Branding and Control Activities for Differentiating Generic Products A study of 30 brands’ most common activities Master’s Thesis in the Master’s Programme Entrepreneurship and Business Design ERICA DAHLGREN NURMAN Department of Technology Management and Economics Division of Entrepreneurship and Strategy CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2016 Report No. E 2016:100 MASTER’S THESIS E 2016:100 Branding and Control Activities for Differentiating Generic Products A study of 30 brands’ most common activities ERICA DAHLGREN NURMAN Tutor, Chalmers: Bowman Heiden Tutor, B&L: Joel Borg Department of Technology Management and Economics Division of Entrepreneurship and Strategy CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2016 Branding and Control Activities for Differentiating Generic Products A study of 30 brands’ most common activities ERICA DAHLGREN NURMAN © ERICA DAHLGREN NURMAN, 2016. Master’s Thesis E 2016:100 Department of Technology Management and Economics Division of Entrepreneurship and Strategy Chalmers University of Technology SE-412 96 Gothenburg, Sweden Telephone: + 46 (0)31-772 1000 Chalmers Reproservice Gothenburg, Sweden 2016 V ABSTRACT This thesis explores which branding-related activities are most commonly performed in order to differentiate generic products (or services). It also explores how control over such products (and services) is claimed. To formulate an answer, a literature review has been made, investigating how to differentiate products and intellectual property rights’ role within branding. The importance for companies to differentiate their brands increases and ways to do so are for example to build the generic product into a concept or to add attributes such as additional features, a design that’s iconic for the brand or irrelevant attributes. Brands should also incorporate intellectual property management into the creative process as all aspects in marketing can be covered by intellectual property rights, but their strength will vary. A qualitative study has been made, exploring the most common branding activities among 30 companies who all have managed to differentiate generic products (or services). Most common is to use influencers for marketing and to deviate from the product segment’s norm. The study has also investigated the companies’ intellectual property strategies and their control-related issues such as infringement. It shows that the need for control varies with product segment and that most companies solely rely on trademarks. Companies tend to protect aspects of their business that aren’t relevant when considering their main differentiating aspects. Trade dress protection has proved to be useful in case of infringement. The result from the study has been analysed in respect to theory, clarifying which aspects of a brand that are in focus when performing the most common brand activities. Companies mainly focus on establishing their brand image. This is done by evoking associations, which also affects the company’s credibility. They also focus on increasing brand awareness. There are indications on that a company’s brand in itself has stronger impact than its value proposition for attracting customers. Key words: Brand management, generic products, differentiating, commodities, controlling generic products, protecting generic products, intellectual property management and branding, brand activities, differentiation VI ACKNOWLEDGEMENTS The author would like to thank Anna Holmberg and Bowman Heiden for their help with identifying the very core of the thesis. Also a thank you to Joel Borg for providing a project that got the author to explore the interesting subject of this thesis. Lastly, the author would like to thank everyone who has contributed to the thesis by suggesting appropriate brands for the study. Erica Dahlgren Nurman 1 Table of contents 1. Introduction ..................................................................................................................................... 3 1.1 Background ............................................................................................................................... 3 1.2 Problem statement ................................................................................................................ 4 1.3 Purpose ....................................................................................................................................... 4 1.3.1 Research Questions ....................................................................................................... 4 1.3.2 Delimitations and Assumptions ............................................................................... 4 2. Methodology ..................................................................................................................................... 5 2.1 Research Process .................................................................................................................... 5 2.2 Research Strategy ................................................................................................................... 5 2.3 Research Design ...................................................................................................................... 6 2.3.1 Comparative Design ...................................................................................................... 6 2.3.2 Research Quality ............................................................................................................ 6 2.4 Data Collection ......................................................................................................................... 7 2.4.1 Theoretical Sampling ................................................................................................... 7 2.4.2 Sample Selection ............................................................................................................ 7 2.4.3 Gathering data of branding activities differentiating generic products . 8 2.4.4 Gathering data of control activities for (differentiated) generic products ........................................................................................................................................ 9 2.5 Data Analysis ......................................................................................................................... 10 2.5.1 Study ................................................................................................................................. 10 2.5.2 Comparison of gathered data and theory ......................................................... 10 3. Theory .............................................................................................................................................. 11 3.1 Brand Equity .......................................................................................................................... 11 3.1.1 Aaker’s Brand Equity Model ................................................................................... 12 3.2 Customer-Based Brand Equity ...................................................................................... 13 3.2.1 The Customer-Based Brand Equity Pyramid .................................................. 13 3.3 Competitive Advantage in a Knowledge-Based Economy ................................. 15 3.3.1 Value acquired through knowledge .................................................................... 16 3.4 Differentiating Commodities .......................................................................................... 17 3.4.1 Increased importance to differentiate ............................................................... 18 3.5 Adding attributes to differentiate products ............................................................. 19 3.5.1 Irrelevant attributes .................................................................................................. 20 3.5.2 Design attributes to establish brand identity ................................................. 21 3.6 Controlling knowledge ...................................................................................................... 22 3.6.1 Intellectual Property’s role in branding ............................................................ 22 4. Results .............................................................................................................................................. 23 4.1. Common branding activities for differentiating generic products ............... 23 4.1.1 Activities ......................................................................................................................... 25 4.1.2 Differentiating Attributes ........................................................................................ 29 4.2 Common control activities for generic products ................................................... 30 4.2.1 Control-related issues ............................................................................................... 32 4.2.2 Protection ....................................................................................................................... 32 4.2.2.1 Intellectual Property Rights ............................................................................... 32 4.2.2.2 Other Protection Strategies ................................................................................ 33 5. Analysis ........................................................................................................................................... 35 5.1 Analysis of Activities .......................................................................................................... 35 2 5.2 Analysis of Differentiating Attributes ......................................................................... 40 5.3 Analysis of Protection ........................................................................................................ 40 6. Conclusion ...................................................................................................................................... 42 6.1 Summary of thesis procedure ........................................................................................ 42 6.2 Answers to the research questions .............................................................................. 42 6.3 Risks .......................................................................................................................................... 43 7. References ...................................................................................................................................... 44 List of Figures Figure 1: Aaker's Brand Equity Model Figure 2: Customer-Based Brand Equity Model. Figure 3: Different types of economies due to knowledge-addition (and control of it). Figure 4: The six dimensions for differentiating commodities Figure 5: Multiattribute Diminishing Sensitivity. Figure 6: Framework for aligning design features with brand identity. Figure 7: Results from the study, showing which activities are most common and by which brands they are performed. Figure 8: Results showing the most common control activities, by which brands they are performed as well as their control-related issues. 3 1. Introduction This chapter provides an initial explanation of generic products’ contexts and a clarification of what the thesis aims to do. It also sets the scope for the thesis, with its delimitations and assumptions. 