The Effectiveness of the UGG Brand Management - Research Paper Example

 Brand Management Contents Introduction 2 UGG ® 2 Brand Value 3 Brand Image 6 Brand Positioning 8 Conclusion 10 Recommendations 10 References 12 Yuksel, K. (2010) UGG-ly Marketing. Just Brilliant, available at http://www.kameruksel.wordpress.com Accesses at May 24, 2011 14 Introduction With growing awareness among people and accelerating competition in this globalised world the role and importance of brands are increasing rapidly. Companies today are immensely interested in the brand and the brand management. Brand image can be the deciding factor between success and failure. Brand name and image of the company is so important and its implications are so far reaching that it cannot be ignored. It explains the fact that why managers today put so much emphasis on positioning and branding the organization. This paper aims at studying the effectiveness of the brand “ UGG” with special reference to the three major criteria brand value, brand image and brand positioning. Brand is a connection between brand owner and the customer. So this paper aims to analyze the effectiveness of brand from the perspective of both. The strengths and weaknesses of the brand will also be analyzed. UGG ® The history of UGG ® registered trade mark of Australia began in 1978, when Brian Smith, a young surfer, introduced his sheep skin boots in California and became popular among surfers. It was acquired by Decker’s outdoor corporation in 1995. In the next couple of years product line grew to include two boots, four slippers, and a few casuals. It was only in 1998 that UGG ® came in the list of the world’s finest footwear. UGG ® was positioned as the high end luxury product and brand and a matching appropriate marketing and distribution strategy was adopted. This high end product, symbol of luxury and comfort, soon started expanding beyond Australia and beaches of California. In 2003 it was named brand of the year in footwear news. The brand promise of UGG ® is accessible luxury. Their products fit into the everyday life of the customers. Their products are fashionable, comfortable and yet attainable and that explains their philosophy. The target customers are those people who value luxury, comfort and highest quality footwear. The quality is ensured by using the highest quality of leather, suede and world’s finest sheepskin. Their mission statement is “UGG ® Australia markets the premier brand in luxury and comfort.” UGG has their concept stores in North America, Europe and Asia Pacific. Apart from that they have their own authorized retailers and authorized online retailers almost all over the world (UGG, 2011). Brand Value Today’s world is flooded with brands. We have witnessed the branding of almost everything around us including people. Even places, institutes, events, literally everything is branded. The list also includes intangible products such as cyber brands. Building brands is not enough because it not only raises expectation and demands from the customers but the brand has to live up to the promise (Parameswaran, 2006). Same is true for UGG brand that now represent the sheep skin boots in over 100 countries. Ugg has been the generic name for sheepskin boots in rural Australia and New Zealand since 1920’s. In this globalized world where businesses and consumers are separated, brands act as an important communication tool. A brand is an aura that surrounds any product or service and creates the differentiation criteria for the customer from the competitors by communicating the benefits of the products and services. UGG represents luxurious and quality sheep skin shoes etc. Brand communication which emphasizes on the holistic nature and brand value takes into account all the communication channels and the audiences. In this model CEO is the ultimate brand manager, who also defines the long term strategic direction of the brand. It is the job of the brand manager to ensure the closest match between customer expectations and the band promise. It is the unique balance and the combination of the two that lead to big brands like Coco-Cola, Gillette, etc (Ellwood, 2002). UGG follows the same model. Expectations of customers are reflected in the perceived value of the brand. Perceived value is very important in brand management. Although perceived value of any product or service depends on many factors but the two most important factors are perceived product or service quality and the perceived risk. After research and studies a model is developed which proves the statistically significant relationship between the three factors. In the mind of the customer the perceived risk is that the product may not perform as expected or it may not be worth the money invested. Perceived risk can be minimized by matching the perceived quality and perceived brand value (Boris et al. 2004). UGG has managed very successfully in delivering the brand promise. The successful growth of UGG and long queues outside its stores is the testimony of its customer’s trust. The high brand value of UGG is depicted from the fact that in this global recession where discretionary and disposable income of the consumers has been shrinking the Deckers outdoor has become an exception. This success of Deckers is driven by the flagship of UGG brand that continues to thrive despite the fact that the fad of sheepskin boots has passed. This extremely popular product was sold at full price. In the first quarter the sale of UGG brand increased by 84% and it shows the trend of growth. This success of UGG has also resulted in increased stock price and it has been recommended brand for investment (Value line 2008). The brand value of UGG is quite high. It has helped a lot in reducing the perceived risk. UGG ensures the best product quality and hence has made it name and increased the brand value. The product quality is premium right from the selection of the sheep skin to the final product. Best quality is ensured to the customers. UGG is known for its comfort and quality and the brand by and large live up to the expectations of the customers hence minimizing perceived risk. The brand value has helped a lot in increasing it sale