Aspects of Brand Management - Term Paper Example

 BRAND MANAGEMENT Introduction 2 Brand Management 2 Walmart 4 Brand Value 4 Brand Image 6 Brand Positioning 9 Recommendations 10 Walmart is a very strong brand with high brand value and unique positioning. Brand image of Walmart suffered a severe blow with bad publicity about its low wages and health facilities and many other issues as discussed above. The brand has come out strong and has been successful in building its new brand image. We recommend Walmart to continue building its brand image not with just customer perspective but from employee and ethical perspectives as well. With its unique positioning it should continue to expand with market penetration and market expansion. Development and projection of its own brand Great Value will also help in increasing its brand value and trust of the customers and will help in maintain its positioning as low price provider by eliminating the margin of the manufacturers. Walmart is a strong brand and can even become stronger by following these strategies. 11 References 11 Introduction In this highly competitive globalized world, markets are flooded with plethora of products and services of various brands. Consumers are literally spoilt with choice. In such an environment the importance of brands has increased manifold both for the consumers and the organizations. Brand management is vital from many aspects for any organization but the most important role is providing the differentiation to the brand from competitors and other products. Brands are part of the company’s intellectual property. They are an important source of company’s revenue. The role of brand is so important that in some companies it shapes the company’s business strategy and outlook. Brand management is a complex, difficult and an important task of the marketing strategy. Its complexity and importance grows as the brand grows from local to global brand. This paper aims at studying various aspects of brand management. Some theoretical concepts of brand management mainly revolving around brand value, brand image and brand positioning will also be discussed. The practical application of these concepts will also be studied with special reference of WalMart. Brand Management The customers and the company together, work for the establishment and building of the brand. The company through its brand, make it clear what they promise and deliver to the customer based upon their vision and strategy for the future of the business and the product. It is very important for the company to have a clear understanding of the expectations of the customers and living up to those expectations. The aim of brand management is to build a healthy relationship between the customer and the company through their brand. Brand management is extremely important for the companies. Brand image can be the determining factor between success and failure of a company (Riezebos et al 2003) Today corporations spend millions on brand establishment and maintenance due to the increased importance of branding. Researchers have tried to identify the scope, domain and potential of branding. It has resulted in many different frame works, theories and concepts. Although there are mainly seven different approaches of branding but the brand strategy should be customized to meet the specific challenges and opportunities specific to a brand at a specific point of time. One approach of branding is economic approach where brand is part of the traditional marketing mix. The identity approach links brand with corporate identity. Consumer based approach gives prime importance to customer satisfaction and customer associations. Personality approach treats brand as a human like character. The relational approach treats brand as a viable relationship partner. The community approach treats brand as a vital point of social interaction, whereas brand is treated as part of the broader cultural picture in the cultural approach (Heding et al. 2009) Whatever approach the companies utilize for the establishment and maintenance of the brand strategy the three most important components of brand management are brand value, brand image and brand positioning. The study will revolve around these three concepts for brand evaluation and management with special reference to Walmart. Walmart Walmart was founded in 1962 when its first discount store was opened in Rogers, Ark. By the end of 1969 the company incorporated as Wal-Mart Stores, Inc. and it got listed in New York stock exchange in 1970. Today Walmart has 9029 retail units under 60 different banners in 15 countries. Its huge business can be estimated from the fact that it serves its customers and members more than 200 million times per week. Walmart has been ranked first in the fortune magazines’ 2010 survey of the Most Admired Companies survey mainly due to its leadership in sustainability, corporate philanthropy and employment opportunity. The purpose and mission of the company is to help people save money so that they can live a better life. (Walmart, 2010) Brand Value The importance of brand has increased in today’s highly competitive globalized world. Companies have recognized the importance of brand as one of their most important asset. The concept of branding stems from America where owners of cattle used to mark them for identification. Now a days manufacturers mark their products, for identification. But branding has come a long way from the simple concept of identification and is a complex phenomena and an important tool for marketers. Brands are the visiting cards for the companies and a label of their products and services. Companies protect their brands legally through trademarks, patent rights and copyrights etc and hence can invest safely in the brand to reap benefits from these valuable assets. Brands are not only important for companies to differentiate them from competitors but are also important for customers in minimizing the risk associated with the quality of the product they purchase. Branding