1.1 Background With an ever-increasing amount of products and services offered on the market, companies work hard to be perceived as better (in some way) than others (Fiske and Silverstein, 2003; Williams, 2004). Traditionally better has been equal to cheaper (Hill, McGrath and Dayal, 1998). If it’s impossible to offer the same perceived value as the competitors to a lower price though, the perceived value needs to change instead (Heiden, 2015). There are many different ways to change the perception of an offer’s value, for example by adding technological features or through innovation. Another highly efficient tool is branding. There are many definitions of what a brand is, some focusing on brand elements such as having a logotype or a name in order to separate one seller’s product from another’s (Keller, Apéria and Georgson, 2008, 4). There’s also a psychological layer to a brand and a brief description of it is that it’s the perception of something such as a company, a person or an organization (Keller, Apéria and Georgson, 2008, 5). Everyone has a brand, no matter whether it’s managed or not. The brand gives the observer an understanding (conscious or subconscious) about what it stands for, who it is for, what it represents etc. (Keller, Apéria and Georgson, 2008, 5). Branding can thus be seen as the activity of aligning people’s actual perceptions with a sought perception. The goal is for people to have a shared perception of how a certain brand is differentiated from the rest and what makes it better (in some way) than others. There are not only benefits for the company in managing their brand: It also helps customers to make decisions and create expectations on what they are about to buy (Aaker, 1992, 29). As mentioned earlier, differentiation can for example be done through innovation or by adding technological features to a product. However, if the product is a commodity and technology or functionality-related features aren’t applicable, branding becomes even more crucial: Because if the price isn’t lower and improved functionality isn’t needed, the brand can be what separates a product from another and makes it more appealing in the eyes of the consumer (Keller, Apéria and Georgson, 2008, 5). As competition becomes more fierce, companies need to control their value propositions and prevent others from tapping into their differentiating aspects (Chasser and Wolfe, 2010). Similar to the challenges in differentiating commodities, the more generic a product is, the harder it is to protect it. A technological breakthrough can for example be patented (Uspto.gov, 2014), thereby preventing others from exploiting it but how can someone prevent others from selling a pen? 4 1.2 Problem statement If offering a generic product there’s a great challenge in trying to differentiate the offer. If succeeding however, there’s possibly an even greater challenge in controlling those differentiating aspects. 1.3 Purpose The purpose of this thesis is to provide concrete examples of which activities companies most commonly perform in order to differentiate their generic products (or services). The aim is also to explore which aspects of a brand that these activities are affecting, thereby giving a suggestion on which activities and brand aspects to prioritize when trying to differentiate generic products (and services). Lastly, the purpose of the thesis is to investigate how the same companies claim control over their value propositions and how successful these strategies are. 1.3.1 Research Questions In order to fulfil the purpose of this thesis, two questions will be answered. RQ1 Which activities are most common for differentiating generic products (or services)? RQ2 What is common practice for claiming control over differentiated generic products (or services) and how well does it work? 1.3.2 Delimitations and Assumptions This thesis does not take any financial aspects of brands into consideration. This means that the studied brands’ respective brand values are not taken into account. If this had been included in the study, it is possible that other activities could have been proved to be more powerful than the most common ones. It is however assumed that the brand activities that are most commonly performed among companies that have managed to differentiate generic products are the activities with strongest effect - at least in relation to effort. The companies in the study are considered successful in their branding, for example due to their brand recall depth. The analysis is performed on the result of the study in respect to the concepts and theories presented in the literature review (and theoretical framework) only. 5 2. Methodology This chapter describes the procedure for conducting the thesis. It also describes with what perspective it has been done. Continuing, the chapter declares how a literature review has been conducted and how a qualitative, comparative study has been conducted. The execution of the study is described in more detail, including how the studied objects have been chosen and how data has been gathered and analysed. The chapter also provides a discussion on the quality of the research performed in the thesis. 2.1 Research Process While some activities have overlapped each other and been iterated, the thesis has primarily been conducted in the following order: 1. A literature review was made to establish definitions and views on concepts that are relevant for the thesis and to explore these concepts in the context of generic products becoming differentiated. The literature review was also conducted to understand what best practice is considered to be for intellectual property in relation to creative branding content. This is presented in Chapter 3. Theory. 2. As suggestions for best branding practice in the literature tend to be quite general, a comparative study of brands that have managed to differentiate generic products was conducted in order to more specifically identify which branding activities are most often performed. It was further investigated how (well) such brands manage to control their brand and business through intellectual property rights and if they use any other tools in this pursuit. This study had an inductive approach and it’s assumed that the pattern among the investigated brands, due to their similarities and the number of them, correlates with other brands (meeting the same requirements). Two elements that were found in theory (irrelevant attribute and recurring design attribute) were searched for, thus using a deductive approach. This is presented in Chapter 4. Results. 3. A comparison of the results and theory was made in order to identify differences and similarities between the two. This is presented in Chapter 5. Analysis. 4. From this, a conclusion was drawn about the most common underlying intentions with the identified branding activities. A conclusion was also drawn on the brands’ control situation and how they should use IPRs most efficiently. This is presented in Chapter 6. Conclusion. 2.2 Research Strategy This thesis includes a qualitative study, which has some quantitative elements embedded into it: The author has had an abductive approach to the thesis, with an inductive approach to the actual gathering of data, except for two phenomena (irrelevant attribute and recurring design attribute) found in theory, which 6 deductively have been searched for, lastly comparing the results with theory in the analysis. The thesis is ontologically subjective as it investigates the world of branding and intellectual property, which are institutionalized realities and therefore, in a sense, not real unless we interpret them in a certain manner. Being a mixed methods research, the thesis is epistemologically subjective in some cases, and objective in others (Bryman and Bell, 2003): The gathered data comes from virtual documents such as online magazine interviews, containing other people’s observations and interpretations and is therefore seen as subjective. An example of this is how spokespersons are considered to be influencers, which depends on the sought audience and can thus not be considered an objective statement. Also the data has been coded based on the author’s interpretations. These two aspects indicate that the study is epistemologically subjective and qualitative. The objective elements come from the fact that the coded data has been treated as elements that can be handled without need for interpretation. Once data has been coded, it has gone from being epistemologically subjective to objective and quantifiable. 2.3 Research Design 2.3.1 Comparative Design The study has a comparative design, as 30 brands have been compared to each other in order to identify the most common activities relating to branding and control. One could argue that the study also has elements of a case study, as each of the 30 brands has been investigated individually and quite thoroughly. However, it’s the comparison of the cases that gives the result, as the data has been coded and treated as epistemologically objective elements that have been counted in order to identify the most common activities among all 30 brands. 2.3.2 Research Quality In order to investigate the study’s trustworthiness, four quality aspects for qualitative research (Guba and Lincoln, 2013) are discussed below. Credibility It is important to remember that the data for the study often corresponds to the image the brands aim to establish. The study’s author has in many cases used several sources providing the same information, in order to increase the study’s credibility but the truth is owned by the brands’ founders and business partners and the message spread in articles is limited to what they tell, resulting in lower reliability. One could argue that since most data about the investigated brands is in line with their brand image, the brands’ own and their fans’ perspective is prioritized over dislikers’ views. This has unfortunately been hard to avoid, simply since most information on branding activities within a certain brand has turned out to be told by people in favour of - or at least not against - the brand. To some extent, this issue is dealt with thanks to the different nature of the two research questions, where data from the first tends to come from neutral or brand-positive sources, and the other research question to large extent is answered with epistemologically objective data (such as whereas a brand owns 7 patents or not) and data exposing the brands’ failures in protecting themselves. In that way, both positive and negative aspects of the brands are brought to light. Transferability The clear requirements and limitations for which brands that have been included in the study set the scope for the study’s transferability (which corresponds to quantitative studies’ external validity). The large amount of brands that have been explored and investigated in the study is another aspect that increases the likelihood of the study having a high transferability. Dependability As the study is based on brands that are considered strong at a certain time, and with trends and tools constantly changing, it’s unclear whether the presented results could be repeated. Although the same results may not be repeatable, considering the changing nature of branding, it is likely though that a similar study can be performed, because of its thoroughly described procedure (see 2.4 Data Collection and 2.5 Data Analysis). Conformability As the study is based on interpreting data from interviews and articles in combination with the author being alone in this pursuit, ensuring conformability (which corresponds to quantitative studies’ objectivity) has been an issue. In order to decrease this risk however, all gathered data is presented in Appendix I, together with each statement’s source(s). Instead of only presenting the number of brands performing a certain activity, the study also presents which brands are doing so, in order to simplify the process of deducing the evidence for such claim. 2.4 Data Collection 2.4.1 Theoretical Sampling Except for two cases that have been explored deductively (irrelevant attribute and recurring design attribute), data has been gathered inductively and in accordance with theoretical sampling: Starting with exploring several virtual documents (online articles) about a few different brands, certain topics proved to be recurring (see Appendix I): The content would vary between the brands but they would all affect a certain business activity, for example the launch of the brand or marketing activity. These business activities or topics set the initial scope for what content (data) to include in the study. When identifying more brands, the number of topics grew only to a small extent and the content within each topic recurred more often (some more often than others) and was thus coded together. Both research questions are answered through a comparative study of the branding and concept building activities (for RQ1) and control activities (for RQ2) of 30 firms that have managed to differentiate generic products. 