244571330 Integrated Advertising Promotion and Marketing MKT320 Ch02 pdf PDF

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2 Corporate Image and Brand Management Chapter Objectives After reading this chapter, you should be able to answer the following questions: 䊏

Why is a corporation’s image vitally important?

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What kinds of tactics and plans can be used to build an effective corporate image?

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GUC C I One Strong Brand Works with Others

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Integrated Advertising, Promotion, and Marketing Communications, Fourth Edition, by Kenneth E. Clow and Donald Baack. Published by Prentice Hall.

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How many Gucci items do you own? Before answering, remember that Gucci stores also sell Yves Saint Laurent, Sergio Rossi, What are family brands, brand extensions, Alexander McQueen, Oscar de la Renta, and other brands. From flanker brands, co-brands, private brands, its humble beginnings as a single-product firm, Gucci has grown brand equity, and brand recognition? and evolved into a dominant player in the fashion industry. The How are logos, packages, and labels related to image and brand management? path was not always easy. Gucci started in Italy, took a detour through Bahrain, and has ended up in The Netherlands. Which brand and product characteristics can be used to establish a positive position The House of Gucci was founded by Guccio Gucci in Florence, in the market? Italy, in 1921. Gucci was the son of a leather craftsman. While visiting Paris and London, he was impressed by the sophistication of the cultures he encountered. He returned to Italy to open his store, which sold small luggage and saddlery. Soon Gucci was a widely popular store, selling exclusive leather goods. As the Gucci company grew, the product line continued to expand, as did the number of locations. Rome and Milan were two of the new sites. Guccio Gucci died in 1953, leaving his company to his brothers and family members. The Gucci heirs opened new stores in London, Paris, New York, and Palm Beach. When the Gucci family sold the remainder of its interests in the company in the 1980s, the firm that purchased it was located in Bahrain. Unfortunately, the company had expanded so quickly that it had lost control over quality and distribution. The newest owners are the Gucci Group NV, located in Amsterdam. The corporation fixed many problems by issuing shares of stock to finance growth. Currently the Gucci line includes watches, leather goods, perfumes, jewelry, and other items. Gucci Group NV now owns and operates 348 stores around the world. In the United States, Gucci is marketed as a seductive, high-fashion brand. Visitors to the Gucci Web site can view the many products and stores that are all part of Gucci’s image. High fashion is a major feature of the Gucci line. All of Gucci’s products are advertised to enhance the same position. Recently, Gucci appointed three new creative directors. One directs the women’s readyto-wear collection, the second leads the men’s ready-to-wear collection, and the third manages the company’s fashion accessories.

T W O C H A P T E R Source: Courtesy of AP Wide World Photos.

Gucci provides an excellent example of how the leaders of one company were able to take a single line of products and eventually build a powerful international presence featuring dozens of products and brand names. Maintaining a cutting-edge position and image drives the marketing team at Gucci to innovate and grow with each new fashion trend.1

OVERVIEW

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ne of the most critical ingredients in the successful development of an integrated marketing communications plan is effective management of an organization’s image. A firm’s image is based on the feelings consumers and businesses have about the overall organization and its individual brands. Advertising, consumer promotions, trade promotions, personal selling, the company’s Web site, and other marketing activities all affect consumer perceptions of the firm. A strong brand creates a major advantage for any product or service. When the image of an organization or one of its brands is somehow tarnished, sales revenues and profits can plummet. Rebuilding or revitalizing an image is a difficult task. Brand managers and advertising account executives are responsible for developing and maintaining a quality image. A company’s image has a “bottom line” that can even be assigned a value on accounting statements. Advertising managers and other marketing experts are expected to create messages that (1) sell products in the short term and (2) build a firm’s image over time. Advertising creatives must think about both goals as they design advertisements and promotional campaigns. When the marketing team is able to clearly understand the firm’s image and has knowledge about the strengths of individual brands, it is easier to make solid connections with consumers and business-to-business customers. A strong IMC foundation combines understanding of the firm’s image and brands with assessments of consumer and business buyer behaviors. Then, the 25

Integrated Advertising, Promotion, and Marketing Communications, Fourth Edition, by Kenneth E. Clow and Donald Baack. Published by Prentice Hall.

