright or to obtain a license for it.

Behaviorally-Oriented Brand Valuation Models

Some 10 years ago, among both marketing practitioners and theoreticians, criticism grew louder that financial models were failing to do complete justice to the essential qualities of strong brands, since they concentrated on quantities such as stock market capitalization, earning-capacity value, license revenues, acquisition costs, price premiums or the customer contribution margin, when brand is not the only calculation of value in quantitative terms. Aaker defines brand equity as a set of assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm customers. Aaker identifies five determinants of brand equity: Brand loyalty, brand awareness, perceived quality, brand associations and other brand assets. It is seen not only as determinants but also as outcomes of brand equity. These parameters, with help of few other important factors, give a new concept of incorporating brand strength as a demand-oriented component. They endeavor to explain what goes on in customers’ hearts and minds and what determines the value of brands from their point of view. Almost on the same lines, Keller defines brand value as the differential effect of brand knowledge on consumer response to the marketing of the brand. That is, customer-based brand equity involves consumers’ response to an element of the marketing mix for the brand in comparison with their reactions to the same marketing mix element attributed to a fictitiously named or unnamed version of the product or service.

Calculation of brand value based on Price Premium method, compares the revenues of an unbranded competing product with the brand. Revenues of an unbranded competing product are deducted from the revenues of a comparable branded product to establish the excess or premium revenue of the brand. This excess or premium gives the value of brand. BPL, Nike, United Color of Benaton, Lotto and Bata, for example, are able to command a higher price even when the product is outsourced. The suppliers to these companies cannot charge the same price if they sell their products directly to the consumers.

Based on the principle that consumer commitment is at the foundation of brand equity and loyalty, the Chicago research firm Market Facts has developed a “Conversion Model”. This model is designed to measure the psychological commitment between brand and consumer. The model segments users of a brand into four groups: Entrenched, Average, Shallow, and Convertible. This model also predicts brand’s future fortunes. Walker and Chip in their paper ‘how strong is your brand’ discusses example, “in measuring the carbonated soft-drink category in the summer of 1991, Market Facts detected weaknesses in consumer commitment to Coke and Diet Coke. At the same time, growth potential was found for several non-cola soft dinks. By the first quarter of 1992, Seven-Up’s shipment volume climbed 8%, and other brands showed directional strengths and weaknesses as predicted.”

Prominent among ‘Behaviorally-oriented’ brand valuation model is, the Young & Rubicam model which is based on the principles of behavioral science. The Young & Rubicam brand model, Brand Asset Valuator (BAV) can be used as a diagnostic tool. The BAV model is the result of a large-scale study Y&R conducted in 1993-94, encompassing 30,000 consumers and 6,000 brands in 19 countries. It is an attempt to value brand by breaking consumer connection into its two parts—brand stature and brand strength, the marketer can assess the health of the brand. Brand strength is a measure of brand distinctiveness that measures how distinctive the brand is in the marketplace and brand relevance measures whether a brand has personal relevance for the respondent. Brand stature, on the other hand, is a combination of brand esteem, which measures whether the brand is held in high regard and considered the best in its class and knowledge is a measure of brand understanding, which measures as to what a brand stands for.

Walker and Chip in their paper “How strong is your brand” discusses brands in the study with high familiarity include Coca-Cola, Jell-O, McDonald’s and Kellogg’s. Brands with high esteem include Rubbermaid, Philadelphia Cream Cheese, Reynolds Wrap, and Band-Aid.

BV = f {[Brand strength (differentiation, relevance)] and [brand stature (esteem, knowledge)]}

McKinsey defines the three Ps of the brand and gives a function “Quantitative brand strength elements = f (the 3 Ps of a brand)”, when three Ps stand for performance, personality, and presence. McKinsey’s method for determining brand value operates on the assumption that brand strength is definitively quantifiable. However, the system does not determine aggregate brand value, but rather
quantifies as target values for individual benefit components of brands from a brand management perspective and can be viewed as a model based on behavioral science only in terms of the drivers of the three Ps of the brand.