2.4.2 Sample Selection The brands in the study have been selected primarily by asking people in the surrounding for suggestions (see the requirements below). This method for choosing 8 the brands have been irregular and uncontrolled, and can therefore be accused of being unscientific. The author would however argue that the unstructured way of choosing the brands for the study in itself is what makes it trustworthy and what gives the brands their right to be included: The fact that the brands have been recalled and suggested by people in varying context, without any specific brand cues (other than the requirements mentioned below), speaks for the profound brand awareness depth that all these brands have established. Requirements Requirements / Limitations for the companies / brands in the study are the following: • The brands are recalled when given the following requirements. • Although the value proposition (concept) may differ, the brands’ products (or services) in themselves should have generic counterparts. The extent to which the differentiated and the generic product differ from each other may vary between the subjects in the study, depending on type of product and which segment it belongs to. • The brands’ differentiating aspects may not be patentable. • The company may not use its own heritage in its branding. This should not be mistaken for companies that brand themselves in a nostalgic way, thus creating a perception of heritage (these companies are allowed and present in the study). • The company should preferably not be established by an already well- established organization, such as an FMCG company. There is no distinct definition for what a well-established organization is however, and one could argue that founders with a well-established personal brand or an impressive entrepreneurial track record could have a similar head start as for example an FMCG company when developing a new brand. Brands that have owners who were known by the target market already before the launch of the brand, are highlighted in the study as “Spokesperson almost equal to the brand”. • The brand should offer consumer goods or services. The brands have been added to the study until the author has noticed a saturation in the brands’ activities and strategies, from where a few additional brands were added in order to be more certain that the saturation was a pattern. 2.4.3 Gathering data of branding activities differentiating generic products As stated, the brands’ activities within each topic have been identified from virtual documents such as online articles and interviews, primarily about the brands and their founders, as well as brand websites. The search-engine Google has been used for finding these sources and although not an extensive list, the following search words have been used most frequently: 9 *brand name* “success story” *founder’s name* “success story” *brand name* branding *brand name* “branding strategy” *brand name* marketing *brand name* “marketing strategy” *brand name* collaboration *brand name* launch *brand name* retailers *brand name* history In some cases, Swedish search words have been used. The results are presented in sub-chapter 4.1 Common branding activities for differentiating generic products. 2.4.4 Gathering data of control activities for (differentiated) generic products Control activities and their success are explored through a comparison of how the 30 studied brands manage control of their brands and products (or services), which problems they have encountered (and why) and litigation cases. The search engine Google has been used for finding these sources and although not an extensive list, the following search words have been used most frequently: *brand name* counterfeit *brand name* litigation *brand name* lawsuit *brand name* fake *brand name* copy *brand name* infringement To map out the brands’ registered trademarks (including trade dress), the Trademark Electronic Search System (TESS) - a search engine provided by the United States Patent and Trademark Office (USPTO) - has been used. More specifically, the Basic Word Mark Search has been used. The search has been limited to live registrations. The brand name was inserted as the Search Term and the searches have been limited to only show hits where the company name could be found as the trademark owner. In cases where no hits were found, the search has been changed to show hits no matter where the brand or company name is to be found. In some cases, the search has been made to identify trademarks owned by a founder instead of a brand or company name. In one case, where no trademark could be found, the Danish Patent and Trademark Office’s online tool PVSOnline has been used. To find utility patents and design patents, the search engine Google Patents has been used. The searches have been limited to show hits where the brand or company name (or in some cases the founder) is the assignee of the patent. 10 The control activities that don’t include intellectual property rights (found under “Other control activities” were identified in the data gathering for RQ1. The results are presented in sub-chapter 4.2 Common control activities for generic products. 2.5 Data Analysis 2.5.1 Study The gathered data has been inserted into a spreadsheet, with the relevant data put under the most appropriate topic. When analysing data, which in this study equals to identifying recurring activities among brands, this has initially been done one topic at a time, comparing data from one brand with data of the others. As a second step, activities under other topics have in some cases coincided with activities primarily identified under other topics, and have thus been added. 2.5.2 Comparison of gathered data and theory Similarly, each identified common branding activity has then been evaluated in the light of theory. The result of this is presented in Chapter 5. Analysis. As a second step, patterns have been highlighted, presented in Chapter 6. Conclusion. 11 3. Theory This chapter starts with explaining important concepts for the thesis and gives an understanding for a brand’s different aspects, competitive advantage in relation to brands and an introduction to intellectual property rights. It also moves further into the branding and protection context specifically for generic products and explains how control and differentiation are suggested to be achieved. 3.1 Brand Equity Though there are different ways to measure it, Brand Equity can be seen as the difference between the outcomes of marketing a product with versus without a brand. (Keller, Apéria and Georgson, 2008, 42). Brand equity is positive when a branded product becomes superior (on some level) compared to its unbranded counterpart. The opposite, where the brand has a negative effect on the perception of the product, is called negative brand equity (Keller, Apéria and Georgson, 2008, 54). Aaker argues (1992, 56) it’s important to manage brand equity since assets have the potential to generate long-term profitability, as opposed to focusing on short-term profitability, which used to be the case for many businesses, aiming for good economic results on a quarterly basis. In a study about which assets are considered most important for a business’ success, many of them were related to brand equity (Aaker, 1992, 56). Moreover, brand equity gives an alternative to compete with low price (Aaker, 1992, 57; Keller, Apéria and Georgson, 2008, 54). 12 3.1.1 Aaker’s Brand Equity Model Figure 9: Aaker's Brand Equity Model (Aaker, 1992, 28). The reasoning behind Aaker’s view on Brand Equity is that it generates value to the customer, which in turn generates value to the firm. Most importantly, this process is iterative, generating greater value to the firm as its fan base increases. According to Aaker (1992, 28) brand equity is built of five parts: Loyalty, Awareness, (Perceived) Quality, Associations, and Other Proprietary Assets. Having loyal customers is profitable, as they require less investment than gaining new customers. An additional benefit is that they through word-of-mouth can lead new customers to the brand (Aaker, 1992, 28-29). Awareness is related to the likelihood of a brand coming to mind and being considered as an option and is deemed to be one of the most important assets for an organization (Aaker, 1992, 30; Aaker, 1992, 56). Perceived Quality, which has the potential to give a customer an incentive to buy, is according to some studies the most important asset for an organization and is affected by aspects such as a brand offer’s pricing, functions and positioning (Aaker, 1992, 29-30). Brand associations help the customer to understand what the brand is about and develop 13 emotions for its (perceived) meaning. These associations can stem from any of the brand touch-points; from attributes on the product to the country where it’s produced (Aaker, 1992, 31). Lastly, Other Proprietary Assets aim to give the company a competitive advantage in such way that it gets more exposure or better control over its assets (for example through intellectual property rights). It is argued that this last aspect of brand equity has less importance and functions as a complement to the other four cornerstones (Aaker, 1992, 28). 3.2 Customer-Based Brand Equity Chasser and Wolfe (2010) suggest using the term Brand Value in order to describe the financial aspects of a brand, while the customer-experience aspects are often described as Customer-Based Brand Equity, shortened: CBBE (Keller, Apéria and Georgson, 2008, 54). CBBE constitutes of three parts: In order to have brand equity, the consumer must (re)act differently to a branded product than if it didn’t have a brand. This difference should stem from the consumer’s view on the brand, whether it’s gained from experience or attention. Lastly, the different consumer behaviour gained through brand equity is concerning behaviour as a result of (some kind of) marketing (Keller, Apéria and Georgson, 2008, 54). As an example, opening a lid differently due to a brand labels’ position on a container (granted that this doesn’t affect the perception of the product or generate any associations), is not a different behaviour that is a result of brand equity, as this different behaviour is based on functionality and not the marketing efforts of the brand. 3.2.1 The Customer-Based Brand Equity Pyramid In order to improve a brand’s Customer-Based Brand Equity, a framework has been developed consisting of a pyramid divided into six blocks (Keller, Apéria and Georgson, 2008, 66). The framework also highlights the importance for a brand to speak to the consumer’s heart as well as providing an offer that lives up to the consumer’s actual requirements (Keller, Apéria and Georgson, 2008, 84-85). Figure 10: Customer-Based Brand Equity Model (Keller, Apéria and Georgson, 2008, 66). 