A PROJECT ON

“A STUDY ON REBRANDING STRATEGIES AND IT’S IMPACT ON

SALES ”
SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF

DEGREE OF BACHELOR OF MANAGEMENT STUDIES
2024-25

SUBMITTED BY
SHAIKH KHALID
JAMAL ROSHAN ALI
ROLL NO:69
UNDER THE GUIDANCE OF

MR.UMER ALI
DAAR-UL-REHMATTRUSTS
A.E.KALSEKARDEGREECOLLEGE
ARTS, COMMERCE & SCIENCE
(AFFILIATEDTOUNIVERSITYOFMUMBAI)
KAUSA-MUMBRA DIST: THANE
ACCREDITED WITH A GRADE BY NAAC
CGPA3.25 (CYCLE II)

1
 DAAR-UL-REHMAT TRUST’s

A.E. KALSEKAR DEGREE COLLEGE

KAUSA, MUMBRA
Permanently Affiliated to the University of Mumbai
Accredited by NAAC with ‘A’ Grade, CGPA 3.25 (Cycle II)
ISO certified 9001:2015

CERTIFICATE OF PROJECT WORK

This is to certify that Mr. /Ms. of
T.Y.B.M.S Semester VI Seat No has
undertaken & completed the project work titled

during the Academic Year 2024-25 under the guidance of Dr./Mr./Ms.

__________________submitted on___________to this college in
fulfillment of the curriculum of

BACHELOR OF MANAGEMENT STUDIES

UNIVERSITY OF MUMBAI.

This is a bonafide project work & the information presented is true &
original to the best of our knowledge and belief.

Project Guide Head of Department Vice Principal

External Examiner Principal

 DECLARATION

I the undersigned, hereby declare that the work embodied in this project work
titled as A DETAILED STUDY ON-“REBRANDING STRATEGIES AND ITS IMPACT ON
SALES Forms my own contribution. To the research work carried out under the
guidance of MR.UMER ALI is the result of my own research work and has not
been submitted previously for any degree or diploma of any university.
Wherever references have been made to previous work of others, it has been
clearly indicated as such and included in the bibliography. I, hereby further
declare that all information of this document has been obtained and presented in
accordance with academic rules and ethical conduct.

Certified by:

Date:

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 ACKNOWLEDGMENT

I would like to acknowledge the following as being idealistic channels and

fresh dimension in the completion of this project.

I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving

me the chance to do this project.

I would like to thank my principal DR.ZAHID HUSSAIN ANSARI for

providing the necessary facilities required for completion of this project.

I take this opportunity to thank our co-ordinator MR.NITESH PATEL for his
moral support and guidance.

I would like to express my sincere gratitude towards my project guide

whose guidance and care made the project successful.

I would like to thank my COLLEGE LIBRARY, for having provided various

reference books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my parents and peers who
supported me throughout my project.

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 TABLE OF CONTENT

SR.NO PARTICULARS PAGE NO

1 ABSTRACT 7
2 INTRODUCTION 9-20
3 RESEARCH METHODOLOGY 21-32
4 LITERATURE REVIEW 33-61
5 DATA ANALYSIS AND 62-75
INTERPRETATION
6 CONCLUSION 76
7 BIBILIOGRAPHY 77

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 “ A DETAILED
STUDY ON
REBRANDING AND
IT’S IMPACT ON
SALES”

ABSTRACT

6
Abstract

Rebranding has emerged as a vital strategic initiative for companies seeking to maintain
relevance, enhance brand equity, and drive business growth in a dynamic and competitive
market. Organizations opt for rebranding to rejuvenate their image, reposition their brand,
differentiate themselves from competitors, or respond to evolving consumer preferences. This
study delves into the concept of rebranding strategies and their impact on sales, examining the
rationale behind rebranding efforts, the different approaches employed, and their effectiveness in
influencing consumer perception, brand loyalty, and ultimately, financial performance.

Rebranding encompasses a broad spectrum of strategies, including logo redesign, name change,
tagline modification, product portfolio adjustments, and shifts in brand positioning. Companies
may undertake either partial or complete rebranding, depending on their objectives. Partial
rebranding typically involves minor modifications to visual elements or messaging, aimed at
refreshing the brand while maintaining its core identity. In contrast, complete rebranding
involves a fundamental transformation of the brand’s identity, often necessitated by mergers,
acquisitions, reputational crises, or significant market shifts.

A critical aspect of rebranding is its psychological impact on consumers. Rebranding initiatives

influence consumer perception by altering associations with the brand. A well-executed
rebranding strategy fosters renewed interest, trust, and engagement, whereas an ineffective or
poorly communicated rebranding effort can lead to confusion, alienation of loyal customers, and
ultimately, revenue loss. Consumer reaction to rebranding is influenced by factors such as
emotional connection to the brand, perceived authenticity of the change, and the effectiveness of
marketing communications in articulating the rationale behind the transformation.

Furthermore, rebranding has a direct correlation with sales performance. A successful rebranding
effort can attract new customer segments, enhance brand recall, and create differentiation in a
crowded marketplace, leading to increased demand and revenue growth. For instance, brands
like Apple, McDonald’s, and Pepsi have leveraged rebranding to reposition themselves and drive
sales through innovative branding techniques. Conversely, failed rebranding attempts—such as
the Tropicana packaging redesign or Gap’s logo change—demonstrate how consumer resistance
can lead to declining sales and necessitate a return to the previous brand identity.

Market dynamics, digital transformation, and socio-cultural trends also play a pivotal role in
shaping rebranding strategies. Companies increasingly use data analytics, artificial intelligence,
and social media insights to gauge consumer sentiment before executing a rebrand. The study
highlights case studies of global brands that have successfully implemented rebranding strategies
to boost sales, as well as those that have struggled due to misalignment with consumer
expectations.

In conclusion, rebranding is a powerful yet complex strategy that requires meticulous planning,
market research, and strategic communication to achieve the desired impact on sales. While it

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presents opportunities for business growth and competitive advantage, it also poses significant
risks if not executed with precision. Organizations must balance innovation with brand legacy,
ensuring that rebranding efforts align with consumer perceptions and market demands. This
study provides valuable insights for businesses seeking to undertake rebranding, offering a
framework for maximizing success while minimizing potential pitfalls.

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CHAPTER NO 01 INTRODUCTION

9
Introduction:
Introduction to Rebranding Strategies

In today’s fast-paced and highly competitive business environment, brands must continuously
evolve to remain relevant, appealing, and competitive. Rebranding has emerged as a strategic
tool for businesses seeking to revitalize their market presence, differentiate themselves from
competitors, and adapt to shifting consumer preferences. It involves making significant changes
to a brand’s identity, which may include alterations to the brand name, logo, slogan, design,
messaging, or even the overall positioning in the market. Rebranding is not merely a cosmetic
exercise; rather, it is a strategic decision aimed at redefining how consumers perceive a brand
and its offerings.

Companies may undertake rebranding for a variety of reasons. Some brands seek to modernize
their image in response to evolving design trends, while others rebrand to reposition themselves
after mergers, acquisitions, or significant business transformations. External factors such as
changes in consumer behavior, technological advancements, and shifts in industry trends also
drive organizations toward rebranding. For instance, businesses transitioning from traditional
retail to digital platforms may adopt a new brand identity to better align with their online
presence. Additionally, brands facing reputational crises often resort to rebranding as a means of
regaining consumer trust and restoring brand equity.

Rebranding strategies can be broadly categorized into partial rebranding and complete
rebranding. Partial rebranding involves modifying specific brand elements while retaining the
core identity, ensuring continuity for existing customers while appealing to new market
segments. For example, brands often refresh their logos, packaging, or advertising styles without
altering their fundamental brand essence. On the other hand, complete rebranding is a more
radical approach, involving a comprehensive transformation of the brand’s name, logo,
messaging, and positioning. This approach is typically undertaken when a company undergoes a
major structural change, such as a merger, or when it needs to distance itself from past
controversies.

One of the critical aspects of rebranding is its impact on consumer perception and business
performance. Successful rebranding efforts can lead to increased brand recognition, improved
customer loyalty, and higher sales by creating a fresh and compelling brand image. For example,
Apple’s transition from "Apple Computers" to simply "Apple Inc." signified its expansion
beyond computers into consumer electronics, ultimately boosting its global appeal. Similarly,
brands like McDonald's and Pepsi have periodically revamped their logos and marketing
strategies to maintain relevance in an ever-changing marketplace. Conversely, poorly executed

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rebranding efforts can alienate loyal customers, cause brand confusion, and lead to revenue
losses, as seen in cases such as Gap’s failed logo redesign.

* Product-
related Behavioral
attributes loyalty
* Non-productrelated
attributes
Brand Brand
* Functionalbenefit association loyalty
* Symbolicbenefit Attitudinal
* Experientialbenefit loyalty

*Attitudes

In the digital age, rebranding has also expanded beyond traditional visual changes to include
digital transformation strategies. Businesses leverage social media, influencer marketing, and
personalized branding techniques to enhance consumer engagement and drive brand recall.
Moreover, companies use data analytics and artificial intelligence to understand consumer
preferences, ensuring that their rebranding initiatives resonate with their target audience.

This study explores the various rebranding strategies used by businesses, their impact on brand
perception, and the role of effective communication in ensuring the success of a rebranding
campaign. It also examines real-world case studies, highlighting both successful and
unsuccessful rebranding initiatives to provide insights into the best practices for companies
considering a brand transformation. Understanding the nuances of rebranding is crucial for
organizations aiming to achieve sustained growth, build stronger brand equity, and enhance
customer relationships in an increasingly competitive global market.

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Different Definitions of Rebranding Strategies
Rebranding strategies have been defined by various scholars, marketers, and business strategists
in different ways, reflecting the diverse approaches and objectives behind brand transformation.
Below are some widely recognized definitions:

1. Kotler & Keller (2016) – “Rebranding strategy is the process of creating a new name,
symbol, design, or combination of these for an established brand with the intention of
developing a differentiated identity in the minds of consumers, investors, and other
stakeholders.”

2. Muzellec & Lambkin (2006) – “Rebranding is a marketing strategy involving a

substantial change to a brand’s name, logo, positioning, or other key identity elements to
reposition the brand in the marketplace.”

3. Kapferer (2012) – “Rebranding refers to the strategic and deliberate process of

reshaping a brand’s identity and image to reflect a shift in market positioning, consumer
expectations, or competitive landscape.”

4. Aaker (2010) – “Rebranding is the structured approach through which companies

modify their brand elements—such as name, logo, messaging, or positioning—to create a
refreshed perception and drive brand loyalty.”

5. Cambridge Dictionary – “Rebranding is the act of changing the way that an

organization, company, or product is seen by the public, often involving a new name,
design, or advertising approach.”

6. Business Dictionary – “Rebranding is the process of altering an existing brand’s

identity, including its name, logo, slogan, or other attributes, to reposition it in the
market and improve its perception among consumers.”

7. American Marketing Association (AMA) – “Rebranding strategy involves significant

changes to a brand’s identity, aimed at improving its competitive position, increasing its
relevance to target consumers, and enhancing overall business performance.”

8. Goi & Goi (2011) – “Rebranding is an organization’s conscious effort to redefine its
brand through changes in visual identity, messaging, or product offerings to align with
evolving market conditions and consumer expectations.”

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 9. Balmer & Greyser (2003) – “Corporate rebranding is the practice of altering an
organization’s corporate identity through changes in name, logo, culture, and
communication strategies to reposition itself effectively.”

10. De Chernatony (2001) – “Rebranding strategy is a corporate-level decision that

integrates marketing and management principles to create a new or modified brand
identity that better connects with key stakeholders.”

These definitions highlight that rebranding strategies involve more than just visual alterations—
they encompass positioning, brand values, messaging, and consumer perception. Organizations
adopt rebranding strategies for various reasons, including market repositioning, differentiation,
innovation, and crisis management.

Significance of Rebranding Strategies

Rebranding strategies play a crucial role in the long-term success of a business by enabling it to
stay relevant, competitive, and aligned with consumer expectations. The significance of
rebranding extends beyond visual changes and influences various aspects of a company,
including market positioning, brand perception, sales performance, and customer loyalty. Below
are the key reasons why rebranding strategies are essential:

1. Enhancing Brand Relevance

Markets are constantly evolving, with changing consumer preferences, technological

advancements, and industry trends. Rebranding allows companies to refresh their image and
align with current market demands, ensuring they remain relevant and appealing to their target
audience.

2. Repositioning in the Market

Businesses often undergo strategic transformations, such as diversifying their product offerings,
expanding into new markets, or shifting their business model. Rebranding helps reposition the
brand to better reflect these changes, attracting new customer segments and reinforcing a
competitive edge.

3. Improving Brand Perception and Reputation

A company’s brand image significantly impacts consumer trust and loyalty. If a brand has
suffered from negative publicity, outdated positioning, or declining sales, rebranding can serve
as a corrective measure to rebuild a positive reputation and renew consumer confidence.

4. Differentiation from Competitors

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In highly competitive industries, brands need to stand out. Rebranding enables businesses to
distinguish themselves from competitors by redefining their unique value proposition, updating
their messaging, and introducing a fresh brand identity that resonates with customers.

5. Expanding to New Customer Segments

As businesses grow, they may seek to attract a broader audience or enter new demographic
markets. Rebranding helps in appealing to younger consumers, international markets, or niche
audiences that may not have previously engaged with the brand.

6. Adapting to Digital Transformation

With the rapid evolution of digital marketing and e-commerce, brands need to establish a strong
online presence. Rebranding often includes adopting a modernized digital strategy, including an
updated website, social media presence, and mobile-friendly branding elements to better connect
with digital-savvy consumers.

