Brand Management: Nestle's Branding Strategies and Brand Equity

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BRAND MANAGEMENT

Table of Contents
INTRODUCTION........................................................................................................................3
ACTIVITY 1................................................................................................................................ 4
P1 An explanation of the importance of branding as a marketing tool, why and how it has
emerged in business practice...............................................................................................4
M1 Evaluating brands are managed successfully over time using appropriate theories,
models and concepts............................................................................................................7
P2 Analysis of the key components of a successful brand strategy for building and
managing brand equity........................................................................................................ 8
M2 Provide appropriate and validated examples within an organisational context..........10
P3 An analysis of different strategies of portfolio management, brand hierarchy and brand
equity management........................................................................................................... 12
M3 Critical analysis of the portfolio management, brand hierarchies and brand equity
using appropriate theories, models and frameworks.........................................................15
ACTIVITY 2.............................................................................................................................. 18
P4 Evaluate how brands are managed collaboratively and in partnership both at a
domestic and global level...................................................................................................18
M4 Critically evaluates the use of different techniques used to leverage and extend
brands................................................................................................................................ 20
P5 Evaluate different types of techniques for measuring and managing brand value using
specific organisational examples........................................................................................23
M5 Critically evaluate the application of techniques for measuring and managing brand
value in relation to developing a strong and enduring brand............................................25
CONCLUSION.......................................................................................................................... 26
REFERENCES........................................................................................................................... 27
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Table of Figures
Figure 1 Nestlé brands............................................................................................................. 5
Figure 2 house brand model of Nestle...................................................................................12
Figure 3 brand pyramid..........................................................................................................13
Figure 4 Nestlé’s Portfolio......................................................................................................16
Figure 5 Brand value of Nestle............................................................................................... 25
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INTRODUCTION
Brand management is referred to the process of developing an association between the
product or a company and emotional perception of the customers so as to build the loyalty.
It includes analysing as well as outlining the brand to increase the perceived value of
products and services to a large target audience (Keller et al., 2011). The brand
management is essential for the company in today’s world as the consumers make the
decision for purchase of product and services on the basis of branding reputation of the
company (Hanna and Rowley, 2011). The assignment takes into account the scenario where
a business report is prepared for the company Nestle by the Brand Management Analyst of
leading consultancy Beloved Brands.
This business report includes the demonstration in order to understand the process of
building a brand and its management over time. It depicts the arrangement of brands in
portfolios and also the development and management of brand hierarchies. The extension
or leverage of the brand over the time at the international or domestic level is portrayed in
this business report. At last, it assesses different techniques to measure as well as manage
the value of brand over the time.
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ACTIVITY 1
P1 An explanation of the importance of branding as a marketing tool, why
and how it has emerged in business practice
BRAND
The brand is the concept that defines the overall experience of the customers which
distinguishes one product or organization from others in the eyes of the customer. Many
organizations prefer to enhance their market position by practising branding (Balmer, 2012).
It is a specific term that includes sign, name, symbol, design or combination with the aim to
identify products or services of a particular seller. Kotler and Amstrong stated that a brand is
a name, symbol, terms, sign and design or arrangement of all these that identifies the
organization of products or services.
BRAND IMPORTANCE AS MARKETING TOOL
Branding is a set of marketing as well as communication methods which aims to distinguish
the company and its products from its competitors and create lasting impression in the
customers’ minds. The branding is important of not only large scale organizations but also
small scale organizations as it increases the value of the company, helps in acquiring the
customers and also provides employees with direction and motivation (Guzmán and Becker-
Olsen, 2017). The brand of the company represents the perception of the people towards
the customer service, advertising, logo and reputation.
It personifies the products and services of the company such as Nestlé and also used a
marketing tool to create an effective image. The loyalty and trust of the customers can be
gained and enhanced through branding (Vander Schee et al., 2011). The product is
advertised and promoted through marketing so as to make their competitive position over
the competitors.
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Figure 1 Nestlé brands
Source: Nestle, 2018
Brand helps in effectively managing the communication and marketing of the products and
services. The brands of Nestle includes Optifast, Maggi, Dessert Solutions, KitKat, Nido,
Mackintosh's Quality Street, Smarties, coffee mate, Nesquik, cookie crisp, and so on.
