Page 220 - Design for Six Sigma for Service (Six SIGMA Operational Methods)

Brand Development and Brand Strategy 189

McDonald’s offer much better food than Burger King? Is Starbuck’s much
better than Caribou Coffee in terms of the coffee it offers? Probably not.
The difference between the top brand and second-tier brands is mostly psy-
chological. Research in psychology has shown that the name recognition
alone can result in more positive feelings toward nearly everything, whether
it is music, people, words, or brands. In a study, respondents were asked to
taste each of three samples of peanut butter. One of these samples contained
an unnamed superior (preferred in blind tests 70 percent of the time) peanut
butter. Another contained an inferior (not preferred in taste test) peanut
butter labeled with a brand name known to the respondents but neither
purchased nor used by them before. Surprisingly, 73 percent of respondents
selected the brand name (inferior) option as being the best-tasting peanut
butter. This test result clearly shows the power of brand-name recognition.
A mere name recognition will make people feel an inferior peanut butter
tastes better than an actually better-tasting peanut butter. From this example,
we can see clearly that consumers’ psychology plays a very important role
in brand-name strength. Davis (2000) calls this consumer psychological
reaction to brand names PATH; it is the acronym for promise, acceptance,
trust, and hope. A strong brand makes the intangible feelings of promise,
acceptance, trust, and hope tangible.

The benefits from strong brands are numerous; Davis (2000) listed the
following benefits:
1. Seventy-two percent of customers say that they will pay a 20 percent
premium for their brand of choice, relative to the closest competitive
brand; 50 percent of customers will pay a 25 percent premium; 40
percent of customers will pay up to a 30 percent premium.
2. Twenty-five percent of customers state that price does not matter if
they are buying a brand that owns their loyalty.
3. Over 70 percent of customers want to use a brand to guide their purchase
decision, and over 50 percent of purchases are actually brand driven.
4. Peer recommendation influences almost 30 percent of all purchases
made today, so a good experience by one customer with your brand
may influence another’s purchase decision.
5. More than 50 percent of consumers believe a strong brand allows for
more successful new product introductions, and they are more willing to
try a new form of a preferred brand because of the implied endorsement.
These benefits clearly indicate that strong brands do create tremendous
values for the companies who own them, so the making of strong brands
should be an integral part of product development strategy. The making of a
strong brand, usually called brand development, is a very elaborate process;