7. Mergers, Acquisitions, and Business Expansion

When companies merge, acquire other businesses, or expand globally, rebranding is essential to
unify brand identities, create a cohesive market presence, and streamline messaging across
different regions or business units.

8. Revitalizing Sales and Revenue Growth

A fresh and engaging brand identity can reignite interest in a company’s products or services,
leading to increased consumer engagement, higher sales, and revenue growth. Successful
rebranding efforts create excitement among customers and drive purchasing decisions.

9. Aligning with Changing Business Goals and Values

Companies evolve over time, adopting new missions, values, or sustainability initiatives.
Rebranding ensures that a company’s brand identity accurately reflects its current vision,
purpose, and corporate social responsibility (CSR) initiatives.

10. Correcting a Failing or Outdated Brand Image

Some brands suffer from outdated visuals, inconsistent messaging, or a brand identity that no
longer resonates with their audience. Rebranding provides an opportunity to modernize the brand
and make it more attractive and relatable to today’s consumers.

Problems Faced While Applying Rebranding Strategies

Rebranding can be a powerful tool for business growth and market repositioning, but it also
comes with significant challenges. If not executed properly, rebranding efforts can lead to

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confusion, financial losses, or even alienation of existing customers. Below are some of the key
problems faced by businesses when applying rebranding strategies:

1. Customer Resistance and Brand Loyalty Issues

 Consumers often develop strong emotional connections with a brand’s identity, logo,
name, or messaging.

 A drastic change in branding can lead to resistance from loyal customers who feel
disconnected from the new identity.

 Example: When Tropicana redesigned its packaging in 2009, customers failed to

recognize the brand, leading to a 20% drop in sales within weeks.

2. Loss of Brand Recognition and Equity

 A complete overhaul of a brand’s visual identity, logo, or name can result in loss of brand
recall.

 If the new brand elements are not effectively communicated, customers may not
recognize or trust the rebranded company.

 Example: The GAP logo redesign in 2010 was so poorly received that the company
reverted to its original logo within a week.

3. High Implementation Costs

 Rebranding requires a significant financial investment in new marketing materials,

website updates, packaging, advertisements, and promotional activities.

 Small businesses may struggle to allocate sufficient funds for a successful rebranding
campaign.

 Additionally, if rebranding fails, companies may face the additional cost of reversing
changes.

4. Internal Resistance from Employees and Stakeholders

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  Employees may resist the rebranding strategy due to fear of change, job uncertainty, or
lack of alignment with the new brand vision.

 Poor internal communication can lead to inconsistencies in delivering the new brand
message to customers.

 Example: When Xerox rebranded itself beyond photocopiers to a technology-driven

company, it took years to align internal teams with the new positioning.

5. Misalignment with Target Audience Expectations

 If rebranding does not align with customer expectations or preferences, it may fail to
attract the intended audience.

 Market research is crucial to understanding consumer perception before executing

rebranding strategies.

 Example: The failed New Coke campaign in 1985 ignored consumer attachment to the
original Coca-Cola formula, resulting in backlash.

6. Negative Public Perception and Backlash

 If customers perceive rebranding as unnecessary or forced, it can damage brand

credibility.

 Social media amplifies customer reactions, making it crucial for brands to manage public
sentiment effectively.

 Example: Weight Watchers rebranded to WW (Wellness that Works), but the unclear
messaging confused customers and weakened brand recognition.

7. Risk of Alienating Existing Customers

 If rebranding is too drastic, existing customers may feel alienated or unrecognized.

 Brands must strike a balance between appealing to new markets while retaining their
loyal customer base.

 Example: When Royal Mail in the UK changed its name to "Consignia," public backlash
forced it to revert to the original name within a year.

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8. Failure to Communicate the Reason for Rebranding

 Rebranding efforts must be backed by a clear narrative explaining the reason for the
change.

 Customers need to understand the purpose behind the rebrand and how it benefits them.

 Poor communication leads to confusion and mistrust.

9. Legal and Trademark Challenges

 Changing a brand name or logo may require legal approvals and trademark registrations,
which can be time-consuming and costly.

 Some companies face lawsuits if their new branding elements resemble those of
competitors.

 Example: Apple Corps (The Beatles’ company) sued Apple Inc. multiple times over
brand name disputes.

10. Failure to Differentiate from Competitors

 Some rebranding efforts fail because they do not offer a unique or compelling identity.

 If a new brand identity is too similar to competitors, it may struggle to create

differentiation in the market.

 Example: Airbnb’s 2014 logo redesign faced criticism for resembling logos from other
industries, leading to brand confusion.

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 COMPANY’S PROFILE

Apple Inc. – Company Profile

1. General Information

 Company Name: Apple Inc.

 Founded: April 1, 1976

 Founders: Steve Jobs, Steve Wozniak, Ronald Wayne

 Headquarters: Cupertino, California, USA

 Industry: Consumer Electronics, Software, Digital Services

 CEO: Tim Cook (since 2011)

 Tagline/Slogan: Think Different (historical), Designed by Apple in California

2. Business Overview

Apple Inc. is one of the world's largest and most influential technology companies,
known for its innovative consumer electronics, sleek product design, and strong brand
loyalty. The company designs, manufactures, and sells a wide range of hardware,
software, and digital services that are deeply integrated into its ecosystem.

Apple has revolutionized multiple industries, including personal computing, music

distribution, smartphones, wearables, and digital services, setting new standards in
innovation and customer experience.

3. Key Products and Services

Apple offers a diverse range of premium products and services that cater to both
individual consumers and enterprises.

A. Hardware Products:

1. Mac: A line of personal computers, including MacBook Air, MacBook Pro, iMac, Mac
mini, and Mac Studio.

2. iPhone: Apple’s flagship smartphone, first launched in 2007, with millions of units sold
annually.

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3. iPad: A series of high-performance tablets, introduced in 2010, used for education,
creativity, and productivity.

4. Apple Watch: A smartwatch introduced in 2015, dominating the wearable tech market.

5. AirPods: Wireless earbuds launched in 2016, leading the wireless audio segment.

6. Apple Vision Pro: A mixed-reality headset introduced in 2024, marking Apple’s entry
into augmented and virtual reality.

B. Software & Operating Systems:

1. iOS: The mobile operating system for iPhones.

2. macOS: The operating system for Mac computers.

3. iPadOS: A specialized OS for iPads.

4. watchOS: The operating system for Apple Watches.

5. tvOS: The OS for Apple TV streaming devices.

C. Digital Services & Ecosystem:

1. App Store: A marketplace for apps and software, generating billions in revenue
annually.

2. iCloud: A cloud storage and synchronization service.

3. Apple Music: A music streaming service competing with Spotify.

4. Apple Pay: A secure mobile payment and digital wallet service.

5. Apple TV+: A video streaming service with original shows and movies.

6. Apple Arcade: A gaming subscription service.

4. Financial Performance

Apple is one of the most valuable companies globally, consistently generating high
revenues and profits.

 2023 Revenue: $394 billion

 Market Capitalization (2024): Over $3 trillion (most valuable publicly traded company)

 Global iPhone Sales: Over 2.2 billion units since 2007

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 Service Revenue (2023): $85 billion (growing sector)

5. Market Position and Competitive Advantage

Apple has established itself as a premium and innovative brand in the global technology
industry.

Strong Brand Loyalty: Apple has a 92% customer retention rate, the highest in the
industry.
Ecosystem Lock-in: Apple’s tightly integrated ecosystem encourages customers to use
multiple Apple products and services.
Premium Pricing Strategy: Apple differentiates itself with high-quality, expensive
products.
Innovation Leadership: Apple consistently sets industry trends, such as Face ID, retina
displays, and ARM-based chips (Apple Silicon).

Major Competitors:

 Smartphones: Samsung, Google, OnePlus

 Computers: Microsoft, Dell, HP, Lenovo

 Streaming Services: Netflix, Amazon Prime Video

 Music Streaming: Spotify, Amazon Music

 Cloud Services: Google Drive, Dropbox, Microsoft OneDrive

6. Global Presence

Apple operates worldwide, with its products and services available in over 175 countries.

 Key Markets: United States, China, Europe, India, Japan

 Retail Stores: Over 500+ Apple Stores globally

 Manufacturing: Apple outsources manufacturing to companies like Foxconn and

Pegatron, mainly in China and other Asian countries.

7. Future Growth and Innovations

 Apple continues to expand its reach into emerging technologies, such as:

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 Augmented Reality (AR) & Virtual Reality (VR): Apple Vision Pro headset.
 Artificial Intelligence (AI): AI-powered features in Siri, iPhones, and Macs.
 Autonomous Vehicles: Apple’s rumored "Apple Car" project.

 Sustainability Efforts: Apple aims to be carbon-neutral by 2030 and invests in

renewable energy.

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 PepsiCo Company Profile

1. Introduction to PepsiCo
PepsiCo is one of the world’s leading multinational food, snack, and beverage corporations.
Known for its flagship product, Pepsi, the company has expanded into a diverse range of food
and beverage brands, including Lay’s, Tropicana, Quaker, and Gatorade. With a strong global
presence, PepsiCo operates in over 200 countries and generates billions in annual revenue.

2. Basic Information

Feature Details

Company Name PepsiCo, Inc.

Founded August 28, 1898 (as Pepsi-Cola); Merged with Frito-Lay in 1965 to
become PepsiCo

Founder Caleb Bradham

Headquarters Purchase, New York, USA

CEO (as of 2024) Ramon Laguarta

Industry Food and Beverage

Number of Over 300,000

Employees

Stock Symbol NASDAQ: PEP

Revenue (2023) Approx. $91 billion

3. History and Evolution of PepsiCo

a. Early History (1898–1965)

 1898: Caleb Bradham, a pharmacist from North Carolina, created “Brad’s Drink,” which
was later renamed Pepsi-Cola.

 1902: Pepsi-Cola was officially registered as a company.

 1923: The company went bankrupt but was revived in 1931 under new ownership.

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  1940s: Pepsi introduced the iconic red, white, and blue color scheme during World War
II.

 1950s–1960s: Pepsi expanded its product lineup and advertising strategies, targeting
younger consumers.

b. Merger and Expansion (1965–1990s)

 1965: Pepsi-Cola merged with Frito-Lay, forming PepsiCo, Inc., diversifying its
business into snacks.

 1970s–1980s: Pepsi launched the famous "Pepsi Challenge", positioning itself as Coca-
Cola’s primary competitor.

 1990s: Expansion into new product categories with acquisitions like Tropicana (1998).

c. Digital and Global Growth (2000–2020s)

 2001: Acquired Quaker Oats, bringing Gatorade into its portfolio.

 2010s: Focus on healthier products, launching Pepsi Zero Sugar and reducing sugar in
beverages.

 2020s: PepsiCo’s rebranding efforts emphasized sustainability and digital marketing

strategies.

4. Product Portfolio
PepsiCo owns a diverse range of brands, classified into beverages and snack foods:

a. Beverage Brands

 Carbonated Soft Drinks: Pepsi, Diet Pepsi, Pepsi Zero Sugar, Mountain Dew, 7UP
(outside the U.S.), Mirinda

 Juices & Hydration: Tropicana, Gatorade, Aquafina, Lipton Iced Tea

 Energy Drinks: Rockstar Energy, Mountain Dew Energy

b. Snack and Food Brands

 Chips & Snacks: Lay’s, Doritos, Cheetos, Ruffles, Fritos

 Breakfast & Nutrition: Quaker Oats, Aunt Jemima (renamed Pearl Milling Company),
Cap’n Crunch

 Dairy & Plant-Based Products: Sabra Hummus, SoBe, Muscle Milk

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5. Financial Performance

Year Revenue (in Billion Net Income (in Billion Market Cap (in Billion
USD) USD) USD)

2020 $70.4 $7.1 $196

2021 $79.5 $7.6 $225

2022 $86.4 $8.3 $235

2023 $91.5 $9.2 $250+

Key Insights:

 PepsiCo’s revenue has consistently grown, surpassing $90 billion in 2023.

 The company has invested heavily in sustainability, digital marketing, and healthier
product options.

 It remains one of the top food & beverage companies globally, competing with Coca-
Cola, Nestlé, and Mondelez.

6. Competitive Landscape

Major Competitors:

 Coca-Cola: PepsiCo’s biggest rival in the beverage industry.

 Nestlé: Competes in bottled water, snacks, and nutrition products.

 Mondelez International: A strong competitor in the snacks category.

 Unilever: Competes in tea and nutrition-based products.

7. Sustainability and Future Outlook

PepsiCo has committed to several sustainability initiatives, including:

 100% Renewable Energy in its operations by 2040.

 Reducing Plastic Waste through recyclable packaging.

 Expanding Healthier Products, with more low-sugar and plant-based options.

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Future Plans:

 Strengthening digital marketing and e-commerce sales.

 Expanding presence in Asia, Africa, and Latin America.

 Investing in alternative beverages (e.g., energy drinks, health-focused drinks).

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Concept of Rebranding

Definition of Rebranding
Rebranding has been defined differently by various scholars:

 Kotler & Keller (2016) describe rebranding as "the process of changing an existing
brand’s name, logo, design, or positioning to create a new and differentiated identity."
 Muzellec & Lambkin (2006) define rebranding as "a marketing strategy involving
substantial changes to a brand’s elements to reposition it in the marketplace."
 Aaker (2010) explains rebranding as "a structured approach to altering brand perception
through modifications in visual identity, messaging, or product offerings."

Types of Rebranding
Scholars categorize rebranding into two main types:

 Partial Rebranding: This involves minor modifications to brand elements, such as a

logo redesign or new packaging.
 Complete Rebranding: This includes a complete transformation of the brand, often
involving a new name, identity, and brand positioning.