Branding helps in getting the word-of-the-mouth referrals which increase the recognition
and creates trusts among the consumers (Douglas and Craig, 2013).
DIFFERENCE BETWEEN PRODUCT AND BRAND
The essential feature to remain competitive in the market is the products and services of the
organization. A product includes the goods or services or both which is made available by
the company to serve their customers or consumers (Stobart, 2016). The brand represents
the reflection of the organization to its customers. For example, the products produced and
sold by Nestle are food and beverages and its umbrella brand is Nestle. Each product of
nestling that are milk, juices, bottled water, baby food, coffee, chocolates and food has its
own specific brand name to distinguish the different product lines (Vander Schee et al.,
2011).
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BRAND EQUITY
Brand equity is referred to the value premium which is generated by the company from its
products with a recognisable name as compared to a generic corresponding. The basic
components of brand equity are the perception of the consumer, negative or positive
effects and its resulting value. The importance of brand equity is considered by nestle
management in this competitive market (Heding et al., 2015). The brand is designed and
maintained by nestling in its ultimate marketing strategy through proper promotions and
advertisement.
Nestle uses the topmost branding strategy in order to meet the demand of potential
customers (Laroche et al., 2012). The role of nestle brands is to meet the customer
satisfaction at all the level as believed by Nestle. CBBE model is significant in order to equate
the customer-centric approaches of the entities (Kim et al., 2012). The corporate value of
Nestle appeals the consumers to buy the products of Nestlé with full consent. The specific
needs of the customers are satisfied by each product line of Nestlé and the nestle’ market is
based on the consumers who need quality products without compromising on price.
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M1 Evaluating brands are managed successfully over time using
appropriate theories, models and concepts
Brand management is essential for the organization as it includes all the facets such as
design, marketing, placement, advertising and distribution in order to nurture to identify
and develop a brand personality. It is a process to identify the core value of a particular
brand and also reflect the same among the targeted customers (Mount and Martinez,
2014). The process includes the first step which it identifying and establishing the brand
positioning. The offer an image of the company is designed in such a way it is occupies the
distinct value and place in the mind of target consumers (Matzler et al., 2013).
For example, Uber has pioneered the market through their ride-share applications. The
entity was started with just black executive Lincoln town cars with the jet black branding
and sleek logo. The entity introduced ore diversified products such as Uberpool and Uberx
to call for a ride and get picked up for few dollars (Strebinger, 2014).
The second step is to plan and implement the brand marketing programs. It involves
through implementing above-the-line and below-the-line strategies and other media
vehicles to reach to end customers. The third step includes measuring and interpreting the
brand performance (Strebinger, 2014). Brand audits are conducted on a periodic basis to
analyse the brands and its performance within the respective industry. The last step
includes the growing and sustaining brand equity. The brand strategy must be defined to
manage the brand equity over time and over market segments, geographical boundaries
and culture (Strebinger, 2014).
Another example is of Airbnb which is a trusted community marketplace for the visitors to
list, find and book distinct accommodations for their unique travel experiences. It has
challenged the hotel industry by redefining the customer experiences totally (Jit Singh Mann
and Kaur, 2013). Virgin America offered new planes, top-notch services, attractive fares and
varied amenities to reinvent the domestic air travel and offer unique, painless travelling
experience.
Apple is the most successful brand in the telecommunication industry as the company
selected one-size-fits-all strategy by designing iPhones identically regardless of the region.
The minimalists and intuitive approach is adopted and limits the standardisation needs (Jit
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Singh Mann and Kaur, 2013). The content and customer service protocol is tailored,
translated and localised for international audiences regardless of location.
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P2 Analysis of the key components of a successful brand strategy for
building and managing brand equity
The marketing team of Nestlé wants their brand to be the foremost in the mindset of
consumers while in their decision-making in relation to their brand category. The brand
equity concept originated to measure the financial worth of significant and intangible entity
(Huang and Sarigöllü, 2014). The successful brand strategy includes the selection of brand
elements to continuously maintain distinct features such as adaptability, Transferability,
memorability, protect-ability, meaningfulness and appeal by incorporating across
communication platforms (Valette-Florence et al., 2011).
According to David Aaker, the five key components to build and manage the brand equity
are:
BRAND LOYALTY: it reflects the attachment of the customers towards in comparison with
other competitive brands in terms of quality, price and repetitive purchase (Mourad et al.,
2011). This reduces the cost of marketing thereby increasing the profit, leveraging the trade
and opportunities to attract new customers.
