BRAND MANAGEMENT

MKT 543
 DESIGNING MARKETING Chapter 5
PROGRAMS TO BUILD BRAND
EQUITY CHOOSING
 NEW PERSPECTIVES ON MARKETING
As firms are dealing with enormous shifts in their
external marketing environments:
 The marketing strategies and tactics have
changed dramatically
 NEW APPROACHES EMBRACED BY
MARKETERS
▪ 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
▪ Globalization and growth of developing markets
▪ Heightened environmental, community, and social
concerns
▪ Severe economic recession
THE NEW CAPABILITIES OF THE NEW ECONOMY
 INTEGRATING MARKETING
• The rapid expansion of the Internet and
continued fragmentation of mass media have
brought the need for personalized marketing into
sharp focus.
• Modern economy celebrates the power of the
individual consumer.
• To adapt to the increased consumer desire for
personalization, marketers have embraced
concepts such as experiential marketing and
relationship marketing.

• The different approaches of personalizing

marketing help reinforce a number of
important marketing concepts and techniques.
• According to the customer-based brand
equity (CBBE) model these different
approaches emphasize different aspects of
brand equity.
PERSONALIZING MARKETING
 EXPERIENTIAL MARKETING
• Promotes a product by communicating a
product’s features and benefits and connecting
it with unique and interesting consumer
experiences.
• Assertions of Pine and Gilmore:
✓ Commodity business - Charge for stuff
✓ Goods business - Charge for tangible things
✓ Service business - Charge for the activities
you perform
✓ Experience business - Charge for the time
customers spend with you
 EXPERIENTIAL MARKETING
▪ Focuses on customer experience
▪ Focuses on the consumption situation
▪ Views customers as rational and emotional
elements
▪ Uses electric methods and tools
 RELATIONSHIP MARKETING
• Attempts to provide a more holistic, personalized brand
experience to create stronger consumer ties.
• Benefits:
✓ 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 to 85 percent, depending
on the industry.
✓ The customer profit rate tends to increase over the
life of the retained customer.
RELATIONSHIP MARKETING
ONE-TO-ONE MARKETING: COMPETITIVE RATIONALE

Consumers help to add value by providing

information.
Firm adds value by generating rewarding
experiences with consumers.
 Creates switching costs for consumers
 Reduces transaction costs for consumers
 Maximizes utility for consumers
ONE-TO-ONE MARKETING: CONSUMER
DIFFERENTIATION
Treat different consumers differently
 Different needs
 Different values to firm
o Current
o Future (lifetime value)
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
 PERMISSION MARKETING (SETH GODIN)
“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.”
 Anticipated
 Personal
 Relevant
Permission marketing can be contrasted to
interruption marketing.
 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.
5. Over time, leverage the permission to change
consumer behavior toward profits.
 RECONCILING THE DIFFERENT
MARKETING APPROACHES
Mass customization and one-to-one and
permission marketing are:
▪ Potentially effective means of getting
consumers more actively engaged with a
brand
According to customer-based brand equity
(CBBE) model:
▪ Different approaches emphasize different
aspects of brand equity
RECONCILING THE DIFFERENT
MARKETING APPROACHES
The four approaches can build stronger
consumer–brand bonds
Firms must still devise product, pricing, and
distribution strategies as part of their
marketing programs
PRODUCT STRATEGY

• Customers’ perception of • To achieve the desired

the overall quality or brand image: Product
superiority of a product strategies should focus on
or service compared to both purchase and
alternatives and with consumption.
respect to its intended
purpose.
 AFTERMARKETING An afterthought, put
together by engineers
who use overly technical
terms and convoluted
language

• Aftermarketing is more
than the design and
communication of
product instructions.

Purpose is identifying, maintaining,

and increasing the yield from a
firm’s ‘best’ customers through long-
term, interactive, value-added
relationships.
PRICING STRATEGY
The pricing strategy can dictate:
• How consumers categorize the price
of the brand.
• How firm or how flexible they think
the price is, based on how deeply or
how frequently it is discounted.

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.
 SETTING PRICES TO BUILD BRAND EQUITY

Value Pricing Price Segmentation Everyday Low Pricing

 VALUE PRICING
• Objective 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.
• It should strike the proper balance among three key
components:
o Product design and delivery
o Product costs
o Product prices
• Communicating value - Marketers may need to engage
in marketing communications to help consumers better
recognize the value.
PRICE SEGMENTATION

• Sets and adjusts prices for appropriate

market segments.
• Because of wide adoption of the
Internet, firms are increasingly employing
yield management principles or dynamic
pricing to vary their prices for different
market segments according to their
different demand and value perceptions.
EVERYDAY LOW PRICING (EDLP)
▪ Has received increased attention as a
means of determining price discounts and
promotions over time.
▪ Reasons for Price Stability:
o Forward buying
o Diverting
CHANNEL STRATEGY

Channel
Design

Indirect
Channels

Direct
Channels

Online
Strategies
 CHANNEL DESIGN
Classified into direct and indirect channels.
o Direct channels sell through personal contacts
from the company to prospective customers
by mail, phone, electronic means, and in-
person visits.
o Indirect channels sell through third-party
intermediaries such as agents or broker
representatives, wholesalers or distributors,
and retailers or dealers.
 INDIRECT CHANNELS
• Retailers - Can have a profound influence on
the equity of the brands they sell, in terms of
the brand-related services they can support
or help create.
• Pull strategy - Consumers use their buying
power and influence on retailers to “pull” the
product through the channel.
• Push strategy - The manufacturer is
attempting to reach the consumer by
“pushing” the product through each step of
the distribution chain.
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.
 DIRECT CHANNELS
Benefits:
• They are a means to showcase the brand and all
its different product varieties in a manner not
easily achieved through normal retail channels.
• Functioning as a test market to gauge consumer
response to alternative product designs,
presentations, and prices.
Disadvantages:
• Some companies lack the skills, resources, or
contacts to operate effectively as a retailer.
• Potential conflict with existing retail channels and
distributors.
 DIRECT CHANNELS
Store-Within-a-Store - This concept can take hold
through actual leasing arrangements or less formal
arrangements where branded mini-stores are
used.
o Goal in all these situations is to find “win–
win” solutions that benefit channel partners
and consumers alike.
Other Means - Sell directly to consumers via
phone, mail, or electronic means.
ONLINE STRATEGIES
Multichannel retailers were able to acquire
customers at half the cost of Internet-only
retailers, citing a number of advantages :
o They have market clout with suppliers.
o They have established distribution and
fulfilment systems.
o They can cross-sell between Web sites
and stores.
SERVICES PROVIDED BY CHANNEL MEMBERS