Analysis of Brand Identity System of Vietnam Airline

POSITIONING STRATEGY WITH A NEW IDENTITY:
A CASE STUDY OF VIETNAM AIRLINES
by
Le Hong Dac
A research study submitted in partial fulfillment of the requirements for the degree of Master
in Business Administration
Examination Committee: Dr. Truong Quang (Chairman)
Dr. Clemens Bechter
Dr. Lalit.M.Johri
Nationality: Vietnamese
Previous Degree: Bachelor of Economics
University of Agriculture and Forestry
HoChiMinh City, Vietnam
Scholarship Donor: The Government of Switzerland
Asian Institute of Technology
School of Management
Bangkok, Thailand
August 1999
Acknowledgement
I wish to express my profound gratitude and great appreciation to my advisor Dr. Truong
Quang for his valuable guidance, advice and encouragement throughout the research study.
Special thanks are extended to the other members of the Examination Committee, Dr.
Clemens Bechter and Dr.Lalit.M.Johri for taking interests and giving valuable suggestions to
improve the content of this study.
Deep appreciation and thanks are also extended to Mr. Luong Hoai Nam, Mr. Trinh Ngoc
Thanh, Mr. Duong Tri Thanh, Mr. Mai Quoc Tuan, Mr. Nguyen Thuong Hai, Mrs. Nguyen Thi
Minh Yen and Mr. Le Dinh Tuan of Vietnam Airlines Corporation for providing me the desired
information and data for this research study.
I fall short of words to express my thanks to my family and my friend Ngo Thi Hong Thu for
their constant love, moral support and encouragement.
Last but not least, I would like to thank the government of Switzerland for providing me a full

scholarship to study at SAV in HCMC, Vietnam and at School of Management in Bangkok,
Thailand.
ii
Abstract
There is a strong link between the growth of market share and the profitability of a company
with the power of its brands. Like other well-known carriers in the region or in the world, when
the old identity is not suitable with the current status of the company anymore, changing in to
a new identity should be implemented as soon as possible. More often than not, the
Vietnamese companies seem to neglect the issue of branding. This study analyzes the
importance of brands and the process of branding management. To illustrate the corporate
identity building issues and positioning with a new identity in the airline market, this study
examines the case study of Vietnam Airlines Corporation. Interviews with managers and
customer survey are carried out to investigate the competitors’ reaction and customer’s
perceptions toward the new identity. At the end, some recommendations are proposed for
Vietnam Airlines to manage its new brand successfully and for other companies that want to
change into a new corporate identity.
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Tables of Contents
Tittle page ……………………………………………………………………………………….i
1.1 Rationale of the Study........................................................................................................................................10
1.2 Statement of the Problem...................................................................................................................................10
1.3 Objectives...........................................................................................................................................................10
1.4 Research Methodology.......................................................................................................................................11
1.4.1 DATA COLLECTION .....................................................................................................................................11
Secondary data:..............................................................................................................................................11
Primary data:..................................................................................................................................................11
1.4.2 DATA ANALYSIS..........................................................................................................................................11
1.5 Research Framework: ........................................................................................................................................11
1.6 Scope and Limitations........................................................................................................................................12
1.7 Structure of Research Study...............................................................................................................................12

2.1 Introduction........................................................................................................................................................14
2.2 Develop a Brand Identity...................................................................................................................................14
2.2.1 WHAT IS A BRAND?....................................................................................................................................14
2.2.2 A BRAND IS MORE THAN A PRODUCT..........................................................................................................16
2.2.3 BRAND EQUITY...........................................................................................................................................17
2.2.4 BRAND IDENTITY.........................................................................................................................................18
Definition .......................................................................................................................................................18
The brand position trap...................................................................................................................................18
Four brand identity perspectives.....................................................................................................................19
The Identity Structure......................................................................................................................................20
2.2.5 Brand Identity Planning Model..............................................................................................................22
2.2.6 BRAND POSITIONING...................................................................................................................................22
2.2.6.1 Developing a positioning strategy.......................................................................................................23
2.2.6.2 Strategic Misconceptions.....................................................................................................................23
2.3 Manage Brand Image.........................................................................................................................................24
2.3.1 THREE COMPONENTS OF BRAND IMAGE.......................................................................................................24
2.3.2 BRAND IMAGE DRIVES BRAND EQUITY......................................................................................................24
2.3.3 BENEFITS AND IMPORTANCE OF A BRAND IMAGE:.......................................................................................24
2.4 Maintain Brand loyalty.......................................................................................................................................25
2.4.1 CULTIVATING LONG-TERM RELATIONSHIPS WITH CUSTOMERS....................................................................25
2.4.2 BRAND LOYALTY.........................................................................................................................................25
2.4.3 BRAND LOYALTY VERSUS SERVICE LOYALTY..............................................................................................26
2.4.4 HOW TO BUILD LOYALTY?..........................................................................................................................26
3.1 Asian-Pacific airline market...............................................................................................................................28
3.1.1 INTRODUCTION............................................................................................................................................28
3.1.2 FUTURE TREND...........................................................................................................................................29
3.1.3 GLOBAL OUTLOOK AND GROWTH TREND:..................................................................................................30
3.1.4. AIRLINE ALLIANCES ..................................................................................................................................31
3.2 Airlines Industry in Vietnam..............................................................................................................................32
3.2.1 BRIEF HISTORY OF VIETNAMESE CIVIL AVIATION:.....................................................................................32

