Page 292 - Marketing Management

CREATING BRAND EQUITY | CHAPTER 9 269

6. A branding strategy identifies which brand elements a 7. Brands may expand coverage, provide protection,
firm chooses to apply across the various products it extend an image, or fulfill a variety of other roles for
sells. In a brand extension, a firm uses an established the firm. Each brand-name product must have a well-
brand name to introduce a new product. Potential ex- defined positioning to maximize coverage, minimize
tensions must be judged by how effectively they lever- overlap, and thus optimize the portfolio.
age existing brand equity to a new product, as well as 8. Customer equity is a complementary concept to
how effectively they contribute to the equity of the brand equity that reflects the sum of lifetime values of
parent brand in turn. all customers for a brand.

Applications

Marketing Debate Marketing Discussion
Are Brand Extensions Good or Bad? Brand Equity Models
Some critics vigorously denounce the practice of brand How can you relate the different models of brand equity in
extensions, because they feel that too often companies lose this chapter to each other? How are they similar? How are
focus and consumers become confused. Other experts they different? Can you construct a brand-equity model that
maintain that brand extensions are a critical growth strategy incorporates the best aspects of each model?
and source of revenue for the firm.
Take a position: Brand extensions can endanger
brands versus Brand extensions are an important
brand-growth strategy.

Marketing Excellence the doors to new product categories. Among these were
Richardson-Vicks (makers of personal care products like
Pantene, Olay, and Vicks), Norwich Eaton Pharmaceuticals
>>Procter & Gamble (makers of Pepto-Bismol), Gillette, Noxell (makers of
Noxzema), Shulton’s Old Spice, Max Factor, and the Iams
Company.
Today, P&G is one of the most skillful marketers of
consumer packaged goods in the world and holds one of
the most powerful portfolios of trusted brands. The com-
pany employs 138,000 people in more than 80 countries
worldwide and has total worldwide sales of more than
$79 billion a year. It is the leader in 15 of the 21 product
categories in which it competes, has 23 billion-dollar
global brands, spends more than $2 billion annually on
R&D, and serves more than 4 billion people in 180 differ-
ent countries. Its sustained market leadership rests on a
number of capabilities and philosophies:
• Customer knowledge. P&G studies its customers—
both end consumers and trade partners—through
Procter & Gamble (P&G) began in 1837 when brothers-in- continuous marketing research and intelligence
law William Procter and James Gamble, whose wives were gathering. It spends more than $100 million on over
sisters, formed a small candle and soap company. From 10,000 formal consumer research projects every
there, P&G innovated and launched scores of revolutionary year and generates more than 3 million consumer
products of superior quality and value, including Ivory soap contacts via its e-mail and phone center. It also
in 1882, Tide laundry detergent in 1946, Crest toothpaste emphasizes getting its marketers and researchers
with fluoride in 1955, and Pampers disposable diapers in out into the field, where they can interact with con-
1961. P&G also acquired a number of companies to open sumers and retailers in their natural environment.