Effective Brand Management: Analysis of Coca-Cola and McDonald's

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Brand Management
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Table of Contents
Introduction......................................................................................................................................3
Task 1 – Building and managing brand over time...........................................................................4
Task 2 – Brand portfolio and hierarchy management.....................................................................7
Task 3 – Brand extension and leverage.........................................................................................10
Task 4 – Measuring and managing brand value............................................................................13
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
“Brand Management” is a function of the marketing department of an organization, which
utilizes tactics in order to increase perceived value of the goods line or the brand from time to
time. Portraying effectiveness in brand management makes it possible for an organization to
raise the price of its products and services and develop a loyal client base via positive and strong
brand image in the marketplace. The assignment will illustrate the comprehension of the way in
which brand is developed and managed overtime. The distinct strategies of brand hierarchy,
portfolio management, and brand equity will be analysed. Furthermore, the assignment will
provide evaluation of the manner in which brands are managed in partnership at global and
domestic level. Lastly, the assignment will discuss the techniques used in order to measure and
manage brand value from time to time.
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Task 1 – Building and managing brand over time
1. Introduction
Brand is the identification mark, symbol, name, logo, word or any sentence used by the business
companies in order to differentiate their products and services from the other companies. It is
considered as one of the most valuable assets of an organization. Furthermore, legal protection
provided to a brand is known as trademark (Heding et al., 2015). On the other hand, brand equity
refers to the premium value, which an organization creates from selling a product with an
identifiable name while compared to any similar product. Brand equity comprises of three main
elements namely consumer perspectives, positive or negative effects, and the outcome (Keller et
al., 2011). For the marketing department to build brand equity, it must have right knowledge on
the brands. It is necessary for the marketing department to select the most appropriate brand
elements. In the next step, the marketing department of the company requires designing the
holistic activities of marketing comprising of personalization, incorporation, and globalization.
In the last step, the company requires leveraging the secondary associations (Aaker and Biel,
2013).
2. Main body
Considering the case of McDonalds, it can be stated that the organization lays emphasis on brand
management. It is a highly complex process in a multinational corporation like McDonalds and
thus, it is of importance for the company to formulate appropriate strategies of branding.
Articulating branding strategy makes it possible for the company to strengthen its brand equity,
extension of the brand, reinforce and revitalise the brand as well. While formulating the brand
management strategy, the company considers brand elements, which includes memorable,
adaptable, likeable, and protectable (Kapferer, 2012). Furthermore, the company aligns the brand
elements with the core values of the organization such as high quality, speed, convenience, and
price value. This makes it possible for the company to strengthen its brand equity in an effective
manner.
Furthermore, McDonalds also utilises the brand extension strategy. This strategy of brand
management involves utilization of the existing brand in order to introduce a completely new
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product within a completely different category of product. Brand extension strategy makes it
feasible for the company to accelerate new products acceptance through mitigating the risk
perceived by consumers. It also enables the company to lower the cost of launching new product
as it is build on the existing brand. It mitigates the time of manufacturing by leveraging the
characteristics of existing brand (Keller, 2013). With the application of this strategy, the
company is able to increase the profit margins and it allows the company to improve the parent
brand image as it associates with the new product features. Lastly, the brand extension strategy
makes it possible for McDonalds to expand the market size, which the company could access in
order to serve the additional sub segments by introducing new products.
Branding plays a vital role for an organization such as McDonalds. Branding makes it possible
for the company to stand out in the market full of competition. It also caters McDonalds with
credibility of customers and the company could price the products easily with a clear and strong
brand image in the market. Furthermore, branding makes it possible for an organization to
increase the loyalty of its customers and retain them for a long period (Elliott et al., 2015).
Branding also enables the company to gain recognition among customers as well as it keeps
consistency in marketing. It also allows the company to gain confidence in their market their
business and help in gaining the trust of customers. In addition, branding makes it feasible for an
organization to facilitate the process of introducing new products and services in the
marketplace. Lastly, it caters the organization with the apparent strategy based on which the
company could focus on moving forward.
Revitalization of McDonalds comprises of healthy options, precise segmentations, and
technological enhancements. The risks involved are changing food habits of the customers and
maintaining the price value of goods.
3. Conclusion
Branding is an important tool for marketing as it enables the company to create a sense of trust
among customers. It also allows the organization to gain recognition and grow in terms of
financial value. Furthermore, it also supports the advertisement of the company and increases the
sales growth effectively.
M1
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A multinational corporation such as McDonalds uses the BRANDZ model. It involves series of
five steps that the organization applies. All the steps have its own objectives making it possible
for the company to categorize the manner in which they would focus on increasing their brand
equity. The first step is presence and in this step, the company analyses the market to know if
any similar product is present that the organization is trying to emerge. The next step is relevance
in which the company tends to evaluate the extent to which it would offer the company in return.
Furthermore, in the third step or performance, the company requires evaluating the performance
of the product and gain a detailed comprehension of what it could deliver to the market to satisfy
the consumers. The fourth step advantage requires the company to analyse if it would be better
and different in market or not. In the last step bonding, the company requires checking if the
product launched can be defeated or not.