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PART 1

The IMC Foundation

Source: Courtesy of State Farm Insurance Companies. State Farm Mutual Automobile Insurance Company, 1999. Used by permission.

marketing team can prepare consistent messages designed to reach all of the individuals who might purchase a company’s goods and services. The first part of this chapter examines the activities involved in managing a corporation’s image. The second part addresses ways to develop and promote the various forms of brand names. Brand equity and brand parity are also described. Brand names, company logos, packages, and labels are closely tied to a firm’s image.

CORPORATE IMAGE

A State Farm ad stressing driver safety.

Effective marketing communication starts with a clearly defined corporate image. The image summarizes what the company stands for and the position the company has established. Whether it is the “good hands” of Allstate Insurance or the “good neighbors” at State Farm Insurance, the goal of image management is to create a specific impression in the minds of clients and customers. In the case of insurance companies, helpfulness, safety, and security are common and favorable elements of strong image. Remember that what consumers believe about a firm is far more important than how company officials view the image. Corporate names such as Dell, Toyota, Nike, and ExxonMobile all conjure images in the minds of consumers. Although the specific version of the image varies from consumer to consumer or business buyer to business buyer, the overall image of a firm is determined by the combined views of all publics, which in turn can have a positive or a negative influence on customers.

Components of a Corporate Image

Integrated Advertising, Promotion, and Marketing Communications, Fourth Edition, by Kenneth E. Clow and Donald Baack. Published by Prentice Hall.

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Consumers encounter many things as they interact with a company or an organization. One primary component of a corporate image is customer perceptions of the goods or services the organization offers. In a study conducted by Edelman Asia Pacific, the quality of a company’s goods and services ranked as the most important component of corporate image. The willingness of a firm to stand behind its goods and services when something went wrong was a close second. Third on the list were perceptions of how the firm dealt with customers, such as by being pleasant, helpful, or professional.2 Every firm’s image consists of a unique set of components. The corporate image of an automobile manufacturer such as Porsche, Mazda, Toyota, or General Motors might be based on the following: (1) evaluations of vehicles, (2) whether the company is foreign or domestic, (3) customer views of each company’s advertisements, and (4) reactions to the local dealership. Further, the corporation’s image might include consumer assessments of company employees. In fact, the mechanic trying to repair a vehicle at a local Mr. Goodwrench garage could become the dominant factor that shapes a customer’s image of General Motors. Recently, Subaru and Mazda created programs that were designed to emphasize the importance of the dealership as an influence on consumer assessments of an automobile company’s corporate image. Both firms launched aggressive remodeling plans for local dealerships, with the goal of providing a more pleasant shopping environment. These new-look dealerships helped boost the images of both Subaru and Mazda, resulting in higher sales. Subaru dealers that remodeled using the new retail format sold 54 percent more vehicles in the following year. Mazda dealers that adopted the new retail design sold 30 percent more vehicles.3 Toyota, recognizing that many women purchase automobiles, and that an even greater number have a significant influence on the purchase decision,

CHAPTER 2

Corporate Image and Brand Management

Source: The PORSCHE CREST, PORSCHE, 911 and the distinctive shape of PORSCHE 911 automobile are registered trademarks in the United States of Dr. Ing. h. c. F. Porsche AG. Used with permission of Porsche Cars North American, Inc. Copyrighted by Porsche Cars North America, Inc. Photographer: Erik Chmil.

