BUSSPP 0020 1st Edition Lecture11Outline of Last Lecture I. Back to the Course ThesisII. Differentiation as an Investment Outline of Current LectureI. BrandingII. Life Cycle of a Product Current LectureI. BrandingA. Concept/definition1. Brand- identifier productB. There are different things that we can think of as identifiers1. Brand namea. “name”b. Big Macb. This is linked to language and therefore could become a symbol to a place that doesn’t speak the same languagec. Some may use an English brand in foreign countriesi. Target market is USii.May see English as more globald. Example: Sonyi. Eventually wanted to sell to US soldiers- needed to be pronounceable by theme. Could be for business, product of a business, or for the entire namei.There can be multiple brand names within one firmThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.f. These are examples of protected intellectual propertyi.Firm that develops the name has exclusive use of the name for a period of timeii. That time is NOT infiniteiii. Has to be renewed on a regular basisiv. If you do not go through federal listing, you don’t necessarily have exclusive use, Example: Yo-yo, escalatorg. People now brand their children with unique names and spellingsi. There are ways to infringe upon this-Piracy-False advertising (false branding)-Knock-offs 2. Brand marka. Symbol (logo)i. McDonald’s golden arches 3. “formal name” of a firma. Example: Dardenb. Owns Olive Garden(brand name of one business) and Capital Grillc. Brand name identifies thing and provokes much more information than just an identifierC. Other than Identity (brands)1. Because of advertising we associate things with brand names2. Emotional/ affectivea. Different people have like/dislike reactions to certain brands3. Knowledge/ cognitive/ beliefa. Information is knownb. You recognize the brand- example “canned soup”, “many flavors”, etc.4. Predisposition (to act)a. When you are looking for soup, you like Progresso better thanCampbell’s, you are therefore predisposed to one of these versus the otheri. We could selectively put info into your heads by advertisementsii. This is the goal and the other two are the means of meeting the goalD. Ownership of Brands1. There can be other brand owners but these are the two most basic2. Assume not vertically integrateda. Manufacturer vs Retailerb. Manufacturerii. Marketii. National: If I brand my product, you can get that at many different retailersc. Retaileri. Private labelii. Retaileriii. Store brandiv. Proprietary brand -Owned by someone, the only place that you can buy something that is branded is in that store (American Eagle)d. Manufactured with 1 product (unique brand)i. Ethical prescription drugse. Manufacturer with set of products (family brand)i. Food productsii. Kraft, Heinz, Nestlef. Retailer with set of products (family brand)i. Apparelg. Retailer with 1 product (unique brand)i. Big MacE. Emergence of Product Differentiation1. A firm must decide to either keep the current brand name or come up with a new one2. Example Hondaa. Already had developed of associations, knowledge, and predispositionb. Did they do a good job at this?i. They want a higher price point and different messageii. Decided that they wanted to release a premium productiii. Called their new identifier Acura-Could have a second chance at developing associations and developing different associations from Honda-Luxury featuresF. Brand Equity 1. Captures the economic value of the brand, NOT the accounting value2. If I were to sell this, what would I get for it now?3. There are things that drive brand equitya. Brand recognitionII. Lifecycle of a ProductA. There is some period of time before the differentiated product appears1. Time before is selling of the generic brand2. Split into 4 periodsa. Introduction periodi. Slow growth in demandb. Growth periodi. Rapid growth in demand c. Mature period i. Constant of slowly declining demandd. Reclining periodi. Rapidly reclining demandB. Not this simple1. A lot of products vanish before introduction period even beginsa. Assume also that there is one firm selling this product (first-mover)b. Advantagesi. Great retail locations2. Technology development protected by patent3. Really great brand4. Take up distribution centers5. In general creates entrance barriers to keep out second moversa. Now in monopolistic competition 6. A lot of products are not able to establish true demand growtha. Assuming at this point that there still is only one playerb. However, if there is significant growth, incentives to enter this product market will increasei. Second-movers-Fast second-movers-Slow second-moversc.This period of time could be very short or last decades C. Maturity conveys several ideas1. Demand is flat or slightly downa. Especially if it is a relatively long period of timeb. All the buyers have a lot of time to know all of the sellersc. Either people exit the market or consolidatei. Development of oligopoliesii. Example Expedia and Travelocityiii. Growth opportunities and profit opportunities are highly limitediv. Consolidate to drop costs and gain profit opportunitiesd. Technology tends to emerge2. Declinea. Attempts to restart
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