New strategic brand management

“New exciting ideas and perspectives on brand building are offered that have been absent from our literature.”

Philip Kotler, S C Johnson & Sons Distinguished Professor of International Marketing, Northwestern University,

Kellogg School of Management, USA

“Kapferer continues to be on the leading edge.”

Earl N Powell, President, Design Management Institute, Boston, USA

“Managing a brand without reading this book is like driving a car without your license.”

Haesun Lee, Senior Vice President of Marketing,AMOREPACIFIC Co, Korea

“The best book on brands!”

Design Magazine

“One of the definitive resources on branding for marketing professionals worldwide.”

The Economic Times, India

“One of the best books on brand management. Kapferer is thought-provoking and always able to create new insights on

various brand-related topics.”

Rik Riezebos, CEO Brand Capital and director of the European Institute for Brand Management

Adopted by leading international business schools, MBA programmes and marketing practitioners alike, The New Strategic

Brand Management is simply the reference source for senior strategists, positioning professionals and postgraduate

students. Over the years it has not only established a reputation as one of the leading works on brand strategy but has

also become synonymous with the topic itself.

This new edition builds on its impressive reputation and keeps the book at the forefront of strategic brand thinking.

Revealing and explaining the latest models used by companies worldwide, author Jean-Noël Kapferer covers all the

leading issues faced by brand strategists today, supported by an array of international case studies. With both gravitas

and intelligent insight, this book reveals new thinking on crucial topics including:

Moving beyond marketing, The New Strategic Brand Management addresses the bigger picture, integrating other

components such as business models, HR and finance into brand building. It analyses the specifics of brands in B2B,

services, distribution, the internet and the luxury sector. It extends the brand concept to celebrities, universities, towns

and nations.

Jean-Noël Kapferer is one of the very few worldwide experts on brands. His book stands out from

others with its unique insights, its style of exhaustive analysis and its original perspectives, stemming from

his strategic vision, and his international background and experience. A professor of marketing strategy at

HEC Paris, he holds a PhD from Northwestern University (USA) and is an active consultant to many

European, US and Asian corporations. He also gives executive seminars in the US, China, Japan, Korea and

India. He is the author of six books on branding, advertising and communication, including Reinventing the Brand, also

published by Kogan Page. You can contact him at www.kapferer.com.

• growth in saturated markets;

• decommoditisation;

• innovation in emerging markets;

• brand rejuvenation and turn around;

• managing brand consistency and diversity;

• positioning private labels and store brands;

• globalisation and market adaptation;

• co-branding strategies;

• internal branding and corporate branding;

• financial evaluation of brands.

Kogan Page

120 Pentonville Road

London N1 9JN

United Kingdom

www.kogan-page.co.uk

Kogan Page US

525 South 4th Street, #241

Philadelphia PA 19147

USA

£35.00

US $70.00

Branding / Business and management

THE NEW

STRATEGIC

BRAND

MANAGEMENT

Creating and sustaining brand equity long term

“New exciting ideas and perspectives on brand building!”

Philip Kotler

J N KAPFERER

KAPFERER

BRAND MANAGEMENT

THE NEW STRATEGIC

4TH EDITION

4TH

EDITION

ISBN: 978-0-7494-5085-4

new_strategic_brand_aw:Layout 1 6/12/07 16:25 Page 1

I

STRATEGIC

BRAND

MANAGEMENT

THE NEW

ii

‘After reading Kapferer’s book, you’ll never again think of a brand as just a name. Several exciting

new ideas and perspectives on brand building are offered that have been absent from our literature.’

Philip Kotler, Northwestern University

‘A real thought provoker for marketing and business people. Strategic Brand Management is an

essential tool to develop strong marketing strategy.’

P Desaulles, Vice President, Du Pont de Nemours Europe

‘A solid contribution written with depth and insight. I recommend it to all those who desire a

further understanding of the various dimensions of brand management.’

David A Aaker, University of California at Berkeley, and author of Managing Brand Equity

‘The best book on brands yet. It is an invaluable reference for designers, marketing and brand

managers.’

Design Magazine

‘‘One of the best books on brand management. Kapferer is thought provoking and always able to

create new insights on various brand related topics.’

Rik Riezebos, CEO Brand Capital and director of EURIB/European Institute for Brand Management

‘One of the definitive resources on branding for marketing professionals worldwide.’

The Economic Times, India

‘Jean Noel Kapferer’s hierarchy of brands with six levels of brands is an extraordinary insight.’

Sam Hill and Chris Lederer, authors of The Infinite Asset, Harvard Business School Press

‘A fresh perspective on branding that is easy to understand and inspirational. I believe it to be

the finest book on the subject in the marketplace today.’

