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IMT-75: Brand Management-MT1

IMT-75: Brand Management-MT1













IMT-75: Brand Management



Q1. 'A brand is an external manifestation of what happens inside the organization.' Discuss.

Q2. Discuss in detail the application of brand identity prism as postulated by KAPFERER to any one Indian brand of your choice.

Q3. What is the role of symbols, logos and slogans in the brand building exercise? What are the practices you will encourage while designing a logo?

Q4. If media advertising no longer existed tomorrow, how would you build a brand with consumers?

Q5. Launching a brand and launching a product are not the same. What steps would you take to launch a new brand?


Q1. What is the significance of 'media class decision' and 'media vehicle selection' in advertising?

Q2. How important do you think it is for advertisers to understand the psychology of consumers for effective brand management?

Q3. In what ways do vision-culture misalignment, image-culture gap and image-vision gap affect the building up of a corporate brand?

Q4. Describe the following in brief:

     (i) Brand Equity

(ii) Brand Awareness

(iii) Brand Associations

(iv) Brand Loyalty

     (v) Brand Personality

Q5. Effective brand management requires proactive strategies designed to maintain brand equity in the face of different forces. Keeping this statement in the background discuss the 'brand reinforcement' and brand revitalization' strategies.


Q1. What does the brand manager use the Pyramidal Model for?

Q2. What do you understand by brand extension and line extension? How do they benefit a company?

Q3. What are the advantages and disadvantages of the portfolio approach to brands?

Q4. Describe the methods by which a company can attain the objective of having 'global brand presence'.

Q5. What is the significance of a 'brand name'? What care should be taken while creating or selecting a brand name?


McDonald's: Serving Fast Food around the World

Ray Kroc opened the first McDonald's restaurant in 1955. He offered a limited menu of high-quality, moderately-priced food, served fast in spotless surroundings. McDonald's 'QSC&V (quality, service, cleanliness, and value) was a hit. The chain expanded into every state in the United States of America. By 1983, it had more than 6,000 restaurants in the US, and by 1995 it had more than 18,000 restaurants in eighty-nine countries, located in six continents. In 1995 alone, the company built 2,400 restaurants.

In 1967, McDonald's opened its first restaurant outside the United States, in Canada. Since then, the international growth accelerated. In 1995, the 'Big Six' countries - Canada, Japan, Germany, Australia, France, and England - provided about 80 per cent of McDonald's international operating income. In the same year, more than 7000 restaurants in eighty-nine countries generated sales of US$ 14 billion.

Yet, fast food has barely touched many cultures. The opportunities for expanding the market are great when one realizes that 99 per cent of the world population is not yet McDonald's customers. For example, in China, with a population of 1.2 billion people, there are only sixty-two McDonald's restaurants (1995). McDonald's vision is to be the major player in food services around the world.

In Europe, McDonald's maintains a small percentage of restaurant sales but commands a large share of the fast food market. It took the company fourteen years of planning before it opened a restaurant in Moscow in 1990. But the planning paid off. After the opening, people were standing in line up to two hours for a hamburger. It has been said that a McDonald's restaurant in Moscow attracts more visitors-on an average 27,000 daily- than Lenin's mausoleum (about 9,000 people) which used to be the place to see. The Beijing opening in 1992 attracted some 40,000 people to the largest (28,000 square-foot) restaurant at a location where some 8, 00,000 pedestrians pass by every day. Food is prepared in accordance with local laws.

For example, the menus in Arab countries comply with Islamic food preparation laws. In 1995, McDonald's opened its first kosher restaurant in Jerusalem where it does not serve dairy products. The taste for fast food, American style, is growing more rapidly abroad than at home. McDonald's international sales have been increasing by a large percentage every year. Every day, more than thirty-three million people eat at McDonald's around the world with eighteen million of them in the United States.

The prices vary considerably around the world ranging from $5.20 in Switzerland to $1.05 in China for the Big Mac that costs in the United States $2.32. Its traditional menu has been surprisingly successful. People with diverse dining habits have adopted burgers and fries wholeheartedly. Before McDonald's introduced the Japanese to French fries, potatoes were used in Japan only to make starch. The Germans thought hamburgers were people from the city of Hamburg. Now, McDonald's also serves chicken, sausage, and salads. One of the items, a very different product, is pizza. In Norway, McDonald's serves grilled salmon sandwich, in the Philippines pasta in a sauce with frankfurter bits, and in Uruguay the hamburger is served with a poached egg. Any new venture is risky and can be either a very profitable addition or a costly experiment.

Despite the global operation, McDonald's stays in close contact with its customers who want good taste, fast and friendly service, clean surroundings, and quality. To attain quality, the so called Quality Assurance Centres (QACs), are located in the Asia, the US, and Europe. In addition, training plays an important part in serving the customers. Besides day-to-day coaching, Hamburger Universities in the USA, Germany, England, Japan, and Australia, teach the skills in twenty-two languages with the aim of providing 100 per cent customer satisfaction, it is interesting that McDonald's was one of the first restaurants in Europe to welcome families with children. Not only are children welcomed, but also in many restaurants they are also entertained with crayons and paper, a play land, and the clown Ronald McDonald, who can speak twenty languages.