14 Brand Identity: Salience Starting at the bottom of the pyramid, the initial aim is to increase brand awareness. Brand awareness is the term for valuating how easily a brand comes to mind by the consumers. For depth, the lowest level of brand awareness is called Brand Recognition and occurs when a brand is recognized while it’s exposed in some sort of way, for example if its logotype is shown. The deeper level of brand awareness is called Brand Recall and requires that someone is able to suggest a certain brand when being given a cue or requirement, for example a type of product. Depending on the shopping situation, the importance of brand recall versus brand recognition can vary. A brand can also have varying scenarios in which they can be recalled or considered as an option to be used. This is called brand awareness breadth and increases with the number of contexts in which a brand is considered. The breadth can be limited by how the brand defines its products (Keller, Apéria and Georgson, 2008, 60, 68). For example, if defining a product as a sandwich spread, the only time this product might be recalled is when planning to eat a sandwich, such as for breakfast or a snack. Although the product could be used for a rich sauce, as dip or a gratin, it is not recalled when given such cues. Brand Meaning: Performance & Imagery The second pyramid level is divided into two blocks: Performance and Imagery. Both aim to distinguish what should set a certain brand apart from others and to establish associations (Keller, Apéria and Georgson, 2008, 66). Performance refers to the products’ actual attributes and functionality and how well it corresponds to the customer’s wishes and requirements. This also covers pricing point and aesthetics (Keller, Apéria and Georgson, 2008, 71-72). Brand Imagery is the brand’s more subconscious or underlying perception of the brand: A sense of who the brands customers are, in what context it’s bought and used, what values it has and how it’s positioned (Keller, Apéria and Georgson, 2008, 72- 74). In order to establish positive consumer-based brand equity, a brand needs to have a positive brand image. This doesn’t mean that a brand must express a positive message: The central part is to evoke associations that the target audience finds to be strong, favourable and unique. (Keller, Apéria and Georgson, 2008, 62) If being successful in this pursuit, it generally means that the associations reflect how the consumer wants to be perceived (Keller, Apéria and Georgson, 2008, 74). A brand’s ability to deliver these associations isn’t limited to traditional marketing in any way. Instead, it can consist of product-related attributes, such as a certain packaging, non- product-related attributes, such as to who the brand aims its offers, and benefits, which constitutes of everything that the consumer considers the brand to fulfil on an emotional level (Keller, Apéria and Georgson, 2008, 63-64). By making the “right” associations come to mind, the brand helps the consumer to form an understanding for the brand’s position, as the brand image will have similarities to other brands’ image (Keller, Apéria and Georgson, 2008, 65). The connection between these brands can for example be that they all target the same audience, their products belong to the same category, or that they have the same price-level in their respective segments. 15 Brand Response: Judgements & Feelings The response level aims to evoke a reaction to the brand. (Keller, Apéria and Georgson, 2008, 66) Brand judgement aims to get the customer to form an opinion about the brand: One factor that influences the opinion concerns the brand’s quality, answering how well a brand performs on what it’s believed to deliver. Another factor is the brand’s credibility of living up to the associations it aims to evoke. A third factor, brand consideration, is connected to brand awareness breadth, with the difference that instead of focusing on in which usage settings a brand might come to mind, brand consideration deals with whether or not consumers see the brand as an option for themselves. An example would be if knowing a brand and finding it credible, but not being interested in what it offers, thereby not considering it. One last factor to get the customer to form an opinion about a brand is whether or not it’s seen as superior to its alternatives (Keller, Apéria and Georgson, 2008, 75-76). Feelings refer to how a brand (and using its offer) makes its consumer feel. With varying intensity, these emotions either bring positive feelings immediately (for example, playing a video game can be fun or exciting) or internally (for example, a certain workout regime can increase self-respect) (Keller, Apéria and Georgson, 2008, 76, 78). Brand relationships: Resonance The last building block for customer-based brand equity is to build loyalty. Resonance deals with how engaged customers are and feel in a brand. It can be expressed as intense consumption behaviour, but in such case it’s also necessary that the purchase is based on a “feel” for the brand and not only for the need of the product (buying the same toothpaste repeatedly because it’s the only brand that the local store offers, doesn’t mean that the brand has resonance). Another way of establishing resonance is if the customers of a certain brand feel a connection between each other. The strongest brand resonance is achieved when customers are seeking to engage with the brand outside of a purchase or consumption situation (Keller, Apéria and Georgson, 2008, 79-81). An example can be when a customer by own will advertises a certain brand on its social media channels or when a customer subscribes to a newsletter. 3.3 Competitive Advantage in a Knowledge-Based Economy Heiden (2015) argues that Competitive Advantage is the ability to create more economic value in comparison to competitors. This in turn, can be achieved in two ways: Either the perceived value can be increased, justifying a higher price, or the perceived value can remain constant to the competitors but with a lower price-tag. A competitive advantage for a commodity is gained by the latter strategy (Aaker, 1992, 57; Keller, Apéria and Georgson, 2008, 54), whereas the (perceived) value increase strategy calls for differentiation (Heiden, 2015). A company can create a competitive advantage from its resources, capabilities and market position. In order for a resource to function as a competitive advantage it needs to be valuable and rare. However, in order to remain a competitive advantage, it 16 also needs to be durable, meaning that it cannot expire or lose its allure even if being unlimited. Lastly, it needs to be imperfectly imitable, meaning that no-one else should be able to get hold of the same resource unless at a higher level of effort (Heiden, 2015). 3.3.1 Value acquired through knowledge Figure 11: Different types of economies due to knowledge-addition (and control of it) (Heiden, 2015). Society has developed from a raw material-based economy where those with access to raw material had the power as it could be sold in its natural state. With increasing knowledge, the raw materials could be refined and combined into commodities: products serving some sort of function (whether necessary such as tiles, or desired such as coffee). Such a product has an advantage if it can offer the same value as its competitors but to a lower price and belongs to a production-based economy. As mentioned above, the alternative way of developing a competitive advantage is to differentiate the product, thus boosting it with a sense of providing something extra that is worth paying for. What allows such products to take the step from a production-based economy to a knowledge-based industrial economy is that their competitive advantage is based on some kind of knowledge instead of low price. As an example, one could see a pair of cheap jeans bought in a supermarket as part of the production-based economy, whereas a pair of Levis jeans, which are perceived as more valuable (thanks to their brand) although providing the same function, belong to the knowledge-based industrial economy. It’s important to understand that this knowledge-generated advantage isn’t limited to branding though. Other knowledge- based competitive advantages can for example be new technology or a business model that optimizes the business in some way. Climbing the ladder even further, there are also businesses within an even more knowledge-based economy, whose main activity is to sell that differentiating effect in it’s raw form: not yet applied to products, for others to apply and profit from. 17 With more knowledge applied in order to generate value, the control of that value needs to increase as more effort has been put into acquiring it. (Heiden, 2015). 3.4 Differentiating Commodities Levitt argues that although products in themselves might be generic and undistinguishable from one company to another, the businesses who offer these products are always differentiated (Levitt, 1980, 83). It is argued that a product’s quality or functions are rarely what make it successful. Instead it’s how well it corresponds to the customers’ expectations (Levitt, 1980, 86). Furthermore, a product can be augmented by exceeding the customers’ expectation (Levitt, 1980, 87). Hill, McGrath and Dayal (1998) reason that in order for a commodity to become differentiated, it needs to be part of a greater concept. Focusing on industrial low-tech products, they state that there are only six different dimensions in which a value proposition for a commodity can be tweaked: Quality Control and Supply Reliability (offering increased consistency), Matching and Applications Knowledge (offering increased customization) and lastly Packaging and Taking Responsibility (offering increased convenience). Lastly, offerings within these six dimensions need to be combined in order to make it harder for competitors to match or stand equal to the advantages. Figure 12: The six dimensions for differentiating commodities (Hill, McGrath, Dayal, 1998). In the market of generic drugs, Williams (2004, 349) describes a situation where brands have become the new reassuring entity, replacing the role that institutions and authorities used to have. This increasing independency among people, seeking information and control by themselves instead of trusting their authorities, seems to reflect society in general, with its individualization and information access overload. However, Levitt (1980, 88) reported already in the eighties about an increasing amount of differentiated (former generic) products, which indicates that our strive for individualization isn’t new. In this individualized context, Williams (2004, 349) argues that brands function as “a badge of trust”. In this pursuit, the importance of establishing a clear brand identity is emphasized, where the product packaging (with 18 its symbols) has the potential to constantly remind the consumer of what the product can offer (Williams, 2004, 350-351). 3.4.1 Increased importance to differentiate Where the old tradition was for the poor to only buy low-cost and the rich to solely choose luxury brands, consumers today spend more on what they feel is important and less on what they don’t care as much about. Where Williams (2004) referred to a growing disbelief in authorities, Fiske and Silverstein (2003) see the increasing demand for brands as a result of an emotional awareness among consumers, who seek options for expressing themselves and tools for becoming who they want to be. Fiske and Silverstein (2003) further argues that this has made it crucial to differentiate products and unless they can be defined as low-cost, new-luxury or some kind of extreme luxury, it’s hard for a brand to be noticed and appreciated. The emergence of new-luxury brands often comes from founders outside of the product market, looking at the product with a fresh perspective. These new-luxury brands don’t need a heritage to rely on, nor do they need the lowest prices, as they change the way we see their type of product. Differentiation can even make room for new competitors in seemingly saturated markets (Datamonitor, 2004, 13). Besides the opportunity for historical luxury brands to introduce a lower-priced product segment, there are two additional ways for developing new-luxury goods: One way is to choose a product segment whose highest-priced alternatives will allow a company to make a substantial profit, but where the price is still low enough for the general consumer to afford. An example of this is Starbucks Coffee, who charges more than most other coffee shops for a take-away coffee. The amount of money that is charged isn’t high in general; it’s just expensive for being coffee. Fiske and Silverstein (2003) have also coined the word masstige, an abbreviation of mass prestige, describing a new type of luxury, which price-wise is positioned a bit above the commodity products but still far from the super premium alternatives. This way, the price is low enough to generate mass consumption but each product is also generating a higher profit than the cheaper generic alternative. Because of new-luxury’s position between low-priced products that need to be sold in large quantities in order to generate profit and luxury goods that need greater skill, time and investment to be produced, it is also argued that new-luxury brands are able to go to market faster and try out ideas faster with smaller investment (Fiske and Silverstein, 2003). 