Marsha Lindsay, President and CEO, Lindsay, Stone and Briggs

‘The treatment of brand-product strategies, brand extensions and financial evaluations are also

strengths of the book.’

Journal of Marketing

‘A “think book”. It deals with the very essence and culture of branding.’

International Journal of Research in Marketing

‘An authoritative analysis about establishing an identity and exploiting it.’

Daily Telegraph

‘A full and highly informative text… well written and brought to life through numerous appropriate

examples.’

Journal of the Market Research Society

III

JEAN-NOËL KAPFERER

STRATEGIC

BRAND

MANAGEMENT

THE NEW

Creating and Sustaining Brand Equity Long Term

London and Philadelphia

Publisher’s note

Every possible effort has been made to ensure that the information contained in this book is

accurate at the time of going to press, and the publishers and authors cannot accept responsi￾bility for any errors or omissions, however caused. No responsibility for loss or damage occa￾sioned to any person acting, or refraining from action, as a result of the material in this

publication can be accepted by the editor, the publisher or any of the authors.

First published in France in hardback in 1992 and in paperback in 1995 by Les Editions d’Organisation

Second edition published in Great Britain in 1997 by Kogan Page Limited

Third edition 2004

Reprinted 2005, 2007

Fourth edition 2008

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as

permitted under the Copyright, Designs and Patents Act 1988, this publication may only be

reproduced, stored or transmitted, in any form or by any means, with the prior permission in

writing of the publishers, or in the case of reprographic reproduction in accordance with the

terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms

should be sent to the publishers at the undermentioned addresses:

120 Pentonville Road 525 South 4th Street, #241

London N1 9JN Philadelphia PA 19147

United Kingdom USA

www.kogan-page.co.uk

© Les Editions d’Organisation, 1992, 1995, 1997, 2004, 2007, 2008

The right of Jean-Noel Kapferer to be identified as the author of this work has been asserted by

him in accordance with the Copyright, Designs and Patents Act 1988.

ISBN 978 0 7494 5085 4

British Library Cataloguing-in-Publication Data

A CIP record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Kapferer, Jean-Noël.

New strategic brand management : creating and sustaining brand equity long term / Jean￾Noël Kapferer. – 4th ed.

p. cm.

Includes bibliographical references and index.

ISBN-13: 978-0-7494-5085-4 (alk. paper) 1. Brand name products–Management. I. Title.

HD69.B7K37 2008

658.8'343–dc22

2007037849

Typeset by Saxon Graphics Ltd, Derby

Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

iv

Contents

List of figures ix

List of tables xii

Preface to the fourth edition xiv

Introduction: Building the brand when the clients are empowered 1

Part One: Why is branding so strategic? 7

1. Brand equity in question 9

What is a brand? 9; Differentiating between brand assets, strength and value 13;

Tracking brand equity 15; Goodwill: the convergence of finance and marketing 18;

How brands create value for the customer 19;

How brands create value for the company 23;

Corporate reputation and the corporate brand 26

2. Strategic implications of branding 31

What does branding really mean? 31; Permanently nurturing the difference 35;

Brands act as a genetic programme 36; Respect the brand ‘contract’ 38;

The product and the brand 39; Each brand needs a flagship product 41;

Advertising products through the brand prism 42; Brands and other signs of quality 44;

Obstacles to the implications of branding 45

3. Brand and business building 51

Are brands for all companies? 51; Building a market leader without advertising 52;

Brand building: from product to values, and vice versa 55;

Are leading brands the best products or the best value? 57;

Understanding the value curve of the target 58; Breaking the rule and acting fast 58;

Comparing brands and business models: cola drinks 59

V

4. From private labels to store brands 65

Evolution of the distributor’s brand 66; Are they brands like the others? 69;

Why have distributors’ brands? 74; The financial equation of the distributor’s brand 75;

The three stages of the distributor’s brand 77; The case of Decathlon 79;

Factors in the success of distributors’ brands 82; Optimising the DOB marketing mix 84;

The real brand issue for distributors 85; Competing against distributors’ brands 87;

Facing the low-cost revolution 90; Should manufacturers produce goods for DOBs? 93

5. Brand diversity: the types of brands 95

Luxury, brand and griffe 95; Service brands 103; Brand and nature: fresh produce 106;

Pharmaceutical brands 108; The business-to-business brand 113; The internet brand 119;

Country brands 123; Thinking of towns as brands 125;

Universities and business schools are brands 128; Thinking of celebrities as brands 131;

