Brand Portfolio Management

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Frame of Reference

In this chapter the authors will present the theoretical framework concerning branding concepts and other relevant theory associated with the topic. The theoretical framework is the foundation for the empirical findings and analysis in the thesis. The authors will in this chapter focus on the importance of brand equity and the process of establishing a strong brand.

Concept of Branding

Ries and Ries (1999), claims that the branding process is the single most important objective of the marketing process. A strong brand is a very abstract term and relates to the subjective values in the mindset of the consumer. It creates an emotional relation to the consumer and attaches a human identity, independently of the product type. The concept of positioning was introduced in the 1970’s by Al Ries and Jack Trout, and involves the idea to position the product or service in a certain place in the consumer’s minds. This is supported by Belch and Belch (2004) who argues that the concept of positioning is the most popular strategy to build a brand. From a company’s perspective a strong brand is always admirable, and something that is essential in order to be successful in a competitive market place. A strong brand is intangible and may be considered as a strategic resource. This strategic resource can be used in several ways, but always with the same objective to create a positive image around the brand. The purpose of brand strategy is to strengthen the brand continuously in order to achieve a long term profit (Melin, 1999).
A fundamental component in creating a promising brand is that the distribution is adapted after the brand’s characteristics. Nilson (1999) argues that the relation between distribution and the brand’s strength can have long term effects. The brand can by being distributed at places that do not attract the average consumer damage the abstract values that surround the brand. The distribution has to support and be an important part of the total brand strategy in order to create a strong and beneficial brand on long term perspective (Nilson, 1999).
“Symbols engage intelligence, imagination, emotion, in a way that no other learning does” (Georgetown University Identity Standards Manual, in Wheeler, 2003 p. 18)
The symbol of a brand has the power to heavily influence and inspire the consumer to develop a personal relationship towards the brand. The symbol is the main communication tool, which is established as graphical, vocal, written or other physical objects. The symbol represents the congregated complex actions executed by the organization narrowed down to a specific characteristic. The brand is not just the logotype and symbols, it contains all actions the company embodies and executes. The brand represents the accumulated actions generated by a company (Armstrong & Kotler, 2005).

The Brand as an Asset

The brand is a company’s key strategic asset (Kapferer, 1997). Philip Morris and Procter & Gamble were the initiators of capitalization of brands. These companies merged and purchased some not so promising companies, but they managed to position these purchases in a profitable manner with assistance of its initial brand strength, and from that strength transfer tacit and explicit knowledge to the purchased brands.
Kapferer (1997) further states that in the 1980’s financial institutions started to evaluate and calculate the financial value of the brand, which could be included as an asset in the balance sheet. The companies become aware of that the brand itself was an asset, now when there was to some extent a tangible value related to the brand name. Uggla (2002) illustrates an example of the brand as an asset, in 2001 Coca-Cola’s brand value was set to 50% over the company’s total market value. Consequently, a major part of the company’s value originates from reputation, association, perceived quality and other factors. These intangible factors summarized are the foundation for a company’s brand equity.

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Brand Equity

Definition of Brand Equity

Melin (1999) argues that the concept of brand equity does not have a proper definition however brand equity is often defined as: ”the added value with which a brand endows a product”. (Farquahar, 1989 in Melin 1999:45). Melin (1999) further discusses that brand equity is closely related to the added value and that the consumer brand loyalty shows that a brand creates added value. Aaker (1991) claims that brand equity is a set of brand assets and liabilities linked to a brand, its symbol and name adds or subtracts value from the provided product or service. The accumulated value represents the brand equity that the company has accomplished and benefit from.
Brand equity is a complex matter that often can be considered as intangible. Further, the brand can be separated from the actual product and advantages can originate from the brand instead from the actual product. The awareness of brand equity has increased over the last decade as a result of the increased competition in equivalent industry sectors.
Hence, the brand equity that a company enjoys may be the essential piece that reflects the performance of the company and is the guide towards future strategies and decisions (Aaker, 1991).
A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless.

Aaker’s Brand Equity Model

David A. Aaker is the J. Gary Shansby professor of marketing strategy at the University of California at Berkeley. He is the author of over 70 articles and eight books on branding, advertising, and business strategy and is one of the most widely cited authors in the field of marketing today. David Aaker’s brand equity model (1991) is the mother of many following researchers’ findings and results. The model has become the standard template for researchers such as Kapferer (1997) and Melin (1999), yet their models are built upon similar factors that Aaker (1991) stresses. Consequently, the authors feel that this model provide the whole spectra within the field of brand equity even though some parts of the model are of less significance within this study.
This model divides the assets that build brand equity into five categories: brand loyalty, brand awareness, perceived quality, brand associations and other proprietary brand assets.
These categories are the fundamental cornerstones and symbolize crucial pieces in the process of enhancing brand equity. It is essential to create a network between these cornerstones and establish links that improve and accumulate actions and events between the cornerstones.
The network symbolizes the glue that ties the cornerstones together and enhances solidity to the brand (Aaker, 1991). Furthermore, the Aaker’s brand equity model can be looked upon as a puzzle, where more value is achieved when the whole puzzle is correctly fitted.