Other consumer-focused models essentially value brands along similar lines with varying degrees of sophistication. Some of the measures used are: Price premium, customer preference, replacement cost of brand, and the price premium that the name supports. The Icon Research and Consulting Brand Trek approach is yet another model for determining brand value based purely on the tenets of behavioral science.

Composite Models of Brand Valuation

A group of brand value measurement indicators has established itself parallel to the focus on psychographics values. Consultancy firms and academicians have proposed many composite models of brand valuation. The Interbrand’s brand valuation approach, AC Nielsen’s brand balance sheet and brand performancer, Gfk brand power model, Semion brand value approach and Sattler brand value approach are a few of the famous composite brand valuation models.

Interbrand consulting firm’s brand value system considers an earnings-based approach. The Interbrand model seeks to estimate the risk and inflation-adjusted benefits—the current and future earnings or cash flows—flowing from brand ownership. Under this model, the value of a brand is a function of two factors: its earnings and its strength. While the brand’s earnings are a measure of potential profitability, the brand’s strength is the measure of its reliability of its future earnings. The greater the brand’s strength, greater is the reliability of its future earnings and lesser is the risk. Since it is difficult to attribute all the earnings to the brand per se, adjustments need to be made to the earnings estimates.

In this model first of all the unbranded profit i.e., earning that would have accrued on a basic unbranded version of the product is eliminated and the historical profit at present day value is restated and adjusted for taxes. To calculate the actual brand earnings the profit attributable to other intangible associated with the business of the brand is deducted.

The model calculates the brand value by multiplying brand earnings with the brand earning with the brand strength multiple. This brand strength multiple is a function of multiple of factors like leadership, stability, market, internationality, trend, support and protection. These factors have been evaluated on a scale of 1 to 100 to calculate the brand multiplier. Some of the IT companies like Infosys, Rolta and Satyam are following a similar practice of valuation for their brands.

The seven determinants of the brand value are:
• Brand leadership—which stands for the ability of the brand to influence the market;
• Brand stability—the characteristic that has made the brand the inherent “fabric” of the market;
• Market—the structural attractiveness of the market, its projected growth, et al.;
• International presence of the brand—the brand’s attractiveness and appeal in a multiplicity of markets with a view to distinguish between regional, national and international brands;
• Brand trend—the brand’s ability to remain contemporary and relevant to the consumers;
• Marketing support—the quantity and quality of the investments made to support the brand and
• Legal protection enjoyed by the brand are the protection received from the legal system, patents, trademarks, etc.

Based on these parameters, Interbrand consulting determines the value of brand. Interbrand has given weighting to all these seven parameters like brand leadership has 25% weighting, brand stability enjoys 15%, market 10%, international presence of the brand 25%, brand trend 10%, marketing support 10% and legal protection enjoyed by the brand has 5% weighting.

Measurement of the seven variables, based on a detailed audit would determine a brand’s strength. This provides the discount rate that needs to be applied to the adjusted estimates of the brand’s earnings for determining its present value.

BV = Brand profit x Brand multiplier

The Interbrand approach while being valuable, especially in an acquisition and merger context, suffers from an accounting focus. This stems from the desire to ensure that the value arrived at is auditable. Further from a marketer’s perspective, the Interbrand approach does not explicitly measure consumers’ perception of the brand, which is critical for marketing decision-making, especially on brand extension.

Schulz and Brandmeyer, of AC Nielsen have used scoring model to develop a brand valuation model called “The AC Nielsen brand balance sheet”. The brand balance sheet relies on six criteria groups containing a total of 19 individual criteria that are deemed good indicators of brand value. The fundamental idea of the brand balance sheet is to relate a correlation between complex market environments, the significance of long-term brand cultivation and successful brand management. AC Nielsen felt that the brand balance sheet is not the absolute model for brand valuation and in search of better brand valuation model, it has developed an advanced model based on Brand Performancer.