3.2.2 VIETNAM AIRLINES BACKGROUND.............................................................................................................33
Current Status of Vietnam Airlines..................................................................................................................34
2.2.2 CORPORATE BRAND NAME: VIETNAM AIRLINES CORPORATION.................................................................37
2.2.3 VIETNAM AIRLINES NETWORKS..................................................................................................................38
4.1. Company Strategy Analysis..............................................................................................................................40
4.1.1 CUSTOMER ANALYSIS.................................................................................................................................40
Industry Trend.................................................................................................................................................40
Motivations.....................................................................................................................................................40
Unmet needs....................................................................................................................................................40
Market Segmentation......................................................................................................................................40
4.1.2 COMPETITOR ANALYSIS..............................................................................................................................41
iv
i. Domestic routes...........................................................................................................................................41
ii. International routes....................................................................................................................................41
4.1.3 SELF-ANALYSIS...........................................................................................................................................45
Existing Brand image:.....................................................................................................................................45
Friendliness..............................................................................................................................................................45
Vietnam Airlines’ SWOT Analysis...................................................................................................................45
Organization structure and values..................................................................................................................48
4.2 Analysis of Brand Identity System of Vietnam Airlines....................................................................................56
4.2.1 BRAND AS PRODUCT...................................................................................................................................56
The Product Scope: Associations with Product Classes..................................................................................57
Product-Related Attributes:............................................................................................................................57
Quality Value..................................................................................................................................................57
Associations with Use Occasions....................................................................................................................57
Country of Origin............................................................................................................................................57
4.2.2 BRAND AS ORGANIZATION..........................................................................................................................58
4.2.3 BRAND AS PERSON......................................................................................................................................58
4.2.4 BRAND AS SYMBOL.....................................................................................................................................58
The Old Logo of Vietnam Airlines ..................................................................................................................58

The Old Design of Vietnam Airlines................................................................................................................58
4.2.5 EXISTING MARKETING MIX.........................................................................................................................59
Reservation Service..................................................................................................................................................62
Before-Flight Service...............................................................................................................................................62
Check-in Service......................................................................................................................................................62
On-board Service......................................................................................................................................................63
After Flight Service..................................................................................................................................................63
Vietnam Airlines’ Strategic Alliances..............................................................................................................64
4.3 Develop New Brand Identity for Vietnam Airlines...........................................................................................65
4.3.1 CORE IDENTITY: SERVICE-MINDED, SECURITY AND SAFETY........................................................................65
4.3.2 EXTENDED IDENTITY...................................................................................................................................65
4.3.3 THE NEW DESIGN OF VIETNAM AIRLINES...................................................................................................67
4.3.4 REASONS FOR LAUNCHING A NEW DESIGN AND A NEW IDENTITY.............................................................67
4.3.5 UPDATING VIETNAM AIRLINE’S IMAGE.......................................................................................................68
(b) The New Identity of VNA..................................................................................................................................71
4.3.6 PARTNERS IN THE SPECIAL LIVERY DEVELOPMENT....................................................................................71
4.3.7 PLANNING FOR LAUNCHING THE NEW DESIGN AND NEW IDENTITY...........................................................72
4.4 Manage Brand Image.........................................................................................................................................72
4.4.1 POSITIONING STRATEGY..............................................................................................................................72
4.4.2 PERSONALITY..............................................................................................................................................72
4.4.3 BRAND STRATEGY.......................................................................................................................................72
4.4.4 NEW MARKETING MIX................................................................................................................................73
Service............................................................................................................................................................73
Tactical and Strategic Advertising...........................................................................................................................76
4. 5 Brand Consistency and Loyalty........................................................................................................................78
4.5.1 CONSISTENT BRAND STRATEGY..................................................................................................................78
4.5.2 BRAND LOYALTY........................................................................................................................................78
5.1 Outline of the survey..........................................................................................................................................79
5.2 Profile of the Customer Survey..........................................................................................................................79
5.3 Factor Analysis...................................................................................................................................................82

Airlines............................................................................................................................................................86
Ads theme line.................................................................................................................................................86
Now more than ever, a great way to fly...................................................................................................................86
5.3.9 MULTIVARIATE ANALYSIS OF VARIANCE (MANOVA) (APPENDIX 1).......................................................89
5.4 Brand awareness.................................................................................................................................................90
5.4.2 BRAND NAME TRIAL...................................................................................................................................92
5.4.3 THE MOST FAVORITE ADVERTISING CAMPAIGN (APPENDIX 1).....................................................................93
5.4.5 FACTORS INFLUENCE ON DECISION-MAKINGS OF CHOOSING VNA’S SERVICE.............................................94
v
5.4.6 THE EVALUATION OF VIETNAM AIRLINES’ SERVICE QUALITY....................................................................94
5.5 Brand Loyalty.....................................................................................................................................................95
5.5.4 INFORMATION ACCESS FOR A NEW BRAND...................................................................................................97
5.6 Questions related to a New Logo and New Colour (New Design) of Vietnam Airlines...................................98
5.6.1 COLOUR OF THE NEW PAINTING...................................................................................................................98
5.6.2 NEW LOGO..................................................................................................................................................99
5.6.3 FEELINGS ABOUT THE NEW DESIGN (NEW COLOUR AND NEW LOGO) .........................................................99
5.6.4 PREFERENCE ABOUT THE NEW DESIGN.....................................................................................................100
TABLE 5.6.4A: PREFERENCE OF NEW DESIGN BY AGE.......................................................................................100
6.1 Conclusions......................................................................................................................................................103
GENERAL CONCLUSIONS.....................................................................................................................................103
6.2 Recommendations for Vietnam Airlines..........................................................................................................104
6.3 The suggested model for Corporate Identity Building Process........................................................................105
CORPORATE IDENTITY BUILDING PROCESS..........................................................................................................105
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List of figures
Figure 2.1: The brand...............................................................................................................................................15
Figure 2.2: The brand and the consumer..................................................................................................................16
Figure 2.3 A brand is more than a product...............................................................................................................17
Figure 2.4: The core of the brand identity...............................................................................................................21
Figure 2.5: Brand Identity Planning Model ............................................................................................................22