launched “Image USA II.” The program’s recommendations suggested that every Toyota dealer provide a children’s play area in the showroom, a coffee bar in the service area, and nicely decorated restrooms.4 The idea was to make the dealership image more attractive to female customers to enhance the company’s image. A corporate image also contains invisible and intangible elements (see Figure 2.1). When consumers learn that a pharmaceutical or cosmetic company has a policy that prohibits product testing on animals, this information will be integrated into their attitudes toward the firm. Personnel policies and practices impact the firm’s image. Strikes and labor disputes often have a negative impact on a firm’s image. The business philosophies of Bill Gates at Microsoft and Rachel Ray (www.rachelray.com) affect the images consumers have of the two companies. The beliefs and attitudes consumers have about Japan might influence their views of companies such as Sony and Toyota. Negative publicity has the potential to stain or damage consumer perceptions of a corporation’s image. Powerful examples of these events took place at Enron, WorldCom, and Tyco. Some writers believe the problems at these companies have created distrust of all corporations.

The Role of a Corporate Image— Consumer Perspective From a consumer’s perspective, the corporate image serves several useful functions. These include: 䊉

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Providing assurance regarding purchase decisions of familiar products in unfamiliar settings Giving assurance about the purchase when the buyer has little or no previous experience with the good or service Reducing search time in purchase decisions Providing psychological reinforcement and social acceptance of purchases

Porsche maintains a strong and positive corporate image.

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A well-known corporate image provides consumers with positive assurance about what to expect from a firm. A can of Coke or Pepsi purchased in Anchorage, Alaska, has

Tangible Elements

Intangible Elements

1. Goods and services sold 2. Retail outlets where the product is sold

1. Corporate, personnel, and environmental policies

3. Factories where the product is produced

2. Ideals and beliefs of corporate personnel

4. Advertising, promotions, and other forms of communicat ions

3. Culture of country and locat ion of company

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FIGURE 2.1 Elements of a Corporate Image

4. Media reports

5. Corporate name and logo 6. Packages and labels 7. Employees

Integrated Advertising, Promotion, and Marketing Communications, Fourth Edition, by Kenneth E. Clow and Donald Baack. Published by Prentice Hall.

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PART 1

The IMC Foundation

a comparable taste to one purchased in Liverpool, England, or Kuala Lumpur, Malaysia. KFC serves the same or similar meals in San Francisco as the ones sold in Minneapolis or Paris. A consumer on vacation knows that if she makes a purchase from a Wal-Mart in Texas, a defective item can be returned to a local store in Toronto, Canada. This assurance has even greater value when consumers seek to purchase goods or services with which they have little experience. Consider families on vacation. Many travelers look for names or logos of companies from their native areas. Purchasing from a familiar corporation is viewed as being a “safer” strategy than buying something from an unknown company. Taking a room at a hotel that the consumer has never heard of seems riskier than utilizing a familiar one. Thus, a family visiting Brazil might normally not stay at the Holiday Inn, but because it is a recognizable name they believe it is a lower-risk option than an unknown hotel. Another significant role corporate image plays for the consumer is reducing search time. Purchasing a product from a familiar firm saves time and effort. An individual loyal to Ford spends fewer hours searching for a new car than does someone with no loyalty to any automobile manufacturer. The same holds in purchasing low-cost items such as groceries. Search time is saved when a consumer purchases items from the same organization, such as Campbell’s or Nabisco. For many individuals, purchasing from a highly recognized company provides psychological reinforcement and social acceptance. Psychological reinforcement comes from feeling that a wise choice was made and the belief that the good or service will perform well. Social acceptance is derived from knowing that many other individuals also have purchased from the same firm. More importantly, other people, such as family and friends, are likely to accept the choice. Which are the most reputable firms? Intrabrand produced a list of the top 100 corporate brands. Companies, such as Procter & Gamble, that have a portfolio of products and brands, were not included in the evaluation. In addition, companies that are privately held, such as VISA, or companies that operate under different names in different countries, such as Wal-Mart, were not included. The list only notes corporations that provide products under one name. Using these criteria, Interbrand ranked Coca-Cola as the top global corporate brand. Microsoft was second. See Table 2.1 for a complete listing.