Brand Loyalty

“You have to have a brand become a friend.”
(Posner in Aaker, 1991 p. 34)
Brand loyalty is one of most important part in the brand equity process and is often considered as the core of which further brand equity actions originates from. To possess loyalty is an incredible advantage for every person operating within the area of business. The loyalty is something that is deserved not something that is bought or gained by pure luck, it demands a long term strategy from the company perspective to position and present the brand as a necessary ally in the mind set of consumers (Aaker, 1991).
A habitual buyer that by routine consistently chose the same brand is the perfect customer for companies, since brand loyalty is highly correlated to future sales resulting in future profits. The revenue flow from these consumers is long term and demands a low amount of marketing action in comparison to what it takes to attract new customers for the first time, they need to be exposed to the brand at several occasions in order to become habitual buyers. The marketing costs will be heavily reduced when the majority of the customers become loyal to the brand (Aaker, 1991). As an effect of brand loyalty the trade leverage of the brand will be facilitated in terms of an increase in distribution hubs.
The figure 2:1 visually displays the positive assets that originate from brand loyalty. These strategic assets give the brand an initial satisfactory foundation, which will make it easier for the brand to increase loyalty towards the brand in the future as well as increasing the overall brand equity in the mind set of the consumers (Aaker, 1991). The results of brand loyalty can be looked upon as economies of scale generated from the executed brand loyalty events.
W.T Tucker a professor of marketing at University of Texas, argues in the article: The development
of brand loyalty (1964) that brand loyalty is conceived to simply favoritism choice behavior with respect to branded products. Brand loyalty is always a biased response to some combination of characteristics, not all of which are critical stimuli. Tucker (1964) furthermore, stress that consumers will become brand loyal even when there is no evident difference between brands other than the brand itself. A consumer can build loyalty towards a brand even though it does not provide higher advantage than the competitive brand. Finally, Tucker (1964) claims that one may learn to like what he chooses as willingly as he may learn to like what he chose.
Brand loyalty differs amongst diverse type of products. For instance a consumer may be loyal to the same type of car brand an entire lifetime whilst the level of loyalty towards consumer goods may fluctuate on occasion. It is obvious that the process of purchasing consumer goods have a higher frequency than for intense financial goods. Newman & Werbel (1973) classifies loyalty in the area of consumer goods as that the consumer would go to another store or postpone purchase rather than buy another brand if their preferred brand was out of stock. This classification is supported by Aaker (1991) who defines loyalty as the likeliness that a consumer switches to another brand when the initial brand makes a change, either in product features or in price.
Brand loyalty can be divided into different levels according to the loyalty pyramid displayed in figure 2.3. Each level demands a specific and customized approach in order to capture the consumer’s attention and create loyalty towards the brand. Further, the pyramid consists of the whole loyalty spectra, the non-loyal consumer at the bottom and the committed buyer at the top. Between these opposites there are three additional levels with different amount of loyalty tendencies. The main objective for brand managers is to perform and execute actions that influence consumers in the lower levels to become more loyal towards the brand, hence accomplish synergy effects as described in figure 2.2.

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1 Introduction
1.1 Background
1.2 Background Evening Tabloids
1.3 Background Aftonbladet
1.4 Background Expressen
1.5 Problem Discussion
1.6 Purpose
1.7 Research Questions
1.8 Delimitations
1.9 Outline of the Thesis
2 Frame of Reference 
2.1 Concept of Branding
2.2 The Brand as an Asset
2.3 Brand Equity
2.4 Aaker’s Brand Equity Model
2.5 Brand Portfolio Management
3 Method
3.1 Research approach
3.2 Research technique
3.3 Sample Selection
3.4 Performing the interview
3.5 Credibility of the respondent
3.6 Validity and Reliability
3.7 Reflection and Criticism
4 Empirical Study and Analysis
4.1 Brand Diversification
4.2 Name Awareness
4.3 Perceived Quality
4.4 Brand Associations
4.5 Brand Loyalty
5 Conclusion 
6 Final Discussion
6.1 Suggestions for Further Research
References
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