BRAND AWARENESS: it is essential to establish awareness by making consumer know about
the products and services nestle company offers this will helps the consumers in recalling
and recognising the brand (Mourad et al., 2011). Different branding strategies can be used
to create familiarity-liking, and also signalling the commitment by making the brand worthy
for consumers.
BRAND ASSOCIATION: clear communication is essential to build brand equity with the
target customer of nestle. It helps the consumer in identifying the core product and services
offered to meet the needs of the customers (Da Silveira et al., 2013). Nestle offers the
products which are customer-centric and can be consumed by any end users. It is essential
for nestle to understand that the strength of brand association to consumers determines
the positivity and favourableness in their minds.
PERCEIVED BRAND QUALITY: it strongly links to ‘reason-to-buy’ as it defines the perception
of the customers about the overall brand quality. It contributes to building trust as well as
sustainable brand equity. The judgment of the consumer regarding the quality may vary and
can be assessed with the offerings of a competitor (Da Silveira et al., 2013). The pricing
decisions are also influenced by the quality perceptions.
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PROPRIETARY ASSETS: patents, trademarks and channel relationships are included in
proprietary assets (Da Silveira et al., 2013). These assets are very useful for companies such
as nestle which protect them from competitors and prevent the loss of competitive
advantages as well as customer base.
BRAND REVITALISATION AND REINFORCEMENT
Nestle focus on maintaining the brand equity by reminding the customers about the brand
and its long-lasting benefits under brand reinforcement. The brand revitalisation is the
marketing strategy which is adopted by the company after the maturity stage of the product
life cycle and a drastic decline in profits (Payaud, 2014). For example, the Mountain dew was
launched in 1969 by Pepsi Company and flourished until its sale declined. Then the product
was re-positioned with a change in packaging and tagline to bring back to competition in the
beverage industry.
CHALLENGES FACED DURING BRANDING
Change in market condition raises challenges for the company which is to be managed
under brand development. For Nestle, new products in food and beverages such as
chocolates, juices and other food products must be provided in order to gain the trust and
loyalty of the customer towards the product (Payaud, 2014). New products are essential for
Nestle to gain competitors advantage in the market.
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M2 Provide appropriate and validated examples within an organisational
context
Brand equity is defined to the portion of a value of the company attributable to its brand.
For example, the brand value of Apple is about 30 per cent of the market capital or
company value. In case of occurrence of a trademark dispute, Apple may lose its half of the
value overnight and could no longer use logo, website, domains or similar graphics (Laroche
et al., 2012). Apple is high brand equity due to its innovation and production of world-class
products with its talents and technology (Mount and Martinez, 2014). The brand equity of
the company such as Apple is built through the positive experiences of the people with their
products, customers’ service or relationships and word-of-mouth and then associate to
unique graphics as well as brand names.
Another example is of Nike which has sold the lifestyle and developed a loyal customer base
to inspire their customer. The slogan ‘Just Do It’ pushed the company forwards by allowing
the consumers to feel a personal connection to the brand. Advertising messages are
continuously developed to drive customer loyalty through the use of inspiration and
heroism common theme.
Likewise, Adidas focused on sports by constantly targeting and branding to build solid brand
equity in its category. Coca-cola uses emotional branding strategy in Keller model while
Pepsi considers brand identity strategy in Keller model (Stobart, 2016). Starbucks is also
another popular brand coffee house which is present in about 63 countries and combatted
the dislike for coffee with coffee-free drinks whereas adaptable seating arrangements were
made to cater large group in Asia (Guzmán and Becker-Olsen, 2017).
Also, Lacoste has strong brand equity wherein the premium prices are accepted as well as
expected by its customers. The product lines can be expanded through the brand equity and
increase the sales and revenue in some organization while reducing costs and expenditure
in other organizations (Guzmán and Becker-Olsen, 2017).
Another example is of Unilever Ltd which focuses on their more than 18 biggest brands
without put them into confined functional boxes. They launched Dove, a bar soap brand
which grew over three billion in 2011 (Keller et al., 2011). The successful growth of the Dove
was its campaign for real beauty which is not based on the young and model thin body with
excessive make-up. Their extension strategy was to influence attributed heritage of the
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