The Role of a Corporate Image—Business-to-Business Perspective A strong corporate image creates a major competitive advantage in the business-tobusiness marketplace. Many of the processes that affect individual consumers also affect business buyers. This means that purchasing from a well-known company reduces the

TABL E 2. 1 Top 10 Global Corporate Brands Rank

Company

Brand Value (billions)

Country of Ownership

Coca-Cola

$65.3

United States

2

Microsoft

$58.7

United States

3

IBM

$57.1

United States

4

General Electric

$51.5

United States

5

Nokia

$33.7

Finland

6

Toyota

$32.1

Japan

7

Intel

$30.9

United States

8

McDonald’s

$29.4

United States

9

Disney

$29.2

United States

Mercedes-Benz

$23.6

Germany

10

Source: Based on “The 100 Top Brands,” BusinessWeek (August 6, 2007), pp. 59–64.

Integrated Advertising, Promotion, and Marketing Communications, Fourth Edition, by Kenneth E. Clow and Donald Baack. Published by Prentice Hall.

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CHAPTER 2

Corporate Image and Brand Management

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feelings of risk. A firm with a well-established image makes the choice easier for business customers seeking to reduce search time. Psychological reinforcement and social acceptance may also be present. Company buyers who make quality purchases might receive praise from organizational leaders and others involved in the process. Therefore, once again, a strong company image or brand name can make the difference in a choice between competitors. Brand image is especially valuable to a company expanding internationally. Members of foreign businesses are likely to feel more comfortable making transactions with a firm that has a strong corporate image. Risk and uncertainty are reduced when the buyer knows something about the seller. Therefore, a company such as IBM can expand into a new country and more quickly gain the confidence of consumers and businesses.

The Role of a Corporate Image—Company Perspective From the viewpoint of the firm itself, a highly reputable image generates many benefits: 䊉 䊉 䊉 䊉 䊉

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Extension of positive consumer feelings to new products The ability to charge a higher price or fee Consumer loyalty leading to more frequent purchases Positive word-of-mouth endorsements Higher level of channel power The ability to attract quality employees More favorable ratings by financial observers and analysts

A quality corporate image provides the basis for the development of new goods and services. When consumers are already familiar with the corporate name and image, the introduction of a new product becomes much easier, because long-term customers are willing to give something new a try. Customers normally transfer their trust in and beliefs about the corporation to a new product. A strong corporate image allows a company to charge more for its goods and services. Most customers believe they “get what they pay for.” Better quality is often associated with a higher price. This, in turn, can lead to greater markup margins and profits for the firm. Further, firms with well-developed images have more loyal customers. Customer loyalty results in patrons purchasing more products over time. Loyal customers also are less likely to make substitution purchases when other companies offer discounts, sales, and other enticements to switch brands. Heightened levels of customer loyalty are often associated with positive wordof-mouth endorsements. Favorable comments help generate additional sales and attract new customers. Most consumers have more faith in personal references than in any form of advertising or promotion. Positive consumer attitudes create corporate equity, which provides greater channel The strong General Mills brand power. Retailers offer brands that are viewed positively by customers. Retailers buy the name makes the introduction brands that pull customers into stores. As a result, of new products easier. a company that has a high positive image has more control and power in the channel and with retailers. Another advantage of a dominant corporate image is attracting quality employees. Just as consumers are drawn to strong firms, potential workers apply for jobs at companies with solid reputations. Consequently, recruiting and selection costs are reduced. There is less employee turnover, so long as employees are treated fairly. A strong corporate reputation often results in a more favorable rating by Wall Street analysts and by other financial institutions. This is especially helpful when a company seeks to raise Integrated Advertising, Promotion, and Marketing Communications, Fourth Edit...