Brand Management Notes

Introduction (Chapter 0)

• Professor: Dr. Alexander Edeling
  • Associate Professor of Marketing at KU Leuven since 2021.
  • studied in Mannheim and Grenoble.
  • PhD in Marketing from the University of Cologne in 2016.
  • Research interests: Marketing finance interface, digital/creator economy.
  • Board member of a German conglomerate.
  • Hobbies: Running, Tennis, Ski, history, reading.

Practical Matters

• Schedule:

  • 12 sessions every Friday at 1 pm, from February 14 to May 16, 2025.
  • No lectures on April 11 & April 18 (Easter break).
  • March 28, 2025 lecture will be pre-recorded and presented online.
  • Each session consists of two parts (1:20 hours each) with a 10-minute break.

• Guest Lectures:

  • March 21, 2025: Dr. Philipp Immenkötter (Flossbach von Storch) on brands for investment decisions.
  • April 4, 2025: Janne Beke (Efluenz) on the role of performance marketing within brand management.
  • May 9, 2025: Nini Fritz (Work Happiness Projekt) on being the brand.

• Course Format:

  • In-classroom.
  • Recorded and uploaded via Toledo; no live online lectures.

• Reasons to attend class:

  • Directly ask questions.
  • Fixed date prevents procrastination.
  • In-class discussions (not fully captured in recordings).
  • Meet and network with fellow students.

• Exam:

  • Friday, June 13, 2025, at 16:30.
  • Closed book, open-ended questions.

• Group Assignment:

  • Groups of approximately 6 people (assigned randomly).
  • Topic announced on February 21, 2025.

• Assignment Objectives:

  • Solve assignment questions.
  • Written report (max. 18 pages, excluding references and appendix, PDF format).
  • Video instructions and at least one meeting with the lecturer per group (20 minutes).
  • Progress discussion around early April (date TBA).

• Group Work Requirements:

  • Team coordination, communication, workload division.
  • Attendance at mandatory meetings.
  • Behavior towards the academic advisor.

• Final Report Requirements:

  • Coherence, form, and structure.
  • Academic quality (methodology, consistency, argumentation).
  • Use of lecture knowledge, theories, and methods, including guest lectures and further academic literature.
  • Practicability and quality of results.
  • Documentation of Generative AI usage.

• Literature:

  • Textbook: Keller, Kevin, and Vanitha Swaminathan (2020), Strategic Brand Management – Building, Measuring, and Managing Brand Equity, 5th edition.
  • Journal articles.
  • Newspaper articles (discussion in some sessions).

• Polls:

  • After each session via polleverywhere.com to check learning progress.
  • Competitive: correct and quicker answers are rewarded.

General Teaching/Learning Principles

• Future of Jobs:

  • The concept of one job per life is outdated.
  • Generalists may be better off than specialists.

• Relevance of Knowledge:

  • Knowledge, theories, and methods are still relevant.
  • Especially important in times of fake news.
  • Theories and methods can address new challenges.

• ChatGPT:

  • Powerful AI-based chatbot by Open AI.
  • Applications: draft speeches, write code, categorization tasks.
  • Can increase productivity.
  • Human-machine hybrid work is possible.
  • Flaws: making up sources, not knowing scientific findings.

• Scientific Approach:

  • Focus on building skills to consider different views and argue productively about them.

• Marketing as a Language:

  • Learning lecture content as vocabulary for marketers.

• Mind Maps:

  • Organizing lecture content visually helps structure the content in your brain.

• Active Participation:

  • Participating in lecture discussions supports learning.
  • Questions during lectures to engage participants.
  • Exercises at the end of each chapter resemble exam questions.
  • Active participation increases student performance.
  • p < .001
  • Student performance was measured as the number of right answers to 15 multiple-choice questions.
  • Source: Pratton, Hales (1986), “The Effects of Active Participation on Student Learning,” Journal of Educational Research, 79 (4), 210-215.

Course Structure

1. What is a brand and why do brands matter?
2. The concept of brand equity
3. How to build and manage strong brands
4. Brand portfolio management
5. Retail branding
6. Emerging topics in brand management

What is a Brand and Why Do Brands Matter? (Chapter 1)

Defining Brands (Chapter 1.1)

• Adidas vs. Nike:

  • Battling for leadership in the global sportswear market.
  • Nike's sales declined by 10%, while Adidas' sales increased by roughly the same percentage recently.
  • Branding activities are great examples of how companies can build (and damage) strong brands.
  • Reading Assignment: Two WSJ articles on Toledo.

