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Branding and Positioning 7.1 Introduction As the elements of the marketing program come together to create the complete offering, mar- kketers must also consider how the marketing program will be used to create effective branding and positioning, These decisions are critical because they create differentiation among competing offerings in the marketplace. This differentiation isthe antidote to commoditization; however, itis becoming increasingly difficult for firms to brand and position ther offerings in meaningful ways. For the firms that ae successful, having a solid branding and positioning strategy is truly priceless. While the concept of a brand may seem relatively simple to understand, branding strategy can actually be quite complex. From a technical point of view, a brand is a combination of name, symbol, term, or design that identifies a specific product. Brands have two parts: the brand name and the brand mark. The brand name isthe part ofa brand that can be spoken, including words, letters, and numbers (Honda, 7-Eleven, Lululemon, Tesla, and BMO). The brand mark—which includes symbols, figures, ora design—is the part ofa brand that cannot be spoken. Good brand ‘marks, such as McDonald's golden arches, Nike's swoosh, and Amazon's smile, effectively com- ‘municate the brand and its image without using spoken words. Brand marks are also useful in advertising and product placement, such as when college football broadcasts clearly depict the Nike logo on the clothing and uniforms of both coaches and players. While these technical aspects of branding are important, branding strategy involves much ‘more than developing a clever brand name or unique brand mark. Itincludes aspects of product as seemingly simple as packaging —see Beyond the Pages 7.1 to find out more. To be truly effec- tive, a brand should succinctly capture the total offering in a way that answers a question in the customer's mind.! Good brands are those that immediately come to mind when a customer has 4 problem to be solved or a need to be fulfilled. Consider these questions that might be asked by acustomer: ‘Where can I find information quickly? ‘Where can I get a quick meal and make my kids happy? Where can I buy everything I need, all at decent prices? ‘Where can I get the best deal on car insurance? How do [find a value-priced hotel in midtown Manhattan? How do you answer these questions? How many customers do you think would give the following answers: Google, McDonald's, Walmart, GEICO, and Kayak? To successfully devel- ‘op a brand, the firm should position the offering (which includes all tangible, intangible, and symbolic elements arising from the marketing program) as the answer to questions like these. Customers tend to buy offerings whose combination of attributes is the best solution to their problems, As shown in Exhibit 7.1, brands may have many different attributes that make 199 Scanned with CamScanner 200 Part3: Developing Marketing Strategy su PON eS rod Upper Sud River New Jey TNT Rate te Made in Canada? Labeling, in and of itself, is an important consideration in marketing strategy. Sometimes alabel can become a differentiating factor, ifnot ‘also a potentially alienating one. During the presidency of Donald, ‘Trump, the United States began to heavily focus on a"Made inthe USA" branding exercise that impacted everything from commod- Itles to product labels. However, with this focused Internal promo- ‘tional position came protectionist actions against one ofthe United, States! most important trading partners: Canada, In June 2018, the ‘Trump administration levied tars on imports of Canaclan steel and, aluminum. The Canadian governments response wasto hit back with Its own retaliatory tars on aluminum, That was not the only response from Canada, though, as 17-year-old from Uxbridge, Ontario, decided it was time to show ‘some Canadian pride in the face of US protectionism. Tyler Camp~ bell developed a database of products that were Made in Canada” Campbell, along with his father and uncle, launched a website {https//madeinca.ca) in order to highlight and support products, ‘made in Canada, The website started out with ahandful of products, from food to textiles, all with one focus: to bring attention to com- panies that create products that are mostly made or assembled in Canada, There were obviously exceptions: Chapman’ icecream isa Source: rom Philp Keer and Kevin Kelle, Framework or Marking Management, the, © N/A. Blecronicaly reproduced by permision of Parson Education Inc. wellknown Canadian brand, but they cannot grow vanilla beans in ‘Canada and, as such, many oftheir products must be made near to were the ingredients are grown. The Competition Bureau of Canada states thatthe threshold for’Made in Conadat requires