Figure 2.6 Brand Image drives brand equity............................................................................................................24
Figure 2.7 Brand loyalty builders.............................................................................................................................27
Figure 3.1: Passenger Transport Through Years......................................................................................................35
FIGURE 3.2: Vietnam Airlines Route Map.............................................................................................................38
QV............................................................................................................................................................................42
Figure 4.1: Regional airlines market mapping.........................................................................................................45
Figure 4.2: The Current Organizational Structure of Vietnam Airlines...................................................................53
Figure 4.3: Transforming Organizational Structure.................................................................................................55
Figure 4.4: The Proposed Organizational Structure.................................................................................................56
Figure 4.6: The Old Design of Vietnam Airlines.....................................................................................................59
Figure 4.7: Distribution Channel of Vietnam Airlines.............................................................................................64
Figure 4.8 Anatomy of Vietnam Airlines Brand......................................................................................................67
Figure 4.9: The New Design of Vietnam Airlines...................................................................................................67
Figure 4.10: The Factors Creating Change Into a New Identity of Vietnam Airlines.............................................68
Figure 4.11: The comparison between the old and new identity.............................................................................69
Figure 5.1: Age group of respondents......................................................................................................................82
T-Test.......................................................................................................................................................................86
Figure 5.2: Awareness of airlines.............................................................................................................................91
Figure 5.3: Brand Name Choice...............................................................................................................................93
Figure 5.4: Brand Loyalty........................................................................................................................................96
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List of tables
Table 2 The brand position trap...............................................................................................................................19
Table 3.1: Overall Financial Performance (in US $ millions).................................................................................29
Table 3.2: International Traffic Growth (1998-2002)..............................................................................................30
Table 3.3: AAPA traffic – 1998...............................................................................................................................31
Table 3.4: Alliance summary 1994-1997.................................................................................................................32
Table 3.5: Average Age of AAPA Fleets by Airlines (as of November 1, 1998)....................................................34
Table 3.6: Passenger & Cargo Transport (domestic and international routes)........................................................34
Table 3.7: Total of international passengers carried from 1991 to 1998.................................................................35

Table 3.8: Market share of Vietnam Airlines from 1996 to 1999 in main Asia-Pacific routes...............................36
Table 4.1: Customer Profile of VNA.......................................................................................................................41
Table 4.2: Vietnam Airlines profile in Southeast Asia market (on a 1-7 scale).......................................................42
Table 4.3: Ranking by categories.............................................................................................................................42
Table 4.4: Vietnam Airlines Profile in North-east Asia market...............................................................................42
Table 4.5: Ranking by categories.............................................................................................................................43
Table 4.6: Vietnam Airlines Profile in European market........................................................................................43
Table 4.7: Ranking by Categories............................................................................................................................43
Table 4.8: VNA Ranking (as compared 15 carriers under survey)..........................................................................44
Table 4.9: VNA’s Brand Image (between 1996 and 1997)......................................................................................45
Table 4.10: Vietnam Airlines’ SWOT Analysis......................................................................................................47
Table 4.11: Vietnam Air Cargo Transport Projection (tons)....................................................................................60
Table 4.12: Vietnam Airlines International Passenger Transport Projection ..........................................................60
Table 4.12: Number of Personnel as of May 1999...................................................................................................61
Table 4.13: Level of education of Vietnam Airlines employees (as of May 1999).................................................61
Table 4.14: Vietnam Airlines Resources and Skills.................................................................................................62
Table 4.15: Vietnam Airlines’ Strategic Alliances..................................................................................................65
Table 4.16 Change of VNA Brand Identity.............................................................................................................69
Table 4.17: Advertising concepts for 1999..............................................................................................................75
Table 5.2.1: Gender..................................................................................................................................................79
Table 5.2.2: Frequency of passengers flying on international routes.......................................................................80
Table 5.2.3: Structure of Nationality........................................................................................................................80
Table 5.2.4: Occupation structure of respondents....................................................................................................81
Table 5.2.5: Income..................................................................................................................................................81
Table 5.2.6: Age.......................................................................................................................................................82
Table 5.3.1: Descriptive statistics of thirteen variables............................................................................................83
Table 5.3.2: MSA (Measure of sampling adequacy)................................................................................................83
Table 5.3.3: Guidelines for Identifying Significant Factor Loadings Based on Sample size..................................84
Table 5.3.4: The rotation of factors..........................................................................................................................85
Table 5.3.5: The Total Variance Explained.............................................................................................................85