• Jeff Bezos on Brands:

  • "A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well."

• Origins of Branding

• Product-Centered Definition:

  • EUIPO: A trade mark may consist of any signs capable of being represented graphically, particularly words, including personal names, designs, letters, numerals, the shape of goods or of their packaging.
  • A trademark identifies one seller’s goods or services as distinct from those of other sellers.
  • Protected by registration (e.g., EU trade mark).

• Types of Trademarks:

  • Word mark: words or letters, numerals, standard typographic characters.
  • Figurative mark: Non-standard characters, stylization, layout, graphic feature, or color.
  • Figurative mark with letters verbal and figurative elements.
  • Shape mark: Three-dimensional shape, including containers, packaging, product itself, or its appearance.
  • Pattern mark: A set of elements repeated regularly.
  • Colour single mark: A trademark consisting exclusively of a single color.

• Trademark Requirements:

  • Distinctive and must not describe what is sold.

• Trademark Registration Gone Wrong:

  • Personal experience with registering "eDOCation" as a trademark in Germany, which was rejected for being too similar to "education."

• Generic Brands:

  • Firms might lose the right to use the trademark if consumers employ the brand name as the product category label (genericide).
  • Examples: Aspirin (in the US), escalator, thermos, linoleum, yo-yo, corn flakes, Walkman (in Austria).
  • Protecting against genericide: emphasizing trade mark status, use category advertising.

• Types of Trademark Threats:

  • Brand Misappropriation (38.7%): Unauthorized use of a brand name or elements to falsely claim affiliation.
  • Counterfeiting (31.1%): Manufacturing, importing, or selling goods under a trademark that is identical or indistinguishable from a registered trademark.
  • Brand Imitation (Copycats) (17.0%): Using a confusingly similar brand name, package, logo, or slogan.
  • Other threats: Cross-industry brand misappropriation, false advertising, grey markets, cross-industry imitation.
  • Source: Ertekin et al. (2018).

• Customer-Centered Definition:

  • The associations that consumers have with something that can be managed professionally.
  • A brand resides in consumers’ minds (what they have heard and learned) and hearts (what they feel).
  • Identify and differentiate products/services of one seller from competitors.

• Brands vs. Products:

  • Product: Anything offered to a market that satisfies a need.
  • Brand: Creates competitive advantage by differentiating a product.
  • Added value that the brand endows to a product based on past marketing activities.
  • Competitive advantage: product performance or non-product-related means (image associations).

• Brands Influence Perceptions and Preferences:

  • Blind tests vs. tests with brand information.

• Brands Influence Objective Performance:

  • The Brand Placebo Effect:
  • Golf putting experiment with different types of branded products showed that Nike putter (= strong performance brand) performed better than Starter putter (= weak performance brand), unbranded putter (= control group), STARTERTM.
  • Average number of strokes: 1.91 (Nike), 2.36 (Starter) [p < .05]), 2.49 (Unbranded) [p < .01].

Brand Functions (Chapter 1.2)

• Overview of Consumer Benefits:

  • Reduction of consumption risk: Brands as proxies of product quality.
  • Reduction of search costs: Brands provide guidance, limiting search costs.
  • Serving as a symbolic device: Representing intrinsic or extrinsic values, communicating self-concept.

• Overview of Brand Functions for Companies:

  • Increase in the level of cash flows.
  • Reduction in risk associated with cash flows.
  • Acceleration of cash flows.
  • $𝑁𝑒𝑡 \ 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 \ 𝑣𝑎𝑙𝑢𝑒 = \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>1}{(1 + 𝑖)^1} + \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>2}{(1 + 𝑖)^2} + \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>3}{(1 + 𝑖)^3} + \cdots \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>T}{(1 + 𝑖)^T}$
  • i = discount factor, T = planning horizon.