Theoretical Framework

Brand Equity Theory

Brand equity, as defined by Keller (1993), refers to the value that a brand holds in the minds of
consumers. Rebranding can enhance brand equity by improving recognition and customer
perceptions.

Consumer Perception Theory

This theory suggests that consumers develop associations with brands based on their
experiences. Rebranding influences consumer perception by altering these associations, either
positively or negatively.

Market Signaling Theory

According to Spence (1973), rebranding acts as a signal to stakeholders about changes in
company strategy, innovation, or repositioning.

Reasons for Rebranding

Market Repositioning

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Companies rebrand to align with changing consumer preferences or industry trends.

Mergers and Acquisitions

Mergers often require rebranding to unify corporate identities.

Reputation Management
Businesses facing crises or negative publicity undertake rebranding to restore public trust.

Global Expansion
Companies entering new markets modify branding to appeal to diverse cultural audiences.

Impact of Rebranding on Sales

Positive Effects
 Increased brand awareness and visibility.
 Improved customer loyalty due to a refreshed brand image.
 Higher sales and revenue growth, as seen in Apple’s rebranding success.

Negative Effects
 Customer alienation due to drastic changes.
 Decline in sales if rebranding efforts fail, as observed in the GAP logo redesign failure.

Case Studies on Rebranding and Sales Impact

Apple Inc.
Apple’s shift from "Apple Computers" to "Apple Inc." helped expand its business into consumer
electronics, boosting sales exponentially.

PepsiCo
Pepsi’s rebranding campaigns have consistently positioned it as a youth-oriented brand, leading
to increased market share.

GAP

GAP’s failed logo redesign resulted in consumer backlash and a decline in sales, forcing the
company to revert to its original design.

27
CHAPTER NO 02 RESEARCH METHODOLOGY

28
Introduction

The research methodology chapter outlines the systematic approach adopted for studying the
impact of rebranding on sales. This chapter provides a detailed explanation of the research
design, data collection methods, sampling techniques, data analysis, and ethical considerations.
The methodology ensures that the research is conducted in a structured and scientific manner to
obtain reliable and valid results.

Research Design

The research follows a mixed-method approach, combining both qualitative and quantitative
research methods. This allows for a comprehensive analysis of rebranding strategies and their
impact on sales. The study is descriptive and causal-explanatory in nature, as it aims to
describe the effects of rebranding and determine causal relationships between rebranding
initiatives and sales performance.

Qualitative Approach

The qualitative aspect of this study involves in-depth case studies of companies that have
undergone rebranding. The objective is to explore the reasoning behind rebranding decisions,
brand perception changes, and customer responses.

Quantitative Approach

The quantitative component involves the collection of numerical data, such as sales figures
before and after rebranding, customer surveys, and statistical correlations. This approach helps in
measuring the effectiveness of rebranding on financial performance.

Research Objectives

The primary objectives of this research are:

1. To examine the reasons why companies undertake rebranding strategies.

2. To assess the impact of rebranding on consumer perception and loyalty.

3. To analyze the effect of rebranding on sales revenue and market share.

4. To evaluate successful and unsuccessful rebranding case studies.

5. To provide strategic recommendations for businesses considering rebranding.

Hypotheses Development

29
Based on the research objectives, the following hypotheses are formulated:

 H1: Rebranding has a positive impact on a company's sales revenue.

 H2: A well-executed rebranding strategy enhances customer loyalty and brand

perception.

 H3: Poorly executed rebranding strategies negatively affect customer retention and sales.

 H4: Digital rebranding strategies have a stronger impact on sales compared to traditional
rebranding methods.

 H5: The success of rebranding is dependent on effective marketing communication and

customer engagement.

Data Collection Methods

To ensure accuracy and reliability, data is collected from primary and secondary sources.

Primary Data

Primary data is collected through:

1. Surveys and Questionnaires: Structured surveys are conducted among customers and
business professionals to gather perceptions about rebranding.

2. Interviews: In-depth interviews with marketing experts, brand managers, and business
executives are conducted to gain insights into rebranding decisions.

3. Focus Groups: Discussions with groups of consumers to understand their response to

rebranding efforts.

4. Sales Data Analysis: Collection of pre- and post-rebranding sales figures from company
financial reports.

Secondary Data

Secondary data is gathered from:

 Published journal articles and research papers on branding and marketing.

 Annual reports and financial statements of companies that have undergone rebranding.

 Case studies of successful and failed rebranding efforts.

 Marketing reports from industry research organizations such as Nielsen and McKinsey.

30
  Business magazines, newspapers, and online databases such as Statista and Harvard
Business Review.

Sampling Design

Target Population

The target population consists of businesses that have undergone rebranding and their customers.
It includes:

 Large multinational corporations that have implemented rebranding strategies.

 Small and medium enterprises (SMEs) that have rebranded.

 Consumers who have interacted with brands before and after rebranding.

Sampling Technique

A stratified random sampling technique is used to ensure diverse representation across

different industries. The sample is divided into:

 Technology companies

 Retail and e-commerce brands

 FMCG (Fast-Moving Consumer Goods) brands

 Service-based industries (banking, telecom, hospitality, etc.)

The study surveys at least 200 respondents (100 customers and 100 business professionals) to
ensure statistical significance.

Data Analysis Methods

A combination of statistical and thematic analysis is used to derive meaningful insights from
the collected data.

Quantitative Data Analysis

 Descriptive Statistics: Used to summarize survey responses, including mean, median,

and standard deviation.

 Regression Analysis: Determines the impact of rebranding on sales revenue.

 T-tests & ANOVA: Used to compare differences in sales before and after rebranding.

 Correlation Analysis: Measures the relationship between branding efforts and customer
retention.

31
Qualitative Data Analysis

 Thematic Analysis: Identifies key themes and patterns from interviews and case studies.

 Content Analysis: Examines textual and visual changes in branding elements.

Ethical Considerations

Ethical guidelines are strictly followed to ensure the integrity of the research:

1. Informed Consent: Participants are informed about the purpose of the study before
participation.

2. Confidentiality: All personal data and business-sensitive information remain

confidential.

3. Voluntary Participation: Respondents have the right to withdraw at any stage without
consequences.

4. Avoidance of Bias: Neutral language and unbiased survey questions ensure accurate data
collection.

5. Proper Citation: All secondary data sources are properly cited to avoid plagiarism.

Limitations of the Study

Despite a well-structured methodology, some limitations exist:

1. Limited Sample Size: The study focuses on specific industries and may not generalize
across all businesses.

2. Potential Response Bias: Survey responses may be influenced by personal opinions and
experiences.

3. Data Accessibility Issues: Some companies may not disclose detailed financial figures
related to rebranding.

4. Time Constraints: The study covers only a limited time frame of post-rebranding
analysis.

Summary

This chapter outlined the research methodology, detailing the approach used to examine
rebranding strategies and their impact on sales. The mixed-method approach ensures a
comprehensive understanding of the topic. The next chapter will present the findings and
analysis based on the collected data.

32
 CHAPTER NO 03
LITERATURE REVIEW

33
A literature review on rebranding strategies and their impact on sales indicates that a well-
executed rebrand can positively influence sales by enhancing brand awareness, attracting
new customer segments, improving brand perception, and fostering customer loyalty,
particularly when the new brand identity aligns with the evolving needs and preferences of the
target market; however, the success of a rebrand is highly dependent on thorough planning,
effective communication, and consistent execution across all touchpoints.

Key findings from research:

 Brand awareness and perception: Rebranding can significantly increase brand
awareness by introducing a new visual identity, messaging, and positioning, which can
capture attention and stand out in a competitive landscape, leading to greater customer
recognition and consideration.

 Customer engagement and loyalty: When a rebrand aligns with customer values and
aspirations, it can foster a stronger emotional connection, leading to increased customer
engagement, loyalty, and advocacy.

 Market expansion and new customer acquisition: By targeting new customer

segments with a refreshed brand image, a rebrand can open up opportunities to expand
market reach and attract previously untapped demographics.

 Brand reputation repair: Rebranding can be a valuable tool to rebuild a damaged brand
reputation by addressing negative perceptions and presenting a new, more positive image.

Factors influencing rebranding success:

 Strategic planning: A well-defined rebranding strategy that clearly identifies the target
audience, brand positioning, and desired outcomes is crucial for success.

 Authenticity: Customers can readily detect inauthentic rebranding attempts, so ensuring

the new brand identity aligns with the company's core values and mission is essential.

 Communication strategy: Effective communication across various channels is vital to

inform customers about the rebrand and manage expectations throughout the process.

 Consistency across touchpoints: Maintaining a consistent brand image across all

customer interactions, including website, marketing materials, and customer service, is
critical for building brand recognition.

Research limitations:

34
  Difficult to isolate impact: Measuring the exact impact of a rebrand on sales can be
challenging due to other market factors that may influence sales simultaneously. [1, 2, 5]

 Context-dependent results: The success of a rebrand can vary depending on the

industry, target market, and the nature of the brand changes implemented. [2, 4, 7]

Examples of relevant studies:

 "The Impact of Rebranding on Brand Equity and Customer Loyalty" by Lee and
Kim: Examined the relationship between rebranding efforts and brand equity, finding
that a successful rebrand can significantly enhance brand perception and customer
loyalty. [1, 2, 5]

 "Rebranding and its Impact on Market Share" by Chen and Huang: Investigated the
influence of rebranding on market share, demonstrating that a well-executed rebrand can
lead to increased market penetration and customer acquisition. [2, 4, 5]

PREVIOUS RELEVANT STUDIES RELATED TOREBRANDING STRATEGIES OF

FIRM:

Firms annually spend hundreds of billions of dollars to implement their marketing strategy, and
much headway has been made in explaining how these expenditures enhance brand performance
over the short run (Bucklin and Gupta 1999).1 More recently, attention has been focused on the
longer-term effect of marketing strategy on brand performance, particularly with respect to price
and promotion (e.g., Boulding, Lee, and Staelin 1994; Jedidi, Mela, and Gupta 1999; Nijs et al.
2001; Pauwels, Hanssens, and Siddarth 2002; Srinivasan et al. 2004; Steenkamp et al. 2005). Yet
there has been little emphasis on the effects of product (e.g., line length) and place (e.g.,
distribution breadth) on brand performance. Accordingly, a critical question remains unanswered
(Aaker 1991; Ailawadi, Lehman, and Neslin 2003; Yoo, Donthu, and Lee 2000): Which
elements of the marketing mix are most critical in making brands successful?

To illustrate these points, we show in Figure 1 and Figure 2 the historical performance of two
brands over a five-year period—one that contracted dramatically (Brand C, C = contracted) and
one that grew considerably (Brand G, G = grew). Figure 1 and Figure 2 show sales volume,
promotion activity, advertising spending, distribution breadth, and product line length for Brand
C and Brand G, respectively, over time. The brands and variables are from a data set that we
discuss in more detail in subsequent sections. Comparison of sales volume between the first and
the second half of the data reveals a considerable 60% sales contraction for Brand C, which
contrasts with an 87% growth for Brand G. This difference in performance leads to the following
question: What strategies discriminate between the performances of these brands?

35
36
Figure 1 Contraction Case: Brand C

Notes: ACV = all commodity volume, and SKU = stockkeeping unit.

Open in viewer

37
38
Figure 2 Growth Case: Brand G

Notes: ACV = all commodity volume, and SKU = stockkeeping unit.

For example, Brand C's downward-sloping sales (Figure 1, Panel A) during its first four years
coincide with frequent and deep discounting (Panel B), negligible advertising (Panel C), lower
distribution (Panel D), and shorter product line (Panel E). Notably, its sales turn around in the
last year of the data. This period is characterized by increased product variety, distribution, and
advertising, while discounting was curtailed, suggesting a long-term link between the brand's
performance and marketing strategy rather than cyclical changes in performance (e.g., Pauwels
and Hanssens 2007).

Brand G's sales (Figure 2, Panel A) show a marked increase shortly after week 100. This might
illustrate the (autonomous) takeoff of a small brand (Golder and Tellis 1997). However, a more
direct link between brand performance and its marketing strategy can be established. The
increase in sales coincides with heavy product activity (Panel E), high advertising spending
(Panel C), increased distribution (Panel D), and diminished price promotions (Panel B). These
examples suggest a link between the brand's performance and marketing strategy.

Together, these examples suggest that product, distribution, and advertising enhance brand
performance, while discounts do little in the way of brand building. Yet these cases are anecdotal
(and involve only two categories), and the various mix effects are confounded. Indeed, the
correlation between these strategies suggests that it is especially important to consider them in
unison; otherwise, an assessment of effects in isolation might lead to the attribution of a brand's
success to the wrong strategy. By analyzing the weekly performance of 70 brands in 25
categories over five years, we identify the marketing-mix strategies that correlate most highly
with growth in brand sales and with the potential to command higher prices.

The results substantiate the belief that distribution and product decisions play a major role in the
(short- plus long-term) performance of brands. By computing the relative long-term sales
elasticities of the various marketing strategies, we find that product effects are 60% and
distribution effects are 32%. In contrast, the effects of advertising and discounting are only 6%
and 2%, respectively. Moreover, while the long-term negative effect of discounting is only one-
third of the magnitude of its positive short-term effect, the long-term effects of the other
marketing variables tend to be 4–16 times their short-term effects, testifying to their long-term
role in brand performance. In addition, the total (long-term plus short-term) elasticities of line
length and distribution breadth are more substantial (1.37 and .74, respectively) than the
advertising and discount elasticities (.13 and .04, respectively). These results illustrate that
discounts do little to build a brand over the long run.