Table 5.3.6: Ads slogans of some famous airlines or aircraft manufacturers in the world......................................86
Table 5.3.7: Test with Gender..................................................................................................................................86
Table 5.3.8: Test with Income..................................................................................................................................88
Table 5.3.9: Test with Nationality............................................................................................................................89
Table 5.4.1: Awareness of the carrier.......................................................................................................................90
Table 5.4.2 Brand name vs. Income.........................................................................................................................92
Table 5.4.4 Sources of information about Vietnam Airlines...................................................................................93
Table 5.4.5: Factors affecting passengers to choose Vietnam Airlines’ services....................................................94
Table 5.4.7: Vietnam Airlines’ Service quality........................................................................................................95
Table 5.5.1 Buying the same brand..........................................................................................................................95
Table 5.5.2 Brand Switching....................................................................................................................................96
Table 5.5.3 New Brand Trial....................................................................................................................................97
Table 5.5.4 Source of information for a new brand.................................................................................................98
Table 5.6.1: Attitudes towards the new painting of Vietnam Airlines.....................................................................98
Table 5.6.3a Feelings about the new design by age.................................................................................................99
viii
Table 5.6.3b Feelings about the new design by nationality...................................................................................100
Table 5.6.4b: Preference of New Design by nationality........................................................................................101
ix
Chapter 1
Introduction
1.1 Rationale of the Study
Building strong brands is one of the ways on which a company can develop and sustain an
advantage over its competitors, and thereby is bale to maintain or increase its sales or market
share. The development of competitive advantage through branding is particularly crucial for
mature and declining industry or market.
With a population of more than 79.4 million people in 1998 (AsiaWeek, 05-07-99), Vietnam is
a great potential for both local and foreign investors in air transport sector. Many international
airlines have come to exploit business opportunities in this country. As a result, this emerging
market has become the site of fierce competition for airlines industry, especially when the

region entered the economic crisis in 1997. Taking advantage of global branding and
powerful financial resources, many carriers have been eating up the market share of Vietnam
Airlines. Furthermore, airlines industry is one of the toughest markets because of its specific
characteristics. Especially, there exist a very high entry barrier due to high cost of entry
(required huge capital investment in terms of facilities and other fixed assets) and the
perishability of the products. Therefore, to be successful in doing business in this industry
requires a very good branding strategy. This is not, by no means, an exception for Vietnam
Airlines.

1.2 Statement of the Problem
Thanks to the open door policy, Vietnam Airlines experienced an exponential growth during
the period between 1991 to 1996 with an average volumes growth of 32% per annum (even
as high as 55 % per year in 1992. But it started to face sharp decline in 1997 and 1998 due to
the financial crisis in Asia. Meanwhile, many foreign airlines firms have kept on increasing
their flights to Vietnam, which has aggravated the situation for Vietnam Airlines. Therefore, to
response to these challenges, Vietnam Airlines needs to better to REPOSITION ITSELF IN
THE ASIA-PACIFIC REGION BY A MORE EFFECTIVE BRANDING STRATEGY (new logo
design). It is a survival mission presently and for building up competitiveness in the future for
the airlines.
1.3 Objectives
This research focuses on the following objectives:
♦ To define the principles of brand performance attributing to airline's competitive
advantage.
♦ To investigate the consumer perceptions toward brand name and their choice criteria for
brands.
♦ To investigate the consumer perception towards the new brand of Vietnam Airlines
10
♦ To reposition Vietnam Airlines in the Asia-Pacific region with its new identity.
1.4 Research Methodology
1.4.1 Data Collection

Secondary data:
In order to get a general picture of the airlines market in Vietnam and in the Asia-Pacific
region, information on airlines industry were collected from many business journals such as
Vietnam Economic Review, Vietnam Investment Review, Saigon Times, Vietnam Civil
Aviation Magazines, Airlines Business Magazine, Orient Aviation Magazine, Air Transport
World Magazine, etc. and even Internet search. In addition, the annual and quarterly service
quality report and the Report of Investigation of Customer Behavior were also studied.
Primary data:
The following surveys were undertaken to provide a proper understanding of the situation:
 Qualitative research: In-depth interviews with functional managers of Vietnam Airlines
(Market Planning Deputy Director, Sales Managers, General Managers at selected
international airports, and sales representatives) are held together with air hostesses of
Vietnam Airlines, in order to understand employees' opinion about the new brand
association and intended new logo design.
 Quantitative research: Market survey toward passengers’ perceptions regarding
Vietnam Airlines and other carrier brands through questionnaires will help understand
customer’s behavior and criteria in choosing brands, and what they feel about the new
design of Vietnam Airlines. 140 questionnaires were distributed to passengers in the
waiting lounge in international terminal of Tan Son Nhat Airport in two weeks. Samples
were taken on the basis of two following criteria:
 Passengers who have flown with Vietnam Airlines more than once
 Passengers who have ever flown with other international airlines
Interviews with selected passengers were also held to clarify controversial and unclear
issues.
1.4.2 Data Analysis
Qualitative analysis was done with information collected from interviews and the survey.
SPSS (Factor Analysis, MANOVA, Crosstabulation) was used to analyze the data collected
from distributed questionnaires in order to know how consumer behavior would be affected by
this brand's attributes.
1.5 Research Framework:

The research was structured according to the following chart:
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1.6 Scope and Limitations
This research focuses only on the positioning strategy of Vietnam Airlines through creating a
new identity by means of a new brand design in the Asia-Pacific airlines market.
The research study was conducted in Tan Son Nhat International Airport, in the international
departure terminal in Ho Chi Minh City because this airport is the main hub of Vietnam
Airlines in Vietnam, where many passengers around the world come and leave the country.
The research study was also mainly aimed at the foreign passengers, whose target matched
with the airline long-term strategy – to extend the network to new destinations, and the
international flight routes are seen the targeted markets for future growth. Other reason is that
with the average income of approximately US$800/head/year which is 3 times higher than the
average income of the whole Vietnam’s population (World Bank Report, 1998).
1.7 Structure of Research Study
The research study’s report will be organized in the following order:
Chapter 1: Introduction
Chapter 2: Literature review
Chapter 3: Overview of airline market in the Asia-Pacific and in Vietnam
Chapter 4: Vietnam Airlines’ positioning strategy
12
DEVELOP
Brand Identity
Brand concept
MANAGE
Brand Image
Portfolio
management
MAINTAIN
Brand loyalty
Equity building

