18-04-2014, 04:29 PM
Merchandising and Licensing to Improve Brand Equity. The Coca-Cola Case
Merchandising and Licensing .pdf (Size: 103.12 KB / Downloads: 94)
Abstract
Today’s markets are characterized by over-supply, intense competitiveness in
every sector, increasingly aggressive competition and product and market
strategies which are open to imitation. Consequently, the brand, and the values it
carries, has become the truly critical competitive factor.
In order to compete, each company needs to develop an integrated
communication campaign which includes different communication tools, with high-
impact like advertising, or with specific promotional tasks, as sales promotions (for
short-term sales volume increases), merchandising (essential for promoting brand
values at points-of-sale), licensing (which aims to transmit brand equity to
members of the public and market sectors which would otherwise be difficult to
reach) and sponsorship (where brand values are highlighted by associating the
company with highly-visible shows and events).
Brand and Brand Equity
What do Coca-Cola (the world’s most famous brand), Levi’s, Harley Davidson,
Disney, Kodak, Marlboro and McDonald’s all have in common? Why does
everyone continually warn to ‘beware of imitations’? What exactly does it mean to
be a ‘brand’?
The answer to all of the above questions is simple enough – nowadays, the brand
is a crucial factor in a company’s success. This concept is confirmed by the current
trend for large companies to adopt an innovative view of marketing which centers
on a specific strongpoint - so-called ‘total brand management’. Thus, product
quality becomes a necessary, though no longer sufficient, requirement.
Licensing and Brand Management
How a brand is perceived depends on its success in communicating its value.
There is no such thing as product value based only on advertising, brand awareness
or availability. Brand equity is a result of a brand’s success in communicating its
values without fail to any type of public.
A brand which is supported by intense advertising but unable to transmit its
values 360°, i.e. whenever and wherever the company comes into contact with its
public, will never build strong brand equity.
Everything communicates – the packaging, the ability of executives to deal with
customers, interaction with the local community, interest in social issues, the
salesforce’s professionalism, means of transport, POS equipment, merchandising
material, etc. The key to brand success, therefore, is the successful integration of
all the different ways in which a company can communicate its values and by
optimizing the performance of each method.
Licensing and Brand Equity
Every year, thousands of companies discover licensing to be an effective
marketing tool which allows them to strengthen the overall image of their
product/service and reach segments of the public they would never have been able
to reach otherwise.
Licensing has many innovative ways of being implemented, especially strategic.
Its great advantage lies not so much in earning relatively large royalties as in the
opportunity to position a brand in otherwise unreachable market sectors. One
fundamental aspect in the whole delicate process of managing a brand and an
image is the choice of both partners and merchandise categories. These categories
must bear a close affinity with the brand and its associated values.
It is a challenge in itself to effectively handle all the integrated communication
tools available to a company. Messages may appear valid on their own but if they
end up as being inconsistent among themselves or not integrated into a clearly
defined strategy, they can cause serious damage to the product or company image.
These difficulties, along with the risks stemming from them, multiply as soon as
brand management is definitively transferred to another company. Indeed, if the
company (the licensee) enjoying the right to attach the brand of another company
(the licensor) to its articles uses low-quality products or is involved in some form
of scandal, the brand image will suffer. Such damage will also be difficult to
correct since it was not caused directly by the licensor.
Merchandising and Brand Management
Another fundamental technique to increase the value of brand equity is
merchandising; meaning the set of activities undertaken by the manufacturer and/or
the trading company which are designed to create an efficient effective
presentation of the product at a sales outlet.
Naturally, the values communicated via merchandising must be consistent with
parallel marketing activities and in synergy with all the messages transmitted via
the various means of communication. Furthermore, they must remain unchanged
over a period of time in order to establish brand equity.
For example, let us compare merchandising with sales promotion, since these two
techniques are often used together at a POS. Both basically aim to increase sales
volume. However, sales promotions, by their very nature, must run for a limited
time in order to avoid distorting consumer perception of the product’s value or
even devaluing the image. On the contrary, one of the strong points of
merchandising is precisely that same continuity over a long period of time.
Trade and Producer Merchandising
The continual growth in the number of supermarket/hypermarket-type sales outlets,
the size of such POSs and the growth in their market share is creating an ever-
increasing interest by distributors in merchandising issues. In the past, such issues
were merely a marginal element in the entire context of communication variables.
The process of modernizing distribution activities has entailed a radical change in
the services offered, often involving the adoption of marketing methods and
techniques which have been developed successfully by companies in industrial
sectors (for example, transforming certain services, which were originally carried
out by company personnel and therefore charged for, into free services which are
carried out by the consumer/purchaser themselves, i.e. self-service).
The present shape of competition has changed profoundly. Commercial
businesses are now forced to put differentiated marketing policies into practice,
segmenting the market and using all the elements of the marketing mix in an
orderly coherent way.
The Coca-Cola Case
Merchandising and licensing are the two main elements that add brand value to
consumer goods such as Coca-Cola. Both should transmit the same values as the
brand, consistent with all the other elements in total brand value. Accurate
marketing in all its aspects - impact advertising, merchandising everywhere and
strong trade partnerships – plus extensive, selected licensing lie behind Coca-
Cola’s success and a growing presence that has lasted for over a century.
The company’s approach is based on exceptional product availability for the
consumer, with packs, bottle and can formats to satisfy every need, and special
emphasis on image. Together, these make The Coca-Cola Company beverages and
brands instantly recognisable and has helped extend Coca-Cola throughout highly
diverse and original distribution channels. Strategy has always centred on resellers
and consumers with a natural, basic need to quench thirst. Real-time market
analysis, research to identify consumer types and ongoing life-style monitoring are
continually updated with respect to behavioural changes and the company’s
approaches to consumption.
The Coca-Cola Licensing
Licensing is of fundamental strategic importance for The Coca-Cola Company.
Licensing (or brand licences) is carefully handled in detail and becomes part of an
integrated, strategic communication plan. Even though it has to fit into a precise,
legally-bound communications context, Coca-Cola licensing exploits specific
characteristics to the maximum.
In its simplest definition, licensing is just a contract by which The Coca-Cola
Company licences its brand to a small, select group of licensees. As a consequence,
the Coca-Cola legal division is of great importance within the company. Each
contract is carefully studied to safeguard all possible aspects within the
collaboration. Studying the contract is hugely important as licensing is a marketing
technique. If used approximately or carelessly, licensing can badly damage
company image. The legal division has the job of safeguarding the brand and
protecting the company. Contract standards are defined worldwide by Atlanta
headquarters and are then applied to the specific local contexts by country legal
offices.