M2
Moreover, McDonalds brand extension strategy comprises of product extension, global
expansion, adapting to the local needs, social responsibility, internal branding, and connecting
with the consumers. Furthermore, the company uses line extension and brand extension as its
brand management strategy. Line extension is a strategy that involves addition of a variant in a
product differing in terms of size, colour, flavour, and so on (Kushwaha, 2012). The reason
McDonalds uses this strategy is that it makes it possible for the company to satisfy and meet the
varying consumer requirements or the market segments by catering variety of products.
Furthermore, this strategy also enables the company to capture consumers with distinguishable
paying potential. This strategy also helps the company to increase the utilization of potential and
boost up the organization’s profitability. In addition, line extension strategy enables McDonalds
to be on par with the ever-growing competition in the marketplace.
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Task 2 – Brand portfolio and hierarchy management
Brand Portfolio Strategy
The organisation in focus for understanding the concepts of brand portfolio and brand
management is Coca Cola. There are several kinds of brand strategies that include branded
house, house of brands, and hybrid strategy. Coca Cola follows the hybrid strategy. The three
different strategies are elaborated in the section below-
Branded House:
An organisation follows the branded house strategy when the organisation itself is the brand. The
main brand does not enable detraction of sub brands from the main brand. The strength of such a
brand is very high along with being memorable and recognizable (Sharp, 2016). Few examples
of branded house strategy following organisations are Google and Apple.
House of brands:
House of brands is the total opposite of branded house as it has promotes and features sub brands
instead of the corporate or company brand. They have complex hierarchies. House of brand
businesses are products for consumers or they hold companies that acquire brands such as global
or large brands with equity that has been established. Some organisations that adopt house of
brand strategies are Proctor and Gamble, Mars, Unilever, and such others.
Hybrid:
Some brand strategies can be observed as a combination of the two strategies described above.
Major brands such as Coca Cola have products that have matching names with the brand. These
companies gradually expand their portfolio for including other products. These products may be
associated with the key brand but operate as distinct brands.
Hierarchy Management of Brands
Brand management hierarchy can be considered as a means of representing a shorter version of
the branding strategy by presenting the nature and number of distinctive and common elements
of the brand across the products of the particular firm. It reveals the explicit ordering of the
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elements of a brand. The several kinds of brand hierarchy are related to corporate brand, range
brand, individual brand, and modifier (Heding et al., 2015). Coca Cola can be considered as a
corporate brand since their brand name is mostly present on their packages or products. The
brand name is utilised in more than one category of product and sometimes they may be
displayed and offered by the name of the sub brand. For instance, Coca Cola has a range of
products that may be associated with the name of the sub brand. They may be offered under the
name of the key brand.
The rest of the brand hierarchies are applicable for brands that offer products under the brand
name or offer only one product and line, and such other categories. Examples of range brand are
Johnson and Johnson that have a wide range of products under the same brand name. Procter and
Gamble can be considered as an individual brand that has various products with different names
such as Rejoice and Pantene. Modifier approach is used for products regardless of their brand
hierarchy types in cases of innovation and different lines of products. The brand hierarchies are
applied according to the number of services and products offered by the organisation.
Brand equity strategies
The brand equity can be considered as the value of a successful brand name where the owner has
the ability of generating revenue according to the recognition of the brand. Various brand equity
strategies are used to evaluate the value of a brand. One such strategy is the Keller’s brand equity
model that can determine ways to strengthen the name of the brand. There are four phases of the
model that are related to the brand identity, brand meaning, brand response, and brand resonance
(Keller, 2013). These phases can be applied for Coca Cola to increase the value of their brand.
The phases will be briefly discussed in the section below-
Phase 1 – Brand identity
In the first phase, it is essential to create awareness for the concerned brand for ensuring they
stand out amongst the other brands in the same market. The brand requires its customers to
recognise it. For applying it is necessary to research the various segments of the market along
with the different requirements and relationships with the brand (Stobart, 2016). Coca Cola has a
unique selling proposition that helps it to stand out amongst its competitors.
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Phase 2 – Brand meaning
Two steps in this phase are related to imagery and performance. Performance determines if the
product is meeting the requirements of the customer whereas imagery determines if the product
is meeting the requirements on a psychological and social level. In order to track these steps the
gaps can be identified between the past and present performance that can enhance the future
performance.
Phase 3 – Brand response
The response of the customers can be categorised into feelings and judgements as they are the
basic steps of this particular phase. The judgements on a product are based on credibility, quality,
superiority, and consideration of a product. The product can be improved on the judgement
received by the target audience.
Phase 4 – Brand resonance
Brand resonance has its place on the top of the pyramid since it is one of the most difficult
phases to achieve. Brand resonance can be achieved when customers can connect with the
products on a psychological and deep level.
Figure 1: Keller’s Brand Equity model
(Source: ResearchGate, 2019)
M3
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There are advantages and disadvantages of each brand strategy that are determined in the section
below:
Branded House:
There are several benefits of the branded house strategy that include high visibility and strong
reputation that requires appropriate nurturing. Brand strength is easily attainable through a
branded house strategy. The labour resources and financial channels focus only on one brand.
