brand management

PRESENTED BY SALMAN MEHMOOD 1

BRAND MANAGEMENT Indus International Institute (GCUF)

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INSTRUCTOR’S INTRODUCTION Name: Salman Mehmood

Educational Background: BBA (hons) from Bahria University, Islamabad MBA from IBA, Karachi

Experience: Permanent Faculty, Indus International, GCUF, D G Khan Area Manage Nestle, Bahawalpur Visiting Faculty BZU, DG Khan Teaching Assistant, IBA, Karachi Manager HR Club, IBA, Karachi Student Ambassador, My Biz Pakistan Assistant Manager Org. Development, PTCL Interned at: DGKCCL, NCHD, TheLiveJobs, Ashlamour

PRESENTED BY SALMAN MEHMOOD


STUDENTS’ INTRODUCTION Each student will introduce with: Name Place lives in Majors they seek CGPA Interest


DISCLAIMER All pictures, logos, text, and examples are used for educational purpose only.


COMMUNICATION AND RESOURCE Use of Computer is essential Internet knowledge is mandatory All the assignments will be emailed to [email protected]

Facebook will be used as a mode of communication and documents sharing

mailto:[email protected]


WHAT IS BRAND Brand is a; name, term, sign, symbol, or design, or a combination of them, intended to identify, the goods and services of one seller or group of sellers and to differentiate them from those of competition.

In a market place a brand has: Awareness, Reputation, Prominence.

Brand can be differentiated on the bases of: Logo Symbol Package design And these components are called brand elements.


EXAMPLES OF BRANDS


MARKETING MIX

ProductsCell PhonesBooksLaptops ServicesBankingMarketingTeaching

OFFERINGS


NEED, WANTS AND DEMAND Need: It’s a state of felt deprivation of some basic satisfaction. Examples: Food, Cloth, shelter, safety, esteem (existence or survival).

Wants: It’s a desire for specific satisfiers of these deeper needs. Example: Food (burger), Cloth (Cotton), Shelter (three bed room house), safety (two security guards), esteem (buy Mercedes)

Demand: These are wants for specific products that are backed up by purchasing power. Example: Food (KFC burger), Cloth (Pasha), shelter (house in Defense), safety (retired arm force trained officers), esteem (Mercedes S class).


PRODUCT LEVELS Core Benefit Level: The fundamental need or want that consumers satisfy by consuming the product or service.

Generic Product Level: It’s a basic version of the product containing only those attributes or characteristics absolutely

necessary for its functioning, but with no distinguishing features. Expected product level: It’s a set of attributes or characteristics that buyers normally expect and agree to when they

purchase a product. Augmented Product Level: It includes additional product attributes, benefits or related services that distinguish the product

from competitors. Potential Product level: It includes all of the augmentations and transformations that a product might ultimately undergo in

the future.


EXAMPLES OF PRODUCT LEVEL Air conditioner

Core: Cooling and comfort. Generic: cooling capacity, and watt consumption.

Expected: speed levels, removable air filters, one year warranty.

Augmented: touch pad, remote control.

Potential: Balanced room temperature, energy efficient.

Mobile phones Core: Connectivity Generic: Internet, SMS, Expected: warranty, color display

Augmented: touch screen, RAM, ROM.

Potential: Smart phone, iOS, Android


IS THERE ANY THING THAT WE CANNOT BRAND? Physical goods, Service, Professional services, Retailers, Online services, People Organizations, Sports,

Arts, Entertainment, Books, Location, Ideas (Every thing can be branded).


CHALLENGES AND OPPORTUNITIES Savvy Customer: Due to exposure and marketing customers are becoming more demanding. (Consumer information and support in form of Consumer reports, blogs, websites).

Economic Downturn: Consumer shifted to more cheaper products due to recession in 2008.

Media Transformation: Emergence of non traditional media (Facebook, Pinterest, Twitter)

Increased Competition: Globalization Low price Competitor (private labels, Brand extension (L'Oréal))

Deregulations (talk shawk) Increased Cost: The ever increasing operational cost.

Greater Accountability: Managing stakeholders. Social Responsibility.


STRATEGIC BRAND MANAGEMENT


STRATEGIC BRAND MANAGEMENT Strategic Brand Management involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity.

Four main steps of Strategic Brand Management Process: Identify and develop brand plan Designing and implementing brand Marketing Programs Measuring and interpreting Brand Performance Growing and sustaining brand Equity.


IDENTIFY AND DEVELOPING BRAND PLAN Starts with what brand Plan is, how it should be positioned with respect to its competitors.

Brand Positioning Model (how to guide integrated marketing to maximize competitive advantage)

Brand Resonance Model (how to create intense, activity loyalty relationships with customers.)

Brand Value Chain (how to trace the value creation process for brands, to better understand the financial impact of brand marketing expenditures and investments.)


DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAM Choosing Brand Elements Name, URL, logos

Integrating the Brand into Marketing activities: BTL ATL

Leverage Secondary Associations: Linking to other entities Spokes Persons


MEASURING AND INTERPRETING BRAND PERFORMANCE Brand Audit To assess the health of the brand

Brand Tracking Collect information from customers.

Brand Equity Management Systems Organizational process to improve the understanding and use of brand equity concept.


GROWING AND SUSTAINING BRAND EQUITY Defining Brand Architecture Brand Portfolio Brand Architect

Managing Brand Equity over time Managing Brand Equity over Geographical Boundaries.


WHAT IS BRAND EQUITY A brand's power derived from the goodwill and name recognition that it has earned over time, which translates into higher sales volume and higher profit margins against competing brands.

The additional money that consumers are willing to spend to buy Coca Cola rather than the store brand of soda is an example of brand equity.

Brand Equity provides marketer with a vital strategic bridge from their past to future.

Conclusion: Brand Equity is based on: Goodwill (It is the established reputation of a business). Recognition (awareness about brand and its features).


CUSTOMER BASED BRAND EQUITY CBBE is the differential effect that brand knowledge has on consumer response to the marketing of the brand.

CBBE is positive when consumer react more favorable to a product/service and the way it is marketed when the brand is identified and when it is not.

CBBE is negative if customer react less favorable to marketing activities for the brand in comparison to unnamed product/service.

CBBE definition has following three components: Differential effect (reflected in perception, preference, and behavior related to branding)

Brand Knowledge (what they have felt, learnt, seen, and heard about the brand) Consumer response to the marketing. (if there is no response to the marketing efforts then brand is generic and product and service is commodity).


MAKING A STRONG BRAND-BRAND KNOWLEDGE Our memory is a network of nodes and these nodes are interconnected and store information and concepts.

Brand Knowledge is based on: Brand awareness: is related to strength of the brand – identify brand in different conditions.

Brand image: consumer perception about the brand – brand association in consumer memory.

Base is awareness and once it is created energies are devoted to build brand image.


SOURCES OF BRAND EQUITY CBBE occurs when the customer has a high level of awareness and familiarity with the brand and holds some strong, favorable, and unique brand associations in memory.

Brand Awareness is sub divided into: Brand recognition: is customer’s ability to confirm prior exposure to the brand when given the brand as a cue. E.g Customer can recognize the brand when he go to store for shopping. (Aquafina)

Brand recall: is consumer’s ability to retrieve the brand from memory when given the product category, need fulfilled by the category, or usage situation or cue. (read to eat products).

Brand Image: Creating a positive brand image requires strong, favorable and unique association to be kept in memory.

Brand associations can be brand attributes (descriptive features that categorize the product/service) and brand benefits (value and meaning that consumer attach to the product or service).


DISCUSSION Ask for the book Assignment Twitter, FB, LinkedIn, Pinterest


BRAND POSITIONING It is the act of designing the company’s offer and image so that it occupies a distinct and valued place in the target customer’s minds.

In Simple Terms: A marketing strategy that aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer.

Position refers to proper location in the minds of targeted customers so they think about the product / service in the right way.

For positioning we need to know (4 components of Brand Positioning): Who the target customer is? Who the main competitors are? How the brand is similar to these competitors? How the brand is different from the


TARGET MARKET The consumers a company wants to sell its products and services to, and to whom it directs its marketing efforts.

A target market can be separated from the market as a whole by: Behavioral: User Status, Usage rate, Brand loyalty Demographically: Income, Age, Gender Psychographic: Values, Opinion, attitude, lifestyle. Geographically: International, Regional


NATURE OF THE COMPETITION Competition is deciding to serve same targeted customers. Direct Competition: Multiple businesses offering similar products and services create direct competition.

Example: Burger King VS McDonald's Pepsi VS Coke

Indirect Competition: Indirect competitors are businesses that offer slightly different products and services, but target the same group of customers with the goal of satisfying the same need.

Examples: A customer may choose a local burger joint, grab some take-out sushi, or pick up a frozen pizza from

the grocery store and take it home to cook.


POINT OF PARITY (POPS) – ASSOCIATIONS The aspects of the product offering that are largely similar to the offerings of like competitors.

POPs are not necessarily unique to the brand but may be shared by other brands i.e. where you can at least match the competitors claimed bets. While POPs may usually not be the reason to choose a brand, their absence can certainly be a reason to drop a brand.

Examples: Warranties offered by mobile phones.


POINTS-OF-DIFFERENCE (PODS) – ATTRIBUTES The aspects of the product offering that are relatively distinct to the offerings of like competitors.

Attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competing brand i.e. points where you are claiming superiority or exclusiveness over other products in the category.