These findings arise from the application of a multivariate dynamic linear model (DLM) that
links brand sales to marketing strategy. The approach offers a flexible means for assessing how
marketing affects intercepts and sales response parameters (e.g., elasticities) over time.

39
 Moreover, the approach (1) controls for endogeneity in pricing and marketing variables, (2)
partials the role of past performance from marketing spending, and (3) considers competitive
interactions in marketing. To our knowledge, the DLM has not been applied to a problem of this
scale.

We organize the article as follows: First, we discuss the literature on long-term effects of the
marketing mix on brand performance. Second, we discuss theories pertaining to how the
marketing mix affects brand performance in the long run. Third, we develop the model and
provide an overview of the estimation. Fourth, we describe the data and variables. Fifth, we
present the results. Last, we conclude with a summary of findings and future research
opportunities.

Literature on Long-Term Effects of the Marketing Mix

Table 1 samples the current state of the literature on long-term effects and indicates (1) a
prevalent focus on certain marketing instruments, (2) the existence of various brand performance
measures, and (3) a clear divide between modeling approaches. We address these issues
subsequently and highlight our points of difference and parity.

Table 1 Current Literature on Long-Term Effects of Marketing Variables

Effect of Effect on Modeling Number of

Promotion Advertising Distribution Product Approach Categories
Clarke (1976) ✓ Brand VPM 1
sales
Baghestani (1991) ✓ Brand VAR 1
sales
Dekimpe and ✓ Chain sales VAR 1
Hanssens (1995)
Papatla and ✓ Choice VPM 1
Krishnamurthi
(1996)
Mela, Gupta, and ✓ ✓ Choice VPM 1
Lehmann (1997)
Mela, Jedidi, and ✓ Incidence VPM 1
Bowman (1998) and
quantity
Mela, Gupta, and ✓ ✓ Market Mixed 1
Jedidi (1998) structure
Kopalle, Mela, and ✓ Brand VPM 1
Marsh (1999) sales
Jedidi, Mela, and ✓ ✓ Choice and VPM 1
Gupta (1999) quantity
Foekens, Leeflang, ✓ Brand VPM 1
and Wittink (1999) sales

40
Dekimpe and ✓ ✓ Brand VAR 1
Hanssens (1999) sales
Dekimpe, Hanssens, ✓ Brand and VAR 4
and Silva-Risso category
(1999) sales
Srinivasan, ✓ ✓ Market VAR 2
Popkowski share
Leszczyc, and Bass
(2000)
Bronnenberg, ✓ ✓ ✓ Market VAR 1
Mahajan, and share
Vanhonacker (2000)
Nijs et al. (2001) ✓ Category VAR 560
sales
Pauwels, Hanssens, ✓ Incidence, VAR 2
and Siddarth (2002) choice, and
quantity
Srinivasan et al. ✓ Margin VAR 21
(2004) and
revenue
Pauwels (2004) ✓ ✓ ✓ Brand VAR 1
sales
Van Heerde, Mela, ✓ Market VPM 1
and Manchanda structure (DLM)
(2004)
Pauwels et al. (2004) ✓ ✓ Financial VAR 1
measures
Steenkamp et al. ✓ ✓ Brand VAR 442
(2005) sales
Sriram, Balachander, ✓ ✓ ✓ Brand VPM 2
and Kalwani (2007) sales
Ataman, Mela, and ✓ ✓ ✓ ✓ Brand VPM-SE 22
Van Heerde (2008) sales (new (DLM)
brands
only)
Slotegraaf and ✓ ✓ Brand VAR 7
Pauwels (2008) sales
Srinivasan, ✓ ✓ ✓ Brand VAR 4
Vanhuele, and sales
Pauwels (2008)
This article ✓ ✓ ✓ ✓ Brand VPM-SE 25
sales and (DLM)
elasticity
Notes: VPM = varying parameter model, VAR = vector autoregressive model, DLM = dynamic
linear model, and SE = system of equation

41
First, Table 1 indicates that most studies focus on promotion and advertising rather than
distribution and product. Thus, these studies cannot provide insights into the relative effects of
marketing variables and risk suffering from an omitted variable bias because these strategies can
be correlated.

On a related note, personal interviews with senior research managers at different consumer
packaged goods firms yielded a similar focus regarding the prevalence of advertising and
discounting in industry research. Yet these managers express uncertainty about whether this
attention is misplaced in the sense that product and distribution actually play a greater role in
brand performance. Accordingly, the question “How does the marketing mix influence brand
equity in the long run?” has been a top research priority of the Marketing Science Institute since
1988 (e.g., Marketing Science Institute 2008). A reason this question has been around for so long
is that answering it requires the combination of extensive data sets and a methodology that can
measure long-term effects while coping with the common challenges of empirical modeling,
such as (1) endogeneity in marketing, (2) performance feedback (e.g., the effect of past sales on
current marketing expenditures), and (3) competitive interactions. This research meets these
challenges, as we discuss in the following sections.

A second observation from Table 1 is that these studies differ in their use of brand performance
measures. Brand performance or brand equity has been conceptualized and operationalized using
stock market returns (Simon and Sullivan 1993), brand attitudes (Aaker 1991), and brand sales or
choice data (Ailawadi, Lehmann, and Neslin 2003). Although each has its respective benefits,
most studies in Table 1 fit in the third stream, as does the current study.

Research embedded in this stream commonly proposes different measures for brand equity. The
first measure suggests assessment of brand equity through base sales, which is operationalized as
the brand intercept in a sales model (Kamakura and Russell 1993; Kopalle, Mela, and Marsh
1999).2 The second measure pertains to the notion that well-differentiated brands can command
higher regular prices and margins than otherwise similar goods (Swait et al. 1993). Because price
premiums are inversely related to the brand's regular price elasticity (Boulding, Lee, and Staelin
1994; Nicholson 1972), regular price elasticity is a second measure of brand
performance.3 Consistent with this literature, we consider both perspectives in assessing the
long-term effect of marketing strategy on brand performance. In contrast, Ataman, Mela, and
Van Heerde (2008) emphasize the effect of the marketing mix on sales and not the implications
for elasticities. Another point on which the current study differs from Ataman, Mela, and Van
Heerde is that they consider only new brands. These brands are qualitatively different from the
mature brands we study; mature brands have an installed base of customers and an existing
distribution network, which are lacking for new brands.

A third observation from Table 1 is that there are two dominant approaches in modeling the
long-term effects of the mix: varying parameter models and vector autoregressive (VAR)
models. Although inertia in marketing spending (Pauwels 2004) and performance feedback

42
 (Horvath et al. 2005) are integral parts of VAR models, they often ignore varying parameter
effects. Varying parameters are relevant because marketing strategy affects both base sales
(intercepts) and price elasticities. In contrast, varying parameter models (including the Bayesian
variant “DLM”) often ignore inertia and feedback effects; yet these are important to calculate the
returns accruing from marketing investments over the long run. Therefore, in our application, we
combine the two approaches and develop a varying parameter model (DLM variant) for a system
of equations that considers the role of inertia in marketing spending and performance feedback.
Our analysis indicates that both inertia and feedback are substantial.

In summary, this study extends the current literature on the long-term effects of marketing
strategy on brand performance by (1) considering the full marketing mix, (2) adopting base sales
and price elasticity as performance measures, and (3) specifying a system of equations with time-
varying parameters.

The Effect of the Mix on Brand Performance

In the following sections, we provide an overview of the current literature on the long-term
effects of price promotions, advertising, distribution, and product on brands and their
relationships to base sales and regular price elasticity (see Table 2). Our discussion of
distribution and product is more tentative given the dearth of work in the area. We then conclude
by discussing the relative efficacy of the various marketing strategies.

Table 2 Expected Marketing-Mix Effects on Base Sales and Regular Price Elasticity

Variable Operationalization Predicted Effect on

Base Sales (Intercept) Regular Price Elasticitya
Discounting Discount depth Positive/negative Negative
Advertising Expenditure Positive Positive
Distribution % ACV-weighted distribution Positive Positive/negative
Line length Number of SKUs Positive Positive
a

A positive effect on regular price elasticity means that the elasticity become less negative; a
negative effect means that it become more negative. Notes: ACV = all commodity volume, and
SKU = stockkeeping unit.

Price Promotion

Some studies in the literature suggest a negative long-term impact of price promotions on base
sales (Foekens, Leeflang, and Wittink 1999; Jedidi, Mela, and Gupta 1999), while other studies
suggest the opposite effect because of the positive effects of state dependence (Keane 1997) and
purchase reinforcement (Ailawadi et al. 2007). Still others have found only a fleeting negative
effect (Pauwels, Hanssens, and Siddarth 2002). Overall, it is not clear whether the positive effect
dominates the negative effect on base sales, and thus a large-scale generalization seems

43
necessary. In contrast, discounting policies are typically found to decrease price elasticities
(make them more negative) by focusing consumers’ attention on price-oriented cues (Boulding,
Lee, and Staelin 1994; Mela, Gupta, and Lehmann 1997; Papatla and Krishnamurthi
1996; Pauwels, Hanssens, and Siddarth 2002).

Advertising

Brand-oriented advertising (e.g., nonprice advertising) strengthens brand image, causes greater
awareness, differentiates products, and builds brand equity (Aaker 1991; Keller 1993).
Advertising may also signal product quality, leading to an increase in brand equity (Kirmani and
Wright 1989). Accordingly, several authors have found that advertising has a positive and
enduring effect on base sales (e.g., Dekimpe and Hanssens 1999).

With respect to the effect of advertising on price elasticity, two schools of thought in economic
theory offer alternative explanations. First, information theory argues that advertising may
increase competition by providing information to consumers about the available alternatives,
thus making price elasticities more negative. Second, market power theory argues that
advertising may increase product differentiation, thus making price elasticity less negative (Mitra
and Lynch 1995). On a related note, Kaul and Wittink (1995) indicate that brand-oriented
advertising increases price elasticity while price-oriented advertising decreases it. Mela, Gupta,
and Lehmann (1997) note that national brand television advertising is predominantly brand
oriented. Accordingly, we expect that national television advertising, as observed in the data,
increases price elasticities (making them less negative).

Product

Similar to advertising, product activity (e.g., innovations, changes in form) enhances a brand's
perceived quality, increases purchase likelihood, and builds equity (Berger, Draganska, and
Simonson 2007). We posit that the long-term effect of increased product line length on base sales
is incumbent on the degree to which cannibalization offsets incremental sales garnered by
serving more segments. In general, we argue that offering more products has a small but positive
effect on base sales because we do not expect cannibalization to entirely offset the increased
demand. Accordingly, several studies in the literature suggest that product line length is
positively related to brand performance in the long run (Ataman, Mela, and Van Heerde
2008; Pauwels 2004; Sriram, Balachander, and Kalwani 2007; Van Heerde, Srinivasan, and
Dekimpe 2010). We expect that more differentiated or customized alternatives increase price
elasticity (making it less negative) because strongly differentiated items can serve loyal niches.

Distribution

Distribution breadth (the percentage of distribution that carries a brand) can affect brand
performance, but as with product, theoretical and empirical evidence for these effects is limited.
We expect that increases in the breadth of distribution lead to higher base sales because the wider

44
availability facilitates consumers’ ability to find the brand (Bronnenberg, Mahajan, and
Vanhonacker 2000).

We can formulate two competing expectations for the effect of distribution breadth on price
elasticity. First, broader distribution may increase the chance of within-brand price comparison
across stores, commonly called “cherry picking” (Fox and Hoch 2005). This leads to an
increased emphasis on price and an attendant decrease in price elasticity. Second, in contrast,
broader distribution signals manufacturer commitment to the brand and, potentially, its success
in the marketplace. A similar signaling effect is also observed for advertising (Kirmani and
Wright 1989). Given the competing arguments, we treat the effect of distribution breadth on
elasticity as an empirical question. Table 2 summarizes the expected effects of marketing on
brand performance.

Relative Effects

Of interest is the relative magnitude of these effects. To our knowledge, no research has
incorporated all these effects into a single framework over a large number of categories, so any
discussion of the relative magnitude of these effects is necessarily speculative. Complicating this
task, marketing strategy is affected by performance feedback, competitor response, and inertia.
For example, a positive effect on base sales can be amplified in the presence of inertia because
the positive effect manifests not only in the current period but in subsequent periods as well.
There is ample reason to believe that some aspects of the mix might be more enduring than
others; for example, it takes more time to make changes to the product line than to implement a
price discount.

Personal communications with firms and colleagues suggest that most people expect distribution
and product to have the greatest overall long-term effects on brand sales. Distribution and
product line length are necessary conditions for sales: No distribution or products imply no sales.
Some evidence for this already exists in the literature. Two recent studies (Ataman, Mela, and
Van Heerde 2008; Srinivasan, Vanhuele, and Pauwels 2008) have shown that distribution plays a
central role in building brands. Product innovation is also likely to have considerable effects
because it is a core source of differential advantage. In contrast, advertising and pricing are more
limited in their ability to differentiate goods, especially because discounting is often viewed as a
short-term tactic to generate immediate sales. In summary, we expect that product and
distribution matter the most for brand performance in the long run.

Modeling Approach

Overview

We allow the base sales and regular price elasticity to vary over time as a function of marketing
strategy. Dynamic linear models (Ataman, Mela, and Van Heerde 2008; West and Harrison
1997) are well suited to this problem. The general multivariate form of our model is as follows:

45
θηζυYt=Ftθt+Xtη+Ztζ+υt, and

(1a)

θθγωθt=Gθt−1+Z′t−1γ+ωt,

(1b)

where Yt is a vector in which the log sales of brand j in chain s at time t is stacked across brands
and chains; Ft is a regressor matrix consisting of an intercept and log regular price; X t is a
regressor matrix including several control variables, such as feature/display and seasonality,
which affect sales; and Zt includes brands’ marketing strategies—specifically, advertising
expenditures, price discounting, distribution breadth, and product line length. We assume that
υt ~ N(0, V), where V is the covariance matrix of error terms in Equation 1a.

