This last example draws attention to the importance of entry barriers in sound brand management: offering a full portfolio of brands helps the Coca-Cola Company extend its dominance, outlet by outlet. The bar owners and restaurant operating companies are satisfied: they can offer their clients a full range of famous soft drink brands, and in addition they often receive bonuses from Coca-Cola for providing full exclusivity to the whole Coca-Cola portfolio. (This was the source of lawsuits in Europe by the other soft drink companies.)
By focusing exclusively on the consumer’s psychology, brand analysis has overlooked the crucial role of the management of the offer itself, which can make it impossible for competitors to enter on the market. This is one of the key questions in the analysis of the financial value of a brand, of the present value of its future profits. The impenetrability of the market is the best warranty for the latter, and the example of Black & Decker is quite revealing.
Why are there hardly any DOBs in the drilling machine market? Because Black & Decker makes it economically impossible for them to enter the market. DOBs sprout up when one or more of the following conditions are fulfilled:
Much to the contrary, the market for drills is small, and moreover is cut up into many segments. Black & Decker drives the market and makes it develop at a fast technological pace. In addition, Black & Decker has globalised its production: each plant produces one single product for the worldwide market. The production cost level thus becomes unbeatable, and as Black & Decker is not overkeen to increase its retail price, it does not leave much room for copycats to manoeuvre. Lastly, the customer feels safe when buying such a well-known and ubiquitous brand. What are the main sources of entry barriers?
The brand must defend its exclusive image against counterfeit products, models or signs. It should not hesitate to defend the exclusive character of its distinctive signs against imitations and distributors’ copycat brands. The latter, under the pretence that these are signs of the category, actually try to make their brands benefit from the value of signs developed by the leading brand.
The imitations of Coca-Cola try to get as close as possible to the red that Coca-Cola has with time associated with its quality. Beyond the deliberate sought-after confusion, which leads the customer, if he or she is not careful, to mistake the copy for the original, the similarity between the signs induces a perception of equivalence (Kapferer, 1995).
Just as Dior, Chanel and Cartier invest heavily in lawsuits against counterfeiter networks, the brands must sue imitators or, at least, state to them that they will tolerate no imitations or copying. From this point of view, the brands which from the start chose non-descriptive signs withstand the test of time and imitation better. The Orangina label is blue: it is not a generic colour and protects this orangeflavoured soft drink brand well.
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Strategic Brand Management Tutorial
Brand Equity In Question
Strategic Implications Of Branding
Brand And Business Building
From Private Labels To Store Brands
Brand Diversity: The Types Of Brands
The New Rules Of Brand Management
Brand Identity And Positioning
Launching The Brand
The Challenge Of Growth In Mature Markets
Sustaining A Brand Long Term
Adapting To The Market: Identity And Change
Growth Through Brand Extensions
Handling Name Changes And Brand Transfers
Brand Turnaround And Rejuvenation
Managing Global Brands
Financial Valuation And Accounting For Brands
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