Examples: Ikea

PODS VS POPS


Situation What to emphasize

When the firm is a ‘me-too’ competitorIn this case, being a weaker competitor, the goal is to piggyback on the success of the market leader by highlighting many points-of-parity

When the firm as a market leader

This is the reverse situation from the one above. To maintain market leadership, the brand/product needs to be seen in as superior/different in key ways, thus highlighting the need to focus on relevant points-of-difference

When the firm enters an established and mature market

In this case, the likelihood of switching is relatively lower, so points-of-difference are required to break their habitual loyalty

When the firm and is a fast-growing market

Fast-growing markets have primary demand (that is, first-time customers to the market), therefore points-of-parity positioning will should be quite successful in capturing new customers

When there is a diversity of needs, even when looking at fairly narrow market segments

When there is significant diversity of consumer needs, a points-of-difference positioning should ensure that reasonable market share is generated

In a target market where the firm already offers multiple products

To reduce the risk of cannibalization of sales, the firm would need to have more emphasis on points-of-difference

In a relatively price sensitive market

Our goal in this case would be to provide additional benefits, in order to reduce the importance of price in the decision. Therefore, apoints-of-difference positioning emphasis would be required


BRAND MANTRA Brand Mantra is a short 3 – 5 words phrase that captures the irrefutable essence or spirit of the brand positioning.

it is not an advertising slogan, and, in most cases, it won't be something you use publicly.

It is similar to Brand essence and Brand Promise. Brand Mantra, must economically communicate what the brand is, and what it is not. McDonald’s Brand Promise is “Food, Folks, and Fun” Nike’s Brand Mantra: authentic athletic performance. Disney’s Brand Mantra: fun, family entertainment.


BRAND MANTRAEmotional Modifier

Descriptive Modifier

Brand Function

Nike Authentic Athletic PerformanceDisney Fun Family EntertainmentMcDonalds Fun Folks Food

Brand Function: Nature of the product or service or the type of experience or benefits that brand Provides.

Descriptive Modifier: it clarifies the nature of offerings that brand offers.

Emotional Modifier: how exactly does the brand provide benefits and in what way?


DISCUSSION Assignment: Positioning model individually.

Ask Junaid to take amount in advance. Assignment: Marketing Diary: Nature of the product offerings Define his competitors A detail of your observation or interview taken Define his POPs Define his PODs


BRAND MANTRA Brand Mantra can be developed for a new brand or existing brand, after conducting brand audit.

Example of IPhone. Step 1: Mental Map Step 2: Core Brand Values Step 3: Brand Mantra

iPhone

Expensive

Friendly GUI

Delicate

iOSTrend

yInnovative

Fashionable

Simple

Different

Fun

Step 1: Mental Map


BRAND MANTRA Step 2: Brand Core Values Simplicity User Friendly Innovative Different Fun

Step 3: Brand Mantra Think Different!

Mental Map Brand Core Values Brand Mantra


BRAND RESONANCE AND BRAND VALUE

CHAIN


BRAND RESONANCE Brand resonance is the term which focuses on the various stages of consumer brand relationship through which consumer connected with brand.

It’s a sequence of steps, each of which is contingent on successful achieving the objectives of the previous one.

These steps are:1. Identification of the brand2. Totality of the brand meaning in to the minds of the customers3. Proper customer response to the brand4. Converting brand response into loyalty relationship between

brand and customer.


BRAND RESONANCE We can also represent these 4 sequential steps into set of fundamental questions of brand Laddering:

1. Who are you? (brand Identity)2. What are you? (brand meaning)3. What about you? What do I think or feel about you? (brand

response)4. What about you and me? (brand relationship)


BRAND RESONANCE PYRAMID


1. Brand Salience – Who Are You? It means brand awareness It reflects that brand stands out, and that

customers recognize it and are aware of it. Need to know who your customers are. A thorough understanding of how your customers

see your brand. Identify how your customers narrow down their

choices and decide between your brand and your competitors' brands.

In building a highly salient brand, it is important that awareness campaigns not only build depth (ensuring that a brand will be remembered and the ease with which it is) but also breadth (the range of situations in which the brand comes to mind as something that should be purchased or used).




2. Performance: Brand performance is the way the product or

service attempts to meet the consumer’s functional needs.

Brand performance also has a major influence on how consumers experience a brand as well as what the brand owner and others say about the brand.

Delivering a product or service that meets and, hopefully, exceeds consumer needs and wants is a prerequisite for successful brand building.



3. Imagery: Brand imagery deals with the way in which

the brand attempts to meet customers’ psychological and social needs.

Brand imagery is the intangible aspects of a brand that consumers pick up because it fits their demographic profile (such as age or income) or has psychological appeal in that it matches their outlook on life (conservative, traditional, liberal, creative, etc).

It is important that brand managers and strategists craft strong, favorable and unique associations for a brand.



4. Judgements: Judgments about a brand emerge from a

consumer pulling together different performance and imagery associations.

There are four judgements that companies must pay attention to in their brand-building efforts. They are:

the perceived quality of the brand; brand credibility (the extent to which the brand is

perceived as having expertise, being trustworthy and likable);

brand consideration (the brand must be relevant to the consumer so that they are likely to purchase or use it);

and brand superiority (the extent to which consumers view the brand as being unique and better than other brands).