The observation equation (Equation 1a) models the short-term effect of marketing activities on
sales. Note that this equation yields period-specific estimates (stacked in θt) for intercepts (base
sales) and regular price elasticities. We allow these to vary over time as described in the system
equation (Equation 1b) to measure the long-term effect of marketing strategies on base sales and
regular price elasticity. The system evolution matrix G measures the duration of these
strategies—comparable to the decay rate of advertising stock. We assume the stochastic term
ωt to be distributed N(0, W).

Importantly, the DLM methodology accounts for evolution/nonstationarity in the data.

According to West and Harrison (1997, pp. 299–300), DLM approaches model the original time
series directly, without data transformations, such as differencing. High levels of nonstationarity
cannot usually be removed by differencing or other data transformations but instead are directly
modeled through a DLM representation. For a detailed discussion on the benefits of DLM
methodology and its relationship to other time-series models (e.g., VAR), see Van Heerde, Mela,
and Manchanda (2004) and West and Harrison (1997). Next, we elaborate on this basic
specification (i.e., Equations 1a and 1b) and detail how we extend it to control for endogeneity in
prices and marketing mix and performance feedback.

Model Specification

Observation equation: short-term effects

To capture the short-term effect of marketing activity on a brand's sales in a given chain, we
operationalize Equation 1a as a log-log model, similar to Van Heerde, Mela, and Manchanda
(2004) and others:

where ln SALESjst represents the log-sales of brand j in chain s in week t; ln RPRjst is the log-
inflation-adjusted regular price; ln PIjst is the log of price index, which is defined as the ratio of
actual price to regular price; FNDjst indicates whether there was a feature and/or display without

46
a price discount; ln CRPRj′st and ln CPIj'st are log-cross-regular prices and log-cross-price
indexes, respectively; TEMPt is the average temperature in week t; and HDUMit is a vector of
holiday dummies for events such as Christmas and Easter. The four marketing variables are
advertising expenditure (ADV jt), national discount depth (DSCjt), distribution breadth (DBRjt),
and product line length (LLNjt).

We standardize all variables (after taking logs, if applicable) within brand chain to control for
unobserved fixed effects and indicate this by the overbar. This standardization also facilitates
comparison of effect sizes across the mix and categories (in which price is typically expressed in
different equivalency units such as liters or grams) and implies that the model uses within-brand
variation over time for inferences.

In Equation 2, αjt is the brand-specific time-varying intercept, which can be construed as base
sales because all independent variables have been mean centered. The time-varying brand-
specific regular price elasticity coefficient βjt is the second central parameter.

We also incorporate several control variables in the model: μj is the promotional price elasticity,
ϕj is the feature and/or display log multiplier, ρ1j′j and ρ2j′j are cross-regular and -promotional
price elasticities, and τij (i = 0, …, I) captures seasonal variation. In addition, ζ kj (k = 1, …, 4)
capture the short-term (contemporaneous) effects of marketing activities on sales. Given the rich
literature on advertising dynamics (e.g., Bass et al. 2007; Naik, Mantrala, and Sawyer 1998), we
allow the advertising effect to vary over time (ζ 1jt) with a random-walk evolution ωζζ1jt=ζ1jt-
1+ωjtζ. We include ξjst, a brand-chain specific intercept, to account for potential first-order
autoregressive errors (ξλξξωξξjst=λjsξξjst−1+ωjsξ). Finally, υυjstS is an error term, which is
assumed to be distributed normal and independent across time.

System equation: long-term effects

A core contention of this research is that brands’ base sales and regular price elasticities vary
over time as a function of marketing variables. To test these conjectures, we specify the long-
term effect of marketing strategies on these two performance measures by operationalizing

(3b)

Here, the γs measure the effect of marketing variables on the base sales and regular price
elasticities. These are the central parameters of interest in our analysis because they measure the
effect of marketing strategy on brand performance. Standardization of the four marketing
variables implies that their parameter estimates are driven by time-varying marketing strategies
for a given brand rather than a cross-sectional comparison of marketing strategies across brands.
The λs represent the decay rate of these effects, where λ is positive. A value near 0 implies that
the effect of marketing strategy is brief, whereas a value of 1 implies that the effect of the
strategy is more enduring (the recursion in 3 implies a geometric decay of marketing effects). We

47
assume that all ωs are independently distributed but brand specific, with zero mean and a
diagonal covariance matrix W.

The intuition behind our observation and system equations is that they decompose the short-term
from the long-term marketing effects, as well as the brand effects from the chain effects if
necessary. The short-term effects, given by the response parameters in Equation 2, capture the
contemporaneous effects of marketing variables on a given week's sales of a brand within a
given chain. For example, μj captures the current-period effect of a chain-specific discount on
brand sales in a given week. We capture the long-term effects of marketing through the influence
of marketing variables on αjt (base sales) and βjt (regular price elasticity), as we show in
Equations 3a and 3b. Thus, γαγ2α captures the effect of a brand's cumulative historical
discounting on base sales. Likewise, whereas μ j captures the short-term effect of a local or chain-
specific discount on sales, ζ2j captures the short-term effect of national discounting policy on
local or chain-level brand sales. Researchers might expect the contemporaneous effect of
national discounting to be small when local chain effects are controlled for because not all stores
within a chain adopt the promotion; indeed, this is what we find. Note that this treatment of
promotion at the national brand level is consistent with the other aspects of the marketing mix.

Price and marketing-mix endogeneity, performance feedback, and competitor response

Bijmolt, Van Heerde, and Pieters's (2005) meta-analysis indicates that price endogeneity plays a
major role in price response estimates. To mitigate this bias, we adopt an approach that is
analogous to a limited-information simultaneous equations approach to the endogeneity problem.
That is, we replace the supply-side model with a linear specification that includes instrumental
variables as the independent variables, and we allow for correlation between the demand-side
error term and the supply-side error term. Specifically, we construct the following equation:

(4) The specification assumes that a brand's regular price in a particular chain (lnRPRjst̄) is a
manifestation of its (latent) national pricing strategy μμ0jRPR. Deviations from this strategy
arise from seasonal and random effects. We use lagged regular price (lnRPRjst-1̄) to capture
inertia in pricing (Yang, Chen, and Allenby 2003). By including lagged national sales of the
focal brand and lagged sum of competing brands’ national sales
(lnSALES̄jt−3Own and lnSALES̄jt−3Cross, respectively), we can control for own- and cross-
performance feedback.4 We estimate Equations 2 and 4 simultaneously and let error
terms υυjstS and υυjstRPR be correlated to account for price endogeneity in the observation
equation. We also specify a similar equation for promotional price (lnPIjst̄).

Finally, we specify an additional equation for each marketing variable to control for performance
feedback in marketing spending. Otherwise, the imputed link between marketing spending and
brand performance may be an artifact of the effect of past performance on marketing spending.
Another key advantage of this approach is that it affords a parsimonious control for changes in
long-term marketing strategies of competing brands because the sales of these brands are a

48
function of their marketing strategies. Therefore, we include the following regression equation in
the system for all four marketing variables:

(5) where Z̄ijt is the ith marketing variable of brand j during week t; μ1j captures inertia in
marketing; μ2j accounts for seasonality; and the parameters μ 3j and μ4j capture, respectively, the
own- and cross-performance feedback effects for marketing variable i. This specification builds
on the work of Horvath and colleagues (2005), who show that own- and cross-performance
feedback are more informative than direct competitive action in the prediction of marketing-mix
activity. In support of this, recent research has shown that cross-instrument competitive reactions
are predominantly zero (e.g., Ataman, Mela, and Van Heerde 2008; Pauwels 2007; Steenkamp et
al. 2005). Equation 5 implies that marketing spending is affected by a geometrically weighted
sum of own- and competing-brand sales from the preceding periods. Therefore, the model
captures phenomena such as retailers’ disadoption of brands whose sales have been declining for
several months (e.g., Franses, Kloek, and Lucas 1998). Finally, the model accommodates
dynamic dependencies among all the marketing variables through the mediating impact of sales
(e.g., Bronnenberg, Mahajan, and Vanhonacker 2000).

Using Markov chain Monte Carlo techniques, we estimate Equation 5 together with
Equations 2 and 4, and we let error terms υυυυjstS, υjstRPR, υjstPI, and υυjstZi be correlated.
Allowing for contemporaneous correlation among sales, pricing, and marketing-mix equations
helps us (1) account for common unobserved shocks that may jointly influence sales and
marketing, (2) control for simultaneity without inducing a causal ordering among the
contemporaneous effects, and (3) capture covariation in marketing expenditures that may arise
from retailer category management practices. The details of the estimation procedure appear in
the Web Appendix (http://www.marketingpower.com/jmroct10).

Note that some of the parameters in Equations 2–5 are specified as non–time varying. The state
space enlarges exponentially with additional time-varying parameters, and the model yielded
poor reliability and convergence when we allowed all parameters, including those for control
variables in Equations 2 and 4 and all parameters in Equation 5, to vary. Although the resulting
degrees of freedom in Bayesian DLM models are difficult to assess and are data dependent
because of the precision of the likelihood and priors, it is evident that strong and perhaps
unpalatable assumptions would be necessary to identify time-varying parameters for all the
regressors.

Empirical Analysis

We use a novel data set provided by Information Resources Inc. (IRI [France]) to calibrate our
model. These data include five years (first week of 1999 up to and including first week of 2004)
of weekly stockkeeping unit (SKU)–store-level scanner data for 25 product categories sold in a
national sample of 560 outlets representing 21 chains. The 25 categories vary across dimensions
such as food/nonfood, storable/nonstorable, new/mature, and so forth. In addition, TNS Media

49
Intelligence (France) provided the matching monthly brand-level advertising data. Accordingly,
the data include temporal and cross-sectional changes in (1) advertising strategies, (2) product
offerings, (3) distribution coverage, and (4) pricing strategies. We selected France over the
United States because it does not suffer from measurement problems induced by Wal-Mart.
Given that Wal-Mart sales are growing and because IRI and ACNielsen do not cover this chain,
parameter paths could reflect these changes.

The long duration, coverage of the entire mix, and manifold categories make the data well suited
to address the core research questions. Conversely, the data's massive size renders estimation of
an SKU-store-level model specification infeasible. As such, we aggregate the data to the brand–
chain level. We aggregate to the brand level because our central focus in on the effect of
marketing strategy on brand sales, and we aggregate to the chain level because pricing and other
marketing policies tend to be fairly consistent within chains in the data.

To avoid any biases due to linear aggregation, we aggregate the data from the SKU–store level to
the brand–chain level following the nonlinear procedures that Christen and colleagues
(1997) outline. We limit our analyses to the top four chains (184 stores), which account for
approximately 75% of the total turnover across all categories, and to three top-selling national
brands per category.5 However, there are three categories, dominated by private labels, in which
we observe fewer than three national brands being sold in the top four chains over the entire
sample period. This leaves us with 70 national brands. The total number of observations is
73,080 (4 chains × 70 brands × 261 weeks).

The total market share of the top three national brands ranges between 26.1% (oil) and 79.1%
(carbonated soft drinks). We present the variables and their operationalizations in the Appendix.
In Table 3, we show the descriptive statistics of the data. There is more week-to-week variation
in the advertising and discounting variables than in the distribution and product variables.
However, because the data span a long period (five years of weekly data), there is sufficient
variation in the product and distribution variables to measure their effects.

Table 3 Descriptive Statistics

Category Number of Market Discount Depth Advertising (100,000

Brands Share (%) (%) Euros)
Ma M Varianceb M Variance Variance
Bath 3 9.9 2.1 1.8 .584 .9 48.9
products
Beer 3 17.4 2.1 1.8 1.786 6.5 12.1
Coffee 3 14.4 2.9 2.3 2.877 5.6 49.9
Chips 1 32.8 3.4 3.2 — — 169.4
Cereals 3 25.4 1.7 1.2 3.784 7.1 13.7
Soft drinks 3 26.4 2.4 1.3 2.825 5.4 28.1
Diapers 3 20.8 1.2 1.0 .835 1.0 548.4

50
Detergent 3 15.6 1.4 2.1 2.891 2.6 170.2
Feminine 3 18.9 .9 .6 1.791 1.4 30.8
needs
Frozen pizza 3 15.8 2.4 2.4 .396 1.0 17.5
Ice cream 3 10.1 3.4 3.9 .664 2.2 739.1
Mayonnaise 3 23.9 1.2 1.3 .818 1.2 50.0
Oil 3 8.7 1.6 1.4 .690 .9 8.5
Pasta 3 20.7 2.5 1.5 1.126 1.7 156.5
Paper towel 1 33.9 2.6 1.8 .782 1.4 5.3
Shaving 3 17.3 1.0 .7 .123 .2 36.1
cream
Shampoo 3 11.3 1.5 1.0 1.776 2.1 87.5
Soup 3 24.1 1.0 .9 1.193 3.5 107.8
Tea 3 17.2 .4 .2 .282 .4 7.3
Toothpaste 3 17.2 1.3 1.3 1.304 1.3 44.1
Toilet tissue 3 14.3 1.9 1.1 .352 .7 5.3
Window 2 29.4 .6 .4 .027 .1 1.9
cleaner
Water 3 10.4 1.2 .9 2.492 6.6 10.6
Yogurt 3 26.3 1.8 3.0 .246 .4 7.8
drinks
Yogurt 3 10.8 1.0 .7 1.030 3.9 11.9
All 70 18.9 1.8 1.5 1.2268 2.3 94.8
categories
a

Average across all weeks and brands within a category.