creates perceived differences and loyal customers which in turn creates value. This brand value is a source of financial profits for the firms. Perceived value of brand is very important because it shapes the buying pattern and customer loyalty. It also has its impact on the pricing strategy as well. This perceived value helps in minimizing risk and the customer expects the product will deliver the promised quality. Although there is no empirical research to prove the effect of individual factors on the perceived value but the research conducted in Slovenia has tried to identify the relationship or impact of perceived quality and perceived risk on the perceived value of the product. The study revealed a strong and statistically significant relationship between these factors (Boris et al 2004). The concept of brand value emerged in the 1980’s and has become an integral part of the marketing strategy. Brand value is not restricted to the brand mark only but it perceives brand as a generator of added value. The value of brand can be judged through three main approaches namely the financial approach, behavioral approach and the combination of financial and behavioral approach. The financial approach values brand in monetary terms only which is a narrow approach. The behavioral approach is based on customers perspective and identifies the brand strength and the combination approach gives a broader perspective and brand equity (Tatiana, 2008). Walmart is the number one retail store in the world. Its success can be judged from the fact it has 9029 units in fifteen different companies. Sam Walton, the founder intended to build conveniently located retail stores with a wide variety at low prices accompanied with quality customer service. Walmart is committed to providing its customers the quality national products and private brands at unmatched price. Such success reveals the brand value of Walmart from the financial perspective. Walmart’s brand value is as successful from the customer perspective as well. The low price Walmart offers has always been a source of customer satisfaction. It is the pioneer of “everyday low pricing” which is now popular in many retail stores. Their slogan is “We Sell for Less, Always” but it has not been the only source of customer satisfaction. The low price coupled with quality customer service is the key of customer satisfaction and loyalty. A company conducted survey “What does Walmart means to you” revealed that it is the element of trust in customer’s mind for Walmart rather than low prices. This shows that even if the combination approach for brand valuation is applied it shows high value of Walmart (Keller, 2008). Walmart contributed to 30% of consumer sales in 2005 and it intends to double it in the future. Walmart not only provide a wide range of quality national products but to ensure high quality at low prices it has its own brand by the name of Great Value. Great Value was revamped in 2005 to achieve the target. Walmart is so sensitive about its brand value that it conducted massive tests to provide the best quality in its own brand and provide customers quality products at low prices. The success of Great Value is another evidence of high brand value of Walmart (Walmart, 2010). Brand Image Brand image is the perception of the product or service in the minds of the customer. Through brand image marketers breathe life in an inanimate product and endow it with distinct characteristics and traits in the perception of the customers. The results of any efforts to establish and maintain brand is intangible yet it creates a relationship between the customer and the brand that is very important in this highly globalized world. It has been an accepted fact now that brands act as a social signal. The relationship between brand and the self image of the user plays an important role in consumer’s decision making. Brand strategy is responsible for establishing and maintaining a brand. One of the major tasks of the brand strategy is creating brand identity that not only provides direction but purpose and meaning to the brand. Brand identity represents the aspirations and associations which the brand owner wants to associate with the brand. In short it is the perception which the brand owner hopes to create about the brand. It is different from brand image because it may include elements which the current brand image does not represent. Successful brands try to minimize the difference between brand identity and brand image (McLaughlin et al. 2010). Creating and maintaining brand image is not just enough but it should also be communicated to the target market. It helps not only in brand positioning but also in improving brand performance. Brand image is so important that the brand meaning is finalized before the launch of the product and marketers constantly strive to improve it. The brand image is created with the help of a well charted out brand strategy that includes all activities related to brand. Perception about brand in the minds of the customer is not made in air but build logically through a series of activities and actions. Any lapse in quality, consistency, or the strategic changes in distribution and targets, misfit line extensions etc can result in image dilution (Kapferer, 2008). Brand dilution can also happen in the cases of family brands. The brand image of one product line can enhance or dilute the image of the other product lines as well. For this very reason some organizations avoid to use family brands and each product line has its own brand name and hence image. Providing umbrella of family brand name can only be beneficial if the same level of quality is maintained for each brand (Rotfield, 2008). Brand image of Walmart is so strong that it is synonymous with quality at low prices. Providing everyday low prices is a strong brand attribute of Walmart. It claims that it saves the average family income by $2,300 yearly with its low pricing. Average prices at Walmart are 15% - 20% lower than the conventional grocery