Logical Path

Emotional PathEmotional Path



5. Feelings: Brand feelings are customers emotional

response and reaction to the brand. There are six brand-building feelings that are

regards as important emotions that a consumer can have towards a brand, namely:

1. warmth, (sense of peace and clam)2. fun, (Sense of amused, Joy, playful)3. excitement, (sense of “being alive”, energy)4. security, (safety, comfort, self assurance)5. social approval (a belief that other will look favorably on

their appearance)6. and self-respect (feel better about themselves)

The first three are experiential and immediate and increase in the level of intensity whereas, latter three are private.



6. Resonance The final step is resonance in which

customers feel that they are “in sync” with the brand.

Intensity and depth of psychological bond that customers have with the brand.

Repeat Purchase Brand information, events, loyalty programs


BRAND VALUE CHAIN The brand Value Chain is a structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value.

The brand value chain has several basic premises. Fundamentally, it assumes that the value of a brand ultimately resides with customers.

Stage1:Based on this insight, the model next assumes that the brand value creation process begins when the firm invests in a marketing program targeting actual or potential customers.

Stage2:The marketing activity associated with the program then affects the customer mindset with respect to the brand – what customers know and feel about the brand.

Stage3:This mindset, across a broad group of customers, then results in certain outcomes for the brand in terms of how it performs in the marketplace – the collective impact of individual customer actions regarding how much and when they purchase, the price that they pay, and so forth.

Stage4:Finally, the investment community considers this market performance and other factors such as replacement cost and purchase price in acquisitions to arrive at an assessment of shareholder value in general and a value of the brand in particular.


BRAND VALUE CHAIN The model also assumes that a number of linking factors intervene between these stages.

These linking factors determine the extent to which value created at one stage transfers or “multiplies” to the next stage.

Three sets of multipliers moderate the transfer between the marketing program and the subsequent three value stages: the program quality multiplier, the marketplace conditions multiplier, and the investor sentiment multiplier.


CHOOSING BRAND ELEMENTS

TO BUILD BRAND EQUITY


BRAND ELEMENTS Brand elements, sometimes called brand identities, are those trademarkable devices that serve to identify and differentiate the brand. For example: names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages,


Six criterion for choosing brand elements. Memorable Meaningful Likable Transferable Adaptable Protectable

CRITERIA FOR CHOOSING BRAND ELEMENTS


MEMORABLE


MEANINGFUL General information about the function of the product or service.

Specific information about particular attributes and benefits of the brand:


LIKABLE


TRANSFERABLE Less specific the name, the more easily it can be transferred across categories.

The main advantages of nonmeaningful, synthetic names like Exxon is that they transfer well into other languages.

As an example, Microsoft was challenged when launching its Vista operating system in Latvia, because the name means “chicken” in the local language.


ADAPTABLE Logos and characters can be given a new look or a new design to make them appear more modern and relevant.

Michelin Man (whose real name is Bibendum) is thinner and smiling.


PROTECTABLE The sixth and final general consideration is the extent to which the brand element is protectable both in a legal and a competitive sense. Choose brand elements that can be legally protected internationally, Formally register them with the appropriate legal bodies, and Vigorously defend trademarks from unauthorized competitive infringement.


OPTIONS AND TACTICS FOR BRAND ELEMENTS Brand Names: The brand name is a fundamentally important choice because it often captures the central theme or key associations of a product in a very compact and economical fashion.

Brand names can be an extremely effective shorthand means of communication. Brand Awareness: Brand names that are simple and easy to pronounce or spell, familiar and meaningful, and different, distinctive, and unusual can obviously improve brand awareness. Example: Apple

Brand Associations: Because the brand name is a compact form of communication, the explicit and implicit meanings consumers extract from it are important. Example: Skype (sky peer to peer).


BRAND NAMES- MISTAKES


SLOGANS Slogans are short phrases that communicate descriptive or persuasive information about the brand.

They often appear in advertising but can play an important role on packaging and in other aspects of the marketing program.

Slogans are powerful branding devices because, like brand names, they are an extremely efficient, shorthand means to build brand equity.

They can function as useful “hooks” or “handles” to help consumers grasp the meaning of a brand—what it is and what makes it special.

Examples: Disney: Where dreams come true Hungry? Grab a Snickers


TAG LINES A tagline is a short, powerful phrase that is associated with your company name. It represents the tone and feeling you want for your products or services.

Tagline is a refinement of your corporate values and identity into a concise phrase that you can use to reinforce your brand and stress the differences between yourself and your competitors as well as what makes your business valuable to customers.

Examples: Disneyland’s tagline: The happiest place on Earth. DeBeers Diamond is forever


DIFFERENCES BETWEEN SLOGAN AND TAGLINESDescription Slogan TaglineFocus Brand CompanyFlexibility More Flexible RigidAppearance Packaging, Display Ads Corporate communicationOccurrence of change Slogan changes with the

culture.Probably won’t change corporate tagline more than once in a generation.

