Designing Marketing Programs to Build Brand Equity

Building Customer-Based Brand Equity

BRAND BUILDING TOOLS AND OBJECTIVES
Choosing Brand Elements Brand name Logo Symbol Character Packaging Slogan Memorability Meaningfulness Appeal Transferability Adaptability Protectability Brand Awareness Recall Recognition Possible Outcomes Greater loyalty Depth Less vulnerability to competitive marketing actions and crises Larger margins More elastic response to price decreases

CONSUMER KNOWLEDGE EFFECTS

BRANDING BENEFITS

Breadth Developing Marketing Programs Product Price Distribution channels Communications Tangible and intangible benefits Value perceptions Integratepush and pull Mix and match options

Purchase Consumption

More inelastic response to price increases

Brand Associations Relevance Consistency Desirable Deliverable Point-of-parity Point-of-difference Greater trade cooperation and support Increased marketing communication efficiency and effectiveness Possible licensing opportunities More favorable brand extension evaluations

Strong Leverage of Secondary Associations Company Country of origin Channel of distribution Other brands Endorsor Event Favorable Awareness Meaningfulness Transferability

Unique

New Perspective on Marketing

Changes in the new economy have led to Mass Marketing approaches being increasingly abandoned 5 major drivers of the new economy
1.

2.
3.

4. 5.

Digitalization and connectivity Disintermediation and reintermediation (middlemen) Customization and customerization (tailored products and ingredients to make products) Industry convergence (blurring of boundaries) New customer and company capabilities

Personalizing Marketing

Personalizing marketing has become important and possible because of the internet and other digital devises The Personalising Marketing concepts are

Experiential marketing One-to-one marketing Permission marketing

New Capabilities in the New Economy

Consumers

Substantial increase in customer power because of

Greater variety of available goods and services Great amount of information Ability to chat with strangers and compare notes on products and services Greater ease in interacting and in placing and receiving orders

New Capabilities in the New Economy

Companies

Use of internet for new information, sales channel, augment geographic reach, to inform and promote products

Can collect fuller information Can facilitate two-way communication and transaction efficiency Can send ads, promotion material, information by email, Can customize offering for individual customers Can improve purchasing, training, recruitment, communication

Personalizing Marketing

Relationship Marketing gaining in importance to create stronger consumer ties and provide a more holistic, personalized brand experiences

Mass customization After-marketing CRM and loyalty programs

The new marketing activities are Relationship Marketing activities

Experiential Marketing Permission Marketing One-to-One Marketing

Experiential Marketing
EM is about - connecting the brand with unique and interesting experiences (not just selling the brand but demonstrating how it enriches life)

Disney says - Experiences come as education, entertainment, aesthetics, escapist

Bernd Schmitt say - it is distinct from traditional marketing in many ways

Focuses on consumer experiences Focuses on consumption situations Views consumers as rational and emotional animals Uses eclectic methods and tools

He details 5 different types of experiences sense,

feel, think, act, and relate

Experiential Marketing
Pine and Gilmore pioneers of EM when you charge for the time customers spend with you, then and only then you are in the experience business

Combines brand education with entertainment Employs multiple touch points and multiple senses Involves special events, contests, promotions, sampling, on-line activities, etc. Distinctive and relevant

One-to-One Marketing: Competitive Rationale

Don Peppers and Martha Rogers popularized the concept in the context of changing trends The basic premise is

Consumers add value by providing information and Firm adds value by generating rewarding experiences with consumers. Thus

Creates switching costs for consumers Reduces transaction costs for consumers Maximizes utility for consumers and builds strong profitable realtionships

One-to-One Marketing: Consumer Differentiation

Based on some fundamental concepts

Focus is on individual customers (with a data base) Response is a dialogue using interactivity Customization of products and services Different needs Different values to firm

Treats different consumers differently because of

Current value future life-time value

Devotes more marketing effort on the most valuable consumers (and customers)

One-to-One Marketing: Five Key Steps

Identify consumers, individually and

addressably

Differentiate them, by value and needs Interact with them more cost-efficiently and
effectively

Customize some aspect of the firms behavior Brand the relationship

Permission Marketing (Seth Godin)

Permission marketing can be contrasted to interruption marketing

Breaks out of clutter and builds customer loyalty Permission marketing encourages consumers to participate in a long-term interactive marketing campaign in which they are rewarded in some way for paying attention to increasingly relevant messages Communication impact is different as messages are

Marketing to customers only after gaining their permission (instead of interruption marketing mass media, etc.)