Consistent brand strategy
Communication program
markets
Chapter 5: Analysis on Customers’ Feedback
Chapter 6: Conclusion & recommendations
13
Chapter 2
Literature Review
2.1 Introduction
Discussions of brands and branding have become increasingly common in recent years. One
of the reasons for this interest, as indicated by McKenna (1991) and Bello et al.(1994) is the
fact that new tendencies in marketing are concerned fundamentally with the creation of added
value, long-term relationships, based on knowledge and experience with the aim of finding a
way for the client to interrelate and integrate with the company. Among the type of
competitive market in which companies act, brands are the strongest, most stable values
through time that they can count on (Aaker and Blanco, 1995a).
Another reason for a company’s interest in studying brand value arises from strategic
considerations. To improve its productivity in the market, marketing managers need an
understanding of consumer behavior and attitude toward the brand on which to base strategic
decision making. Here is where the study of brand value can offer us a measure of consumer
attraction, or loyalty to the brand, which reflects a measure of the resistance to brand change
if there is a change in commercial policy (Aaker, 1994).
2.2 Develop a Brand Identity
2.2.1 What is a Brand?
Roderick White (1999) defines that a brand is the means by which a company aims to
differentiate its products from competition and – through marketing- protect its position in the
market, profitably, over time. For this to happen, it has to achieve a rapport with its
consumers: if a brand is not somehow “in the mind” of its target market, it can be only a
casual purchase, at best.
How should we understand this? A brand has been graphically described by Julie Lannon

(1994), drawing on anthropological analyses, as consisting of a ‘mosaic of meaning’. She
describes branding as the mechanism that crates and sustains ‘consumption myths and
consumption rituals, involving products and services endowed with symbolic meanings’.
S. King (1971), offers a different view: a product is something that made in a factory, a brand
is something that is bought by consumers. A product can be copied by a competitor, a brand
is unique. A product can be quickly outdated, a successful brand is timeless.
Graham Hankinson and Philippa Cowking defines that a brand is a product or service
made distinctively by its positioning relative to the competition and by its personality. It
positioning defines the brand’s point of reference with respect to the competition. The brand
personality consists of a unique combination of functional attributes and symbolic values. For
successful brands, the positioning and the personality are inextricably linked. The positioning
defines potential competitors and the personality distinguishes the brand. The relative
importance of positioning and personality will depend on the extent to which a brand is
intended for a specific target market or product sector.
14
Kotler (1994) defines a brand as “a name, term, sign, symbol, or design, or a combination of
them, intended to identity the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.”
Kapferer (1992) makes a clear distinction in writing that, “ products are what the company
makes; what the customer buys is a brand.” So brand can be understandable as the product
in the customer viewpoint. A brand is landmark. Buyers are actually purchasing a position in
the minds of potential customers be in the stalls or in the royal circle.
Arnold (1992) comments that brand is the personality or identity of a product, range of
products or an organization, derived from consumer perception of both tangible and intangible
attributes. Brands are recognized and understood on an emotional level, in a way that most of
their founders would find astonishing.
David.A.Aaker (1991) also has similar definition. He says a brand is a distinguishing name
and/or symbol (such as a logo, trade-mark, or package design) intended to identify the goods
or services of either one seller or a group of sellers, and to differentiate those goods or
services from those of competitors. A brand thus signals to the customer the source of

product, and protects both the customer and the producer from competitors who would
attempt to provide products that appear to be identical.
A brand can be visualized as a form of see-saw, achieving a balance(which may vary widely
for different types of brands) between rational and emotional elements or characteristics
(figure 2.1)
Figure 2.1: The brand
From the marketer’s point of view, this is constructed and articulated by the whole of the
marketing mix but, in particular, the communications elements of the mix, of which advertising
is typically the largest part in monetary terms (figure 2.2). However, without the consumer, the
brand barely exists. To complete the picture, we have to recognize the consumer’s
relationship with the brand, which , as we have seen, involves the three facets of recognition,
affect and experience. Each of these operates both as a recipient of the brand (Figure 2.2).
15
RATIONAL
EMOTIONAL
BRAND
Figure 2.2: The brand and the consumer
Source: International Journal of Advertising, 1999
Branding, therefore, has to do with the way customers perceive and buy things, it is not
simply a characteristic of certain industries.
2.2.2 A Brand is more than a Product
According Aaker (1996)Brand is more than a product. Branding is about the way people
perceive, not about the products in isolation (Aaker, 1996).
A brand represents a pact between brand owner and consumer. Brand allows consumers to
shop with confidence in what is an increasingly complex world. The brand offers the
consumer a guarantee of quality, value and product satisfaction. Branding re 2real, in the
minds of consumers. Strong brands exist, because they have become deeply rooted in the
minds of consumers, and are apart of the texture of people’s lives. They become part of this
texture because people are willing to respond to the brand and the way in which it is
presented, and advertising is often the most visible and dramatic aspect of this ( Roderick