Example Current slogan for the iPad Air is “Change is in the air”

Apple’s current tagline is “Think different,”

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DESIGNING MARKETING PROGRAMS

TO BUILD BRAND EQUITY PRESENTED BY SALMAN MEHMOOD


INTEGRATED MARKETING COMMUNICATION IMC is integration of all marketing tools, approaches, and resources within a company which maximizes impact on consumer mind and which results into maximum profit at optimum cost.

IMC study ranges from latest marketing channels like Social Media Marketing, SMS Marketing to traditional mediums like print, electronic and public relations.

Evolution of IMC begin in 1980, when companies focused on strategic integration of promotion tools.


IMC Planning Model Promotional ToolsPromotional Mix

Advertising

Direct Marketing

Internet Marketing

Sales Promotion

Public Relation

Personal Selling

ADVERTISEMENT Advertising is defined as any paid form of non-personal communication about an organization, product, service, or idea by an identified sponsor. Non-personal component means that advertising involves mass media Above the line advertisement ATL (TV, Radio, Newspapers, Banner ads) Below the line advertisement BTL (Sampling, POSM, Billboards, Brand Ambassadors, Pamphlets)

Through the line advertisement TTL (Social Media)

DIRECT MARKETING Direct marketing, in which organizations communicate directly with target customers to generate a response and/or a transaction. It includes: Database management, Direct selling, Telemarketing, SMS marketing, Direct response ads through direct mail / e-mail, Internet.

Direct-marketing techniques are also used to distribute product samples or target users of a competing brand.

INTERNET MARKETING An interactive media allow for a back-and-forth flow of information whereby users can participate in and modify the form and content of the information they receive in real time.

It’s a two way flow of information

SALES PROMOTION Sales promotion, is defined as those marketing activities that provide extra value or incentives to the sales force, the distributors, or the ultimate consumer and can stimulate immediate sales. Consumer Oriented sales promotion: is targeted to the ultimate user of a product or service and includes couponing, sampling, premiums, rebates, contests, sweepstakes, and various point-of-purchase materials.

Trade-oriented sales promotion: is targeted toward marketing intermediaries such as wholesalers, distributors, and retailers.

PUBLIC RELATION Public relations is defined as, the management function which evaluates public attitudes, identifies the policies and procedures of an individual or organization with the public interest, and executes a program of action to earn public understanding and acceptance. Maintain a positive image of the company among its various publics.

PERSONAL SELLING Personal selling, a form of person-to-person communication in which a seller attempts to assist and/or persuade prospective buyers to purchase the company’s product or service or to act on an idea. Contact face-to-face or Telephonically allows the seller to tailor the message to the customer’s specific needs or situation.

DIFFERENCE BETWEEN PERSONAL SELLING AND DIRECT MARKETING Direct marketing is more aggressive than personal selling that appears like an attempt to arm the client with important information at first.

There is an emphasis on building up a relationship with the customer in personal selling whereas direct marketing seeks to impress upon the benefits of the offer.

Personal selling is the oldest form of selling while direct marketing is being used increasingly by small and big companies to increase their sales.

Personal selling is flexible, precise and interactive. Direct marketing is more rigid, imprecise and mostly one way.

The main strength of personal selling is that it has a high success rate because it is persuasive. Direct marketing has a lower percent success rate, but its lower costs allow it to reach more people for often higher overall sales results.


EXPERIENTIAL MARKETING promotes a product by not only communicating a product’s features and benefits but also connecting it with unique and interesting consumer experiences. One marketing commentator describes experiential marketing this way:

“The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life.”

• If you charge for stuff, then you are in the commodity business. • If you charge for tangible things, then you are in the goods business. • If you charge for the activities you perform, then you are in the service business. • If you charge for the time customers spend with you, then and only then are you in the experience business.

Columbia University’s Bernd Schmitt, another pioneering expert on the subject, notes that “experiential marketing is usually broadly defined as any form of customer-focused marketing activity, at various touchpoints, that creates a sensory-emotional connection to customers.”


EXPERIENTIAL MARKETING Schmitt details five different types of marketing experiences that are becoming increasingly vital to consumers’ perceptions of brands:

• Sense marketing appeals to consumers’ senses (sight, sound, touch, taste, and smell). • Feel marketing appeals to customers’ inner feelings and emotions, ranging from mildly positive moods linked to a brand (e.g., for a noninvolving, nondurable grocery brand or service or industrial product) to strong emotions of joy and pride (e.g., for a consumer durable, technology, or social marketing campaign).

• Think marketing appeals to the intellect in order to deliver cognitive, problem-solving experiences that engage customers creatively.

• Act marketing targets physical behaviors, lifestyles, and interactions. • Relate marketing creates experiences by taking into account individuals’ desires to be part of a social context (e.g., to their self-esteem, being part of a subculture, or a brand community).


RELATIONSHIP MARKETING Marketing strategies must transcend the actual product or service to create stronger bonds with consumers and maximize brand resonance. This broader set of activities is sometimes called relationship marketing and is based on the premise that current customers are the key to long-term brand success.

