An Analysis of Brand Equity of Blacks Leisure Group Plc - Case Study Example

AN ANALYSIS OF BLACKS LEISURE GROUP PLC'S BRAND EQUITY AND RECOMMENDATIONS FOR ITS SUSTAINABILITY AND GOWTH INTRODUCTION Established in 1863, Blacks Leisure Group has come a long way from its humble beginnings as a simple sail manufacturer. It has gone through three major phases, from a small enterprise manufacturing sails to becoming a tent supplier during the First World War, and eventually a camping and sporting goods retail empire in the latter half of the 20th Century. Today, it can be confidently argued by the millions of outdoor-loving enthusiasts as much more than just a retail store and more like an institution. Herein rests its strength from the point of view of Brand Equity. In determining a brand's equity, it is important to refer to the pioneers of this marketing concept that has since grown to become an interesting field of research, constantly being pushed and developed by both academics and industry practitioners alike. It was Peter Farquhar who articulated that "a brand is a name, symbol, design, or mark that enhances the value of a product beyond its functional purpose" (Farquhar 1989). This gave rise to the brand equity's subsequent definition as the "added value with which a brand endows the product." (Farquhar 1989). In 1991 David Aaker put forth the model of Brand Equity in his seminal work "Managing Brand Equity" (1991). The model stipulates that brand equity is founded on five dimensions that of brand loyalty, name awareness, perceived quality, brand associations and other proprietary brand assets. Of the five brand equity elements, the basic four elements will be the subject of this discourse that will attempt to apply the principles of brand equity to Blacks Leisure Group's current market situation. This report will attempt to discuss the subjects of Brand Loyalty and how Blacks can begin to fully appraise the status of its core market's willingness to support the brand vis--vis the many market and economic fluctuations; the subject of Brand Name Awareness and how Blacks can continue to perpetuate its top-of-mind status in the outdoor sporting goods and lifestyle business; the subject of Perceived Quality and how Blacks can improve on its product attributes which can make or break its "specialist" status in the outdoor sporting goods category; and finally, the subject of Brand Associations which is ever more important these days in the face of stiff competition, environmental pressures and increasing consumer awareness that exacts nothing less than the best of what a company can offer and give back to the various communities and stakeholders it impacts on. CASE BACKGROUND With its stock publicly traded at the London Stock exchange and enjoying, there is no arguing that Blacks has been enjoying enthusiastic public support over the last 10 years. In fact, there is no denying that Blacks is one of United Kingdom's leading retail sportswear and sporting goods groups and the largest specialty outdoor retailer. Innovation, style and technology and a demonstrated passion for providing a range of outdoor clothing and equipment at great value for money remain Blacks Outdoor's hallmark in the industry. The company operates 427 stores under seven company-owned and managed retail chains across the United Kingdom and the Republic of Ireland. Its Sports & Fashion division includes the First Sport chain, the AV (Active Lifestyle) chain, and the company's newest store concept, Pure Women, the company's first attempt to target specifically the women's sportswear and sports fashions category. Its Outdoor division features the company's original store format, Blacks Outdoor, buttressed by the company's acquisition of U.K. outdoor sporting goods leader The Outdoor Group--which included the Millets chain of family-oriented sporting goods stores and the higher-end Air and youth-oriented Free Spirit retail chains. Though it had to cut back on its Wholesaling division, after the sale of the company's Fifa UK license back to Italian parent Fifa International in 2000, Blacks still enjoys a dominant position in the Outdoor Lifestyle with such iconic casual lifestyle brands such as Animal, Oakley and Mambo, alongside its very own brand Freespirit range of clothing and accessories. It also secured the UK license for distribution and retail of the original California surf, snow and lifestyle brand founded in 1952 by Jack O'Neill. However in 2007, Blacks Outdoor posted a 13 Million loss reportedly due to "onerous leases and inducements, impairment of property, plant and equipment, re-structuring costs and its O'Neill's working capital adjustment incurred in the year", followed by another year of losses amounting to 9.3 Million, largely due to the group's sluggish summer season sales, presumably the impact of the global economic crunch which greatly depleted consumer spending power and confidence. But over-all Blacks Outdoor still enjoys the support of investors; the status of each of the various brands underneath the Outdoor Group chain of stores remains healthy. CONCEPTUAL BACKGROUND Modern branding came by way of continuous attempts to solve business problems posed by observable consumer behavior-specifically during the late 20th century where industrialization has given birth to a gamut of brands from every product imaginable-each vying for a small piece of the consumers "share of mind". The problem of sustaining repeat purchases, product recognition in retail stores and a pre-conditioned preference for a specific manufacturer's goods