Average across all brands within a category.

Notes: ACV = all commodity volume.

Results

In this section, we first discuss the results of the short-term sales model. Then, we detail long-
term effects, including (1) the effect of the marketing mix on base sales and regular price
elasticities and (2) inertia and performance feedback arising from the marketing expenditures
model. We conclude by integrating the long- and short-term models to derive insights into the
overall effect of marketing strategy on sales over the long and short run and across the mix.

The Short-Term Effects

We consider three sets of parameters in the sales model (Equation 2) for each of the 70 brands:
(1) the control variable parameters, such as promotional price elasticity, feature/display

51
 multiplier, cross-price elasticities, and seasonality parameters; (2) parameters pertaining to short-
term marketing effects; and (3) the time-varying parameters (the intercepts and elasticities). The
promotional price elasticity is –3.35 (see Table 4), which is consistent with Bijmolt, Van Heerde,
and Pieters (2005). The mean of the feature and display multipliers, which we obtained by taking
the anti-log-transformation, is 1.12, which is comparable to other results in the literature (Van
Heerde, Mela, and Manchanda 2004). The regular and promotional cross-price elasticity
estimates average .07 and .18, respectively, across all brands, which is also similar to other
results in the literature (Sethuraman, Srinivasan, and Kim 1999). The coefficient of average
weekly temperature is significant (95% posterior density interval excludes zero) in product
categories in which sales are expected to exhibit a seasonal pattern (i.e., reaching a peak during
summer months in categories such as ice cream and carbonated soft drinks and during winter
months in categories such as soup and coffee) and insignificant in others.

Table 4 Parameter Estimates of Sales and Marketing-Mix Models

Equation Coefficient M Variance

Sales Feature/display .106 .007
Price index (own) –3.348 6.136
Price index (first competitor) .160 .218
Price index (second competitor) .195 .135
Regular price (first competitor) .041 .142
Regular price (second competitor) .091 .102
Temperature .001 .000
Christmas –.079 .049
New Year's .012 .035
Easter .068 .005
Ascension –.021 .002
Bastille Day –.015 .001
Assumption –.052 .003
Advertising .008 .004
Discounting .000 .001
Distribution .016 .003
Line length .015 .009
Advertising Constant –.001 .000
Temperature .001 .000
Lagged advertising .851 .002
Own-performance feedback –.028 .004
Cross-performance feedback .004 .004
Discounting Constant .000 .000
Temperature .002 .000
Lagged discounting .707 .007
Own-performance feedback .000 .011
Cross-performance feedback .003 .008
Distribution Constant .005 .000

52
 Temperature –.002 .000
Lagged distribution .624 .090
Own-performance feedback .037 .015
Cross-performance feedback –.012 .010
Line length Constant .006 .000
Temperature .002 .000
Lagged line length .923 .004
Own-performance feedback .003 .004
Cross-performance feedback –.005 .005
Regular price Constant .000 .000
Temperature .000 .000
Lagged regular price .898 .003
Own-performance feedback .000 .000
Cross-performance feedback .000 .000
Price index Constant .000 .000
Temperature .000 .000
Lagged price index .703 .007
Own-performance feedback .000 .000
Cross-performance feedback .000 .000
Notes: Mean and variance across median estimates for 70 brands.

Table 4 also indicates that, on average, all marketing-mix variables have a positive short-term
effect on sales. The strongest effects pertain to distribution breadth (.016) and product line length
(.015), followed by advertising (.008) and discounting (.0001). The average regular price
elasticity over time and across brands is –1.45, consistent with the results of Bijmolt, Van
Heerde, and Pieters's (2005) meta-analysis.

The Long-Term Effects

Base sales and price elasticity

To exemplify how long-term changes in brand performance evolve over time, Figure 3 plots the
base sales and price sensitivity of Brand C.

Plot of Base Sales and Price Elasticity Over Time for Brand

Notably, at the point of the turnaround, both metrics improve. Base sales increase, implying
higher levels of demand, and price response lessens, implying that the firm can raise its average
price and, thus, margins. Closer inspection of Figure 1 reveals that many aspects of the brand
strategy changed at the point of the brand's turnaround (discounts decreased, advertising
increased, the product line expanded, and distribution grew), making it difficult to ascertain the
determinant factors that drive performance. Pooling across brands, however, enables us to paint a
more reliable picture of the tools that are most impactful.

53
 Specifically, we examine the long-term effect of marketing strategy on base sales and regular
price elasticity (Equations 3a and 3b). Across all categories, the marketing effects on base sales
and regular price elasticity are given by γα and γβ, respectively (see Table 5).

Table 5 Marketing-Mix Effects on Intercepts and Elasticities

Effect of Estimated Effect on

Expected Effect on Intercept Elasticity
Intercept Elasticity Mdn [5th and 95th Mdn [5th and 95th percentile]
percentile]
Discounting Positive/negati Negative –.0044 [–.0061,–.0029] –.0119 [–.0067,–.0177]
ve
Advertising Positive Positive .0069 [.0052,.0086] .0083 [.0014,.0139]
Distribution Positive Positive/negati –.0008 [–.0026,.0012] –.0047b [–.0128,.0027]
ve
Line length Positive Positive .0012a [–.0001,.0025] .0123 [.0074,.0182]
aThe effect of line length on base sales crosses zero at 93rd percentile.

bThe effect of distribution breadth on elasticity crosses zero at 86th percentile.

Table 5 indicates that advertising spending and product line length increase base sales, as we
expected. The negative effect of discounting reflects that excessive discounting lowers base
sales, consistent with deal-to-deal buying patterns. The effect of distribution breadth on base
sales is negligible because the 90% posterior density interval includes zero. However, as we
discuss subsequently, this limited direct long-term effect does not mean that distribution breadth
has negligible impact on sales. The indirect long-term effect can remain large if the positive
short-term effect of distribution is coupled with a sizable sales feedback effect. We explore the
total long-term effects subsequently.

Table 5 further indicates that product line length and advertising increase regular price elasticity
(i.e., make it less negative). The result supports the notion that offering more alternatives and
high advertising support helps brands better match consumer needs to products and differentiate
themselves from the competition. Conversely, discounting decreases price elasticity (i.e., makes
it more negative). This result is consistent with previous research, which suggests that discounts
make demand more price elastic (Kopalle, Mela, and Marsh 1999). Finally, Table 5 indicates that
the effect of distribution breadth on price elasticity is negative; however, the effect can be
considered negligible because the 90% posterior density interval includes zero. 6

Table 6 displays the median long-term effect across the brands in the category. For each brand j,
these are given by γαλαγα/(1−λjα) and γβλβγβ/(1−λjβ). Table 6 shows that the magnitudes of the
long-term effects on base sales and elasticities vary considerably across categories. Moreover,
categories for which the effects on base sales are relatively strong (e.g., diapers, soup) do not

54
necessarily coincide with categories for which the effects on elasticity are relatively strong (e.g.,
detergent, bath products). This lends support to our two-faceted measures of brand performance.
This may be related to the purchase cycle of some of these categories because long-term effects
tend to be more enduring as these purchase cycles lengthen; next, we provide an overview of
these duration effects.

Table 6 Long-Term Effects of Marketing-Mix Effects on Intercepts and Elasticities

Category Intercept Elasticity

Discounting Advertising Distribution Line Discounting Advertising
Length
Bath –.010 .016 –.002 .003 –.415 .268
products
Beer –.021 .032 –.004 .005 –.017 .012
Coffee –.034 .052 –.006 .009 –.022 .014
Chips –.014 .022 –.003 .004 –.021 .014
Cereals –.014 .023 –.002 .004 –.022 .015
Soft drinks –.020 .032 –.004 .005 –.016 .011
Diapers –.181 .278 –.031 .048 –.022 .015
Detergent –.008 .013 –.001 .002 –.035 .023
Feminine –.009 .014 –.002 .002 –.023 .016
needs
Frozen pizza –.041 .063 –.007 .011 –.026 .018
Ice cream –.068 .105 –.012 .018 –.076 .049
Mayonnaise –.033 .052 –.006 .009 –.017 .011
Oil –.014 .021 –.002 .004 –.019 .011
Pasta –.010 .015 –.002 .003 –.025 .016
Paper towel –.121 .184 –.020 .031 –.021 .014
Shaving –.007 .011 –.001 .002 –.018 .012
cream
Shampoo –.011 .017 –.002 .003 –.017 .011
Soup –.069 .106 –.012 .018 –.042 .024
Tea –.009 .014 –.002 .002 –.015 .011
Toothpaste –.008 .013 –.001 .002 –.025 .018
Toilet tissue –.010 .014 –.002 .002 –.029 .020
Window –.013 .020 –.002 .003 –.031 .020
cleaner
Water –.008 .012 –.001 .002 –.016 .011
Yogurt –.099 .149 –.017 .025 –.066 .042
drinks
Yogurt –.015 .023 –.002 .004 –.020 .013
All –.014 .022 –.002 .004 –.022 .015
categories
Notes: We computed the long-term effects of marketing variables over a five-year horizon. Table
entries are medians across brands in a product category.

55
Duration of base sales and price elasticity dynamics

Also of interest is the duration of these effects, parameterized by λ in our model

(Equations 3a and 3b). If a brand has done well, how long do positive effects linger? Conversely,
if a brand has done poorly, how long does it take to resuscitate it? Across the 70 brands, the
intercept decay parameters range between .48 (25th percentile) and .92 (75th percentile), with a
median of .69. This implies that 90% duration intervals of marketing activity (Leone 1995) range
from 3.2 to 28.3 weeks with a median of 6.2 weeks. The median decay for regular price elasticity
is .44, ranging between .25 (25th percentile) and .73 (75th percentile), and the implied 90%
duration intervals range from 1.7 to 7.2 weeks with a median of 2.8 weeks. This implies that the
adjustment in elasticity is slightly faster than the adjustment in base sales. In seven categories,
the effects of the marketing mix on base sales or elasticities appear to be persistent
(nonstationary) because the posterior density intervals for decay parameters include 1 (Dekimpe
and Hannsens 1999). Overall, these dynamics imply that, in general, it is possible to recover
from a weak position within a couple of months. However, in some instances, it can take 6
months or more to resuscitate a brand.

Price and marketing-mix expenditure dynamics

We summarize the findings that pertain to the regular and promotional price equations
(Equation 4) and the four marketing-mix models (Equation 5). First, we compared the fit of a
model with no endogeneity and performance feedback with that of a model with these controls.
A log–Bayes factor of 12,992 suggests that it is critical to control for endogeneity and
performance feedback.7 Second, Table 4 shows that inertia in prices and marketing mix ranges
between .62 (distribution) and .92 (line length). Third, better historical performance leads to
greater marketing spending (i.e., increased distribution coverage and longer product lines),
highlighting the importance of controlling for performance feedback when evaluating the long-
term effect of marketing strategy. Finally, we find that cross-sales performance feedback is
usually zero.

The Short- and Long-Term Effects of Marketing Variables on Sales

So far, our discussion about the long-term effect of marketing variables on base sales and
elasticities has focused on the γ in Equation 3. However, to quantify the full impact of marketing
variables on sales, we also need to consider the direct (contemporaneous) effects of marketing
variables on sales through Equation 2, the indirect effects through the inertia and feedback
effects present in Equation 5, and their implications on chain-level regular prices and price
indexes through Equation 4.

To calculate the full effects of the marketing variables (ADV̄jt, DSC̄jt, DBR̄jt, LLN̄jt) on sales
over the short and long run, we set each variable at its mean and then increase each marketing

56
variable, in turn, by 1% in week t. The effect on ln(sales) in week t (through Equation 2) is the
short-term elasticity, η^ks, where k denotes the element of the mix (e.g., advertising) and s
indicates the short run. This shock in marketing also carries forward to future periods in several
ways, including inertia (μμ1jzi in Equation 5), performance feedback (μμ3jzi in Equation 5), and
the long-term effect on base sales and price elasticity in Equation 3. We compute the cumulative
implication of this shock for ln(sales) over a time window of 52 weeks (weeks t + 1, …, t + 52),
representing the long-term elasticity, η^kl. The total effect (η^kt) is given by the long-term effect
plus the short-term effect. To compute the relative effect, we calculate |η^kP|/Σk|η^kP|, where p
= {s, 1, t}. Table 7 shows the contemporaneous, long-term, and total brand sales elasticity of the
marketing mix, and Figure 4 presents a pie chart of the relative effects.

Table 7 Sales Impact of 1% Temporary Increase in Marketing Support (%)

Contemporaneous Long Term Total

Discounting .06 –.02 .04

Advertising .01 .12 .13

Distribution .13 .61 .74

Line length .08 1.29 1.37

Notes: Table entries are medians across brands.

Several striking results emerge. First, the short-term elasticities (η^ks) of distribution and
product are predominant. The distribution elasticity is .13, the product elasticity is .08, the
discount elasticity is .06, and the advertising elasticity is .01. 8 The short-term depth elasticity is
slightly larger than the mean of .02 that Jedidi, Mela, and Gupta (1999) report, and the short-term
advertising elasticities appear to be somewhat smaller than the average of .05 for mature brands
that Lodish and colleagues (1995) report.

Second, the long-term elasticities (η^kl) of product (1.29) and distribution (.61) dwarf the
elasticities for advertising (.12) and discounting (–.02). The long-term advertising elasticity (.12)
is lower than the empirical generalization (.20) that Hanssens, Parson, and Schultz (2001, p. 329)
report. This difference, as well as the differences we discussed in the previous paragraph, might
be attributable to (1) the inclusion of the full marketing mix as regressors (most studies to date
include only a subset [see Table 1], possibly suffering omitted variable biases) or (2) changes in
the effectiveness of advertising and promotion over time.