White, 1999).
16
Brand
Experience
Cognition
Affect
Rational
Emotional
R&D
NPD
Design
Production
Pricing
Service
Information
Awareness
Communication
Positioning
Motivations
Associations
Marketin
g
Consumer
Products cannot speak for themselves. The brand is what gives them meaning and speaks
for them. Figure 2.3 describes all possible attributes of a brand.
The most important attribute of a successful brand is, of course, the product itself. Creating a
brand image for a product, which does not match the consumers’ expectation, is a formula for
a certain failure (Tennant, 1994).
Figure 2.3 A brand is more than a product
Source: Building Strong Brand, D.A.Aaker, 1996

However, non-tangible factors have come to play an increasingly important role. Recently, the
way in which branded products or services have been distinguished from one another has
increasingly concerned non-tangible factors rather than tangible factors. Therefore, branding
has become a highly skilled and specialized discipline. It concerns with managing and
maintaining a mix of factors, both tangible and intangible to attract consumer loyalty (Stobart,
1994).
Brands are real, in the minds of consumers. Strong brands exist, because they have become
deeply rooted in the minds of consumers, and are apart of the texture of people’s lives. They
become part of this texture because people are willing to respond to the brand and the way in
which it is presented, and advertising is often the most visible and dramatic aspect of this
( Roderick White, 1999).
2.2.3 Brand Equity
Brand equity is the aggregation of all accumulated attitudes and behavior patterns in the
extended minds of consumers, distribution channels and influence agents, which will enhance
future profits and long term cash flow.
The key elements of this definition are as follows:
17
Product
Scope
Attributes
Quality
Uses
Brand
Personality
Organizational
Associations
Country of Origin
Self-Expressive
Benefit
Emotional

benefit
Brand-Customer
Relationships
Symbol
User Imagery
BRAND
BRAND
• It follows the holistic approach to branding;
• “extended minds” such as automatic ordering programs and other systems are included;
and
• This definition distinguishes the asset from its valuation.
The job of the brand manager is to maximize both profits and brand equity, not just sales,
market share and short-term profits alone.
One stream of brand equity research has focussed on brand extensions (Barwise, 1993). Part
of this work has explored the impact of a brand’s equity on its extendibility, with the general
conclusion being that the firm can leverage a brand’s existing equity in new categories
(Shocker and Weitz, 1988). Research within this stream has found that highly valued brands
(i.e. those with higher brand equity) extend more successfully (Rangaswamy et al., 1993).
Other research has looked at the reverse relationship: the effect of brand extensions on brand
equity. As one would expect, the findings are that successful brand extensions can have a
positive effect on the core brand, i.e. build brand equity (Dacin and Smith, 1994; Keller and
Aaker, 1992).
2.2.4 Brand Identity
Definition
A brand identity provides direction, purpose and meaning for the brand. Aaker (1996) gives a
variety of definitions of brand identity such as:
Brand identity is a unique set of brand associations that the brand strategist aspires to
create or maintain. These associations represent what the brand stands for and imply
a promise to customers’ form the organization member.
Brand identity should help establish a relationship between the brand and the

customer by generating a value proposition involving functional, emotional or self-
expressive benefits.
Brand identity consists of twelve dimensions organized around four perspectives - the
brand-as-product, brand-as-organization, brand-as-person, and brand-as-symbol .
Brand identity structure includes a core, extended and proposition identity. A brand
identity is to brand strategy what “strategic intent” is to a business strategy. Strategy
intent involves an obsession with winning real innovation, stretching the current
strategy and a forward-locking dynamic perspective.
The brand position trap
A brand position has been defined as “the part of the brand identity and value proposition that
is to be actively communicated to the target audience and that demonstrates an advantage
over competing brands” (Aaker, 1996).
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Thus, the brand position guides the current communication programs and is distinct from the
more general brand identity construct. There is a distinction between three related constructs
as illustrated in the table below:
Table 2 The brand position trap
Brand Image Brand Identity Brand Position
How the brand is
now received
How strategists want the
brand to be perceived
The part of the brand identity and
value proposition to be actively
communicated to a target audience
Source: Aaker (1996)
The brand position trap occurs when the research for a brand identity becomes a search for a
brand position, stimulated by a practical need to provide objectives to those developing the
communication programs. The goal becomes an advertising tag line rather than a brand
identity (Aaker, 1996).

Four brand identity perspectives
Aaker (1996) classifies brand identity into 4 categories:
a. The brand-as-product
Although strategists should avoid the product-related associations, they remain to be an
important part of a brand identity as they are directly linked to brand choice decisions and the
use experience. Product-related associations may comprise product-scope, product
attributes, quality/value, uses, users and country of origin.
b. The brand-as-organization
The brand-as-organization perspective focuses on attributes of the organization rather than
those of the product or service. The people, culture, values, and programs of the company
create such organizational attributes as innovation, a drive for quality, and the concern for the
environment. Organizational attributes are more enduring and more resistant to competitive
claims than are product attributes. It is difficult to duplicate an organization with unique
people, values, and programs. These attributes may apply to a set of product classes.
c. The brands-as-person:
The brand-as-person perspective suggests a brand identity that is richer and more interesting
than one based on product attributes. Like a person, a brand can be perceived as being
upscale, competent, impressive, trustworthy, fun, active, humorous, casual, formal, youthful,
or intellectual. A brand personality can create a stronger brand in several ways. First, it can
help create a self-expressive benefit that becomes a vehicle for the customer to express his
or her own personality. Second, brand personality can be the basis of a relationship between
the customer and the brand. Third, a brand personality may help communicate a product
attribute and thus contribute to a functional benefit.
d. The brand-as-symbol
A strong symbol can provide cohesion and structure to an identity and make it much easier to
gain recognition and recall. Its presence can be a key ingredient of brand development and its
absence can be substantial handicap. Symbols involving visual imagery can be memorable
and powerful. A strong symbol can be the cornerstone of a brand strategy.
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The Identity Structure

