03.branding as a competitive advantage

THARAKA DIASMBA(USA), BBA(USA), Dip in Mgt, ACIM(UK), FAEA(Dip in AEA-UK), FinstSMM(UK), CPM(Asia), MSLIM

In strategic device, companies invest on brands considering

Growth plans of organization Long term objectives Competitive advantage compared with

rivals

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Cost Driven brands thrives because actions are taken to curtail cost.

Their total cost is always lower Profits could be always as equal as the

average competitor. The cost leadership strategy a brand would

adopt - Concentrates on features than

added values E.g. 3M post it pad/Mazda/Mruti

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Economic of scale Reducing Quality More selective raw materials Introduction of new technology and

streamlining the product range Dealing with only large orders Improve the production efficiency/system

line the process – Garment industry Eliminating un-relevant add ups Maruti -800

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Cost reduction in R & D (Low brands low competitive advantage)

High dependency on technology advancement

Marketers fails to foresee market changes, due to too much focus on cost reduction

E.g. Ford and GM

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These brands offer more added benefits than the competitor at an extra cost.

Companies follows total differentiation competitor strategy

Value added brands successful due to functional, psychological and emotional stimulants it offers.

E.g. Big Mac vs Bun

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Cost leadership and value added brand leadership are two extremes scenarios on competitive advantage. There

for many companies adopt middle path. (CDC – Cost driven characteristics)

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Dialog, Toyota, Maruti are few examples that adopt a value addition along with cost drive branding strategy

When companies adopt this theory they can improve on following factors

01. Target segment 02. Competitive strength 03. Organization strength

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Porters value chain is a tool that managers could use to get out of dilemma by identifying the brands competitive advantage.

This transforms the raw materials to profitable sale

and divided in to following stages1. Inbound logistics 2. Operations3. Outbound logistics4. Marketing and Sales5. Servicing

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1. Purchasing2. Technical Development3. HR4. Firms infrastructure

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Based on Porter, marketers are able to refine their strategies by considering

Cost driven Value addition competitive advantage

Porters 4 brand generic model explains in following ways

Competitive scope – Broad or Narrow Competitive advantage – Low cost or value

added

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Focus Cost – Significantly lower cost targeted at small narrow markets .(Hutch)

Broad Cost – Lower price to a broader market achieved through economic of scale.(signal/sunlight)

Broad differentiation – Value added to larger market/ concentrated market. Where cost and value adding strategy both implement to serve a larger segment.IBM/Voda/Dialog/Toyota)

Focus differentiation – Niche market/ products, which are very much focused on a particular segment at a greater profits. (BMW/ Mercedes)

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The core for successful brand is it offers more benefits which others cant offer E.G. Toyota/Lux

A winning successful brand has characteristics other than offering benefits that competitors cant offer.

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Pretax return on investment is high Gains economies of scale Leading brands attracts quality people E.g.

HSBC/Unilever Instills confidence in risk aversive

consumers Profitable brands are committed to high

quality

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Successful brands instill high perceived quality, invest more on R&D (Mercedes/3M)

- As a result marketers can charge premium price

Winning brands are memorable - Communication and branding

attributes, makes brands to be memorable - Cross pen/Hilton Winning brands capitalize on environment - these brands grab the opportunity in the

environment faster than the others – proactive

- Toyota-Hybrid/ Philips energy saving bulbs.

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Cost of building brands- to build a brand organizations have to go through a long process.

The level of good will undisclosed in balance sheet – it is so much difficult to find this

How fast the organization needs to enter the market- if the company could think of a potential opportunity in the future then they could think of investing in building bards

E.g. Confify group hotels were bought by LOLC Wyeth was bought over by Pfizer

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Same product in different form- Coke-Diet coke Companion product – Eveready torches with

Eveready battery Same customer franchise- Ceylinco life/VIP Expertise brands – Bajaj bikes/Three wheelers Unique benefits , attributes or features owned by

the brand - Panadol tabs-syrup Distinctive taste, ingredient or component –Kraft

cheese – Cheese spread

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Kodak Picture Maker AdExploiting a positive deviation?

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Brand stretching refers to the use of an established brand name for products in unrelated markets.

E.g. Yamaha

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