had become highly debated, so much that they warranted academic research and millions of manufacturing and research capital to identify, model and predict. It was in this highly charged atmosphere that the concept of Brand Equity came into being. Aaker (1991) formulated one of the most detailed and widely accepted definitions of brand equity, that of "a set of brand assets and liabilities linked to a brand, its name and symbol that add or subtract from the value provided to a firm and/or to the firm's customers". According to his model, brand equity can be measured in terms of brand loyalty, name awareness, perceived quality and brand associations. Diagram Figure 1 visually illustrates this model. Figure 1: Aaker's Brand Equity Model Aaker (1996) further modified his earlier findings with the Ten Measures of Brand Equity. In this subsequent work, he breaks down each element into more meaningful and quantifiable measures. The modified model shows Brand Loyalty as a sum of the consumer's willingness to pay for the product despite an increase or decrease of the Price Premium while deriving the same level of Satisfaction from the said product regardless of it altered state. Perceived Quality and Leadership which affects how the brand is seen vis--vis its position in the product category has a measurable impact on a brand's equity. Name Awareness or the unaided recall of a specific brand name can now be measured with a certain degree of validity. While its advocacies and corporate social responsibility programs had become vital tools for gaining brand Differentiation, which in turn are vital measures of the over-all health of a brand, although experts still do not universally agree as to the validity of the methods used to accurately measure these. DISCUSSION Applying Aaker's brand equity model to Blacks Outdoor requires a thorough assessment of its brand portfolio. According to its 2008 annual report, the Group has strong positions within the two specialist markets in which it operates-the Outdoor and Boardwear markets. These positions are achieved through Blacks Outdoors' Millets chain of outdoor stores that stock specialist brands such as North Face and Berghaus, along with its own house brands such as Technicals and ALS. North Face and Berghaus, although not considered house brands, being leading brands in the specialist market segment, serve the purpose of strengthening the over-all image of Millets as the retail store of choice for professional outdoor sportsmen. Together, they casts their "halo effect" on the Millets store brand, although not directly to the house brands Technicals and ALS. The halo effect refers to the transfer of "perceived positive features of a particular item to a broader brand. It has been used to describe how the iPod has had positive effects on perceptions of Apple's other products" (Wilcox 2008). Using this retail brand strategy, Blacks Outdoor can consistently build up its specialist image without having to spend so much on building its own stores using the traditional route of mass advertising. By carefully selecting and lining complimentary brands, as Blacks had done with North Face and Berghaus, alongside its house brands Technicals and ALS, the Millets store brand achieves optimum name awareness while improving perceived quality through effective brand association. This way, the consumer goes home more confident that he or she had purchased the right product, with the just the right quality from a selection of similar-quality products-from the right store. From Blacks Outdoor's point of view, a satisfied customer is a lot easier to keep and costs less to induce future purchases with since he or she already has a positive impression of the brand of service the store provides and the caliber of goods he or she can expect to find there. Loyal customers also tend to stick with the brands they are used to and are harder to entice to shift. With more loyal shoppers comes more trade leverage. Blacks can now afford to demand better paying terms for its orders from manufacturers, which means more savings in terms of cost of money. It can even dictate better trade support by way of more innovative modules and in-store collaterals (i.e. posters, rack displays, etc.). This can ultimately be passed on to customers in the form of better service, more discounts and loyalty programs that can translate into a greater competitive advantage against competitors like Debenhams, JLB Sports and Snow & Rock. RECOMMENDATIONS Blacks Outdoor's business challenges are manifold with many issues specifically beyond the direct scope of brand equity management such as its financial management blunders that had adversely impacted on how the brand is perceived by its internal publics, namely the investors. The recent global economic slowdown is also a force majeure that makes brand equity development a lot more difficult to push, for the simple reason that most of the financial resources that can otherwise be devoted to aggressive brand building in a bullish economy are slashed in the interest of survivability in a bearish economy. The above reasons notwithstanding, Blacks Outdoor must certainly take advantage of the lull in consumer spending to focus on streamlining operational efficiencies that will enable them to pass on the added savings to the end-buyers to keep their prices competitive, if not even better than their competitors, thus bolstering their Brand Loyalty metrics. It will also be prudent to keep their personnel compensation plans in check, making sure that performing employees are retained and