19 3.5 Adding attributes to differentiate products Nowlis and Simonson (1996, 37) argue that an additional feature has greater impact on a product with lower performance than the same kind of product with a higher performance and give an example of a pair of binoculars where a step from four to eight times magnitude capacity will have greater impact than a pair of binoculars’ magnifying capacity increasing from 14 to 18. It is further explained that if two similar products already have a set of different features, adding yet another feature to one of the two products will only have a small impact on the perception of the products’ differences. The authors describe this phenomenon as Multiattribute diminishing sensitivity, meaning that with few and few varying features, adding a novel feature will distinguish one product more from the other. Figure 13: Multiattribute Diminishing Sensitivity (Nowlis and Simonson, 1996, 37). It is also argued (Nowlis and Simonson, 1996, 38) that people believe a new feature’s performance to be better if it’s applied to a product which is higher in quality and that already has many features, whereas the opposite (low quality and few features) generates a belief that the added feature won’t live up to the expectations. It is consequently recommended that new features are added to products that are already perceived as high-quality and that the added feature has its greatest impact on the buying behaviour among consumers who need rational reasons for choosing one product over another (Nowlis and Simonson, 1996, 44). Alternatively, since a new feature will have greatest impact if it’s applied to a high-quality product, introducing a new feature can be a way for a company to increase its product prices, or at least provide a seemingly legit reason for doing so (Nowlis and Simonson, 1996, 45). 20 3.5.1 Irrelevant attributes Carpenter, Glazer and Nakamoto (1994, 340) explain that an attribute added in order to differentiate a product and increase its competitive advantage doesn’t necessarily need to have a function or even an actual benefit. Instead it’s the customers’ perception of what the new feature implies that generates a preference (Carpenter, Glazer and Nakamoto, 1994, 339). Carpenter, Glazer and Nakamoto describe this as meaningless differentiation or irrelevant attribute while others choose the less harsh terms unneeded features (Simonson, Carmon and O'Curry, 1994, 24) and trivial attribute (Sun, 2010, 1557). The irrelevant attribute can function as an association to a sought effect, and Carpenter, Glazer and Nakamoto (1996, 339) bring up an example of using the word Silk for a shampoo product, as it will lead the consumer to believe that using that specific shampoo will more likely lead to silky smooth hair, even though actual silk doesn’t have that effect on hair. Another, less direct, way of generating a preference is to use an irrelevant attribute that (to the consumer) wouldn’t make any sense unless it implied some kind of superior performance. Carpenter, Glazer and Nakamoto (1994, 341) mean that the attribute in itself, while not being informative enough to expose its advantage, leads the consumer to ask “Why would a company make the effort to promote this feature unless it’s relevant?”. Moreover, even if an attribute’s irrelevance is understood by the consumer, the product can still be favoured since it’s more distinctive (Carpenter, Glazer and Nakamoto, 1994, 341). Unless the perceived superiority from the irrelevant attribute isn’t reflected in the product’s price, the irrelevant attribute is perceived as having low effect. If setting the price higher than its competitors, the product with the irrelevant attribute will be preferred (Sun, 2010, 1570) - even if its attribute’s irrelevance is revealed (Carpenter, Glazer and Nakamoto, 1994, 344). When setting a premium price however, only products with irrelevant attributes that seem to be meaningful will be preferred (Carpenter, Glazer and Nakamoto, 1994, 347). Sun explains (2010, 1558) that the findings in Carpenter, Glaze and Nakamoto’s research isn’t undisputed. It’s also been stated that products with unneeded features might take the attention from more significant features that could otherwise have created a preference and that consumers can choose other products if they believe that the trivial attribute is what generates a product’s higher price (Simonson, Carmon and O'Curry, 1994, 24). However, Sun’s study shows that irrelevant attributes generate the strongest preferences when applied to products that are highly involved (Sun, 2010, 1570), i.e. products that consumers strongly identify themselves with and that are engaging the consumer, products that feel important in the consumers’ lives (Sun, 2010, 1561). 21 3.5.2 Design attributes to establish brand identity Figure 14: Framework for aligning design features with brand identity (Karjalainen, 2007, 69). Karjalainen (2007) argues that another way of expressing brand values is through the design features of the product. Instead of adding features, as discussed by Carpenter, Glazer and Nakamoto (1994), a brand could stay consistent with its design features, and thus establish them as part of a potentially iconic look, harmonizing with and strengthening the brand identity (Karjalainen, 2007, 67). These design features are in a way another example of irrelevant attributes as their perceived effect rarely - if ever - corresponds to their actual effect on the product. These reappearing design features function both as a way to establish a recognizable style among the brands’ products and as a way to emphasize the brand values (Karjalainen, 2007, 67). However, it is also explained that the design consistency of a brand can be not to reuse design features, if the brand for example aims to establish values of being disruptive newthinkers (Karjalainen, 2007, 68). It is also argued that staying too consistent with the design isn’t sought either, as the products will then be deemed to lack novelty in the eyes of the customer (Karjalainen, 2007, 69). The design features are further divided into explicit and implicit design attributes, where the explicit ones are reused on different products while the implicit design features may differ from one product to another but always aim to establish the brand’s values (Karjalainen, 2007, 69). While implicit design features always aim to reflect brand values, explicit design features are not limited to this and might instead be added without a reason other than to establish a brand look (Karjalainen, 2007, 68). 22 3.6 Controlling knowledge Knowledge can be controlled through intellectual property rights (IPRs), secrets, contracts and first-mover advantage (Petrusson, 2004, 76). Besides utility patents, which can exclude others from exploiting an invention, other IPRs can cover less functional - yet still differentiating - sources of value. Chasser and Wolfe (2010) even argue that all parts in marketing can be protected in one way or another. However, it’s important to remember that although something can be covered by an IPR, its strength will vary depending on its content. Below follows a brief explanation of what can be protected through different IPRs (Uspto.gov, 2014). Utility Patents Excludes other from exploiting an invention. Design Patents Excludes others from exploiting a non-functional design. Trademarks & Service marks Excludes others from using a name or symbol for the same commercial use. Trade dress Excludes others from using a shape or packaging for the same commercial use. Copyright Excludes others from copying creative work, such as literature, music, paintings etc. 3.6.1 Intellectual Property’s role in branding When Chasser and Wolfe (2010) asked branding professionals what they saw as common denominators among the world’s highest valued brands, the answer was their ability to create strong emotional bonds with their customers and that they do this in all touch points. Another shared feature was that the brands aren’t fixed but instead develop in order to remain interesting to their customers. When asking intellectual property lawyers about the common denominators, the answer was instead that these brands are protected in multiple ways and that the brands are focused and consistent in what they express, no matter the channel. Similarly to Hill, McGrath and Dayal’s (1998) standpoint that a generic product can only be differentiated by embedding the product into a greater concept, Chasser and Wolfe (2010) come to the conclusion that the strongest brands are the ones who have understood that it consists of many elements. They further argue that the strongest brands, which are able to stay strong over a long time, are the ones where intellectual property is incorporated into the creative work of the brand. Since the result of all branding activities can be protected by intellectual property rights, the potential IPR’s strength should be considered when developing a creative brand element. 23 4. Results This chapter shows the result of the gathered data, relating to the thesis’ research questions. 4.1. Common branding activities for differentiating generic products Below is a table showing which activities are the most common for differentiating generic products. It also shows which brands are performing these activities. The brands are categorized into different segments depending on their value proposition. The data is presented in its entirety in Appendix I. This subchapter relates to the first research question (RQ1): Which activities are most common for differentiating generic products (or services)? 24 Figure 15: Results from the study, showing which activities are most common and by which brands they are performed. 25 4.1.1 Activities The tendencies found in the qualitative study will here be presented in order from most to least common practice. Influencers 50% Half of the brands in total, with all Exercise brands, over two thirds of the Food & Beverage brands and one third of the brands in Beauty, Care & Cleaning, Clothing and Accessories & Useful Objects respectively, use influencers for marketing their brands. Examples of these influencers can be social media celebrities, actors and athletes. Some of them are acquired by the brands while others are fans that have reached out to the brands themselves. Unorthodox strategy to the segment custom 43% Over one third of the brands are doing something dramatically different from what’s common practice in their respective segments. Although these strategies vary, most common is to set a different price than what’s common (both higher and lower than what’s usual) or to change the sales experience from what’s expected, defining the brands’ products as belonging to other product categories than their generic counterparts. An example of this is how a supplement is sold in the beauty department. Collaboration to create products 37% Most of the Accessories & Useful Objects brands (5/9 brands) and half of the brands in the Beauty, Care & Cleaning, Clothing and Exercise segments, sell products from collaborations with other companies. In most cases, these co-created products are the same as the brands’ original products but with an aesthetic made or inspired by the collaborating partner. In fewer cases, new products have been developed together. Launch targeting influencers & establishing position 37% When launching the brands’ products/services, what was more common than building a reputation from small players (e.g. individual stores) to attract larger players (eg. chains), over one