Thinking of television programmes as brands 132

Part Two: The challenges of modern markets 135

6. The new rules of brand management 137

The limits of a certain type of marketing 139; About brand equity 141;

The new brand realities 144; We have entered the B to B to C phase 152;

Brand or business model power? 153; Building the brand in reverse? 154;

The power of passions 155; Beginning with the strong 360° experience 156;

Beginning with the shop 158; The company must be more human, more open 158;

Experimenting for more efficiency 159; The enlarged scope of brand management 160;

Licensing: a strategic lever 164; How co-branding grows the business 166

7. Brand identity and positioning 171

Brand identity: a necessary concept 171; Identity and positioning 175;

Why brands need identity and positioning 178; The six facets of brand identity 182;

Sources of identity: brand DNA 188; Brand essence 197

Part Three: Creating and sustaining brand equity 201

8. Launching the brand 203

Launching a brand and launching a product are not the same 203;

Defining the brand’s platform 204; The process of brand positioning 207;

Determining the flagship product 209; Brand campaign or product campaign? 210;

Brand language and territory of communication 210;

Choosing a name for a strong brand 211;

Making creative 360° communications work for the brand 214;

Building brand foundations through opinion leaders and communities 215

9. The challenge of growth in mature markets 219

Growth through existing customers 219; Line extensions: necessity and limits 222;

Growth through innovation 227; Disrupting markets through value innovation 230;

Managing fragmented markets 232; Growth through cross-selling between brands 234;

Growth through internationalisation 234

vi CONTENTS

10. Sustaining a brand long term 237

Is there a brand life cycle? 238; Nurturing a perceived difference 240;

Investing in communication 243; No one is free from price comparisons 245;

Branding is an art at retail 247; Creating entry barriers 248;

Defending against brand counterfeiting 250; Brand equity versus customer equity:

one needs the other 252; Sustaining proximity with influencers 260;

Should all brands follow their customers? 262; Reinventing the brand: Salomon 263

11. Adapting to the market: identity and change 269

Bigger or better brands? 270; From reassurance to stimulation 271;

Consistency is not mere repetition 272; Brand and products: integration and

differentiation 273; Specialist brands and generalist brands 275;

Building the brand through coherence 279;

The three layers of a brand: kernel, codes and promises 290;

Respecting the brand DNA 292; Managing two levels of branding 293

12. Growth through brand extensions 295

What is new about brand extensions? 296; Brand or line extensions? 298;

The limits of the classical conception of a brand 300;

Why are brand extensions necessary? 303;

Building the brand through systematic extensions: Nivea 306;

Extending the brand to internationalise it 309; Identifying potential extensions 310;

The economics of brand extension 312; What research tells us about brand

extensions 316; What did the research reveal? 324;

How extensions impact the brand: a typology 324; Avoiding the risk of dilution 326;

Balancing identity and adaptation to the extension market segments 330;

Assessing what should not change: the brand kernel 332;

Preparing the brand for remote extensions 333; Keys to successful brand extensions 336;

Is the market really attractive? 340; An extension-based business model: Virgin 342;

How execution kills a good idea: easyCar 345

13. Brand architecture 347

The key questions of brand architecture 347; Type and role of brands 349;

The main types of brand architecture 356;

Choosing the appropriate branding strategy 372; New trends in branding strategies 376;

Internationalising the architecture of the brand 379; Some classic dysfunctions 379;

What name for new products? 381; Group and corporate brands 385;

Corporate brands and product brands 388

14. Multi-brand portfolios 391

Inherited complex portfolios 392; From single to multiple brands: Michelin 393;

The benefits of multiple entries 395; Linking the portfolio to segmentation 396;

Global portfolio strategy 401; The case of industrial brand portfolios 402;

Linking the brand portfolio to the corporate strategy 405;

Key rules to manage a multi-brand portfolio 406;

The growing role of design in portfolio management 409;

Does the corporate organisation match the brand portfolio? 410;

Auditing the portfolio strategically 411; A local and global portfolio – Nestlé 413

CONTENTS vii

15. Handling name changes and brand transfers 415

Brand transfers are more than a name change 415; Reasons for brand transfers 416;

The challenge of brand transfers 418; When one should not switch 419;

When brand transfer fails 420; Analysing best practices 421;

Transferring a service brand 426;

How soon after an acquisition should transfer take place? 428;

Managing resistance to change 431; Factors of successful brand transfers 433;

Changing the corporate brand 435

16. Brand turnaround and rejuvenation 437

The decay of brand equity 438; The factors of decline 439; Distribution factors 442;

When the brand becomes generic 443; Preventing the brand from ageing 443;