• Acceleration of Cash Flows:

  • Faster response to marketing efforts, such as earlier new product trials and referrals.
  • The sooner/faster cash flows are generated, the higher their net present value (cash flows shift from period 1 to 0, for instance).
  • $𝑁𝑒𝑡 \ 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 \ 𝑣𝑎𝑙𝑢𝑒 = \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>0}{(1 + 𝑖)^0} + \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>1}{(1 + 𝑖)^1} + \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>2}{(1 + 𝑖)^2} + \cdots \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>T}{(1 + 𝑖)^T}$

• Increasing the Level of Cash Flows:

  • Price premium: Identical product sold for a higher price.
  • Sales premium: Identical product sold more often.
  • Cash flows increase in all periods.
  • $𝑁𝑒𝑡 \ 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 \ 𝑣𝑎𝑙𝑢𝑒 = \frac{\boldsymbol{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>1}}{(1 + 𝑖)^1} + \frac{\boldsymbol{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>2}}{(1 + 𝑖)^2} + \frac{\boldsymbol{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>3}}{(1 + 𝑖)^3} + \cdots \frac{\boldsymbol{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>T}}{(1 + 𝑖)^T}$

• When to Use Which Premium:

  • Sales premium: Low price is part of the brand’s identity.
  • Price premium: High price is part of the brand‘s identity.
  • Balancing price and sales premium: Higher quality, but price is not a core attribute.

• Lowering Costs:

  • Customer base is more responsive to advertising and less service-intensive.
  • Brand extensions, co-branding, easier access to cooperative ventures.

• Reduction in Risk:

  • Two types of firm-level risk: Vulnerability and variability/volatility of future cash flows.
  • Strong brands decrease both types of firm-level risk; leading to a lower discount factor i.
  • $𝑁𝑒𝑡 \ 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 \ 𝑣𝑎𝑙𝑢𝑒 = \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>1}{(1 + \boldsymbol{𝒊})^1} + \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>2}{(1 + \boldsymbol{𝒊})^2} + \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤<em>3}{(1 + \boldsymbol{𝒊})^3} + \cdots \frac{𝐶𝑎𝑠ℎ \ 𝑓𝑙𝑜𝑤</em>T}{(1 + \boldsymbol{𝒊})^T}$

• Means to Lower Risk:

  • Facilitating repeat purchase behavior, cross-selling, and brand loyalty (reduces cash flow volatility).
  • Quality perceptions are associated with lower price sensitivity (secures future cash flows).
  • Corporate reputation effect as investors have higher awareness levels, resistant to negative events.
  • Brands serve as security for debt holders in case of financial distress.

• Empirical Findings on Firm-Risk Effects of Brands:

  • Data covers 252 firms from 2000-2006.
  • CBBE (Consumer-Based Brand Equity).
  • Dependent variables: credit rating and unsystematic risk.

• Brand Relevance in Category (BRiC):

  • Overall role brands play in customers’ decision-making in a specific category.
  • General decision weight putting expected brand benefits in relation to other product benefits.
  • Category-level measure, not brand-level measure.
  • Measured before an existing or new brand has been introduced into a new market.
  • Explains how sensitive customers react to differences in brands.

• Data Collection for BRiC:

  • Representative online consumer survey in 5 countries (France, Japan, Spain, the UK, the US) and 20 product categories.
  • Average > 1,200 respondents per country evaluating 2 product categories.
  • BRiC operationalization: Scale from 1 (Strongly disagree) to 7 (Strongly agree).
  • Sample BRiC statements:
    • When I purchase a product in the given category, the brand plays - compared to other things - an important role.
    • When purchasing, I focus mainly on the brand.
    • To me, it is important to purchase a brand name product.
    • The brand plays a significant role as to how satisfied I am with the product.

• Convergent and Nomological Validity Tests for BRiC

• Discriminant Validity Tests for BRiC

• Differences in Brand Relevance Across Product Categories:

  • Overall results and cross-country comparisons.

• Determinants of BRiC:

  • Modeling approach, considering consumer heterogeneity.

• Results of the BRiC Determinants Model.

• Development of BRiC Over Time:

  • Overall brand relevance is stable over time.
  • Product markets show consistently highest brand relevance.

• Brand Relevance in B2B Markets

• Discussion Questions:

  • Counterfeit products.
  • Placebo effect from strong brands.
  • Importance of risk reduction, search cost reduction, or serving as a symbolic device.
  • Product categories where brands play the strongest role.
  • Branding yourself.