BRAND MANAGEMENT

 Brand is an identifying symbol, words or mark that distinguishes a product from

its competitors. Differentiation is made with a label, logo and recognition signs.
Brands are created by peasants (putting recognition sings on their animals) and artists
(although, at first artists did not do that). The key point in brand history is middle of 19
century in arts and arrival of packaged goods.

 Creating the brand:

1) Name (better short, human or not, word that does not mean anything)
2) Registration office – National Institute for Industrial Property (name, class and
territory)

 Artistic direction – working on differentiation of a product and on image of the

company (with communication and advertising department)

 Marketing department (mix marketing):

1) Type of product
2) Price (the more expensive the more luxury product)
3) Place (top level- flagship store with the name in a front; department store- important
brands get a place in a front of the entrance; multi brand stores- important brands can
refuse to be sold with cheaper competitors; duty free shops- cheaper products; hypo
markets)
4) Promotion
- People who work in a shop must be polite and educated about the product
- Window shops
- Regular advertisement (usually 5% of the turnover, although some companies give
more- 10-15%)
- Sponsorship of some events

 Product Manager is responsible for selecting the:

1) Basic Products- which are making the basic profit (the most money) and they are well
known by customers
2) Reedited products- IN products (can be produced for several seasons)
3) New products- Trendy products (if it shows good goes to reedited products and if it
sells a lot goes to basic products)

 Logistics:

1) Transportation (plane- very fast, but very expensive; boar- cheaper, but longer time;
trucks- only for not far locations)

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2) Customs and taxes

 Communication and advertisement

The key style is made by artistic director and communication and advertisement
department is here to assist on the image of the brand.

Different communications:
 Advertising- vision (magazines, newspapers…) or oral (commercials)
 Cinema- usually shows “easy to buy” products; target group is younger
population between 15 and 29 years old)
 TV- involve widely public and it is very expensive
 Internet- cheaper, but not very effective, target group is young office people
 Catalogs- product oriented or image oriented
 Window display
 Sponsorships
 Fashion shows, car shows, fairs…

 Buying management

Buying Manager is aware of the market needs and wants, according to that he selects the
products that are going in shops. He has direct contact with the shops and the best one to
give statistics.

 Distribution- place you sell the product:

 Brand shops (your own shop- if you are important, profitable brand)
 Flagship shops (small brand stores)
 Satellite shops (not making the brand, but turnover)
 Franchising (your name on the store, you are getting percentage, but somebody
else invest in the store)
 Department store (important brands get the place in front of the entrance)
 Super markets and Hypo markets (middle class products)
 Mail order business and e-mail (the range of products available to customers)

 General management

 Short term- 1 year (what is new on the market- competition and their products)
 Medium term- 2-3 years (for reactive policies, big investments)
 Long term- special projects (changing the position, very risky and huge
investments)

General management can be in:

1) Horizontal way- expanding (buying competition); somebody else working for you

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2) Vertical way- independent
Licensing

Licensing is the right the company gives to some other company to use its name (brand)
for manufacturing and distribution of its products in exchange for percentage.
It started in 50s (especially in America) when big companies realized that it is easier to
sell abroad if they give somebody else the right to do that and invest instead of them.

▲ Positive for the company giving the license:

 Easy profit
 Not involving its design team
 Receiving company can do the products that the giving company don’t know how
 Easier to adapt products to prices, culture, law and regulations

▼ Negative for the company giving the license:

 The product might be on the lower level of quality

 The receiving company might price the products too low and ruin the image of the
brand

▲ Positive for the receiver of the license:

 By doing the license for the big company its own image is growing

▼ Negative for the company receiving the license:

 When the contract is over the giver of the license might ask for higher percentage

The Contract:

• Article 1: Definition- who are the companies and what each one is doing
(Company A is giving the license to Company B)
• Article 2: Receiver will get the right to manufacture and distribute what kind of
products and what is the minimum price
• Article 3: Personal nature of the license (you know what is the company today,
but not what will become, so you can request something- example: some manager
to stay in the company)
• Article 4: Detailed explanation how to make a product, with what technology and
design. You can request the prototype and give or not your approval
• Article 5: Control of the production (right to visit factories and stores)
• Article 6: Distribution- on which territory and what kind of distribution
• Article 7: Advertising- obligation to give the receiver (usually) 5% of the turnover
to use in advertising or you can advertise for the whole world

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 • Article 8: Turnover expectation (what they will achieve in Y1, Y2, Y3- the best is
to compare with competition)
• Article 9: Royalty expectations (what you will get- usually 7-10%)
• Article 10: Turnover declaration (for protecting yourself you can require to check
their sells)
• Article 11: Minimum royalty (if the turnover is much smaller than expected,
usually you get to be paid 50% of expected turnover)
• Article 12: Duration of the contract (usually 3-5 years)
• Article 13: Ending the contract (6 months before the end consider to extend the
contract)
• Article 14: Stopping the contract:
1) One is not following the contract
2) International problems (war, inflation…)
• Article 15: After the contract you have to make an agreement what to do with the
stocks (you can by it from the licenser or destroy it…)
• Article 16: The question of the sublicense- is it allowed or not and what are the
terms
• Article 17: Decide which law will be used (from the country of the receiver, giver
of the license, or some other country)

Franchising

Franchising is the right the company gives to some other company to open the shop
wearing its brand name and distribute its products (but NOT manufacture it).

▲ Positive for the company giving the franchise:

 Good for the company’s name and it is not investing it’s own money
 In countries that are not economically stable or dangerous countries it is the risk
of the receiver not of the giver of the franchise

▼ Negative for the company giving the franchise:

 Shops may not have the same level (can be dirty, bad service, cheaper
products…)

▲ Positive for the receiver of the franchise:

 By doing the license for the big company its own image is growing
 It is not hard to find products (the giving company can supply them)

▼ Negative for the company receiving the franchise:

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  If the receiver of the franchise is not doing good the giving company may decide
not to renew the contract
 If receiver company is doing really good the giving company can decide on the
end of the contract to open its own shop

The Contract:

• Article 1: Definition- who are the companies and what each one is doing
(Company A is giving the franchise to Company B)
• Article 2: Decide on the financial capital of the receiving company for the shop
• Article 3: Detailed explanation how to organize the shop, train the staff, make the
window display, organize the products…
• Article 4: Decide who is the supplier of the products (the giver of the franchise or
some other supplier)
• Article 5: Decide on the percentage (Royalty fee)
• Article 6: Being confidential about the received information’s and company’s
management sales system
• Article 7: Decide on the ways of promoting and advertising the shop and its
products
• Article 8: Duration of the contract (usually it is 3 to 5 years)
• Article 9: Minimum of turnover (the best is to decide by comparing with
competition)
• Article 10: The reason for stopping the contracts
• Article 11: After the contract you have to make an agreement what to do with the
stocks and decorations of the store (you can by it from the franchisor or destroy
it…)
• Article 12: Decide which law will be used (from the country of the receiver, giver
of the franchise, or some other country)