Brand identity consists of a core identity and an extended identity. In addition, the identity
elements are organized into enduring patterns of meaning, often around the core identity
elements (Aaker, 1996).
• Core identity
The core identity represents the timeless essence of the brand, which contains the
associations that are most likely to remain constant as the brand enters to new markets and
products classes. In addition, the core identity for a strong brand should be more resistant to
change than elements of the extended identity. Ultimately, the core identity follows from the
answers to some tough, introspective questions, such as:
 What is the soul of the brand?
 What are the fundamental beliefs and values that drive the brand?
 What are the competencies of the organization behind the brand?
 What does the organization behind the brand stand for?
• Extended Identity
The extended brand identity includes elements that provide texture and completeness. It fills
in the picture, adding details that help portray what the brand stands for. Important elements
of the brand’s marketing program that have become or should become visible associations
can be included. A brand personality does not often become a part of the core identity.
However, it can be exactly the right vehicle to add needed texture and completeness by being
part of the extended identity (Aaker, 1996).
The extended brand identity may include product scope, retail experience, slogan, logo,
personality, and relationship.
• Value Proposition
Aaker (1996) stated that “a brand’s value proposition is a statement of the functional,
emotional and self-expressive benefits delivered by the brand that provide value to customer.
An effective value proposition should lead to a brand-customer relationship and derive
purchase decision.”
Propositioning is a description of an appeal of a brand to its consumers. It offers the reason
why a consumer might prefer the brand.
There are three types of benefit, which brand name product/service can bring to consumers:

Functional benefit: The benefit based on a product attribute that provides functional utility to
the consumer. Such a benefit will usually relate directly to the functions performed by the
product or service for the customer.
The functional benefits have limitation of failure to differentiate, easy to copy. Other benefits
attributes can overcome those limitations.
 Emotional benefit: When the purchase or use of a particular brand gives the customer a
positive feeling, that brand is providing an emotional benefit. It adds richness and depth to
the experience of owning and using the brand.
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 Self-expressive benefit: A brand can provide a self-expressive benefit by providing a
way for a person to communicate his or her self-image.
For each individual, the people will have an associated self-concept and a need to express
that self-concept. The purchase and use of brands is one way to fulfill this need for self-
expression. For example, using a positioned brand name products/ service with strong
personality associated with a visible athlete generates self-expression (Aaker, 1996).
Figure 2.4: The core of the brand identity
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Brand
Positioning
Strategic
Personality
Selling
Strategy
Promotion/
Merchandising
Brand
Name
Product/Service
Performance
Logo/

Graphic
System
Marketing
Communication
2.2.5 Brand Identity Planning Model
Figure 2.5: Brand Identity Planning Model
2.2.6 Brand Positioning
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Customer Analysis
Trends
Motivation
Unmet Needs
Segmentation
Competitor Analysis
Brand image/Identity
Strengths/Strategies
Vulnerabilities
Self-Analysis
Existing Brand image
Brand heritage
Strengths/capabilities
Organization value
BRAND-CUSTOMER RELATIONSHIP
CREDIBILITY
Support other brands
VALUE PROPOSITION
Functional
benefits
Self-expressive
benefits

Emotional
benefits
BRAND IDENTITY IMPLEMENTATION SYSTEM
BRAND POSITION
Subset of the brand identity and value proposition
At a target audience
To be actively communicated
Providing competitive advantage
Execution
Generate alternatives Symbols and metaphors Testing
TRACKING
BRAND IDENTITY SYSTEM
BRAND as Organization
Organization attributes
(e.g., innovation, consumer
concern, trustworthiness)
Local vs. global
Country of Origin
BRAND IDENTITY
BRAND as Symbol
Visual imagery and
metaphors
Brand heritage
BRAND as Person
Personality ( e.g.,
genuine, energetic, rugged)
Brand-customer
relationships( e.g., friend,
adviser)
BRAND as Product

Product scope
Product attributes
Quality/value
Uses
Users
Country of Origin
Core
Extend
ed
The positioning decision for an established brand is complicated by the set of associations
already in place. A s a result, consideration needs to be given as to which associations
should be weakened or eliminated, as well as which should be created or enhanced.
The selection is based upon an economic decision involving the market response to the
associations, and the investment and marginal cost associated with them. Basically, a
position is needed that will attract a market or a large part of a small market-at a cost that will
result in an attractive return over an appropriate time frame. The problem is, of course that is
not easy to forecast the sales and cost streams that will be associated with any specific
positioning decision.
2.2.6.1 Developing a positioning strategy
Positioning by product attributes and benefits
A common approach to positioning is setting the brand apart from competitors based on
specific characteristics or benefits offered. Sometimes a product may be positioned on more
than one product benefit.
Positioning by price/quality
Marketers often use price/quality characteristics to position their brands. One way they do is
with ads that reflect to the quality benefits derived from using the brand. Premium brands
positioned at the high end of the market use this approach to positioning
Positioning by competitor
Competitors may be as important to positioning strategy as a firm’s own product or service.
In today’s market, an effective positioning strategy for a product or brand may focus on