aminimum $1 percent of Canadian content, while"Product of Canada*has a much higher threshold of 98 percent Canadian content. Despite these humble beginnings, there are now many well- known and recognizable Canadian brands on the *Made in CA ‘website: Booster Juice East Coast Lifestyle, and Lush toname afew. “The lit continues to grow, and now companies re proudly stating a Canacian connection when they appear onthe website. In the end, this site fs not about retaliating against US protectionism as much as Itis about doing something that Cenadians ae not often comfort- able doing: promoting Canada and posionin Its products among the worlds best. ‘The Cenadian “brand”is easly attached to symbols that others around the world associate with Canada: maple syrup, hockey, and the Royal Canadian Mounted Police. Initiatives like*Made in CA"goa long way to show support for Canada by Canadians.The path toward creating a brand and defining for youself starts with knowing what itis that makes you proud to be Cenadian. Scanned with CamScanner Chapter 7:Branding and Positioning 201 up the way customers think about them, For example, the iPhone possesses many different attributes that make up customers’ overall knowledge about the brand: alliances (TELUS, Bell, Rogers, Gorilla Glass), company (Apple), extensions (Beats Audio, Incase, accessories), ‘employees (Tim Cook), endorsers (Serena Williams, Kendrick Lamar, and Billie Elish), events (Apple keynote speeches), and channels (the Apple Store). Other brands are enhanced via strong country-of-origin (BMW, Guinness, IKEA), branded ingredients (Dell computers use Microsoft and Intel components), causes (Ben & Jerry's), influencers (Dior), and endorser (Nike) effects. 7.2 Strategic Issues in Branding ‘When a firm considers its branding strategy, the marketing program, especially the product, becomes a central focus. Before we examine some of the key strategic issues in branding strat- egy, however, we need to discuss the closely related topic of corporate branding. Most firms consider their corporate brands to be equally as important as individual product-related brands. In fact, product-related brands and corporate brands are clearly intertwined. Ben & Jerry's Ice Cream, for example is an ardent participant in many social causes such as climate and social injustice. In fact, in addition to a product mission and economic mission, the company has a social mission statement. In this case, the company’s corporate brand clearly plays a role in branding and positioning its ice cream products. In some companies, the corporate brand dominates. For example, IBM advertises that it provides problem-solving solutions, though many of its advertisements do not name specific products. Instead, the purpose of the adver- tisements—which feature the tagline “put smart to work’ —is to give potential customers the impression that IBM is a company that understands business and that has the ability to solve a variety of problems. Branding typically starts with individual products, bt the principles also apply to both phys- ical and online stores, as well as services. For example, Canadian Tire is a well-known brand, and although “Canadian Tire” is not a specific product, it represents the service of organizing a {great product mix for its customers. Similarly, the Uber brand is not a retail store but a mobile platform that provides the service of connecting riders with transportation. Walmart’s brand focuses on both its stores and a robust online platform. In these cases, the brand represents a larger set of varied products or a connection point to the services of larger set of vendors. Thus, brands can focus on the larger picture of where we find answers to our needs (eg, shopping at ‘TJ Max« for clothing), or the actual tools that address those needs (eg, purchasing Adidas shoes that are comfortable for cross-training). Both types of branding strategy are important and the focus of this chapter. Corporate branding activities are typically aimed ata variety of stakeholders, including cus- tomers, shareholders, advocacy groups, government regulators, and the public at large. These activities are designed to build and enhance the firms reputation among these groups, and to rebuild the firm’ reputation when unexpected and unfavourable events occur. Corporate branding and reputation are critical to effective product-related branding and positioning as they create trust between the firm and its stakeholders. Exhibit 7.2 lists the most visible US firms ranked by strongest and weakest public reputations. Note that firms with lower reputation scores, such as Wells Fargo and Facebook, have experienced a number of scandals and legal problems in recent years. The range of scores in Exhibit 7.2 is quite telling ofthe effects that positive and negative