third instead focused from the start on targeting influencers and establishing a notion about the brands’ position. This was the strategy for almost half of the Food & Beverages brands as well as the Accessories & Useful Objects brands (4/9 brands respectively) including all of the water brands. The ways to do this differ dramatically between the companies but can be categorized into limiting access, getting influencers as early customers (celebrities, fashion-related people) and sponsorship (financially or with products). The brands are sprung from the founders’ own needs 33% Although the brands’ products or services in this study are seen as general (yet somehow differentiated in the eyes of the consumer), the differentiating aspects of the brands were often sprung from the founders’ own needs. Examples of these differentiating aspects would be more convenient access (Bread & Boxers, Lärabar), attention to skin sensitivity (Bliss Spa, The Art of Shaving) and introducing something that’s more easily found in the founder’s native country (Chobani, VOSS). Avoiding traditional marketing 33% 26 One third of the brands, primarily in Foods & Beverages (4/9 brands) and Accessories & Useful Objects (3/9 brands) but with representatives in all segments, are or were for a long time avoiding traditional marketing (e.g. TV commercials and billboard advertising), instead relying on social media, word-of-mouth and other earned and owned media. The concepts have a strong emphasis on social or environmental benefits 30% Though many more have some engagement in environmental issues or CSR work, only the brands having social and/or environmental engagement as one of their core activities are included in these ten brands. Especially in the Food & Beverages segment (4/9 brands) and Accessories & Useful Objects (3/9 brands), environmental concern and social benefit play important roles in the brands’ image and values. Also, the study’s two cleaning brands are both emphasizing their environmental awareness. In the Food & Beverages segment, this environmental awareness is strongly connected to the brands’ profile of being healthy, resulting in natural ingredients, non- GMO etc. which, simultaneously as healthy, are promoted as environmental-friendly. Many of these brands are also engaging their customers in charity, shoe-brand TOMS being the role-model with its One-for-one business model where the company donates one pair of shoes to a child in need, with each bought pair. Innocent Drinks is another example, who encourages its customers to knit hats to their bottles, for which the company will donate money to charity. Marketing brand instead of product range 27% Eight brands, with one third of the Food & Beverages brands, use marketing to establish their brand and brand values rather than their actual value propositions. Examples of these activities can be to host or sponsor exhibitions and launch festive events. The brand as it’s known today was initially a business extension 27% Especially in the Beauty, Care & Cleaning segment (4/6 brands), product-centered brands as they’re known today were originally an extension of a service business (SPAs, hairdressers). Starting the business without any “self-created” products is also common in the Clothing segment where 2/4 started as retailers. Trade shows 23% Another common strategy to launch the brands’ products has been to attend trade shows. It’s been argued that what’s even more important than attending, is to make the booth stand out from the crowd and showing off the products in the best way possible. Outsourcing distribution and marketing 20% Although more brands outsource parts of their business activities (such as production), one in five brands also outsource the distribution of their products to agents or hire foreign marketing agencies for establishing their brand abroad. Merchandise 20% All Exercise brands and two of nine brands in Food & Beverage and Accessories & Useful Objects, respectively, offer merchandise, most commonly in the form of branded T-shirts. For the Exercise brands, merchandise has even grown into large business by itself. 27 Shopping experience 20% Especially in the Beauty, Care & Cleaning segment (5/6), the brand focus on shopping experience. While some do this by still offering its initial services such as SPA treatments, this is also often done with educated sales personnel that give extensive advice on the customers’ specific concerns, guide the customers to the right products and showcase how to use the products. These experiences are offered both in real-life stores as well as online. Other ways the shopping is turned into a brand experience is through free samples and artistic store interiors. Story-telling 20% In the Accessories & Useful Objects segment (3/9 brands) and for the study’s both bottled water brands, storytelling are a large part of the brands. For the water brands, the story sold is about water from a place on earth that is still untouched, assumingly clearer than all other waters. For the remaining three, the stories’ character differ: There are examples of brands based on a tale about a (possibly fictitious) person, a story centered around helping someone in need, and even a story of (fictitious) heritage. Collaboration to create marketing material 17% In some cases, the brands have teamed up with artists and partners to create material for marketing, such as short films and installations. Launching imperfect products 17% Food & Beverage as well as Accessories & Useful Objects brands (2/9 brands respectively), admit to initially having sold products that needed improvements. In case of the food brands, the improvements have concerned manufacturing, where products initially have been made by hand, whereas the accessory brands have needed to improve their products since the first batches. Free samples 17% When launching the products, many brands, especially in the Food & Beverages segment (4/9 brands), have offered free samples of their products, most often to the consumers but in some cases also to the retailers. Close customer relationships 13% Four brands emphasize their close relationship to their customers, especially using social media to connect with their fans and provide customer service. For these brands, it’s argued that the customers play an important role in the brands’ product development. Rebellious act 13% In four of thirty cases, the creation of the brand was a rebellious move against the norm: The common denominator among these is a wish for a more straight-forward and less exclusive approach to the offer. Reinvesting profit to buy larger batches 10% Four brands claim to have grown from investing their own money into buying a small batch and reinvesting the profit into larger batches. 28 Unconventional sales channels 10% In accordance with many brands choosing unorthodox strategies to their segment custom, one in ten brands do this by re-defining their offering and selling it in untraditional channels. An example of this is how a brand selling high-end liquorice prioritizes quality and design over segment when choosing retailers. Another is how basic clothing garments such as T-shirts were sold in hotels “as an extension of the mini bar” instead of in clothing stores. No Logo 10% A few brands, especially in the Clothing category (2/4 brands), are avoiding logotypes, attracting customers who perceive themselves as above the need for loud statements. Ironically, it has become a statement to consume these brands. However, while these clothing brands still market themselves (in one case almost aggressively), another brand also joins the movement of no or at least quiet marketing (2/30 brands). Spokesperson almost equal to the brand 10% In three cases, the brands are (partially) owned by people who prior to the brand, were already known by the brands’ target audience. This functions as a springboard for gaining exposure, as magazines and online sites are more keen to mention the brands. The brands were created to fill a gap in a current trend 10% Although all successful brands have managed to fill a gap in the market, this study provides three cases where that gap has been identified in an on-going trend, and filled with an additional product category. In the retro trend, a lack of alternatives for bags was identified, in the “trend” of environmental awareness, cleaning supplies seemed to be left out of the conversation and in the case of colourful technology, the trend hadn’t yet spread to headphones. Founder / Author 10% One founder for each ten brands has published a book on a subject related to the founded brand, helping to establish the notion that the founder (and consequently the brand) is an expert in the field. Product-centered business expanding into offering services 10% In a few cases, brands have started by selling products and later added services to their value proposition, such as subscriptions, cloud services and delivery within the hour. Concept before product 7% In two cases, the brands’ products were an outcome of the concept. Both these examples come from the Accessories & Objects category, where Happy Plugs started with a slogan “What colour are you today?” and Happy Socks got found of its name and had only a vague idea about selling colourful socks. Starting globally 7% In the Accessories & Useful Objects segment, 2/9 brands outspokenly started selling their products globally from the very beginning. The reasoning is that if the concept is well packaged you might as well go international from the start. It can also be necessary to hit a global market in order to reach enough buyers. 29 4.1.2 Differentiating Attributes Recurring design attribute other than label 40% Over one third of the brands (5/9 brands in Accessories & Useful Objects and 4/9 brands in Food & Beverage) have non-functional design features that help forming their design identity. Irrelevant attribute 30% Almost one third of all brands also have some kind of irrelevant attribute. This is especially common within Food & Beverage (5/9 brands) where all water brands have irrelevant attributes from referring to distant locations. It is also common within Beauty, Care & Cleaning (2/6 brands) where the product names often (indirectly) imply a certain user experience or result. 30 4.2 Common control activities for generic products Below is a table showing which intellectual property rights and other control activities are most commonly chosen for protecting (to some extent differentiated) generic products. It also shows which brands are experiencing control-related issues. Since all brands own trademarks (or service marks) and domain names, these are excluded from the table. Although 30 brands have been studied, only the ones that are experiencing control-related issues and/or are claiming control in more ways than through trademarks and domain names are presented in the table. The data is presented in its entirety in Appendix I. This subchapter relates to the second research question (RQ2): What is common practice for claiming control over differentiated generic products (or services) and how well does it work? 31 Figure 16: Results showing the most common control activities, by which brands they are performed as well as their control-related issues. 