IB Business Management SL 4.5.2 Branding

[Maximum number: 4]

Red Squirrel Apple Juice (RS)
Red Squirrel Apple Juice ( RS) is a cooperative of apple farmers. RS was named after the red squirrel, whose population is declining because of growing numbers of grey squirrels. Originally from North America, grey squirrels are aggressive and take over red squirrels' habitats. RS's founders thought that the red squirrel would be a good symbol to reverse the declining popularity of traditional apple juice due to consumer preference for high-sugar American-style beverages. With the symbol, R S aimed to appeal

Figure for Question 4.5.2—Branding question 1 — IB Business Management SL

to environmentally aware and health-conscious consumers.

Originally, R S only sold apple juice in bulk to beverage companies. These companies bottle the juice and sell it under their own labels. R S requires these companies to place R S 's logo of a red squirrel on their labels. Although R S only sells to a small number of beverage companies, its logo is on juice bottles in stores across the country.

Awareness of the R S brand grew. The cooperative's managers recently opened another channel of distribution: direct sales of bottled juice to consumers at the cooperative's processing plant. R S charges lower prices than stores. The new channel of distribution required capital expenditure for bottling equipment and additional revenue expenditure. R S experienced increased labour and promotion costs, which some farmers complained about.

In recent decades, R S 's home country has experienced rising anti-immigrant sentiment. Some politically motivated organizations have begun to use images of red squirrels to symbolize this sentiment, so some beverage companies no longer want to use R S's logo on their labels.

Some of RS's stakeholders are concerned.

With reference to R S, explain the importance of branding.

Branding is a way for a company to distinguish itself from other organizations. Ideally, it succinctly delivers a message about your product, as R S hoped with the symbol of the red squirrel would symbolize environmental friendliness by reminding consumers of the dangers of invasive species and would symbolize health consciousness, as R S was promoting traditional juice, which has less sugar (and preservatives) than American-style beverages. In this way, R S hoped to build credibility with consumers - any beverage with the R S symbol would be healthy and would remind consumers of the environment. With these features, R S hoped to build goodwill.

Brands, and their symbols, run the risk of taking on a life of their own. Sometimes a famous brand, like McDonald's, enjoys decades of positive psychological associations but then, as culture and consumer trends change, the brand starts to generate negative associations. Such was partially the case with R S. Originally, the image of the red squirrel was at worst innocuous and at best heart

warming. As anti-immigrant groups co-opted the red squirrel for its own purposes, however, the cooperative faced risks of being associated with anti-immigrant sentiment. Some consumers may now be turned off by the brand as to them a red squirrel may symbolize a political position that they disagree with.

Award [1] if the candidate demonstrates some understanding of branding. Award up to [2] if the candidate demonstrates a clear understanding of the importance of branding but makes no meaningfully reference to the stimulus.

Award up to [3] if the candidate demonstrates a clear understanding of the importance of branding and makes meaningfully reference to the stimulus, but the explanation is one-sided. Award up to [4] if the candidate demonstrates a clear understanding of the importance of branding, makes meaningfully reference to the stimulus, and points out both a benefit of branding and some risks inherent with it.

Maximum award: [4]
N.B. For application, just mentioning red squirrel is not enough. Candidates must link the response to the stimulus (for example, "appeal to environmentally aware and health-conscious consumers.")

IB Business Management SL 4.5.2 Branding Question Bank

Exam points

4.5.2—Branding question 1