and it has become a reliable and known brand. In order to ensure premium quality and best value of the product UGG also provide a full range of shoe care products including UGG shampoo along with a lot of information for the usage and care of the product. The view about premium quality is not restricted to brand owners only but it is the view of customers as well that is why in 2003 it was named brand of the year in footwear news. The brand value of UGG can be judged from the fact that it has been the most successful acquisition of Deckers in 1995. It has shown the most impressive growth in sales. UGG has very little substantial competitors. Decker’s success is directly linked with the success of the UGG brand. The high value of brand enables the company to charge premium prices in every segment of the luxury market. The growth of UGG brand has been positive throughout although its growth rate has declined a little bit but it is still positive. This high value of brand has enabled the company to expand its business all over the globe successfully (Faustgen et al. 2010) Brand Image Brand image defines the perception of your brand in the people around you. Brand image is different from brand identity. Brand identity is how brand owners want their brand to be perceived by others. Brand image gives a complete picture of how others perceive brand. If the brand exceeds expectations and out deliver the promise then the image is polished otherwise the image is tarnished. Brand image is not something static but it is a continuous process and efforts should be made for its continuous improvement (Wilson et al 2008). In the case of UGG there isn’t any difference whatsoever between the brand identity and the brand image. The brand image of UGG is the high end fashion item that is to be sold in limited quantities. To maintain this image UGG has a wide range of trendy colors and styles. This strategy has worked for the company and has attracted the attention of celebrities like Oprah Winfrey. She not only added her in her favorite things but also bought UGG shoes for her entire staff i.e. 350 pair of shoes worth $ 50,000. This image brought UGG shoes in upscale departmental store chains like Nordstrom. According to a brand spokesperson of the company UGG does not intend to portray the image of trendy. The image of trendy gave the company its start but cannot guarantee long term success. Hence the company wants to build the image of a high end, exclusive and comfortable product (Boone et al. 2010) Brand image is so important that family brands can play a positive or detrimental role for the entire line of the products. Some organizations keep one brand name for all products and all the different product lines come under the umbrella of family name, whilst the other approach is keeping different brand labels. If the company decides to maintain different brand label then special attention should be given for ensuring same level of quality. If the quality level is different for various brand labels it may tarnish the image of the other brands as well (Rotfield, 2008). UGG has been doing its business keeping the same brand name and ensuring premium quality to keep the brand image. UGG ® Australia has divided its range of shoes in the following categories, Boots, casuals, Sandals and Flip Flops, Slippers and care products. It has range of products for women, men and kids but women sales constitute 80% of the total sales. UGG ® has not a very wide range of products and hence no different brand labels to manage. All of their products are sold under the same brand name. Hence it does not have to deal with any brand conflicts. However the brand image in the minds of the customer is very good and it is very much in line or in agreement with the brand identity. The brand image of the company is built upon its Classic boots that is synonymous with quality, comfort, luxury and accessibility. UGG has mainly built its brand image with its earned celebrity endorsements. Celebrity endorsement varies from Pamela Anderson to Oprah Winfrey. UGG boots have come in the list of Oprah’s “Favorite Things” (The Oprah Winfrey Show) four times in 2002, 2004, 2007 and 2010. Each year it has led to a large increase in sales. UGG has hired NFL superstar Tom Brady to launch its first men’s marketing initiatives. Such measures have helped UGG in building its brand image and minimizing the difference between brand image and brand identity (Dahlen et al. 2010). Brand Positioning Brand positioning plays an important role in creating superior customer value. According to Simon Knox the relationship between customer value and how it has traditionally been interpreted within the organization has changed recently. The horizon of marketing needs to be extended beyond the traditional 4 P’s and broadened to include customer value in the organization. Brand managers need to redefine their role as brand custodians and these changes in the marketing scenario must be inculcated in the marketing and branding strategy of the organization. This dynamic concept of including superior customer value through branding and positioning the organization can be done by the senior managers (Knox, 2004). Brand positioning is a tool through which a brand demonstrates its advantage and differentiates it from its competitors. Positioning is a functional affair which emphasizes and exemplifies the features of a product or service, benefits, usages and problem solving abilities to increase its value for the customers (Gelder, 2003). UGG positions its brand mainly upon the product quality and exclusivity. UGG brand differentiates it from the rest of the generic ugg shoes. Brand name adds value to the product. Point of parity (POP) and point of differentiation (POD) plays a vital role in brand positioning. PODs are the attributes and the benefits which the customer strongly associates with the brand and is convinced that it will not be found in competitor’s product. POPs are the attributes etc. which is not unique to the brand and may be found in other brands as well (Keller, 2008). There is a flexibility and range of tolerance and acceptance in the points of parity for various brands. Assuming more or less all