32 4.2.1 Control-related issues Being that all studied brands sell products that (if being harsh) in themselves don’t differ much from non-differentiated, generic versions, all are experiencing competing products on the market. However, due to the fact that these brands to some extent have managed to differentiate their products from the generic type, competitors aim to benefit from their efforts. Below are presented such cases that are either complete replicas of the brands’ products (described as Counterfeit) or cases that have been brought to court due to a competing product’s similarity (described as Infringement). Counterfeit 30% Almost one third of the brands struggles with counterfeit products on the market. This is especially common for brands in Beauty, Care & Cleaning (3/6 brands), likely because of the products’ liquid form, which makes it easy to dilute or replace the original formula with something that appears to be the same before use. Monster Energy drinks also deal with counterfeit issues, which is in line with the above assumption. In China, there’s a case where a company has established a chain of counterfeit stores and since it has also registered the trademark, the original brand hasn’t been able to enter the Chinese market. Infringement 20% One in five brands has competitors passing off their reputation to such extent that it’s seen as infringement. These are found in the Food & Beverage segment (2/9 brands) and Accessories & Useful Objects (5/9 brands). In one case, the brand hasn’t sued the infringers but since the case is noticed by the general public and wildly debated, it is incorporated as an infringement case in this study. While the brands in most cases have won their litigations thanks to their control activities, their intellectual property has also been challenged and turned out to be weaker than expected - or invalidated. An example of this is a product that was protected by copyright but which wasn’t broad enough to stop a competitor from selling a similar product. In another case, the brand has won cases thanks to its trade dress protection but has also had to settle with a competitor as the trade dress has been invalidated. It should also be noted that three of the studied brands have been accused of infringing. 4.2.2 Protection 4.2.2.1 Intellectual Property Rights Trademarks 100% All studied brands have their brand name and logo trademark protected. In three cases (2/6 brands in the Beauty, Care and Cleaning segment), the brands are also registered as service marks. Trade Dress Protection 20% One in five brands have also trademark protected their packaging or details of their products with trade dress protection (3D trademark). This is especially common in the Food & Beverage segment where half of the brands, including all water brands, have protected their packaging. For one water brand, this protection has led to less 33 infringement, whereas the other water brand has experienced both wins and settlements (due to its trade dress’ lack of distinctiveness). For the brand that has a design protection yet still is being copied by a competitor, the trade dress protection covers a product which is an extension of the brand’s product range, thus irrelevant for the protection of what the brand is mostly known for. Design Patents 23% Four out of six design patents (with Food & Beverage representing the most with 3/9 brands) are related to packaging design. Two of these nevertheless experience counterfeit and infringement, which in one case has to do with that the design patent isn’t related to the product that’s being copied. Utility Patents 17% Although the brands in this study are known for products that most often cannot be protected by a utility patent, five brands nevertheless own such patents. Many of these utility patents cover inventions that are outside of the brands’ main scope and have limited importance for the protection of the brands’ success. 4.2.2.2 Other Protection Strategies Besides the above-mentioned intellectual property rights and domain names (which all studied brands have), the brands have additional control strategies in order to protect their brand position. Offer Low-Price Option 7% Two brand owners mean that you need to fill the price gap between your products and a potential competitor’s imitation. A creative example of this is how one brand created another brand selling products almost identical to the original brand’s but with a lower price in order not to lose low-price customers to competitors. First Mover Advantage 7% Two brands, both in the Accessories & Useful Objects segment, highlight that they were the first on their respective markets. In order to cope with the competition they now have, one brand claims to focus more on product development and marketing. The other highlights that the market they created will remain, but change, for which they’ll need to adapt (or possibly lead the way). Moreover, a third brand means that the threat doesn’t necessarily come from the segment in which the products belong, but that more relevant competitors can be found in other product categories, which offer an alternative for the brands’ consumers to spend their money on. Inform Customers 3% A brand from the Beauty, Care & Cleaning segment, which is described as a “grey zone” where products can be diluted or sold after they’ve expired, aim to inform their customers by explaining on their website where their authentic products can be found and where not to buy them. Strengthen brand values 3% One brand argues that since their products are hard to protect, they instead focus on establishing their brand values, as those are considered harder to replicate. 34 Opportunism 3% One brand who has a hard time staying on top of the counterfeit situation as their exercise DVDs are wildly copied and illegally sold, figured that since they couldn’t stop it, they should try to benefit from it. By adding advertising both on the packaging as well as in the content, recommending the viewer to seek a real-life exercise class, their marketing is spread for free, potentially leading the consumer of the counterfeit DVD to seek the brands’ other and, most importantly, original products and services. 35 5. Analysis This chapter explains which aspects of a brand (presented in Chapter 3.Theory) that are affected most often through the most common activities (presented in Chapter 4. Results). It also compares the most common activities with what is suggested in Chapter 3. Theory. 5.1 Analysis of Activities Influencers Using influencers for marketing a brand can help customers get the “right” associations as they will connect their perception of the influencer with the brands’ values and standpoint. It can also give the brand credibility if the influencers are seen as credible within their fields. Moreover, by using an influencer who the target audience admires and relates to, the chances for the brand to be considered by that audience likely increases. Influencers also give the brand a proprietary asset as it gets additional space. If the influencer organizes competitions in collaboration with a brand, this also calls for interaction and thus brand resonance. Using influencers creates the impression that the promoted products are highly involved products in the influencers’ lives, which might up the chance for them to become highly involved products in the target customers’ own lives. Risks can be if an influencer behaves in a manner that isn’t in accordance with the brand’s values or if the influencers’ own brands are too varied, leading to confusion of what the promoted brand stands for. Unorthodox strategy to the segment custom Doing business differently within a segment is a way to generate new associations and possibly to broaden brand awareness. This in turn, could also lead to a change in who will consider the brand, if the broadened brand awareness coincides with a category that the potential customer considers. Changing the way people look at a certain product is a classic strategy among new-luxury brands but the study shows that the change in doing business sometimes instead is to lower the price (still without defining the offer as a commodity). The reason for such movement can be to establish a brand image of being honest. Collaboration to create products By collaborating with another brand, new associations can increase the credibility, if the collaborating partner is deemed credible. It is also a way to gain a proprietary asset as the brand will be shown in new channels, segments etc. Similar to the above- mentioned strategies, also collaborations can lead to new potential customers considering the brand, if they consider the collaborating partners’ brand and products. As the product from the collaboration can be seen as if it has an added feature, there is a risk for multiattribute diminishing sensitivity. If collaborating with many different brands for example, the brand image risks becoming diluted. There are however also benefits with collaborating, for example that the collaborated product could motivate a higher price since it has an added feature. 36 Launch targeting influencers & establishing position By immediately focusing on establishing the sought brand associations, the brand can more efficiently develop brand awareness, credibility and consideration among its target audience. In some cases, this strategy involves limiting the access, which is the opposite of what the differentiating framework for commodities suggests. That is likely outweighed with the associations that exclusivity creates and the perceived quality coming from a high price point. The brands are sprung from the founders’ own needs Stating that a brand’s offer comes from a personal need for it can increase the brand’s credibility for providing such offer. This also gives the founder a chance to function as a spokesperson for the brand, meaning that not only has the brand potential to attract customers interested in the value proposition, but also those who relate to the founder, since they might consider the brand if the founder considers it for him- or herself. The differentiating aspects of the offers, stemming from the founder’s needs, are often also in line with Hill, McGrath and Dayal’s (1998) differentiating framework, where the brands offer increases convenience in the form of improved access to a product or increases customization, such as products developed for certain needs. The concepts have a strong emphasis on social or environmental benefits Developing a brand (partially) focusing on social or environmental benefits develops brand associations of caring. It can lead to loyal customers, who share the values of the brand and choose the brand to contribute to a certain cause. There are a few examples from the study where brands encourage their customers to contribute to a social or environmental concern in other ways than financial, which generates brand resonance. Since the brand will also be seen in forums concerning the certain cause and will build associations to it, it gets a proprietary asset as it increases its number of touch-points and can increase the number of cues for the brand to be recalled: Instead of just being recalled when asking for a juice brand, the brand can also be an example of a brand donating to charity. In a way, this kind of “caring” part of a brand can also be seen as an irrelevant attribute, as it sometimes gives the product a perceived quality increase (in some dimension): It is easy to associate responsibility in one aspect (e.g. donating shoes to children in need or exclusively using non-GMO produce) with responsibility in another (e.g. choosing environmental-friendly colouring materials or having a low sugar content). Also, if not managing to live up to the expectations in the work for a cause, it can damage the brand’s credibility. Avoiding traditional marketing By avoiding traditional marketing, brands choose to lower the general awareness in favour of efficiently reaching their target audience. It can also in itself be a statement that gives the customers certain associations, for example that the brand is current or a smaller player with a “soul”. Doing something differently is common for new-luxury 37 brands but avoiding traditional marketing specifically has been identified also among other sorts of brands in the study. Choosing alternative marketing channels can also subconsciously increase the brands’ credibility as the target customers are reached on their own terms: “This brand is for people like me because we meet at the places where I prefer to be.” This can likely lead to a brand being more considered by its target market. Marketing brand instead of product range Marketing the brand and its values instead of its products is done to establish the “right” associations to the brand and increase brand recognition. This in turn can lead to an increased credibility for the products as the brand