Rejuvenating a brand 445; Growing older but not ageing 450

17. Managing global brands 455

The latest on globalisation 456; Patterns of brand globalisation 459; Why globalise? 461;

The benefits of a global image 466; Conditions favouring global brands 468;

The excess of globalisation 470; Barriers to globalisation 471;

Coping with local diversity 473; Building the brand in emerging countries 478;

Naming problems 479; Achieving the delicate local–global balance 480;

Being perceived as local: the new ideal of global brands? 483;

Local brands can strike back 485; The process of brand globalisation 487;

Globalising communications: processes and problems 495;

Making local brands converge 498

Part Four: Brand valuation 501

18. Financial valuation and accounting for brands 503

Accounting for brands: the debate 504; What is financial brand equity? 507;

Evaluating brand valuation methods 513; The nine steps to brand valuation 525;

The evaluation of complex cases 528;

What about the brand values published annually in the press? 529

Bibliography 531

Index 545

viii CONTENTS

Figures

1.1 The brand system 12

1.2 The levers of brand profitability 25

1.3 Branding and sales 26

2.1 The brand system 34

2.2 The cycle of brand management 36

2.3 The product and the brand 41

2.4 Product line overlap among brands 42

2.5 Brands give innovations meaning and purpose 43

3.1 The two models of brand building through time 56

4.1 Relative positioning of the different distributors’ brands 68

5.1 The pyramid brand and business model in the luxury market 98

5.2 The constellation model of luxury brands 100

5.3 History-based and story-based approaches to luxury 101

5.4 How brands impact on medical prescription 112

6.1 Limits of traditional marketing 140

6.2 From brand values to brand value 143

6.3 Brand equity 144

6.4 The extension of brand management 162

7.1 Identity and image 174

7.2 Positioning a brand 176

7.3 The McDonald’s positioning ladder 180

7.4 Brand identity prism 183

7.5 Sample brand identity prisms 188

7.6 Example of brand platform: Jack Daniel’s 199

8.1 Transfer of company identity to brand identity when company and brand

names coincide 206

8.2 From brand platform to activation 210

IX

8.3 Consumer empowerment 217

9.1 Increasing volume per capita 221

9.2 Segmenting by situation 222

9.3 Brands’ dual management process 229

9.4 A disruptive value curve: Formule 1 hotels 231

10.1 Innovation: the key to competitiveness 241

10.2 Paths of brand growth and decline 242

10.3 Penetration of distributors’ brands and advertising intensity 244

10.4 Sources of price differentiation between brands and hard-discount products 246

10.5 Brand capital and customer capital: matching preferences and purchase behaviour 255

11.1 The identity versus diversity dilemma 271

11.2 The double role of brand integration and differentiation 274

11.3 Differentiate what is variable from what is non-negotiable in the brand identity 276

11.4 Generalists and specialists 278

11.5 The different relationships between brands and products 285

11.6 How brands incorporate change: kernel and peripheral traits 287

11.7 Product lines must embody the core facets and each adds its own specific facets 288

11.8 Organisation of Mars masterbrand and products 289

11.9 How the brand is carried by its products 290

11.10 Identity and pyramid models 291

12.1 The Nivea extensions galaxy 307

12.2 Perimeters of brand extension 311

12.3 Rate of success of new brands vs brand extensions (OC&C) 313

12.4 The impact of brand extension on the consumer adoption process (OC&C) 313

12.5 Ayer model: how a family name impacts the sales of a new product 314

12.6 Comparative sales performance during the first two years (Nielsen) 315

12.7 The brand extension decision 317

12.8 The consequences of product and concept fit and misfit 322

12.9 Type of brand and ability to extend further 334

12.10 The process of extension 335

12.11 Framework for evaluating extensions 336

12.12 The Virgin extension model 343

13.1 Positioning alternative branding strategies 352

13.2 The six brand architecture strategies 354

13.3 The product-brand strategy 356

13.4 Range brand formation 360

13.5 Range brand structured in lines 362

13.6 Endorsing brand strategy 363

13.7 Umbrella brand strategy 364

13.8 Source brand or parent brand strategy 367

13.9 A case of brand proliferation or dilution of identity 371

13.10 3M branding options review 376

13.11 Which brand architecture is suitable for brand innovation? 382

13.12 Corporate and product branding at ICI 390

14.1 Segmenting the brand portfolio by price spectrum 400

15.1 When rebranding fails: from Fairy to Dawn (P&G) 421

x FIGURES

15.2 A stepwise approach to brand transfers (relating the type of transfer to the

image gap) 431

16.1 Analysing the potential of an old brand 446

16.2 Sustaining brand equity long term : dual management in practice 451

17.1 Managing the globalisation process between headquarters and subsidiaries 498

