CHAPTER 5:

DESIGNING MARKETING PROGRAMS TO BUILD

BRAND EQUITY

5.1
 Overview
How do marketing activities in general—and
product, pricing, and distribution strategies in
particular—build brand equity?
How can marketers integrate these activities to
*enhance brand awareness,
*improve the brand image,
*elicit positive brand responses, and *increase
brand resonance?
5.2
 New Perspectives on Marketing
The strategy and tactics behind marketing programs have changed
dramatically in recent years as firms have dealt with enormous shifts in their
external marketing environments. changes in the economic, technological,
political–legal, socio-cultural, and competitive environments have forced
marketers to embrace new approaches and philosophies. Some of these
changes include:
• Rapid technological developments
• Greater customer empowerment
• Fragmentation of traditional media
• Growth of interactive and mobile marketing options
• Channel transformation and disintermediation
• Increased competition and industry convergence

5.3
• Globalization and growth of developing markets
• Heightened environmental, community, and social concerns
• Severe economic recession
These drivers, and others such as privatization and regulation, have
combined to give customers' and companies new
Consumers
Can wield substantially more customer power. Can
purchase a greater variety of available goods and
services.
Can obtain a great amount of information about practically
anything.
Can more easily interact with marketers in placing and
receiving orders.
5.4
Can interact with other consumers and compare notes on
products and services.
Companies
Can operate a powerful new information and sales channel
with augmented geographic reach to inform and promote
their company and its products.
Can collect fuller and richer information about their markets,
customers, prospect and competitors.
Companies
Can facilitate two-way communication with their customers
and prospects and facilitates transaction efficiency.
Can send ads, coupons, promotion, and information by email
to customers and prospects who give them permission.
5.5
Can customize their offerings and services to individual
customers.
Can improve their purchasing, recruiting, training and internal
and external communication.
-These new capabilities have a number of implications for the
practice of brand management.
Implications for the Practice of Brand
Management
They have a number of implications for the practice
of brand management.

5.6
 -Marketers are increasingly
abandoning(discarding) the mass-market
strategies that built brand powerhouses in the
1950s, 1960s, and 1970s to implement new
approaches.
-Even marketers in staid (calm,serious),
traditional industries are rethinking their
practices and not doing business as usual.
There are many different means by which products andActivities
services and their corresponding marketing programs can build brand
equity.

5.7
Channel strategies, communication strategies, pricing strategies, and
other marketing activities can all enhance or detract from brand
equity. The customer based brand equity model provides some
useful guidance to interpret these effects.
Creative and original thinking is necessary to create fresh new
marketing programs that break through the noise in the
marketplace to connect with customers.
Marketers are increasingly trying a host of unconventional (original)
means of building brand equity.
Marketers must orchestrate (arrange) programs to provide
seamlessly(flawlessly) integrated solutions and experiences for
customers that create awareness, spur(urge) demand and cultivate
loyalty.

5.8
1.Personalizing Marketing
Personalized marketing refers to targeting a product or
service to an individual customer.
-It can be achieved only by collecting data and information
about a particular customer, or small group of customers,
and then creating products and/or advertisements of special
interest to that individual.
-To adapt to the increased consumer desire for
personalization, marketers have embraced concepts such
as.
i. Experiential marketing
ii. Relationship marketing
5.9
 i. Experiential Marketing
Experiential marketing is based on the entire experience a
consumer has with a product or service. Whereas
traditional marketing sells by pointing out benefits and
features, experiential marketing focuses on allowing the
consumer to try the service or product for himself.
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:
5.10
-“The idea is not to sell something, but to demonstrate how a
brand can enrich a customer’s life.”

5.11
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 non involving, 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 5.10
ii. Relationship Marketing
Relationship Marketing. Marketing activities that are
aimed at developing and managing trusting and long-
term relationships with larger customers.
-It is based on the premise that current customers
are the key to long-term brand success.
-It 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. -Marketing
5.11

strategies must transcend the actual

-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.
5.14
• A 5 percent reduction in the customer defection ratecan
increase profits by 25–85 percent, depending on the
industry.
• The customer profit rate tends to increase over the life
Tof the retained customerhree concepts that can be helpful
with relationship marketing:
a. Mass customization,
b. one-to-one marketing, and
c. permission marketing.
 a. Mass customization -Making
products to fit the customer’s exact
specifications
-Production of personalized or custom-tailored goods
or services to meet consumers' diverse and changing
needs at near mass production prices.
-Enabled by technologies such as
computerization, internet, product modularization,
and lean production, it portends/means the ultimate
stage in market segmentation where every customer
can have exactly what he or she wants.
-Mass customization is not restricted to products.
5.16
 b. One-to-One Marketing
One-to-one marketing is a (CRM) strategy emphasizing
personalized interactions with customers. The
personalization of interactions is thought to foster greater
customer loyalty and better return on marketing
investment.
It is a strategy that relies on getting to know the individual
choices made by a customer, and then tailoring marketing
outreach to each customer differently based on those
choices.