retooled to engage customers with a slightly altered purchasing mindset. Meanwhile, bail-outs can prove to be a wise strategy for acquiring complimentary outdoor lifestyle brands that have a good brand image but are performing poorly in terms of profitability due to poor financial disciplines and lack of brand foresight. Acquisitions similar to the O'Neil brand of surf and snow-boarding products can further extend its brand image as the go-to place for the outdoor adventure-loving people. The creative use of ever-dwindling advertising budgets, like the use of new affiliate marketing models like Google Ad-sense, Adwords, etc. and social marketing sites like Friendster, Multiply, Facebook, YouTube and other such sites can greatly boost brand advertising's frequency and reach without necessarily maxing the communications budget. Embracing socially responsible and economically sustainable product lines are also very appealing avenues for enhancing the brand image by organizational association. Blacks can choose to work with the indigenous tribes in the Asia-Pacific for organically-produced raw materials to be used on their product lines like composite plastic substitutes from coconut fibers, while paying them on "Fair Trade" practices can also do a lot to lift up the brand. The positive publicity generated by these efforts can be leveraged to enhance Brand Awareness. CONCLUSION The continuing cycle of managing brand equity will always remain as one of the most pivotal roles of today's business leaders. Blacks Outdoor Group is already in a position where it had gained the trust of the millions of its loyal customers, but as with any business, the next strategic maneuver or tactical promotion can undo years of careful planning and investment in fostering the goodwill of its stakeholders. One misstep can do a lot of damage as what happened to the company in 2007 that sapped investor confidence and blemished Black's corporate image. To make matters worse, the economic situation makes growth a lot more difficult to achieve, while competitors lurk around every corner mulling every strategic and tactical option they can use. Now more than ever, succeeding as a brand takes a lot more than people, knowledge or financial resources. It also requires fierce ethical leadership, a demonstrated concern for the environment and a long term commitment to be an active part of your prospects' lives; effective Brand Equity management has everything to do with it. The way to go for Blacks Outdoor is to go beyond its category as a mere purveyor of outdoor sporting goods. For many, it already is an institution if years in operation would count as a valid measure of brand equity (which, to many consumers, is how reliability can be vividly gauged). What Blacks Outdoor needs is a way to bridge the image divide between a discount retailer, which the Outdoor and Millets store chains were more readily identified with and its emerging fashion division which appeals to the younger, lifestyle-oriented upscale consumers. To do this, a retail brand audit for its retail store brands should certainly be the first order of the day. Brands that come out as poor in consumer polls should be retired or otherwise sold. With very limited resources for ad spending, declining brands are harder to reposition (Cheverton 2002). They may serve to tie up Black Outdoors into the image of these out-moded and therefore irrelevant brands. For insight on how to improve the selection of brands, quality of service, price and brand image, regular analysis of key customer complaints are vital indicators of what can still be improved. The industry-wide impact of the deflated consumer spending power should also be factored in all the brand communications. Here Millets can leverage on its image as a value retailer. While Blacks Outdoor's high-end concept stores like Air and AV can offer more socially-responsible product lines that help better lives of trade suppliers in third-world countries. In a recession, it is one of way rationalizing the guilt of indulgence which many upscale consumers might feel. Over-all, a brand health check for Blacks Outdoor store brands can validate Brand Loyalty, Awareness, Perceived Quality and Brand Associations. So it should invest heavily on getting its people to focus on its brand cycle and from there, continue to strengthen Blacks Outdoor position as Outdoor Sports and Lifestyle super-category leader for years to come. References Aaker, David A. (1991). Managing Brand Equity, New York: The Free Press _____________ (1996). Measuring Brand Equity Across Products and Markets, California Management Review, 38, 3, 102-120 Answers.com. Blacks Leisure Group plc. Available at: http://www.answers.com/topic/blacks-leisure-group-plc [Accessed 9 February 2009]. Blacks Leisure Group plc, 2008. Year Round Leisure, Annual Report and Accounts March 2008, Northhampton: Blacks Leisure Group plc Available at: http://www.blacksleisure.co.uk/Investor_Relations/Home.aspxid=3 [Accessed 9 February 2009]. Cheverton, Peter, (2002). How Come Your Brand Isn't Working Hard Enough, London: Kogan Page Limited Farquhar, Peter H. (1989) Managing Brand Equity, Marketing Research 1,24-33 Smith, David J. (2007). "An Analysis Of Brand Equity Determinants: Gross Profit, Advertising, Research, And Development", Journal of Business & Economic Research, Vol. 5, No.11, November, pp.103-107. Wilcox, Joe (22 August 2008). "The iPhone Halo Effect". Apple Watch - eweek.com. http://blogs.eweek.com/applewatch/content/mac_os_x/the_iphone_halo_effect.html. [Accessed 12 February 2009]. Read More