The disadvantages of this strategy are the overall brand suffers when one service or product
undergoes a crisis. Negative situations for one product can affect the entire brand.
House of brands:
House of brands is the most beneficial for consumer brands and it is not suitable for a standard
company. Liability structures and particular funding plans along with complex requirements for
licensing make house of brands a beneficial strategy. They make it easier to mitigate legal or
financial risks (Batey, 2015). Disadvantages are their resources are spread over many brands for
promotion and marketing purposes.
Hybrid:
Hybrid strategy happens organically. They start with one product and move on to expand the
range of their products. They have the potential for expansion. When a new product is offered by
the organization, it is better to have a sub brand for maintaining standard of the key brand. Some
disadvantages are higher costs of marketing for each new sub brand.
Task 3 – Brand extension and leverage
Strengths of the brand that can be leveraged
Coca-Cola utilises both line extension and brand extension strategy. The strengths of line
extension strategy that can be leverages is that the company would be able to meet and satisfy
the differing requirements of the consumers in the market by providing wide range of products
and services. Furthermore, it makes it possible for the company to meet the requirements of
variety as well as capture clients having different capacity of paying for the products and
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services. It also helps Coca-Cola to increase the utilization capacity significantly and enables the
company to increase the profit margins in an effective manner. Line extension strategy also helps
the company in capturing ledge space and assists the company to compete effectively, as the
competition keeps on growing at an exponential rate (Hanna and Rowley, 2011).
Furthermore, the company also emphasizes on utilising the brand extension strategy. The use of
this strategy makes it feasible for Coca-Cola to lower the cost of launching the new product, as
the product is manufactured on the brand existing. It also enables the company to speed up the
acceptance of the new product, as this strategy reduces the risks perceived by the consumers. The
use of this strategy also allows the company to mitigate the time required in order to manufacture
new products and services, as the company is able to leverage or integrate the characteristics of
the existing brand in the new product effectively (Santos-Vijande et al., 2013). Moreover, brand
extension strategy also makes it possible for the organization to increase the margins of profit, as
it helps the company to acquire access to wide range of channels through mitigation of the risks
perceived by the consumers within the market. With the utilization of this strategy, the
organization is able to expand the market size in an effective manner and the company could
easily access the market in order to serve the further sub segments of the market with new
products and services. At last, adoption of this strategy enables the organization to improve the
parent’s brand image by relating it to the new or emerging product’s features.
Weaknesses that may need attention providing some possible suggestions
While implementing the brand management strategies, it is necessary for the organization to
consider certain weaknesses. It could be possible that the product launched might fail to add
value to the brand. Furthermore, it is necessary for the company to identify the fit before
launching the product. The product might also fail to carry the association of the parent brand.
Thus, it is important for the company to evaluate the exact needs of market and the appropriate
integrate the parent brands characteristics within the new product. Furthermore, it is of
significance for the organizations to pay close attention to the new product manufactured and
check if any sort of defect is there or not.
Collaborative and partnership agreements
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Collaborative and partnership agreements refer to the actions and agreements made by
organizations to share goals and resources. The organization and the partnership will mutually
achieve the goals by sharing finances, resources, people and knowledge. Collaborative
partnership benefits both the parties. Collaborative and partnership agreements develop between
two parties to benefit each other and drive sustainable development. A legal partnership refers to
a contractual relationship, which involves coordination between the two parties or more
involved. They have joint and specified rights and responsibilities. The performance of the tasks
by each party will benefit the other member in the partnership. All the members involved in the
partnership have to bear the same level of rewards and risks. Collaborative partnership involves a
memorandum of understanding (MoU) which mentions all the ground rules for the partnership. It
contains the details of the initiatives and projects undertaken by the members involved. It
involves the costs and risks which the parties have to bear and the benefits earned by the
company (Kim and Darnall, 2016).
Coca-Cola has collaborated and undertaken partnership agreements to curb their emissions and
reduce their carbon footprints. It collaborated with the Climate Protection department to reduce
the emissions of carbon dioxide and other greenhouse gases. It has collaborated with United
Nations’ Conference of the Parties (COP) to protect the climate. Several initiatives were taken by
both the parties to reduce the carbon footprint and drive the organization towards a sustainable
development. Innovation in the supply chain was made and various changes in packaging and
manufacturing of the products took place. There are several benefits of the collaborative and
partnership agreements. It paves a way for the brand to build a strong brand image and provides
a cost effective marketing method. The collaboration of Coca-Cola has increased the sales and
revenue of the brand as they addressed environmental issues and fostered positive awareness
among its consumers (coca-cola company, 2019).
M4
The line extension enables an organization to introduce new products in terms of different
package size, shape, flavour, colour, and so on. The companies having the objective to meet and
satisfy the distinguishable requirements of the customers within the market by delivering wide
range of products apply this strategy. Brand extension is about introducing any new product or
service in an entirely different category (Albrecht et al., 2013).
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