5.17
 It involves the representative or sales person listening to
what the customer requires and then proposing services or
goods they can offer to meet those requirements.
Firm adds value by generating rewarding experiences with
consumers.
Creates switching costs for consumers
Reduces transaction costs for consumers

On e-toMaximizes utility for consumers-one marketing is thus

based on several fundamental stra tegies:
• Focus on individual consumers through
consumerdatabases—“We single out consumers.”
5.18
• Respond to consumer dialogue via interactivity—
“Theconsumer talks to us.”
• Customize products and services—“We makesomething
unique for him or her.”
One-to-One Marketing:
Consumer Differentiation
Treat different consumers differently
Different needs
Different values to firm
Current
Future (lifetime value)

5.19
 Devote more marketing effort on 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 firm’s behavior
Brand the relationship
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 c. Permission Marketing
Permission marketing, the practice of marketing to consumers only
after gaining their express permission and build customer loyalty.
It is an approach to selling goods and services in which a prospect
explicitly agrees in advance to receive marketing information.
example-pOpt-in e-mail, where internet users sign up in advance for
information about certain product categories, is a good example of
permission marketing.
Given the large number of marketing communications that bombard
consumers every day, Godin argues that if marketers want to attract
a consumer’s attention, they first need to get his or her permission
with some kind of inducement—a free sample, a sales promotion or
discount, a contest, and so on. By eliciting consumer cooperation in
this manner, marketers might
 develop stronger relationships with consumers so that they
desire to receive further communications in the future. Those
relationships will only develop, if marketers respect consum5.18ers’
Five Steps in Permission Marketing
1 Offer the prospect an incentive to volunteer.
2 Offer the interested prospect a curriculum over
time, teaching consumers about the product.
3 Reinforce the incentive to guarantee that
prospect maintains the permission.
4 Offer additional incentives to get more
permission from the consumer.
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5 Over time, leverage the permission to change
consumer behavior toward profits.
Integrating the Brand Into Supporting
Marketing Programs
Supporting marketing mix should be designed to enhance
awareness and establish desired brand image.
1.Product strategy
2.Pricing strategy
3.Channel strategy

5.23
1.Product Strategy
-The product itself is the primary influence on what
consumers experience with a brand, what they hear
about a brand from others, and what the firm can tell
customers about the brand.
-Designing and delivering a product or service that fully
satisfies consumer needs and wants is a prerequisite for
successful marketing.

a. Perceived quality and value

5.24
-Perceived quality is customers’ perception of the
overall quality or superiority of a product or service
compared to alternative and with respect to its
intended purpose.
-Consistent with the CBBE model, research has identified the
following general dimensions for estimate consumer opinion
about quality. i. performance, ii. features, iii. conformance,
iii. reliability, iv.
durability, vi.
serviceability, vii.
style and design.
-For creating value, markets have to consider
5.25
i. Brand intangibles: It depends on broader performance
considerations as well, like speed, accuracy, and care of
product delivery and installation, the promptness, courtesy,
and helpfulness of customer service and training, and the
quality of repair service.
ii.Total quality management and return on quality iii.
Value chain: It identifies five primarily value creating
activities
-Inbound logistics include the receiving, warehousing, and
inventory control of input materials.
-Operations are the value-creating activities that transform
the inputs into the final product.

5.26
-Outbound logistics are the activities required to get the
finished product to the customer, including warehousing,
order fulfillment, etc.
-Marketing & Sales are those activities associated with
getting buyers to purchase the product, including channel
selection, advertising, pricing, etc.
-Service activities are those that maintain and enhance the
product's value including customer support, repair services,
etc.
Procurement - the function of purchasing the raw
materials and other inputs used in the value-creating
activities.

5.27
Technology Development - includes research and
development, process automation, and other technology
development used to support the value-chain activities.
Human Resource Management - the activities associated
with recruiting, development, and compensation of
employees.
Firm Infrastructure - includes activities such as finance, legal,
quality management, etc.
b. After marketing: It is those marketing activities that occur
after customer purchase. Steps which a firm takes after a sale
is completed, to retain loyalty of the customer for repeat
sales. Marketers may need to
5.28
i. User Manuals. To enhance consumers’ consumption
experiences, marketers must develop user manuals or help
features that clearly and comprehensively describe both what the
product or service can do for consumers and how they can realize these
benefits. ii. Customer Service Programs. It consists of standards
and training. All staff follow these standards to ensure that service is
maintained at the necessary level to keep your customers happy.
Creating stronger ties with consumers can be as simple as creating a
well-designed customer service department.
iii. Loyalty programs: These have become one popular means by
which marketers can create strong ties to customers through
long-term, interactive, value-added relationships.
-some tips for building effective loyalty program
5.29
*Know your audience
*Change is good
*Listen to your beat customer
*Engaged people
2.Pricing Strategy
Price premiums are among the most important brand equity
benefits of building a strong brand.
Consumer price perceptions
Consumers often rank brands according to price tiers in a
category(figure 5.5 show the price tiers).
Marketers have adopted value based pricing
strategiesattempting to sell the right product at the right price-to
better meet consumer wishes, as describe in the next section.
5.30
Setting prices to build brand equity
Value pricing: It 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.
Price Segmentation. different consumers may have different value
perceptions and therefore could and should receive different
prices.

3.Channel Strategy
The manner by which a product is sold or
distributed can have a profound impact on the
resulting equity and ultimate sales success of a
brand.
5.31
 Marketing channels are sets of interdependent
organizations involved in the process of making a
product or service available for use or
consumption.
Channel strategy includes the design and
management of intermediaries such as wholesalers,
distributors, brokers, and retailers.
i. Channel Design
a. Indirect channels: Selling through third-party
intermediaries such as agents or broker

5.32
 representatives, wholesalers or distributors, and
retailers or dealers
* Push and pull strategies
* Channel Support. A number of different services provided
by channel members can enhance the value to consumers
of purchasing and consuming a brand name product.
b. Direct channels :Selling through personal contacts from
the company to prospective customers by mail, phone,
electronic means, in-person visits, and so forth
*Company-Owned Stores. manufacturers are introducing
their own retail outlets to sell their product directly to
c. Online Strategies: allow consumers to shop
5.33
when and how they want. Many consumers value
the convenience of ordering from companies
online or over the phone and picking up the
physical product at their local store rather than
having it shipped.

5.34