store. This brand image of Walmart is so strong that an MIT study shows that traditional grocery stores reduce their prices by 5 % if Walmart comes in the town. Another aspect of the positive brand image is its generosity in donations. It is the largest corporate donor in US with its contribution of $ 170 million annually. Its brand image also increased with the immediate response and massive contribution in Hurricane Katrina. However this is the perspective of the brand owners. From the perspectives of the customers Walmart also has a dark side to tarnish its brand image. The allegations on Walmart includes its anti union policy, violation of child labor laws, extremely low wages, no health insurance for employees, environmental pollution, usage of sweat shops, driving traditional business squeeze out of the business, discrimination against women and Hispanics, unhealthy work practices such as denial of lunch break etc. All these have tarnished the brand image of Walmart. This negative publicity not only tarnished its brand image but also reduced its sale by about 8 %. According to New York Times, February 2006, CEO of Walmart admitted that bad publicity has hampered expansion of Walmart. The company has bounced back since then and had taken concrete measures to avoid these allegations and has been quite successful in its attempt (Long, 2006). All these allegations and bad publicity has resulted in Wal-Mart becoming a classic example of strong brand with weak reputation. The worst case happened in 2004 when the company failed to open a store in California and Ingleland and lost referendum because of its image as a source of unwanted traffic and low paying jobs. After that company published a full 100 page newspaper where it mentioned its salary and benefit package that was 74% higher than the competitors. It has helped a lot in image building (Foley, 2006). Brand Positioning Brand positioning is a vital function of branding strategy; it links the external and internal aspects of the brand. The external aspects include brand image and brand usage whereas internal aspects consist of brand identity, brand personality and brand values. A well positioned branding strategy links the internal and external aspects properly. It includes minimization of differences between brand strategy and brand identity through the product itself and its communication. Brand positioning is a very complex phenomenon which includes many elements such as product quality, pricing and distribution strategy etc (De Mooij, 2010). Brand positioning is very important from customer’s perspective. It helps in creating superior customer value and thereby differentiating from its competitors. Simon Knox believes that recently customer value has much gained importance and value and it must be reflected in the organization’s branding strategy as well. The traditional approach of marketing that revolves around 4 P’s has changed and has become much more dynamic and now it includes elements like customer value. Brand mangers instead of playing the traditional role of brand custodians has to play a dynamic role and constantly has to adapt their marketing and branding strategy according to the changes in the external environment and marketing scenario. Senior managers must play their role in inculcating customer perspective in their marketing and branding strategy (Knox, 2004). A positioning strategy is usually based on any of the following aspects, category, image, unique product feature or benefit. The type of positioning Walmart has done falls in the category of unique feature positioning. This form of positioning is based on the quality or benefit of the product or the company which is unique to the organization. Walmart has positioned itself as low price leader in mass merchandizing. Walmart’s slogan is “Always low prices” provides its positioning. The company had to face litigation from competitors because once it claimed lowest prices, but despite this fact company has managed to maintain its position and image as low price provider (Duncan, 2006). The positioning statement of Walmart is quite clear and succinct that very efficiently defines it positioning. It is as follows (Wilson et al. 2008) “ Walmart is a large discount department store that has thousands of products, all providing a wide range of consumers both one stop shopping and national brands at everyday low prices” All activities of brand are so intricately connected and needs to aligned with each other that when walmart after its controversy decided to change its image and rebranding it was a difficult task. It took two years for Lippincott, which was the design office that work with Walmart, to design a new logo that was called” the spark”. It was designed in such a way that new identity, brand positioning and the store environment all support each other and work in alignment. This new logo and image became an overnight success (Gardner et al. 2009) Recommendations Walmart is a very strong brand with high brand value and unique positioning. Brand image of Walmart suffered a severe blow with bad publicity about its low wages and health facilities and many other issues as discussed above. The brand has come out strong and has been successful in building its new brand image. We recommend Walmart to continue building its brand image not with just customer perspective but from employee and ethical perspectives as well. With its unique positioning it should continue to expand with market penetration and market expansion. Development and projection of its own brand Great Value will also help in increasing its brand value and trust of the customers and will help in maintain its positioning as low price provider by eliminating the margin of the manufacturers. Walmart is a strong brand and can even become stronger by following these strategies. References Boris Snoj, Aleksandra Pisnik Korda, Damijan Mumel. The relationships among perceived quality, perceived risk and perceived product value. 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