Relationship marketing attempts to provide a more holistic, personalized brand experience to create stronger consumer ties. It expands both the depth and the breadth of brand-building marketing programs.

Here are just a few of the basic benefits relationship marketing provides: Acquiring new customers can cost five times as much as satisfying and retaining current customers. The average company loses 10 percent of its customers each year. A 5 percent reduction in the customer defection rate can increase profits by 25–85 percent, depending on

the industry. The customer profit rate tends to increase over the life of the retained customer.

We next review three concepts that can be helpful with relationship marketing: mass customization, one-to-one marketing, and permission marketing.


MASS CUSTOMIZATION Mass Customization. The concept behind mass customization, namely making products to fit the customer’s exact specifications, is an old one, but the advent of digital-age technology enables companies to offer customized products on a previously unheard-of scale. Going online, customers can communicate their preferences directly to the manufacturer, which, by using advanced production methods, can assemble the product for a price comparable to that of a noncustomized item.

Mass customization is not restricted to products. Many service organizations such as banks are developing customer-specific services and trying to improve the personal nature of their service experience with more service options, more customer-contact personnel, and longer service hours.


ONE-TO-ONE MARKETING The basic rationale behind one to one marketing is that consumers help add value by providing information to marketers, marketers add value, in turn, by taking that information and generating rewarding experiences for consumers.

The firm is then able to create switching costs, reduce transaction costs, and maximize utility for consumers, all of which help build strong, profitable relationships.

One-to-one marketing is thus based on several fundamental strategies: Focus on individual consumers through consumer databases—“We single out consumers.”

Respond to consumer dialogue via interactivity—“The consumer talks to us.” Customize products and services—“We make something unique for him or her.”


PERMISSION MARKETING Permission marketing, the practice of marketing to consumers only after gaining their express permission, was another influential perspective on how companies can break through the clutter and build customer loyalty.

A pioneer on the topic, Seth Godin, has noted that marketers can no longer employ “interruption marketing” or mass media campaigns featuring magazines, direct mail, billboards, radio and television commercials, and the like, because consumers have come to expect—but not necessarily appreciate—these interruptions.

Godin identifies five steps to effective permission marketing: Offer the prospect an incentive to volunteer. Offer the interested prospect a curriculum over time, teaching the consumer about the product or

service being marketed. Reinforce the incentive to guarantee that the prospect maintains his or her permission. Offer additional incentives to get more permission from the consumer. Over time, leverage the permission to change consumer behavior toward profits.


PRICING STRATEGY The pricing strategy can dictate how consumers categorize the price of the brand (as low, medium, or high), and how firm or how flexible they think the price is, based on how deeply or how frequently it is discounted.

Consumers often rank brands according to price tiers in a category.


SETTING PRICES TO BUILD BRAND EQUITY Choosing a pricing strategy to build brand equity means determining the following: A method for setting current prices A policy for choosing the depth and duration of promotions and discounts

Factors related to the costs of making and selling products and the relative prices of competitive products are important determinants in pricing strategy.

Many firms now are employing a value-pricing approach to setting prices and an everyday-low-pricing (EDLP) approach to determining their discount pricing policy over time. Value Pricing Price Segmentation Everyday Low Pricing


VALUE PRICING The objective of value pricing is to uncover the right blend of product quality, product costs, and product prices that fully satisfies the needs and wants of consumers and the profit targets of the firm.

Marketers have employed value pricing in various ways for years, sometimes learning the hard way that consumers will not pay price premiums that exceed their perceptions of the value of a brand.

In general, however, an effective value-pricing strategy should strike the proper balance among three key components: Product design and delivery Product costs Product prices


PRICE SEGMENTATION At the same time, different consumers may have different value perceptions and therefore could—and most likely should—receive different prices. Price segmentation sets and adjusts prices for appropriate market segments.

Example: Apple has a three-tier pricing scheme for iTunes downloads—a base price of 99 cents, but $1.29 for popular hits and 69 cents for oldies-but-not-so-goodies.


EVERYDAY LOW PRICING Everyday low pricing (EDLP) has received increased attention as a means of determining price discounts and promotions over time.

Advocates of EDLP argue that maintaining consistently low prices on major items every day helps build brand loyalty, fend off private-label inroads, and reduce manufacturing and inventory costs.

Example: Walmart.


CHANNEL STRATEGY The manner by which a product is sold or distributed can have a profound impact on the equity and ultimate sales success of a brand.

Marketing channels are defined as “sets of interdependent organizations involved in the process of making a product or service available for use or consumption.”

Channel Design A number of possible channel types and arrangements exist, broadly classified into: Direct Channels Indirect Channels.


INDIRECT CHANNELS Indirect channels can consist of a number of different types of intermediaries, but we will concentrate on retailers.

Retailers are “customers” too. Retailers tend to have the most visible and direct contact with customers and therefore have the greatest opportunity to affect brand equity.

Consumers may have associations to any one retailer on the basis of product assortment, pricing and credit policy, and quality of service, among other factors.