Anticipated Personal Relevant

5 Steps in Permission Marketing

1. Incentive - offer overt, obvious, and clearly delivered incentive to prospect to volunteer samples, discount, contest. That can potentially develop a relationship for further communication But customer wishes are respected and consumers must be willing to become involved 2. Over time, teach the consumer about the product or service 3. Reinforce the incentive over time 4. Increase the level of permission the marketer receives from the customer 5. Leverage permission to generate profits

Drawback of Permission Marketing

A draw back PM presumes that the client knows what they want to some extent

They may need guidance for forming and communicating their preference

Participatory marketing (consumers and marketers work together) may be a more appropriate term and concept to employ to satisfy consumer goals.

10 Questions to Evaluate Permission Marketing Program

Whats the bait? What does an incremental permission cost? How deep is the permission that is granted? How much does incremental frequency cost? Whats the active response rate to communications? What are the issues regarding compression? Is the company treating the permission as an asset? How is the permission being leveraged? How is the permission level being increased? What is the expected lifetime of one permission?

Buzz Marketing (Emanuel Rosen)

Keep it simple Simple messages spread across social networks more easily. Tell us whats new The message must be relevant and newsworthy for people to want to tell others about it. Dont make claims you cant support Making false claims will kill buzz or, worse, lead to negative buzz. Ask your customers to articulate whats special about your product or service If customers can explain why they like the product or service, they can then communicate this to others. Start measuring buzz To determine which strategies generate the most buzz. Listen to the buzz Monitoring consumer reaction can yield insights such as how to improve the product or service.

Reconciling New and Traditional Marketing Approaches

New approaches help reinforce a number of important marketing concepts and techniques.

Eliciting a positive brand response Get customers more actively involved iwith the brand Create deeper, richer, and more favorable brand associations Create brand resonance and build BE by working differently in the CBBE model context

But There is still a need for control and predictability of traditional marketing activities Models of BE can help to provide direction and focus to the marketing programs

Integrating the Brand Into Supporting Marketing Programs

Design marketing mix to enhance awareness and establish desired brand image.

Product Strategy

Channel Strategy
Blend channel push with consumer pull Develop and brand direct marketing options

Deliver tangible and intangible benefits Relationship Marketing

Pricing Strategy

Understand perceptions of value Balance price, cost, and quality

Communication Strategy
Mix and match communication options

Product Strategy

Integrating the Brand into Supporting Marketing Programs

Product Strategy considers 2 topics
1. 2.

Perceived quality and value Relationship Marketing in formulating product strategy and offerings

Product Strategy
1. Perceived quality and value

2. Relationship Marketing

Performance level Supplementary features Conformance quality Product reliability Durability Serviceability Style and design

Mass customization After-marketing CRM & loyalty programs

Brand Intangibles

Product imagery TQM and ROQ Value Chain

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
1.

Perceived quality and value

Perceived quality - overall assessment of

product quality / superiority (perception) Satisfactory levels of perceived quality are difficult to achieve because of continuous product improvements which leads to heightened consumer expectations The CBBE model specifies the following general dimensions of product quality

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
1.

Perceived quality and value

CBBE model specifies general dimensions of product quality

Performance level at which the primary characteristics of the

product operates

Supplementary features secondary elements complement the

primary characteristics

Conformance quality degree to which the product meets the

specifications and is absent of defects Product reliability consistency of performance over time and from purchase to purchase

Durability expected economic life of the product Serviceability ease of servicing the product Style and design appearance or feel of quality

Consumer beliefs along these dimensions underlie perceptions of quality and influence attitude and behavior towards brand

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
1.

Perceived quality and value

Perceived quality is also about Brand Intangibles Product imagery symbolism / personality reflected in the brand Brand decisions may not always be taken on the basis of perceived quality and consumers may adopt heuristics

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
1.

Perceived quality and value

Total Quality management and Return on Quality

TQM leads to a being noncustomer focused at times ROQ (return on quality) focuses on improvements on dimensions that are produces tangible consumer benefits, lowers costs, increases sales etc.

Value Chain the strategic tool for creating more customer value Michael Porter
To assess a product consumers combine quality perceptions with cost perceptions (opportunity, time, energy, psychological involvement, etc.)

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics 1. Perceived quality and value - Value chain 5 primary value creating activities 1. Inbound logistics Competitive advantage and 2. Operations reduction of cost can be 3. Out bound logistics created in every activity 4. Marketing and sales
5.

4 support activities that occur through primary activities

1. 2. 3. 4.

Service

Firm infrastructure Resource management Technology development Procurement Core businesses processes and cross functional integration and cooperation is also important Competitive advantage can also come from partnering with other members of the value chain

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
2. Relationship Marketing based on the
premise that current customers are key to brand success Benefits of RM

Acquiring new customers is 5 times more expensive 5% reduction in defection rate can increase profit by 25% to 85% depending on the industry Average company loses 10% of customers annually Customer profit rate increases over life

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
2. Relationship Marketing broader set of activities

RM provides a more holistic, personalized brand experiences to create stronger consumer ties through

Experiential Marketing Permission Marketing One-to-One Marketing

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
2. Relationship Marketing 3 important issues
1. 2.