With the aging population, McDonald's takes aim at the adult market. Wth heavy advertising (it has been said that McDonald's will spend US$200 million to promote the new burger) the company introduced Arch Deluxe on a potato-flower bun with lettuce, onions, ketchup, tomato slices, American cheese, grainy mustard and mayo sauce. Although McDonald's considers the over-50 adult burger a great success, a survey conducted five weeks after its introduction showed mixed results.

McDonald's golden arches promise the same, basic menu and QSC&V in every restaurant. Its products, handling and cooking procedures and kitchen layouts are standardized and strictly controlled. McDonald's revoked the first French franchises because the franchise failed to meet its standards for fast service and cleanliness, even though their restaurants were highly profitable. This may have delayed its expansion in France.

The restaurants are run by local managers and crew. Owners and managers attend the Hamburger University near Chicago, or in other places around the world, to learn how to operate a McDonald's restaurant and maintain QSC&V. The main campus library and modern electronic classrooms (which include simultaneous translation systems) are the envy of many universities. When McDonald's opened in Moscow, a one-page advertisement resulted in 30,000 inquiries about the jobs; 4,000 people were interviewed, and some 300 were hired. The pay is about fifty per cent higher than the average Soviet salary in the same sector.

McDonald's ensures consistent products by controlling every stage of the distribution. Regional distribution centers purchase products and distribute them to individual restaurants. The centers will buy from local suppliers if the suppliers can meet detailed specifications. McDonald's has had to make some concessions to available products. For example, it is difficult to introduce the Idaho potato in Europe.

McDonald's uses essentially the same competitive strategy in every country: Be first in the market, and establish its brand as rapidly as possible by advertising very heavily. New restaurants are opened with a bang. So many people attended the opening of one Tokyo restaurant that the police closed the street to vehicles. The strategy has helped McDonald's develop a strong market share in the fast food market, even though its US competitors and new local competitors quickly entered the market. The advertising campaigns are based on local themes and reflect the different environments. In Japan, where burgers are a snack, McDonald's competes against confectioneries and new 'fast sushi' restaurants. Many of the charitable causes McDonald's supports abroad have been recommended by the local restaurants.

European and South American restaurants are generally company-operated or franchised (although there are many affiliates-joint ventures-in France). Like the US franchises, restaurants abroad are allowed to experiment with their menus. In Japan, hamburgers are smaller because they are considered a snack. The Quarter Pounder didn't make much sense to people on a metric system, so it is called a Double Burger. Some German restaurants serve beer, some French restaurants serve wine. Some Far Eastern

McDonald's restaurants offer oriental noodles. In Canada, the menu includes cheese, vegetables, pepperoni, and deluxe pizza, but these new items must not disrupt existing operations.


Q1. What opportunities and threats did McDonald's face? How did it handle them? What alternatives could it have chosen?

Q2. Before McDonald's entered the European market, few people believed that fast food could be successful in Europe. Why do you think McDonald's has succeeded? What strategies did it follow? How did these differ from its strategies in Asia?

Q3. What is McDonald's basic philosophy? How does it enforce this philosophy and adapt to different environments?



A Dream Gone Awry

In the late 1990s, the global direct selling giant, Amway had to contend with increasing doubts regarding its survival in India. The Company that had become synonymous with network marketing or multi-level marketing (MLM) the world over, was beset with problems. Media reports were quick to point out Amway's failure to sell the basic concept of direct selling to the Indians.

Though the company managed to rope in a substantial number of distributors, the attrition rate was at an alarming high of 60 to 65 per cent. The distributors themselves consumed most of the products that they bought. Estimates put the percentage of self-consumption at almost 50 to 60 per cent of the total volume. (There were rumours that some distributors enrolled just to take advantage of the distributor's margin of 18 to 30 per cent). In the initial stages, when trials were the only criterion, this worked well. However, this self-consumption did not translate into repeat purchases.

This was because the percentage of 'active' distributors at any given point of time remained at a low level of 35 to 40 per cent. Many people who joined in the initial frenzy returned the product kits within the first month. Company sources claimed that the returns constituted just one per cent of the total strength, but rivals and ex-employees put the figure at over 5 per cent. Of the total distributors, only about ten per cent showed reasonably high levels of activity.

To top it all, Amway was burdened with an image that had little basis in fact. Its products began to be perceived as being very expensive and meant only for the premium segment. This was identified as the single biggest reason for the high attrition rate. What was overlooked was the fact that almost all Amway products were concentrates. When used in the proper diluted form, the cost per use of each product worked out to be at par with (and in some cases, even lower than) the nearest competitor's products. For instance, the product named LOC (priced above Rs 320 for a one-litre pack), when diluted gave around 165 bottles. The cost per usage was thus very low. Either the distributors were themselves not aware of this fact, or they were unable to communicate this to the customers. Since the distributors themselves were unsure about the price-value equation of the products they were selling, they could not effectively convince the consumers either.

Amway also had to contend with customers complaining of poor customer service on the part of the Company. Analysts commented that as long as the volume of products that moved through the network was high, network marketers such as Amway were satisfied. Even though customers complained of the lack of services, the company deemed it more beneficial to go for higher sales force motivation programs rather than undertake customer service initiatives. This was largely due to the fact that the Company was almost never involved directly with the end-consumers and the sales volumes were the end of all discussions.


Q1. Enumerate the reasons for brand 'Amway' to be not so successful in India.

Q2. Compare the advantages and disadvantages of MLM to the conventional system of marketing.

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