The Brand Performancer attempts to deliver an integrative consumer and company-oriented brand valuation system. It provides tailor made data to the decision-makers for any specific information needed. The modular structure makes it possible to supplement gauges of brand value with analyses for the purpose of brand steering, financial brand valuation and tracking of brand leadership. The four modules are brand steering system, brand value system, brand control system, and the central element – brand monitor.

BV = [Annual sales of respective brands x Net operating margin x Relative brand strength x Perpetual annuity NPV discount factor]

One approach, which relies strongly on behavioral and image data in addition to financial values, is ‘Semion brand value approach’. He defines four brand values – financial value of the company, which is determined by earning before taxes and earning trends, brand strength that is determined by market share, market influence, marketing activities, distribution rate degree of familiarity, identity and potential, brand protection determined by product classification, brand environment and intern protection and brand image determined by consumer association, image position on market among consumer and vis-à-vis product.

BV = financial value x [financial value factor + brand protection factor + brand strength factor + brand image factor]

The market-oriented system of brand valuation, which combines a consumer-based perspective with a company-based perspective is proposed by Bekmeier-Feuerhahn model that operates on the assumption that brand value is derived from brand strength and brand earnings, both assessed on the basis of market prices. It is a comprehensive, integrative approach to build brand valuation that takes into account the special requirements of brand appraisal and yields a tangible monetary value.

The other well-known composite brand valuation approaches are Sattler brand value approach, Gfk brand power model and brand rating valuation model.

The Seven Golden Rules of Cult Branding

Harley Davidson, Volkswagen Beetle, Star Trek, Apple Computers evokes passion in their customers and command loyalty. They are called a cult brand. The cult brand stood the test of time, which includes adverse market conditions, merely through the support of loyal customers.

Matthew W. Ragas and Bolivar J. Bueno in his book, The Power of Cult Branding goes into depth to distinguish between harmful and benign cults. The authors outlines The Seven Golden Rules of Cult Branding which postulates the basic rules that cult brands consciously follow to build and sustain their status in the minds of their followers:

Rule 1. The Rule of Social Groups: Cult brands give people the opportunity to become part of social groups – groups of like-minded people who prefer being different Just like HOG.

Rule 2. The Rule of Courage: Creators of cult brands tend to be fighters and winners. It helps brand knock people’s general attitude and liking to be associated with winners. The owners of the cult brand portray an attitude of brazen courage and adventure.

Rule 3. The Rule of Fun: nothing can match the taste of freedom and independence. Cult brands offer their customers an opportunity to pursue and satisfy their innate passions, thus taking their minds away from the serious responsibilities of life.

Rule 4. The Rule of Human Needs: Cult brand focus on the needs of their existing customers and give regard to their feedback, rather than expending energy to win new customers. Cult brand work on enriching the customer experience and treat the customers as King. The cult brand offers every person wants to be heard and feels happy when their opinion is valued.

Rule 5. The Rule of Contribution: Cult brands believe in giving back to their customers the profits they generate to develop and support customer communities, thus forging lifetime relations with them.

Rule 6. The Rule of Openness: Cult brands are open to one and all i.e., they are indifferent to caste, creed, socio-economic backgrounds of customers, etc. they do not discriminate among customers. They fulfill the human desire of caring, sharing, bearing and belonging.

Rule 7. The Rule of Freedom: Cult brands promote the underlying themes of freedom and non-conformity with memorable sensory experiences.

Through meticulous research and scores of interviews Matthew W. Ragas and Bolivar J. Bueno have uncovered the remarkable and untold stories behind nine very successful cult brands. The nine brands are Star Trek, Harley-Davidson, Oprah Winfrey, World Wrestling Entertainment, Apple, Volkswagen Beetle, Jimmy Buffett, Vans Shoes, and Linux.