brands has POPs then customer make their decision on the POD which differentiates a product from its competitors. UGG brand not only have all the POPs but have its unique product quality and exclusivity as its POD. It differentiates UGG from its competitors and hence has this strong brand positioning. UGG brand positioning is to create high quality, comfort, luxury that is fashionable and accessible. The philosophy is that consumers can enjoy comfortable and fashionable life every day. UGG has maintained its market positioning as a high end luxury product through its very high quality, premium prices and a selective controlled distribution channel. UGG products are available through their authorized retailer and the concept shops all over the world. UGG core business is its sheep skin boots. Five years earlier it tried to diversify in an attempt to expand its business. It started its business in women’s sportswear. It included parkas, toggle sweaters and swimwear cover ups. The company was expecting great success. The result was the contrary. The company lost its positioning. The company spent most of the time in the new line clothing and lost focus on its core outdoor shoes business. It was a mistake. Company need to focus on their core business and make it stronger for good positioning of the brand. UGG is a classic example that companies should not fall prey to the alluring expansion charms but should concentrate on their core business and growth and expansion will naturally come (Cohen, 2010). One of the most successful brands in recent history has been UGG boots. It is considered the most brilliantly positioned brand of the last decade. It is a common sight to see long queues outside UGG store which helps its brand image of hard to obtain. The distribution channel which is very exclusive also helps and exemplifies the exclusivity of the band. UGG boots are available in limited number in their own stores and through few high end stores. It gives customers a sense of privilege if they manage to buy a UGG product. Production quantity is also controlled first to ensure premium quality and secondly for the exclusivity element (Yuksel, 2010). Conclusion Brand evaluation of UGG revealed that it is a very successful brand with high brand value. It has been the most successful brand of Deckers and the major contributor of profits. Its high brand value has helped expand the business all over the world successfully. The brand has shown remarkable growth although the growth rate has declined a little but it is still positive. The growth rate of brand is still 15% which is reflective of its brand value. Brand image is also very successfully build and managed. There is very little difference between brand image and brand identity. It has the image of an exclusive, high end, luxurious and comfortable product which is in agreement with the brand identity company wanted to create. The usage of celebrities has helped a lot in creating this brand image. Brand positioning is very brilliant. This luxurious product has very little substantial competitors. Brand positioning of exclusivity is further enhanced by matching pricing and exclusive distribution policy. Recommendations UGG brand has its own niche market in luxury sheep skin shoes. They need to expand globally within this niche market. Chinese and Russian markets have strong appetite for western luxury goods. UGG can do market penetration in these two countries. UGG brand has shown strong commitment to international growth through their various concept stores and online authorized retail stores. UGG has some concept stores in China, but that requires further expansion. Maintaining its unique brand image and positioning UGG needs to explore new markets all over the globe for its expansion as well as penetrating further in the already existing markets. UGG should continuously strive to maintain its technical superiority and should gear it towards men’s shoes as well. Men’s shoes constitute only 10% of the total sales. UGG has already started working on it and has hired Tom Brady in 2010 for the launch of men’s boots campaign. With these steps UGG can increase its sale and hence profit for the organization. References Boris Snoj, Aleksandra Pisnik Korda, Damijan Mumel,(2004) The relationships among perceived quality, perceived risk and perceived product value, Journal of Product & Brand Management, Volume 13, Number 3 (March 01, 2004), pp. 156-167 Boone, Louis E., Kurtz, David L. (2010) Contemporary Business 2010 Update, USA: John Wiley & Sons Dahlen, M., Lange, F., Smith, T. (2010) Marketing Communication: A Brand Narrative Approach, UK: John Wiley & Sons Cohen, M. (2010) BUY ME! New Ways to Get Customers to Choose Your Product and Ignore the Rest, USA: McGraw- Hill Ellwood, I. (2002) The essential brand book: over 100 techniques to increase brand value, London: Kogan Page Faustgen, J., Maddipatla, M., Morse, S., Stephensen T., Yu, H. (2010), Integrated company analysis, http: // www. business.library.wisc.edu, Date accessed May 24, 2011 Gelder, S. (2003) Global Brand Strategy: Unlocking Brand Potential Across Countries, Cultures and Markets, London: Kogan Page Hiebing, Robert G., Hiebing, R. Cooper, Scott W. (2004) The One day marketing Plan: Organizing and completing a plan that works, USA: McGraw-Hill Herbert Jack Rotfeld, (2008) Brand image of company names matters in ways that can't be ignored. Journal of Product & Brand Management, Volume 17, Number 2 (2008), pp. 121-122 Keller, Kevin L. (2008) Strategic Brand Management, New Delhi: Pearson Prentice Hall Parameswaran, G. (2006) Building Brand Value, New Delhi: Tata McGraw-Hill Simon Knox, Positioning and branding your organisation. Journal of Product & Brand Management, Volume 13, Number 2 (February 01, 2004), pp. 105-115 UGG ® , (2011), UGG ® Australia, http:// www.uggaustralia.com, Date accessed 20/5/2011 Value line (2008) The value line investment survey, Indiana: Value line Wilson, Jerry S., Blumenthal, I. (2008) Managing brand you: Seven steps to creating your most successful self, New York: AMACOM Yuksel, K. (2010) UGG-ly Marketing. Just Brilliant, available at http://www.kameruksel.wordpress.com Accesses at May 24, 2011 Read More