Third, we find that the magnitude of the negative long-term effect of promotion is approximately
one-third the magnitude of the positive short-term effect, consistent with the result for a single
category that Jedidi, Mela, and Gupta (1999) report. In contrast, the ratio is reversed for other
marketing-mix instruments, making the greater long-term impact on brand building evident. For

57
these other instruments, the long-term effects are 4 to 16 times the short-term effects. The larger
long-term effect results from an interaction between a large short-term effect and substantial
carryover. In particular, product has the highest inertia, and distribution has the highest sales
performance feedback. As a result, the total effect of these instruments is much larger than for
promotion.

Finally, the total (short-term plus long-term) elasticity η^kt (and its share of the sum of total
elasticities) of product is 1.37 (60%), and the long-term elasticity for distribution breadth is .74
(32%). In sharp contrast, the effect of advertising is only .13 (6%), and for discounts, it is .04
(2%). Thus, we find evidence that distribution and product play the major roles in discriminating
between the performance of mature brands, despite the emphasis of prior research on discounts
and advertising (e.g., Jedidi, Mela, and Gupta 1999). This result is consistent with the common
wisdom that distribution and product are among the most important components of marketing
strategy.

Summary

Marketing managers spend billions of dollars annually on their marketing programs, but few
studies systematically assess the long-term effect of these programs over many brands and
categories. Moreover, extant research focuses largely on advertising and promotions (see Table
1) but not on product or distribution.

This study attempts to address both the data and the modeling requirements. We use five years of
weekly data across 25 categories and 70 brands sold in the four largest chains in France. By
relating the performance of these brands to their integrated marketing-mix strategy, we offer
insights into which strategies are most likely to lead to long-term advantages for brands. We
apply a DLM to the data, which enables us to model both sales and the marketing mix as
dependent variables and helps us accommodate endogeneity, performance feedback, and
competitive interactions (through cross-performance feedback effects).

Using the DLM, we link marketing strategy to two components of brand performance: base sales
and regular price elasticity. First, after controlling for short-term sales spikes induced by
discounting, we find that all aspects of the marketing mix exhibit a positive short-term direct
effect on sales, most notably distribution and line length.

Second, the mix also evidences indirect effects through base sales and price response. Base sales
are positively affected by advertising but negatively affected by discounting over the long run.
Thus, discounting plays a largely tactical role by generating strong bumps in the short run, but it
has adverse effects as a strategic long-term marketing instrument. Regular price elasticities are
decreased by discounting and distribution, but they are increased by advertising and line length.
We suspect that the negative effect of distribution on price elasticity is due to increased potential
for consumers to shop across stores. Third, the median 90% average decay of the mix effect on
base sales is approximately 6.2 weeks. The corresponding figure for elasticities is 2.8 weeks.

58
Fourth, dynamics are also present through performance feedback and inertia in spending.
Performance feedback is strongest for distribution, while inertia is strongest for product. Fifth,
when combined, all these effects indicate that product (60%) and distribution (32%) have a
substantially larger relative effect on brand sales over the long run than discounting (2%) or
advertising (6%). Finally, we find that the magnitude of the dynamic effect of a promotion is
one-third the magnitude of its contemporaneous effect. This ratio is reversed for other aspects of
the marketing mix, suggesting their greater potential to make an enduring impact on brand sales.

Limitations

The findings are subject to several notable limitations, some of which point out several future
research opportunities. First, the DLM is well suited to linking marketing activity to intercepts
and elasticities but cannot easily be scaled to a large number of variables, periods, and
observations because (1) the state space explodes and, along with it, the computer memory
needed for estimation and (2) convergence of each model run takes weeks. Therefore, our use of
the DLM amplifies the trade-off between model parsimony and completeness. Accordingly, we
made several assumptions to render the analysis feasible.

Second, our model does not allow for different decay factors for different marketing variables. A
canonical transfer function DLM can be written to overcome this limitation, and different decay
parameters can be estimated for each marketing variable using a data augmentation step in the
Gibbs sampler.

Third, several potential interactions exist in the marketing mix. For example, advertising itself
may facilitate new distribution. We control for these effects indirectly through lagged
performance feedback, which embeds the marketing actions that firms pursue in preceding
periods.

Fourth, we assume that the effects of feature and display are fixed over time. Undoubtedly, these
effects can change over time with marketing strategy. Expansion of the model to accommodate
these effects would render such insights unreliable as a result of increased model complexity. In
an analysis not reported herein, we estimated a simpler version of the DLM in which all
parameters were time varying, but the time paths were not specified to vary with the marketing
mix. The estimated parameter paths for price and the intercept were largely the same as observed
in our model, suggesting that the omission of time-varying effects for feature and display does
not bias the results.

Fifth, we aggregate data to the chain level. It would be desirable to extend this research to the
store level because that would enable us to study interretail price competition. Chain-level
measures are more noisy, and the reduction in observations reduces power. As a result, this
research is a conservative test of the hypotheses. Chain-level analysis is not uncommon in
marketing (e.g., Slotegraaf and Pauwels 2008; Srinivasan et al. 2004), perhaps because
marketing activity tends to be correlated across stores within a chain.

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Sixth, we consider the top four chains and three largest brands in each category. As such, the
results should be interpreted from the perspective of managers with large brands selling through
predominantly large chains. It would be worthwhile to consider whether the results generalize to
smaller brands and outlets.

Seventh, our focus is on mature brands, and it is interesting to conjecture how the stage in
product life cycle moderates our analysis. For example, in the context of new consumer
packaged goods brands, Ataman, Mela, and Van Heerde (2008, Table 6) find that gaining access
to distribution has a greater impact on sales than extending the product line, contrary to the
findings in this article. However, in line with our findings, they find that advertising and
discounting elasticity magnitudes are much smaller than those of distribution and line length.

Eighth, our analysis pertains to consumer packaged goods products. In the context of other
products or services, evidence suggests that distribution matters more than advertising (e.g., in
the motion picture industry, see Elberse and Eliashberg 2003; on the diffusion of cable
television, see Mesak 1996). Analyzing sales and marketing data on established non–consumer
packaged goods brands, Pauwels and colleagues (2004) find that the positive short-term impact
of product line length on firm performance dominates that of discounting—similar to our
findings; however, this relationship is reversed in the long run.

Ninth, because of the lack of data, we cannot include the perceived quality of the brands
(e.g., Aaker and Jacobson 1994) as a driver of brand performance. However, perceived quality is
a fixed effect, so our standardization should control for its omission.

Tenth, we find that better historical performance leads to increased distribution coverage and
more SKUs on the shelves, results for which retailers may be responsible since they act as
gatekeepers. It may also be that manufacturers spend more money on push marketing for brands
that performed well. Disentangling the two explanations would be worthwhile. Related to this,
we consider retail price elasticities when evaluating the effect of observed marketing strategies
on brand performance. However, retail prices embed behaviors of both the retailers and the firms
that supply them. Accordingly, a formal accounting for the role of retailers would help firms
disentangle those aspects of marketing strategy that are more salient to the firm and those that are
more relevant to the retailer.

Finally, our data are from France, and it remains unclear whether some distribution elements are
unique in France relative to other regions. France is similar to other Western European countries
and comparable to the United States on several marketing statistics (see Steenkamp et al.
2005, Table 2). However, compared with the United States, in France, retail concentration is
higher, while advertising and discounting intensity is lower. In the face of these differences, we
may speculate that the effect of distribution will be attenuated in the United States, while the
effects of advertising and discounting will be stronger. The results in IRI's (2008) long-term

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Drivers Consortium Study partially support the notion that distribution and advertising are
critical for long-term growth in the U.S. market, with advertising being the largest driver.

Despite these limitations, we believe that this article makes an important first step in
documenting the overall long-term effects of the entire marketing mix on brand sales. We hope
that this study stimulates additional research that analyzes these effects in more detail, enabling
even more finely tuned recommendations for marketing executives.

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 CHAPTER NO 04 DATA
ANALYSIS AND INTERPRETATION

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Case Study: Apple Inc. – A Successful Rebranding Strategy

Company Profile: Apple Inc.

 Founded: April 1, 1976

 Founders: Steve Jobs, Steve Wozniak, Ronald Wayne

 Headquarters: Cupertino, California, USA

 Industry: Consumer Electronics, Software, Digital Services

 Key Products: iPhone, Mac, iPad, Apple Watch, AirPods, Apple Music, iCloud

Apple Inc. is one of the most successful companies in the world today, recognized for its
premium technology products, minimalist design, and customer-centric ecosystem. However, its
journey to success was not always smooth. In the late 1990s, Apple was struggling with
declining sales, poor management, and a fragmented brand image. Many analysts predicted that
Apple would not survive. However, the return of Steve Jobs in 1997 marked a major turning
point, leading to one of the most iconic and effective rebranding strategies in corporate history.
Apple’s transformation from a struggling personal computer manufacturer to a global leader in
technology, lifestyle, and innovation is a testament to the power of rebranding.

This case study explores Apple’s strategic rebranding initiatives, detailing how the company
successfully reinvented itself through logo redesign, brand repositioning, product innovation,
marketing transformation, and digital expansion.

Apple's Rebranding Journey

Apple's rebranding was not just a change in its logo or marketing campaigns but a complete
overhaul of its corporate strategy, product lineup, and customer experience. The company shifted
from being perceived as an old-fashioned computer manufacturer to an innovative and premium
lifestyle technology brand. This transformation was driven by a series of strategic changes that
reshaped Apple's identity and market positioning.

Key Elements of Apple’s Rebranding Strategy

1. Logo Redesign and Visual Identity

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Apple’s logo is one of the most recognizable brand symbols in the world today. However, its
visual identity has evolved significantly over the years:

 1976: Apple’s original logo was an intricate illustration of Sir Isaac Newton sitting under
an apple tree, designed by co-founder Ronald Wayne. While artistic, the logo was
complex and did not align with the simplicity that Apple would later embrace.

 1977: The company adopted the famous rainbow-colored apple with a bite. This logo,
designed by Rob Janoff, symbolized creativity, innovation, and Apple's focus on making
computers accessible to everyone.

 1998: Steve Jobs, upon his return, introduced a sleek, monochrome Apple logo,
reflecting the brand’s shift toward modern, minimalist aesthetics. This decision aligned
with Apple's new philosophy of simplicity and sophistication.

 Current Design: Today, Apple’s logo exists in different variations, such as silver, black,
or white, reinforcing a premium and timeless brand identity.

Impact of Logo Redesign:

 Strengthened Apple’s visual consistency across products.

 Helped reposition the brand as a leader in technology and design.

 Made the logo more adaptable for digital and hardware branding.

2. Brand Positioning: From Computers to a Lifestyle Technology Brand

When Apple first started, it was primarily known for its Macintosh computers. However, over
time, the company expanded its focus beyond computers to a broader range of consumer
electronics and services.

 The "Think Different" campaign (1997) was a major part of this repositioning. This
slogan emphasized innovation, creativity, and breaking the status quo, appealing to
artists, designers, and professionals.

 Apple redefined itself as not just a tech company but a lifestyle brand, where products
seamlessly integrate into customers' daily lives.

 The introduction of the iPod (2001), iPhone (2007), and iPad (2010) further solidified
Apple's transformation from a computer company to a global consumer electronics
powerhouse.

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Impact of Repositioning:

 Expanded Apple’s customer base beyond traditional computer users.

 Created a strong emotional connection between customers and the brand.

 Positioned Apple as an aspirational and premium brand.

3. Product Innovation and Simplification

One of the most crucial aspects of Apple’s rebranding was its focus on product innovation and
simplicity.

 When Steve Jobs returned in 1997, Apple had an overly complex product lineup,
causing confusion among customers. Jobs streamlined Apple's offerings by eliminating
unnecessary products and focusing on innovation.

 The iMac (1998) was the first product under the rebranding strategy, featuring a modern,
colorful design and an all-in-one computer concept.

 The launch of the iPod (2001), iTunes (2003), iPhone (2007), and iPad (2010)
revolutionized multiple industries, making Apple a market leader.

Impact of Product Innovation:

 Strengthened Apple’s reputation for creating groundbreaking technology.

 Created a seamless and interconnected ecosystem that encouraged brand loyalty.

 Increased consumer trust and drove massive sales growth.

4. Marketing and Advertising Transformation

Apple’s marketing approach changed significantly as part of its rebranding efforts:

 Minimalistic Advertising: Apple shifted from feature-driven ads to simple, emotion-

driven campaigns.

 The "Get a Mac" Campaign (2006-2009): This humorous campaign compared Apple’s
Mac computers with Microsoft’s PCs, highlighting Apple’s superior design, security, and
user experience.

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  Iconic Product Launch Events: Apple turned its product launches into global events,
creating anticipation and hype for new releases.

Impact of Marketing Transformation:

 Strengthened Apple’s brand messaging and storytelling.

 Created a strong brand personality associated with innovation and premium quality.

 Increased customer engagement and excitement around new products.

5. Digital Transformation and Ecosystem Branding

Apple’s rebranding extended beyond products and marketing; it also embraced digital
transformation:

 Apple Stores (2001): The launch of physical stores provided a premium shopping
experience and direct customer interaction.

 App Store (2008): Revolutionized how software was distributed and monetized.

 Cloud Services (iCloud, Apple Music, Apple Pay): Strengthened Apple's ecosystem by
integrating services across devices.

Impact of Digital Transformation:

 Made Apple’s products more indispensable to customers.

 Strengthened brand loyalty through interconnected services.

 Helped Apple transition into a services-driven company alongside hardware sales.