Through the products and brands retailer stock and the means by which they sell, retailers strive to create their own brand equity by establishing awareness and strong, favorable, and unique associations into the minds of the customer.


DIRECT CHANNELS Company-Owned Stores. To gain control over the selling process and build stronger relationships with customers, some manufacturers are introducing their own retail outlets, as well as selling their product directly to customers through various means. These channels can take many forms, the most complex of which, from a manufacturer’s perspective, is company-owned stores.

Store-Within-a-Store. Besides creating their own stores, some marketers—such as Nike, Polo, and Levi Strauss (with Dockers)—are attempting to create their own shops within major department stores.

More common in other parts of the world such as Asia, these approaches can offer the dual benefits of appeasing retailers—and perhaps even allowing them to benefit from the retailer’s brand image—while at the same time allowing the firm to retain control over the design and implementation of the product presentation at the point of purchase.


DIRECT CHANNELS Other Means. Finally, another channel option is to sell directly to consumers via phone, mail, or electronic means. Retailers have sold their goods through catalogs for years. Many mass marketers, especially those that also sell through their own retail stores, are increasingly using direct selling, a long-successful strategy for brands such as Mary Kay and Avon.

CHANNELS IN PAKISTAN Key Accounts: Purchase in Bulk Quantity Provide them Shelf rent Dedicated infrastructure is required Huge potential for promotion Examples: Metro, Makro, Hyper star,

Large Groceries: Purchase substantial Quantity Provide them Shelf rent Company assest (visi coolers, gondolas) are provided Examples: Jallal and Sons, Discount Store

CHANNELS IN PAKISTAN General Store: 80 percent branded items Provisioning for promotion POS material Examples: Ajwa General Store, Qasarani General Store

Kariyana Store: 80 percent loose items Limited space for branding Examples: Bilal Kiryana Stores,

CHANNELS IN PAKISTAN Specialty Store: Bakers / Pharmacies / Tobacco Kiosk Examples: Kashif Bakers, Dil Lagi Pan shop, Azeem Medical Store

Wholesalers: Purchase in Bulk Quantity. No provisioning of promotional activity. Buy and sell in cartoons / pets


PRIVATE LABELS Private labels can be defined as products marketed by retailers and other members of the distribution chain. Private labels can be called store brands when they actually adopt the name of the store itself in some way (such as Safeway Select).

Private labels should not be confused with generics, whose simple black-and-white packaging typically provides no information about who made the product.


PRIVATE LABEL STRATEGY In terms of building brand equity, the key point-of-difference for private labels in consumers’ eyes has always been “good value,” a desirable and transferable association across many product categories.

Implementing a value-pricing strategy for private labels requires determining the right price and product offering.

Specifically, to achieve the necessary points-of-parity, or even to create their own points-of-difference, private labels have been improving quality, and as a result are now aggressively positioning against even national brands.


ROLE OF MULTIPLE COMMUNICATIONS 1) Advertising and promotion: Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified

sponsor. Although it is a powerful means of creating strong, favorable, and unique brand associations and eliciting positive

judgments and feelings, advertising is controversial because its specific effects are often difficult to quantify and predict. Sales promotions are short-term incentives to encourage trial or usage of a product or service.

Consumer Promotion Trade Promotion

(2) Interactive marketing, The main advantages to marketing on the Web are the low cost and the level of detail and degree of customization it

offers. Web sites, online ads and videos, and social media.

(3) Events and experiences: Events and experiences range from an extravagant multimillion dollar sponsorship of a major international

event to a simple local in-store product demonstration or sampling program. (4) Mobile marketing: As smartphones are playing an increasingly significant role in consumers’ lives, more marketers are taking notice, and

mobile ad spending passed $1 billion in 2011.


MARKETING COMMUNICATION OPTIONS


DEVELOPING INTEGRATED MARKETINGCOMMUNICATION PROGRAMS We consider how to develop an integrated marketing communication (IMC) program by choosing the best set options and managing the relationships between them.

Our main theme is that marketers should “mix and match” communication options to build brand equity—that is, choose a variety of different communication options that share common meaning and content but also offer different, complementary advantages so that the whole is greater than the sum of the parts.


CRITERIA FOR IMC PROGRAMS Here are six relevant criteria, known as “the 6 Cs” for short: 1. Coverage 2. Contribution 3. Commonality 4. Complementarity 5. Conformability 6. Cost


COVERAGE Coverage is the proportion of the audience reached by each communication option, as well as how much overlap exists among communication options.

In other words, to what extent do different communication options reach the designated target market, and the same or different consumers making up that market.

If there is some overlap in communication options, however, marketers must decide how to design their communication program to reflect the fact that consumers may already have some communication effects in memory prior to exposure to any particular communication option.


CONTRIBUTION Contribution is the inherent ability of a marketing communication to create the desired response and communication effects from consumers in the absence of exposure to any other communication option.

In other words, contribution describes the main effects of a marketing communication option in terms of how it affects consumers’ processing of a communication and the resulting outcomes.