reputations can have on a firm. Wegmans’ (a northeast US grocery chain) reputation score is closely tied to its treatment of employees, community giving, sustainability practices, and focus on organic products. Contrast this to Wells Fargo. Not only was Wells Fargo implicat- ‘ed in a fake account scandal in which its employees opened accounts for customers without their knowledge, but Wells Fargo's unattainable sales goals fostered an unethical culture. These examples demonstrate the important connections between corporate branding and Scanned with CamScanner 202 Part3:Developing Marketing Strategy PPM Ma CU Uke Lets CePA Pa 1 Google 420 ‘Amazon Se sig YouTube 238 Apple 22 Meta (Facebook) 261 Microsoft ee 257: Nettie 251 Misa 220 : 9 PCOptimum 219 “10 Walmart se le au “aftuence- eapored at sore ot of ttl of 20, inldes he lowing itor: trastworthines, engagement leading ede porate cits and presence COVID-I9 response was alo incldedin the 2021 survey, : ‘Source: Ipsos Canada, "The Mos liven Brands n Canada, 20217 ped /wpos.com sites ef By/MIBN20A8%620 ‘Canadab20202120FOV%20-920V3 pl acessed May 20,2022, Scanned with CamScanner (Chapter 7:Branding and Positioning 203 PC Optimum is the only Canadian brand to score in the top 10 Influential Brands in Canada, acording to ‘marketing research frm Ipsos. reputation, and the activities that companies use to successfully brand and position their product offerings. 7.2a Basic Branding Decisions To brand or not to brand: There really is no question. Virtually every product is associated with some type of branding. Unbranded, generic products generally do not exist today, except in some grocery items and perhaps commodities such as sugar, wheat, and corn, The advantages of branding are so compelling thatthe real question is not “why?” but “how?” Some of the many advantages of branding include: + Product Awareness, Brands help consumers to quickly select a product solution that addresses a need. + Product Identification. Brands make identifying and locating products easier for ‘customers. ‘+ Comparison Shopping. Brands assist customers in evaluating competing products. ‘+ Shopping Efficiency. Brands speed up the buying process and make repeat purchases easier by reducing search time and effort + Risk Reduction, Brands allow customers to buy known products, thereby reducing the risk of purchase. ‘+ Product Acceptance. New products released under a known brand name are accepted and adopted more quickly. ‘+ Enhanced Self-Image. Brands can convey status, image, and prestige. + Enhanced Product Loyalty. Branding increases psychosocial identification with a product. Scanned with CamScanner 204 Part 3: Developing Marketing Strategy In addition to these general benefits of branding, specific branding decisions can also create other benefits, For example, one key branding decision involves the distinction between manufacturer brands and private-label brands (brands owned by the merchants that sell them). Private-label brands are sometimes called store brands (but never generic brands) and include Walmart Great Value or Shoppers Drug Mart Life brand, Strategically, the choice to sell manufacturer brands or private-label brands isnot an either-or decision. As Exhibit 73 illustrates, both types of brands have important advantages. For that reason, many distributors, wholesalers, and retailers carry both types of brands. For example, sporting goods retailers carry manufacturer brands— ‘such as Nike, Under Armour, and Reebok—because customers expect to find them. Hence, manufacturer brands are important in driving customer traffic. They also give customers con. fidence that they are buying a widely known brand from a respected company. The COVID-19, pandemic, along with skyrocketing inflation, led more Canadians to private label brands, with sales of Loblaws “No Name” private label brand reaching an all-time high in May 2022.* ‘A second important branding decision involves individual versus family branding. A firm uses individual branding when it gives each of its product offerings a different brand name, ‘A number of well-known firms use individual branding, including Coca-Cola (Coca-Cola, Diet Coke, Powerade, Minute Maid, Sprite, and Dasani), Frito-Lay (Doritos, Cheetos, Tostitos, and Miss Vickies), and Estée Lauder (Aveda, Bobbi Brown, Bumble and bumble, Clinique, and MAC). The Pn eee EDLC CLIC UC RCE ae Loe CMTC ed Reduced Costs Heavy promotion by the manufacturer reduces the marketing costs of the merchant that carries the brand, Built-in Loyalty "Manufacturer brands come with their ow cadre of loyal customers. Enhanced image ‘The image and prestige of the merchant are enhanced. delivery, which allows the mer- | chant to carry less inventory and reduce inventory costs. Increased Profit Poor quality or product failures become attributed