3.

Mass customization After-marketing Loyalty programs

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
2. Relationship Marketing 3 important issues
1.

Mass customization digitalization allows customization at a scale never heard of Customers interact directly with marketers Dell, NIKEiD program Offers supply side benefit reducing inventory etc. Asian Paints - Mix Your Own Choice Services are also customized allocate less to TQM and more to customer satisfaction, retention and loyalty Internet sites do it most effectively Not every product is easily customized, or all demands customizable

Limitations

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
2.Relationship Marketing 3 important issues
2. After marketing - activities that occur after purchase Multimedia / illustrated manuals, help-lines, call centers, etc. Calls for a new mind-set for retention activities that build relationships to last a life-time Can improve the sale of complementary products, upgrades

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
2. Relationship Marketing 3 important issues
3. Loyalty Programs (frequency marketing) to identify, maintain and increase yields from the best customers through long-term, interactive, value added relationships With programs that are a mixture of specialized services, incentives, news letters Sometimes involving co-branding or brand alliances Create switching costs for consumers Reduces price competition amongst brands

Integrating the Brand Into Supporting Marketing Programs

Product Strategy considers 2 topics
2. Relationship Marketing 3 important issues
3. Loyalty Programs tips for building effective loyalty programs Know your audience data base software to determine segments to target purchasing behavior that can be changed Change is good update and change programs to avoid metoo programs Listen to your best customer suggestions and complaints Engage people to make them want a program easy to use, immediate reward, to sign-up, made to feel special

Integrating the Brand Into Supporting Marketing Programs

Product Strategy - Summary

Products are at the heart of BE but they must be manufactured, marketed, sold, delivered, serviced

Create a positive image that is unique, strong and favorable associations That create favorable judgments and feelings And foster greater brand resonance

Product strategy entails choosing tangible and intangible benefits to be embodied in the product and marketing activities desired by the consumer and deliverable by marketing programs Perceived quality and value are important brand associations that drive consumer decisions RM is a priority because of the importance of loyalty

Product experience, after marketing activities, and CRM are important to build CBBE

Pricing Strategy

Integrating the Brand Into Supporting Marketing Programs

Pricing Strategy

The revenue generating elements of marketing mix and Price premium are important benefits of CBBE

Pricing strategy must consider

Different pricing perceptions Different pricing strategies

Pricing Strategy
Price Perception
Price bands - high, low, medium
Price variability flexibility and breadth of pricing within the tier

Pricing Strategies Value based pricing

Product design and delivery Product cost Product price Everyday low price

Integrating the Brand Into Supporting Marketing Programs

Price perceptions play multiple roles in brand assessment

Consumers categorize the price as high, low, medium, and how firm or flexible. They think

Price tier associations and level of brand in category

Range of acceptable prices or price bands Indicates the flexibility and breadth of pricing within a tier

Infer quality of product and assessment of value

Value based pricing strategies - right price for right product

Price premium based on unique aspects in tangible and intangible considerations

Infer varying price volatility and variance (frequency and magnitude of discounts)

Integrating the Brand Into Supporting Marketing Programs

Setting prices to build BE

Pricing strategy choice entails determining the following

A method for how the current prices will be set

Value pricing Everyday low price

A policy and set of guidelines for the depth and duration of promotions and discounts over time.

Integrating the Brand Into Supporting Marketing Programs

Pricing strategy

Value pricing charging a fairly low price for a high-

quality item Popular approach because of competition and more demanding consumers Objective is to uncover what will satisfy consumer needs and wants right blend of product quality, product cost, product prices Keys for success of VP are the balance between

Product design and quality delivery Product cost Product price

Integrating the Brand Into Supporting Marketing Programs

Pricing strategy entails determining the following

Value pricing keys of success
1. Product design and delivery (does not mean a stripped down version) Nano Prices can be increased with new value-added products Gilltte, Dr Scholl 2. Product cost lower costs as much as possible for productivity gains - material substitution, product reformulation, process changes But cost reduction should not compromise quality 3. Product price understand how much value is perceived and to what extent they are prepared to pay a premium over product costs

Integrating the Brand Into Supporting Marketing Programs

Pricing strategy Value pricing keys of success

Techniques for determining value perceptions

Directly seeking consumer perception of price in different ways

Summary - Price should be found appropriate and reasonable

Lowering price may not be the answer, and value added costs may be more profitable Different segments have different perceptions
price segmentation can be considered depending on demand and value perception

Integrating the Brand Into Supporting Marketing Programs

Pricing strategy
Everyday low price (EDLP) a constant low price with
few or no price promotions or special sales (complementary pricing approach)