Impact of Apple’s Rebranding Strategy

Revenue Growth: Apple’s market capitalization surpassed $3 trillion, making it one of the
most valuable companies in the world.
Brand Loyalty: Apple cultivated a dedicated customer base that eagerly anticipates new
product releases.
Premium Brand Image: Apple successfully positioned itself as a luxury technology brand,
allowing for premium pricing.
Global Expansion: Apple became a household name worldwide, dominating smartphone,
laptop, and digital service industries.
Competitive Differentiation: Apple’s minimalist design, integrated ecosystem, and focus on
user experience helped differentiate it from competitors like Microsoft and Samsung.

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Conclusion

Apple’s rebranding strategy is one of the most successful corporate transformations in history.
By focusing on minimalistic design, premium product positioning, emotional marketing, and
digital integration, Apple reinvented itself into a global leader in technology and lifestyle
innovation. The company’s journey highlights the importance of strategic rebranding in
achieving long-term success, making it a benchmark for businesses aiming to enhance their
brand identity and market presence.

Apple’s story proves that rebranding is not just about changing a logo—it’s about changing
how customers perceive and engage with the brand.

Effect of Apple’s Rebranding Strategies on Its Sales

Apple’s rebranding strategy played a crucial role in transforming the company from a struggling
personal computer manufacturer in the 1990s into one of the most valuable and profitable brands
in the world. The impact of Apple’s rebranding on its sales was significant, leading to increased
revenue, market share expansion, and heightened brand loyalty. Below is a detailed analysis of
how Apple’s strategic rebranding affected its sales performance.

1. Drastic Increase in Revenue and Market Capitalization

Before Apple’s rebranding efforts, the company was facing financial instability, losing market
relevance to competitors like Microsoft and Dell. However, after Steve Jobs returned in 1997 and
implemented a strategic rebranding initiative, Apple saw a massive turnaround.

Key Financial Growth Indicators:

 1997 (Pre-Rebranding): Apple was on the verge of bankruptcy, reporting losses of

$1.04 billion.

 2001 (Launch of iPod): Revenue increased as Apple successfully entered the digital
music industry.

 2007 (Launch of I Phone): Apple’s revenue jumped 24% year-over-year, reaching $24
billion in 2007.

 2010 (Expansion into Mobile Devices): Apple’s revenue surged to $65 billion, tripling
within three years.

 2020 (Strong Ecosystem Growth): Apple reached $274.5 billion in revenue.

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  2023 (Current Success): Apple’s annual revenue exceeded $394 billion, and its market
capitalization surpassed $3 trillion, making it the most valuable company in the world.

Impact: Apple’s rebranding directly contributed to its revenue growth by reshaping its market
perception, expanding product offerings, and increasing demand among consumers worldwide.

2. Increased Product Sales Across Categories

Apple’s shift from a computer company to a premium consumer electronics and lifestyle brand
led to higher sales across multiple product categories.

Major Product Sales Growth Due to Rebranding:

Product Yearof Sales Growth

Launch

IMac 1998 Revitalized Apple’s computer sales, positioning it as a design-

centric brand.

IPod 2001 Sold over 400 million units before being discontinued.

IPhone 2007 Became Apple’s most successful product, with over 2.2 billion
units sold globally.

IPad 2010 Captured 32% of the tablet market, generating billions in

revenue.

Apple 2015 Apple became the world’s largest watch manufacturer by 2019.
Watch

AirPods 2016 Dominated the wireless earbuds market, generating over $12
billion annually.

Impact: Apple’s rebranding helped expand its product portfolio beyond computers, making it a
dominant player in multiple industries, including smartphones, music, and wearables.

3. Stronger Brand Loyalty and Repeat Purchases

Apple’s rebranding positioned it as an aspirational brand, resulting in:

1. Higher customer retention rates.
2.Increased repeat purchases across devices.

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 3.Growth in the Apple ecosystem, where customers buy multiple Apple products that
seamlessly integrate with each other.

Statistics Reflecting Brand Loyalty:

 90% of iPhone users upgrade to a newer iPhone model.

 Apple’s customer retention rate for iPhones is over 92%, higher than any competitor.

 In 2022, Apple accounted for 51% of all smartphone sales in the U.S., showing
continued customer preference.

Impact: Apple’s rebranding successfully positioned the brand as a status symbol and a leader in
technology, ensuring customers remained loyal and upgraded their devices frequently.

4. Premium Pricing and Higher Profit Margins

Before rebranding, Apple competed with brands like Microsoft and Dell based on price.
However, Apple’s rebranding allowed it to:
1.Position itself as a premium brand, commanding higher prices.
2.Increase profit margins, as customers were willing to pay for innovation and design.

Example of Premium Pricing Strategy:

 MacBook Air vs. Competitors: Despite similar specifications, Apple’s MacBook Air is
priced 30-50% higher than equivalent Windows laptops.

 iPhone vs. Android Phones: The iPhone consistently sells at premium prices, while
Android competitors rely on affordability.

 AirPods vs. Other Earbuds: Apple’s AirPods, priced higher than most competitors,
outsell them due to strong brand perception.

Impact: Apple’s rebranding transformed its pricing strategy, allowing it to focus on quality,
exclusivity, and brand value rather than cost-cutting competition.

5. Global Market Expansion and New Customer Segments

 Apple’s rebranding helped it expand into new global markets:

Entered China, India, and emerging economies, increasing international sales.
Attracted younger demographics, professionals, and creative industries.
Became a dominant player in corporate and education sectors.

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Geographical Sales Growth:

 In China, Apple’s revenue grew from $3 billion in 2009 to over $60 billion in 2023.

 In India, iPhone sales surged by 50% in 2023 due to increased brand awareness and
premium positioning.

Impact: Apple’s rebranding allowed it to become a global technology leader, expanding its
reach beyond the U.S. market.

6. Service Revenue Growth: Transition to a Digital Ecosystem

Apple’s rebranding also emphasized digital transformation, leading to massive growth in its
services sector.

Revenue from Digital Services:

 App Store: Generates $85 billion annually from app sales and in-app purchases.

 Apple Music: Competes with Spotify, boasting over 88 million subscribers.

 iCloud & Apple Pay: Integrated into Apple’s ecosystem, encouraging repeat purchases.

 Apple TV+ & Apple Arcade: Strengthened Apple’s presence in the entertainment and
gaming industries.

Impact: Apple’s focus on services diversified revenue streams beyond hardware sales,
ensuring long-term financial stability.

7. Competitive Advantage Over Rivals

Before rebranding, Apple struggled against companies like Microsoft, Dell, and IBM. However,
its successful rebranding strategy enabled it to:
1Dominate the smartphone industry, surpassing Samsung and Huawei.
2Outperform Microsoft in the PC market, with MacBooks becoming the preferred choice for
professionals.
3Redefine the tablet industry, making the iPad the most popular tablet worldwide.

Comparison of Market Performance:

 Microsoft’s market capitalization in 1997: $200 billion → Apple surpassed it in

2010.

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  Samsung sold more smartphones globally, but Apple earned 70% of the industry's
total profits.

Impact: Apple’s rebranding helped it become the world’s most profitable and valuable
technology company.

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 PEPSICO AND IT’s REBRANDING STRATEGIES
PepsiCo has undergone multiple rebranding efforts throughout its history, with changes in its
logo, packaging, marketing strategies, and product positioning. Below is a detailed account of
PepsiCo's rebranding journey, focusing on its strategic transformations, reasons behind these
changes, and their impact on the brand.

1. Introduction to PepsiCo's Rebranding

Rebranding is a crucial strategy for companies to stay relevant, adapt to market trends, and
reposition themselves for better consumer engagement. PepsiCo, one of the world’s largest
beverage and snack companies, has executed several rebranding efforts over the years to
maintain its stronghold in the competitive market against rivals like Coca-Cola.

PepsiCo’s rebranding includes visual identity changes, advertising campaigns, product

innovations, and marketing strategies to align with shifting consumer preferences. Each phase of
rebranding has had a significant impact on sales, brand image, and consumer perception.

2. Evolution of PepsiCo's Branding

PepsiCo has continuously evolved its brand to reflect modern aesthetics and consumer trends.
Below is a timeline of key rebranding events:

a. 1898 – 1950: Early Identity and Growth

 1898: Pepsi was initially called “Brad’s Drink,” formulated by Caleb Bradham.

 1903: Renamed “Pepsi-Cola” with a script logo that remained for several decades.

 1940s: Introduction of the famous red, white, and blue color scheme in response to World
War II patriotism.

b. 1960s – 1980s: The Rise of a Global Brand

 1962: Pepsi dropped “Cola” from its name and introduced a modernized logo.

 1970s: The tagline “Pepsi Generation” was launched to target younger audiences.

 1987: The circular logo was refined, creating a cleaner look.

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c. 1991 – 2000: Modernization and Competitive Positioning

 1991: Pepsi’s first major shift away from the traditional script font to a more
contemporary typeface.

 1998: Pepsi celebrated its 100-year anniversary with an updated globe icon and a sleeker
design.

d. 2003 – 2008: A Digital-First Strategy

 2003: Pepsi introduced a 3D-style logo, giving it a more futuristic and dynamic look.

 2008: The brand underwent another major transformation with a minimalist logo that
focused on simplicity and energy.

e. 2023: The Latest Pepsi Rebranding

 PepsiCo revealed its latest logo and brand identity in 2023 to celebrate 125 years of the
brand. The new logo reintroduced the bold typeface from the 1990s but modernized it
with a digital-friendly design.

3. Key Factors Behind PepsiCo's Rebranding

Several factors have driven PepsiCo’s rebranding strategies:

a. Changing Consumer Preferences

 The company adapted to health-conscious consumers by introducing diet sodas, zero-

sugar variants, and healthier snack options.

b. Digital and Technological Advancements

 Pepsi shifted its branding approach to digital-first strategies, optimizing its logos,
advertisements, and packaging for mobile and online platforms.

c. Competitive Market Pressure

 Rivalry with Coca-Cola led to frequent rebranding to capture the younger demographic
and distinguish itself from its biggest competitor.

d. Cultural and Social Relevance

 Pepsi has aligned its branding efforts with major cultural movements, such as
sustainability, inclusivity, and diversity.

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4. Impact of PepsiCo’s Rebranding on Sales and Market Presence
PepsiCo’s rebranding has played a crucial role in boosting its market share and consumer
loyalty. Some key outcomes include:

a. Increased Sales and Market Share

 Successful campaigns like the "Pepsi Challenge" (1975) helped Pepsi gain a larger
market share.

 Introduction of sugar-free and healthier product lines boosted sales among health-
conscious consumers.

b. Enhanced Brand Recognition

 The distinctive red, white, and blue branding, along with catchy advertising slogans,
strengthened Pepsi’s global recognition.

c. Digital and Social Media Engagement

 The rebranding efforts of the 2000s and 2020s focused on social media-friendly designs
and digital campaigns, increasing Pepsi’s online presence.

5. Challenges Faced During Rebranding

Despite its successes, PepsiCo has faced several challenges during its rebranding journey:

a. Consumer Backlash

 Some logo redesigns were met with criticism, as certain consumers preferred the older,
more nostalgic designs.

 For example, the 2008 logo change was initially met with mixed reactions.

b. Failed Marketing Campaigns

 Some advertising campaigns, such as the controversial 2017 Kendall Jenner ad, faced
significant backlash for being tone-deaf.

c. Keeping Up with Market Trends

 Adapting to healthier beverage trends has required continuous innovation and marketing
shifts.

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CHAPTER NO 05
CONCLUSION

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Conclusion: The Transformative Impact of

APPLE’S REBRANDING ON SALES

Apple’s rebranding strategy was a game-changer that drove significant growth in sales, revenue,
and global market dominance. Through a combination of minimalist branding, innovative
product development, premium pricing, ecosystem integration, and strong marketing
strategies, Apple successfully reinvented itself into one of the most influential brands in the
world.

Key Takeaways:

 From Bankruptcy to Market Leader: Apple’s revenue skyrocketed from $7 billion in

1997 to $394 billion in 2023 due to rebranding.
 Brand Loyalty Drives Sales: A 92% customer retention rate ensures repeat purchases
and sustained revenue growth.
 Ecosystem Strategy: Apple’s interconnected products encourage users to stay within its
ecosystem, increasing sales across multiple categories.
 Premium Pricing Strategy: Apple’s rebranding allowed it to charge higher prices while
maintaining high sales volumes.
 Global Expansion: Apple’s rebranding positioned it as a dominant brand in China,
India, Europe, and beyond.

Final Thought: Apple’s rebranding success is a masterclass in strategic transformation, proving

that effective branding can turn a struggling company into an industry giant.

PEPSICO

PepsiCo’s rebranding efforts have allowed the company to remain a dominant force in the global
beverage and snack industry. By constantly evolving its logo, marketing strategies, and product
offerings, Pepsi has successfully maintained its appeal across generations. While there have been
challenges, PepsiCo’s ability to adapt to digital trends, consumer preferences, and cultural shifts
has ensured its longevity and relevance in the marketplace.

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 BIBLIOGRAPHY

[1] https://ojs.journalsdg.org/jlss/article/download/1701/918/8514

[2] https://www.smashbrand.com/articles/benefits-of-rebranding/

[3] https://www.sciencedirect.com/science/article/pii/S0148296324001930

[4] https://sendpulse.com/support/glossary/rebranding

[5] https://www.researchgate.net/publication/365972474_The_Effect_of_Rebranding_on_Brand
_Loyalty_Brand_Reputation_As_Mediator

[6] https://www.ignytebrands.com/benefits-of-rebranding/

[7] https://www.canva.com/learn/rebranding/

[8] https://www.webfx.com/blog/web-design/why-branding-yourself-is-important/

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