Learning Objectives:
- What factors cause companies to reposition brands?
- What is the relationship between brand identity and brand image?
- How to effectively segment market with the same brand?
- Good/bad rebranding - Example.
1. What factors cause companies to reposition brands?
Each company should have a comprehensive understanding of its internal and external business environment, especially, relevant factors that could lead the company to difficult situations.
There are four factors considered in determining the reasons for brand repositioning:
- Environmental factor: political changes, economic fluctuation, globalisation
- Competitor factor: new strong brands
- Consumer factor: changing in taste/ preferences
- Internal factor: change in company’s strategic direction/ establish new business/ acquire new technology/sciences/ current strategy is no longer adaptable, appropriate/ Product range itself has a bad image and needs development.
2. What is the relationship between brand identity and brand image?
Brand identity is the unique set of brand associations that represents what the brand stands for and promises to customers.
In other words, brand identity encompasses of verbal and non-verbal (visual) elements that the company creates as a promise to its customers. On the other hand, these elements together identify and differentiate the brand from its competitors in the consumer’s mind.
Brand image expresses the perception of the marketplace about company’s products or services. The company’s brand image interprets a sum of attitudes that customers have and the feelings that come to mind when they think about your brand.
Comparison between Brand Identity and Brand Image:
Example: McDonald's
Brand image in my point of view: unhealthy, obesity, unfriendly, time-saving, affordable price.
3. How to effectively segment market with the same brand?
Segmentation of the market based basically on four essential aspects:
- DEMOGRAPHIC (age, gender, income, education level, interest..)
- BEHAVIOURAL (attitude, belief, opinion towards products and services)
- GEOGRAPHIC (region, climate type)
- PSYCHOGRAPHIC (lifestyle)
4. Good/bad rebranding - Example
What is a good brand repositioning?
- Obtain a comprehensive understanding of the market ( competitor, consumer, product)
- New repositioned brand should be able to un-teach its existing customers so that the customers will forget an old brand and believe and accept a new brand. On the other hand, the repositioned brand should create a new target customer group on the market. For examples, P&G -deodorant tried their first time on the new generation target group - the young school kids. A “strong brands must constantly renew themselves, making themselves relevant for each new generation of customers” (David Aaker, 1993)
LEGO
In between 2004 and 2010 the LEGO’s group got through its historical seven-year rebranding process and became the world’s most powerful brands in 2015 (Brand Finance, 2015). A rebranding process of LEGO’s group is a good example to understand why a company has to reposition its brand on the market place, what factors cause a company to redefine its brand and a corporation’s culture.
Reason - Why did the LEGO’s management decide to reposition the company’s brand?
Environmental factors:
One of the most serious problem for the toy industry at that time was a change in trend in child development. “KGOY - Kids getting older younger” which meant that children spent less time on playing conventional games and thinking these games as boring and being more interested in computer games. The variety of online and offline computer games developed with up-to-date technologies made the competition much more difficult for LEGO.
Internal factors:
The company found itself in a bad financial and operational situation because it had underestimated the marketplace and overestimated its capacity.
The company focused very intensively on the external environment and adapted every new trend on the market which led the company to the hyper-adaptation stage. There were also many sub-brands on the market at the same time such as Logo Technic, Duplo and Primo and the customers were confused and also did not realised that they were all parts of LEGO’s group. This marketing strategy had a negative impact on the company’s culture as the employees were divided into separate groups and worked with different products. As a result, a brand identity was no longer consistent and customers no longer understood the message of LEGO and, therefore, the company lost its competitiveness.
Action - How did LEGO’s management deal with rebranding issue and lead the company out of its crisis?
1. Analyse and redefine a brand
LEGO started to analyse the brand and all its extensions intensively. It turned out that it was so much confusion in customers’ mind in between brands, sub-brands and product range of company (Schroeder and Salzer-Morling, 2006). LEGO talked to its stakeholders and employees to come up with ideas what the brand and the corporation’s culture was. As well as this, the company focused on getting consumer’s attitudes towards the company’s current and future product lines so that the company can offer a better retailer service to its customers. 2. Define consequences of rebranding process on the brand and organisation
LEGO defined results when repositioning a brand and investigated whether or not a rebranding process is necessary and whether or not it fits into an original company’s culture. In this action, there were new roles and responsibilities for managing the brand. 3. Change in brand architecture and focus on brand visualisation LEGO restructured a platform for toys by dividing products into four groups regarding an age group of the customer (children), which make parents easier to choose a suitable product for their children. It also meant that brands which did not fit into company’s categories were abandoned. The company also focused and improved its online market. The company developed design facilities LEGO factory.com and LEGO Digital Designer (3D construction software). The LEGO Factory is an interactive website that allows the consumers virtualise their LEGO. The main site of LEGO offers children the opportunity to choose any bricks they like and build their construction. As a result, the LEGO’s website becomes one of the ten most visited children’s websites (Dahlen, 2009) Result LEGO revived from its crisis and now become the world’s most powerful brand (2015). LEGO’s revenue increased steadily from 6,8 billion euros in 2003 to 35,8 billion euros in 2015. The successful rebranding process led to a significant increase in revenue for the company from 2010 to 2015.
Sources:
Annual Group Report, LEGO Group, 2007
Dahlen, Marketing Communications: A Brand Narrative Approach, 2009
Schroeder and Salzer-Morling, Brand culture, 2006
http://www.managementstudyguide.com/identity-vs-image.htm
http://www.brandingstrategyinsider.com/2006/08/top_reasons_to_.html#.V9aPOfmLTIU
https://aytm.com/blog/research-junction/brand-positioning-standards-and-practices-part-4/
https://www.decisionanalyst.com/whitepapers/marketsegmentation/
https://www.linkedin.com/pulse/20140518234704-16573298-brand-identity-vs-brand-image-is-there-a-difference
https://macdovsquick.wordpress.com/2013/11/20/identity-prism-mac-donalds/
http://pure.au.dk/portal-asb-student/files/36188558/Rebranding_Lego_Thesis.pdf
http://brannce.com/images/upload/global_500_2015_for_print.pdfdfina
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/11416671/How-Legos-bricks-have-built-a-stronger-brand-than-Ferraris-cars.html
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