is seen in the “right” contexts. If successful, it can even be a way to increase brand resonance, since the customers will have to seek up the product range themselves, such as through the brand website. The brand as it’s known today was initially a business extension When a brand’s product range has evolved from another primary business, the products are likely enabled through customer loyalty. Also, the (perceived) quality of the product can be high as there is a client base, which has used the brand’s services for the same function as the product now provides. This also gives the brand credibility. If a brand isn’t considered, an extension might be considered. An example of this could be customers who don’t consider themselves as people going to an exclusive salon. However, they might consider themselves as people using a hair product. This also connects with the framework for differentiating commodities as convenience is increased (because of better access to the brand) as well as customization (since the brand often can be consumed in more ways). Trade shows By attending trade shows, brands develop their awareness breadth (depending on which trade shows they choose to attend), recall and recognition at once (for retailers). By attending, they can gain credibility in their segment while the space at the show can give them a proprietary asset. Retailers can form an opinion on whether or not to consider the brand if they get to know it, The emphasis on making the booth stand out from the crowd and showing the products from their very best side are ways to develop the “right” associations of the brand. A giant booth might give the impression of being a well-established company for example. Outsourcing distribution and marketing The choice of outsourcing some activities (separated from the results of that choice) is likely less relevant for branding purposes. However, it does allow the firms to put more effort into branding and their offerings, which could lead to increasing credibility as these brands are able to say: “We focus on what we’re doing best.” 38 Merchandise Offering merchandise increases awareness as loyal customers chooses to resonate with the brand and market it. The companies offering merchandize are likely known for products that are highly involved as customers identify with the brand to such extent that they want to market it - not only for free but by paying for it. Shopping experience By developing the shopping experience into something extraordinary, credibility can be achieved as the staff can mirror the expertise that the brands claim to have. This can also lead to loyal customers who not only buy the products because of the products themselves but also because they enjoy the actual purchase moment. This experience might also function as an irrelevant attribute since the fact that someone has picked out a certain product for a customer could make him or her believe that it works better. This has the potential to generate extremely loyal customers, especially since these products are often highly involved products, such as skin care used in a daily beauty regimen. Developing a shopping experience based on the sales representatives’ expert advice is also an example of how to increase customization through service. Story-telling By telling stories, brands establish strong associations in their customers’ minds. These have potential to establish a high (perceived) quality of the products, for example that bottled water from the Fiji Islands is more natural than any other water, which should most likely be seen as an irrelevant attribute. Storytelling will likely also expand brand recall even to cues about the interesting stories. Collaboration to create marketing material If collaborating with an artist for creating marketing material, customers will form new associations and possibly also think of the brand as being more credible, since it has managed to be promoted by someone who’s credible within his or her field. Free samples By offering free samples, more people might consider the brand. It’s also a statement about the products’ quality, implying that it’s so high-quality that the brand is sure customers will love it and buy it if they get to try it. Close customer relationships With close customer relationships, brands can get loyal customers to interact with the brand. It can lead to associations of the brand being caring and humble and shows an example of how products can be differentiated through increased customization, if they are developed based on consumer needs. Rebellious act Brands that are counter-reactions to a custom can bring a number of different associations to the customers. The examples in the study show associations to “being on the customers’ side”. 39 Launching imperfect products Several companies in the study started with launching products (or manufacturing processes) that had to be improved. This is likely done in order to spread brand awareness but it also risks the brand’s credibility and (perceived) quality and could result in negative brand associations. Reinvesting profit to buy larger batches A successful business that once started small and has grown in smaller steps, gives credibility to its products’ perceived quality, as there has been a growing demand. If the products are only sold in small quantities that sell out, they also give the impression of being exclusive, even if that low quantity is based on cash-flow issues more than anything else. Unconventional sales channels By selling a product in a way that’s more usual for another product segment, brand awareness can be broadened. It also leads new associations to the brand and customers in other segments might consider the brand’s product. In some cases, the unconventional sales channel is a way to increase convenience but in others it can (from a branding perspective) be seen as an irrelevant attribute: “Is the quality and taste of candy really that much better just because it’s sold next to a designer chair?” No Logo Without logotypes, the brand establishes associations and an image of not relying on something superficial. Because of this, the brand has the potential to increase its products’ perceived quality, as the products are claimed to speak for themselves. Spokesperson almost equal to the brand Spokespersons that are strongly connected to a brand bring the same benefits and risks as brand influencers in general and give the brand a huge proprietary asset since it will more likely be shown in different channels such as magazines and TV. The brands were created to fill a gap in a current trend Developing a brand with a current trend in mind is in a way risky as it isn’t a long- lasting strategy. That being said, by connecting the brand associations to an on-going trend, the awareness depth can increase and the likelihood of getting attention increases as the field in which the brand claims to belong is discussed. Furthermore, people who are already in awe of a trend might also consider the new brand entering the market. Founder / Author By publishing a book in the field that the brand operates, the credibility of the brand can increase. It can also improve brand recall, as the brand can now also come to mind when given the cue authors. It’s also a way of increasing customization through service as the book can provide additional information of how to use the brand’s products. 40 Product-centered business expanding into offering services Businesses who offer services in connection to their products show examples of differentiation through customized services. It’s also a way to broaden brand awareness and strengthen brand recall as the brand can be considered in more situations and segments. Concept before product For brands where the concept has been more important than the product (according to the founders), key is likely to establish the right associations and image that the potential customers will want to identify themselves with, no matter in what way. Starting globally By starting globally, a brand focuses on developing its brand depth. It can also improve the brand’s credibility of delivering something in a safe and reliable manner, as international businesses traditionally have been well-established organizations. Lastly, by offering worldwide accessibility, the brand differentiates its business by increasing convenience through service. 5.2 Analysis of Differentiating Attributes Recurring design attribute other than label By forming a coherent look of a brand’s products, brand recognition can increase as a given aesthetic can be connected to the brand. The chosen design features can also help generate the “right” associations. These two results can in turn lead to a clearer brand image. Irrelevant attribute Irrelevant attributes generate associations leading to expectations on what the product can do. This is a risk, as the perceived quality might not correspond to those high expectations but the frequent use of this strategy among differentiated brands show that it is an effective method to differentiate a brand. 5.3 Analysis of Protection It’s striking that many of the brands have IPRs that cover aspects of the business that aren’t relevant to their core value proposition: Most brands’ utility patents for example, are related to details and functions that don’t contribute to the brands’ differentiation (in the eyes of the consumer). In accordance with Chasser and Wolfe (2010), the more different kinds of protection, the better, also in this study. Of the brands that are covered by three or four different IPRs (one being trade dress protection), none are experiencing counterfeit. With less than three different sorts of IPRs however, the control is weakened. That being said, only one third of the brands have additional IPRs to their trademark protections (and domain names): Of the total fourteen brands experiencing counterfeit and/or infringement issues, six of them only have trademark protection. This means that of all the brands only protecting their brands and goods through registered 41 trademarks, about one third encounters problems with claiming control. On the other hand, because of the brands’ products differentiated yet still close-to-generic state (at least from a manufacturing perspective), most brands have encountered very similar products from other companies on the market. The lack of but need for control is especially evident in Beauty, Care & Cleaning, indicating that the importance of protecting a brand varies with the category it belongs to. Similarly, brands within Accessories & Useful Objects are overrepresented in counterfeit and infringement cases, and therefore likely more exposed to control-related issues. For brands experiencing infringement, having a trademark including trade dress protection has according to the study proved to work best. There’s not a solid track record though, as one trade dress protection has also been invalidated when trying to claim its right against an infringer. Also, the different sorts of IPRs won’t help if too many of them are irrelevant in relation to what’s being infringed. As an example, several brands that have both trademark protection as well as patent protection (utility patent or design patent) have still not been successful in protecting their products, likely since the patent protections haven’t protected the aspects that have been infringed. 42 6. Conclusion This chapter provides a summary of the thesis procedure and highlights the conclusions drawn from the analysed results (Chapter 5. Analysis), answering the research questions. Lastly it provides a discussion about potential risks with the thesis. 6.1 Summary of thesis procedure This thesis has investigated which branding and control activities are most common among firms that have differentiated generic products (or services) and what their intentions are. A theoretical framework was developed, highlighting important concepts concerning branding and intellectual property. A literature review was then conducted, exploring the importance of differentiating products, how it can be achieved and w