18.1 What is ‘brand equity’? 504

18.2 The issue of fair valuation of brands 505

18.3 Positioning brand valuation methods 513

18.4 A multi-step approach to brand valuation 518

18.5 The Interbrand S-curve – relation between brand strength and multiple 521

18.6 Stepped graph showing relationship between brand strength and multiple 524

FIGURES xi

Tables

1.1 From awareness to financial value 14

1.2 Result of a brand tracking study 17

1.3 Brand financial valuation, August 2006 19

1.4 How brand awareness creates value and image dimensions 21

1.5 The functions of the brand for the consumer 22

1.6 Brand functions and the distributor/manufacturer power equilibrium 23

2.1 The brand as genetic programme 36

3.1 Consumer price (in euros/litre) of various orange-flavour drinks in Europe 59

4.1 Brand attachment: the 10 winning brands 72

4.2 Determinants of attachment to distributors’ and producers’ brands 73

4.3 How copycat resemblance influences consumers’ perceptions 79

4.4 In which sectors do big brands resist trade brands and where are they defeated? 84

4.5 Percentage of consumers who intend to buy the distributor’s product 85

5.1 Consumers’ four concepts of luxury 97

5.2 Brand personality is related to prescription levels 110

5.3 The brand influence in medical prescription 111

5.4 The top ten European business schools 129

6.1 Evolution of brand indicators over 10 years 142

6.2 Evolution of brand capital for Coca-Cola and Danone 142

6.3 Strategic uses of co-branding 170

7.1 How to evaluate and choose a brand positioning 177

7.2 Sub-brand and master brand positioning 182

7.3 The most typical products of two mega-brands 191

7.4 Brand laddering process: the Benetton case 193

8.1 Underlying the brand is its programme 205

8.2 Comparing positioning scenarios: typical positioning scenarios for a new

Cuban rum brand 208

xii

9.1 Addressing market fragmentation 233

10.1 Advertising weight and trade brands’ penetration 245

11.1 From risk to desire: the dilemma of modern branding 271

12.1 Relating extensions to strategy 296

12.2 Brand extension impact on launching costs 315

12.3 Success rate of two alternative branding policies 318

12.4 Extension strategic evaluation grid 341

13.1 ‘House of brands’ or ‘branded house’ 353

13.2 Shared roles of the corporate and product brand 389

16.1 How brand equity decays over time 439

17.1 From global to local: eight alternative patterns of globalisation 459

17.2 Globalisation matrix 461

17.3 How Absolut copes with the grey market: corridor pricing 466

17.4 How global and local brands differ 468

17.5 What differences between countries would compel you to adapt the

marketing mix of the brand? 472

17.6 Which facets of the brand mix are most often globalised? 473

17.7 Barilla’s international and domestic range 489

17.8 How to make local brands converge 499

18.1 A method of valuing brand strength 520

18.2 Another estimate of the financial value of brands (2007) 524

18.3 Assessing brand strength: strategic diagnosis 527

TABLES xiii

xiv

Preface to the fourth edition

Integrating brand and business

This is a book on strategic brand management. It capitalises on the success of the former three

editions. As far as we understand from our readers worldwide (marketers, advertisers, lawyers, MBA

students and so on), this success was based on six attributes which we have of course maintained:

l Originality. Strategic Brand Management is quite different from all the other books on brand

management. This is due to its comprehensiveness and its unique balance between theory

and cases. It also promotes strong and unique working models.

l Relevance. The cases and illustrations are new, unusual, and not over-exposed. They often

represent business situations readers will relate to and understand more readily than over used

examples using Coke, Starbucks, Cisco, Fedex, BMW and other great classics of most books

and conferences on brands.

l Breadth of scope. We have tried to address most of the key decisions faced by brands.

l Depth of treatment. Each facet of brand management receives a deep analysis, hence the size

of this edition. This is a book to consult.

l Diversity. Our examples cover the fast-moving consumer goods sector (FMCG) as well as

commodities, business-to-business brands, pharmaceutical brands, luxury brands, service

brands, e-brands, and distributors’ brands – which are brands almost like the others.

l International scope, with examples from the United States, Europe and Asia.

This fourth edition is much more than a revision of the previous one. It is a whole new book for

understanding today’s brands and managing them efficiently in today’s markets. Sixteen years

after the first edition, so much change has happened in the world of brands! This is why this new

edition has been thoroughly updated, transformed and enriched. Of course, our models and

methodologies have not changed in essence, but they have been adapted to reflect current

competition and issues.