Helps build brand loyalty, Fend off private labels Reduces manufacturing and inventory costs Reduces over reliance on trade and consumer promotions that lead to spurt in demand

But timely, well conceived sales promotions still induce sales

Integrating the Brand Into Supporting Marketing Programs

Pricing strategy - Summary

Marketers must determine strategies for setting prices and adjust them over the short and long run These decisions must reflect the consumers perception of value EDLP is a complementary pricing approach that maintains consistently low, value-based prices on major items on a day-to-day basis, and determines the nature of price discounts, promotions, over time

Channel Strategy

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy

Marketing channels -a set of interdependent organizations involved in the process of making products available for purchase or consumption Channel strategy - design and management of intermediaries distributors, brokers, retailers,etc

Channel design

Hybrid channel design - multiple channel types Indirect channels selling through third party intermediaries Direct channels selling through personal contacts from the company to customers by phone, mail, etc.

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy Channel design

Hybrid channel design - multiple channel types adopted by most

Direct channels is preferable when

Product information needs are high Product customization is necessary Product quality assurance is important Purchase lot size is important Logistics are important A broad assortment is essential Availability is crucial After-sales service is important

Indirect channel is preferable when

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy - Channel design

Indirect channel retailers affect BE the most most visible and have direct contact with customers
Consumers are attached to retailers for various factors Retailers strive to create their own equity through

Product assortment, pricing, credit policy, quality of service and other unique associations Retailers influence on the brands they sell, particularly in terms of brand related services There is also an interplay between the store image and the retail image Marketing activity of retailers can directly impact BE

Retailers come in many forms

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy - Channel design

Indirect channel Push and Pull strategies

Manufacturers are today vulnerable to the retailers pressures and actions - increased their power over manufacturers One way to regain lost power is by creating strong brands through brand building tactics Pull strategy Or they can devote marketing effort to trade Push strategy Although one strategy may dominate, most use a blend of both strategies

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy

Channel design the goal is to

maximize channel coverage and effectiveness while minimizing channel cost and conflict

BE implications of channel design type

Channel Support to establish channel partnership is critical as a number of services are offered by the channel that enhance the value for consumers Channel partnership 2 aspects are critical
1. 2.

Retail segmentation Cooperative advertising

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy -Channel partnership - two aspects are critical
1.

Retail segmentation to devise an optimum retailer program they are segmented depending on their marketing capability Different retailers have to be given different product mix, special delivery systems, customized promotions, sometimes own branded version of products - branded variants

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy -Channel partnership - two aspects
are critical 2. Cooperative advertising manufacturer pays for a portion of the promotion that retailer runs. (% of business / upto a certain limit, based on purchases)

It has a local impact and more relevance to selling To be eligible the retailer must follow the manufacturers stipulations about the nature of brand exposure in the ad Unfortunately brand image cannot be tightly controlled and the emphasis could shift to the store, or the promotion, and may run counter to the desired image of the brand The challenge is to create effective co-op ads and get involved in designing the campaign selling the brand while pushing the store

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy - Channel partnership

Summary

Elicit channel support through merchandising and marketing programs aimed at trade Important to consider how channel activity can encourage trial purchase, communicate or demonstrate product information, to build awareness, unique and favorable associations and elicit a positive brand response

Integrating the Brand Into Supporting Marketing Programs

Channel StrategyDirect Channel Company owned stores Other means Web strategies

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy Direct Channel to build strong relationships

Company owned stores most expensive form, but provides many benefits

Bolster brand image, education and build BE more than a direct sales device Nike Town ads / tourist attraction Showcases the brand and product variety Test market alternative designs, presentation, price keep finger on the consumer pulse and shopping habits A way to hedge bets with retailers who push their own labels Manufacturer have to explain that not a threat but a show case for the brand

May cause conflict with existing retail channel on turf issues

Integrating the Brand Into Supporting Marketing Programs

Channel StrategyDirect Channel to build strong relationships
Other means Own shop within dept stores

It appeases retailers / benefit from the retailers image At the same time retain control over the design and product presentation at POP magazines, web-sites not only sell but become a means to BE by building awareness, range, understanding of key benefits Engage in a dialogue, Establish a relationship

Direct Selling via phone mail or electronic means,

Integrating the Brand Into Supporting Marketing Programs

Channel Strategy- summary

Channel strategy must build BE by

Designing and managing direct and indirect channels to build awareness, strength, uniqueness of brand associations Direct and indirect channels offer varying advantages and disadvantages and must be matched carefully

Direct channel can enhance BE Through better consumer understanding of depth, breadth, and variety of products and any distinguishing characteristics Indirect channel can influence equity through Actions taken and support given to the brand by retailers and , transfer of any associations

Developing an integrated shopping experience using stores, web-site, telephone, catalogue etc.