COMMONALITY Commonality is the extent to which common information conveyed by different communication options shares meaning across communication options.

They should coordinate the entire marketing communication program to create a consistent and cohesive brand image in which brand associations share content and meaning.

The consistency and cohesiveness of the brand image is important because the image determines how easily consumers can recall existing associations and responses and how easily they can link additional associations and responses to the brand in memory.


COMPLEMENTARITY Complementarity describes the extent to which different associations and linkages are emphasized across communication options.

The ideal marketing communication program would ensure that the communication options chosen are mutually compensatory and reinforcing to create desired consumer knowledge structures.

Marketers might most effectively establish different brand associations by capitalizing on those marketing communication options best suited to eliciting a particular consumer response or establishing a particular type of brand association.


CONFORMABILITY Conformability refers to the extent that a marketing communication option is robust and effective for different groups of consumers.

There are two types of conformability: communication and consumer.

We consider a marketing communication option conformable when it achieves its desired effect regardless of consumers’ past communication history.


COST Finally, evaluations of marketing communications on all of the preceding criteria must be weighed against their cost to arrive at the most effective and efficient communication program.


LEVERAGING SECONDARY BRAND ASSOCIATIONS TO

BUILD BRAND EQUITY


LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY Brands themselves may be linked to other entities that have their own knowledge structures in the minds of consumers. Because of these linkages, consumers may assume or infer that some of the associations or responses that characterize the other entities may also be true for the brand.

This indirect approach to building brand equity is leveraging secondary brand associations for the brand.

Secondary brand associations may be quite important to creating strong, favorable, and unique associations or positive responses if existing brand associations or responses are deficient in some way.


EIGHT WAYS FOR SECONDARY BRAND ASSOCIATION 1. Companies (through branding strategies) 2. Countries or other geographic areas (through identification of product origin) 3. Channels of distribution (through channel strategy) 4. Other brands (through co-branding) 5. Characters (through licensing) 6. Spokespersons (through endorsements) 7. Events (through sponsorship) 8. Other third-party sources (through awards or reviews) The first three entities reflect source factors: who makes the product, where the product is made, and where it is purchased. The remaining entities deal with related people, places, or things.


COMPANIES Branding strategies are an important determinant of the strength of association from the brand to the company and any other existing brands. Three main branding options exist for a new product:

1. Create a new brand. 2. Adopt or modify an existing brand. 3. Combine an existing and a new brand.


COUNTRY OF ORIGIN AND OTHER GEOGRAPHIC AREAS Besides the company that makes the product, the country or geographic location from which it originates may also become linked to the brand and generate secondary associations.

Choosing brands with strong national ties may reflect a deliberate decision to maximize product utility and communicate self-image, based on what consumers believe about products from those countries. Levi’s jeans—United States Chanel perfume—France Cadbury—England Gucci shoes and purses—Italy BMW—Germany


CHANNELS OF DISTRIBUTION Let’s next consider how retail stores can indirectly affect brand equity through an “image transfer” process because of consumers’ associations linked to the retail stores.

Because of associations to product assortment, pricing and credit policy, quality of service, and so on, retailers have their own brand images in consumers’ minds.

Retailers create these associations through the products and brands they stock and the means by which they sell them. To more directly shape their images, many retailers aggressively advertise and promote directly to customers.


CO-BRANDING An existing brand can also leverage associations by linking itself to other brands from the same or different company.

Co-branding—also called brand bundling or brand alliances—occurs when two or more existing brands are combined into a joint product or are marketed together in some fashion.


LICENSING Licensing creates contractual arrangements whereby firms can use the names, logos, characters, and so forth of other brands to market their own brands for some fixed fee.

Essentially, a firm is “renting” another brand to contribute to the brand equity of its own product. Because it can be a shortcut means of building brand equity, licensing has gained in popularity in recent years.


CELEBRITY ENDORSEMENT Using well-known and admired people to promote products is a widespread phenomenon with a long marketing history.

The rationale behind these strategies is that a famous person can draw attention to a brand and shape the perceptions of the brand, by virtue of the inferences that consumers make based on the knowledge they have about the famous person.


SPORTING, CULTURAL, OR OTHER EVENTS Sponsored events can contribute to brand equity by becoming associated to the brand and improving brand awareness, adding new associations, or improving the strength, favorability, and uniqueness of existing associations.

The main means by which an event can transfer associations is credibility. A brand may seem more likable or perhaps even trustworthy or expert by virtue of becoming linked to an event. The extent to which this transfer takes place will depend on which events are selected and how the sponsorship program is designed and integrated into the entire marketing program to build brand equity.


THIRD-PARTY SOURCES Finally, marketers can create secondary associations in a number of different ways by linking the brand to various third-party sources.

Third-party sources can be especially credible sources. As a result, marketers often feature them in advertising campaigns and selling efforts.

With the growth of social networks and blogs, a whole range of new online opinion leaders are emerging that can influence the fate of brands