specific competitors. When positioning by competitor, a marketer must often employ another
positioning strategy as well to differentiate the brand
Positioning by cultural symbols
Aaker and Myers include an additional positioning strategy in which cultural symbols are used
to differentiate brands.
The use of cultural symbols has become so common in our society that psychologists and
sociologists have examined the mythological foundations underlying many characters and
dissected the inherent meanings consumers ascribe to them.
Repositioning
One final positioning strategy involves altering or changing a product’s or brand’s position.
Repositioning a product usually occurs because of declining or stagnant sales or because of
anticipated opportunities in other market positions.
2.2.6.2 Strategic Misconceptions
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A new Identity/Execution is Ineffective
Sometimes, it takes time for an identity/execution to wear in. Customers need to get used to
the concept, and the execution needs to be refined. A brand identity is not like a TV show that
starts slow, develops a growing following, and only after two or three years becomes a hit. It
can take that long for the audience to build, and for the characters to find their niche and
become familiar to the audience. During that time, characters or other elements may be
added, deleted, or modified as the show settles into its style.
A new Paradigm Requires a New Identity/Execution
Managers, by instinct and training, are always examining the market for trends. A major
challenge is to determine which of these trends represent a fundamental shift in the market.
Even when a paradigm shift is accurately detected, it is not always clear that the brand
strategy should change. The old strategy, even if found to be inappropriate for a major
segment, may still represent a better strategy than alternatives. Further, there is an upside to
maintaining an existing identity in the face of a new paradigm.
2.3 Manage Brand Image
2.3.1 Three components of brand image

The image of a brand has three contributing subimages:
• The image of provider of the product/service, or corporate image
• The image of the user
• The image of product/service itself.
2.3.2 Brand Image Drives Brand Equity
Figure 2.6 Brand Image drives brand equity
2.3.3 Benefits and importance of a brand image:
A strong brand image offers an organization several important strategic advantages. A brand
distinguishes the goods and services of one seller from those of competitors. A powerful
brand identity creates a major competitive advantage; a well recognized brand encourages
repeat purchases. Thus, a brand acts as a signal to consumers regarding the source of the
product and protects customers and manufacturers from “me-too” products that may appear
identical. Brand image consists of consumer knowledge and beliefs, stored in memory as
associations, about brand attributes and the consequences of brand use (Peter and Olson,
1994). These associations are usually organized in some meaningful manner (Aaker, 1991).
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Brand Image
Brand Equity
Brand Equity
Market Value of a
Brand
Market Value of a
Brand
All Non-image
Factors
Contribute to
Brand Equity
All Non-image
Factors
Contribute to

Brand Equity
Thus, Coke is not just a set of ten strong associations and 20 weaker ones. Rather, the
associations are grouped in such a manner that it has meaning. There may be a lifestyle
cluster, a sponsorship cluster, and a variety of products cluster. There might also be one or
more mental pictures that come to mind when Coke is mentioned, such as the Coca-Cola
logo, the Olympic Torch Relay, or inevitably, a refreshing drink.
2.4 Maintain Brand loyalty
2.4.1 Cultivating long-term relationships with customers
In today’s changing global environment, every organization is searching for innovative ways
to achieve competitive advantage, increase customer loyalty, and improve efficiency without
sacrificing quality of service. Confronted with these challenges, marketers are differentiating
their product service offerings by cultivating long-term relationships with their customers, who
are setting new standards for service excellence.
Marketers have been studying the differences between goods and services (Berry, 1980;
Bessom, 1973), and the variations in optimal marketing strategies to satisfy customers (Berry
and Parasuraman, 1991; Crosby and Stephens, 1990; Hart, 1988). Inseparability, intangibility,
heterogeneity, and perishability are the four characteristics that are most commonly used by
marketers to differentiate between goods and services (Berry, 1980; Parasuraman, Zeithaml,
and Berry, 1985). Since goods and services have these distinct characteristics that result in
varying optimal strategies, it makes sense that the most effective strategies for building and
retaining loyalty will also vary between goods and services.
2.4.2 Brand loyalty
Numerous studies have been conducted to examine determinants of brand loyalty in goods
(Cunningham, 1966; Jacoby and Chestnut, 1978; Tranberg and Hansen, 1986), and the most
effective ways in building loyalty for goods (Laforet and Saunders, 1994). Compared with
brand loyalty research, studies on service loyalty are less numerous. Snyder (1991) found
some correlations between demographic variables and strong service loyalty. One study
found that men and women often differ in how they value the core and relationship aspects of
services (Iacobucci and Ostrom, 1994). Morgan and Dev (1994) studied the impact on the
lodging industry of variables on brand switching. To build service loyalty, hotel managers

entice guests to join frequent-stayer programs. Frequent stayers tend to exhibit demographic,
attitudinal, and behavioral characteristics that differ from those of non-frequent stayers
(Rivers, Toh, and Alaoui, 1991). There have been other articles that have focussed on
building loyalty for specific service industries(Bond, 1995; Meyers, 1994). Even with these
exceptions, a recent review article on loyalty noted that most of the studies that were
examined focussed on loyalty for goods (Dick and Basu, 1994).
The consensus among researchers is that loyalty is a very complex construct. Evidence of
this complexity can be found in the lack of consistency in how loyalty has been defined in the
literature:
One group prefers to define loyalty in behavioral terms. Behavioral definitions are based on
the amount of purchases for a particular brand (Bass, 1974; Tranberg and Hansen, 1986).
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