to the manufacturer rather than the merchant. The merchant maintains a higher margin on its own brands and faces less pressure to cut prices to match the competition. - Less Competition BaGHe ‘Where manufacturer brands are carried by many different merchants, pri- " vate-label brands are exclusive to the merchant that sells them. Total Control The merchant has total control over the development, pricing, distribution, and promotion of the brand. Glstomes who ae loa toa pte label brand ae automaticaly to themerchant, © bie Scanned with CamScanner Chapter 7:Branding and Positioning 205 key advantage of individual branding is thatthe potential poor performance of one product does not tarnish the brand image of other products in the firm’s portfolio. It is also useful in market segmentation when the firm wants to enter many segments of the same market. Procter & Gamble uses this strategy in the laundry detergent market (Downy Ivory, Gain, and Tide). Conversely, family branding occurs when a firm uses the same name or part ofthe brand name on every product. For example, every cereal in the Kellogg's portfolio uses the Kellogg's name (Kellogg's Frosted Flakes, and Kellogg's Rice Krispies). Campbell uses the same strategy in its soup portfolio (Campbell's Tomato Soup, Campbell's Chunky, and Campbells Healthy Request), and with many of its other brands such as Pepperidge Farm, Pace, Swanson, and V8, ‘The key advantage of family branding is that the promotion (and brand image) of one product reflects on other products under the same family brand. However, in addition to the obvious risk of releasing a poor product under a family brand, family branding also runs the risk of. overextension. Too many brand extensions, especially into unrelated areas, can confuse cus- tomers and promote brand switching. For example, Bic, the company known for pens, and razors, tried to launch disposable underwear, pantyhose, and perfume, but consumers could not make the leap. 7.2b Strategic Brand Alliances ‘As we have stated in previous chapters, relationships with other firms are among the most import- ant competitive advantages that can be held by an organization. Many of these relationships are based on a variety of brand alliances, For example, co-branding is the use of two or more brands ‘on one product. Co-branding leverages the image and reputation of multiple brands to create distinctive products with distinctive differentiation. Co-branding is quite common in processed foods and credit cards. For example, General Mills partners with Hershey’ on its Betty Crocker chocolate cake mixes that feature Hershey's cocoa. This brand alliance gives Betty Crocker a distinct advantage over competitors like Duncan Hines. Similarly, Taco Bell collaborates with Frito Lay on the Doritos Locos Taco by offering a Dorito taco shell. Even online merchants can When a brand lke Star Wars lends its name to a line of products, the cost of licensing is often offset by greater awareness and sales. Scanned with CamScanner 206 _Part3: Developing Marketing Strategy combine brand power. For example, Uber and Spotify partnered to offer “ride and listen” oppor- ‘tunities. Co-branding is quite successful because the complementary nature of the brands used ona single product increases perceived quality and customer familiarity. Brand licensing is another type of branding alliance. Brand licensing involves a contractual agreement where a company permits an organization to use its brand on noncompeting prod- ucts in exchange fora licensing fee. Although this royalty can be quite expensive, the instant brand recognition that comes with the licensed brand is often worth the expense. Licensing is quite common in toys where manufacturers will license the characters and images from popular movies such as Disney+’s The Mandalorian to create a variety of products. Tervis, Lovepop, PopSockets, and Build-A-Bear are just afew brands that produced the Mandalorian and Grogu (Baby Yoda) merchandise. 7.2¢ Brand Value ‘What is a brand worth? The answer depends on whether you ask customers or the firm. For customers, brands offer a number of advantages as mentioned above. However, customers also have attitudinal and emotional attachments to brands that create value. One of the most common types of customer brand value is brand loyalty. Brand loyalty is a positive attitude toward a ‘brand that causes customers to have a consistent preference for that brand over all other com- peting brands in a product category. There are three degrees of brand loyalty: ‘+ Brand recognition—exists when a customer knows about the brand and is considering it as one of several alternatives in the evoked set. This is the lowest form of brand loyalty and exists mainly due to the awareness of the brand rather than a strong desire to buy the brand, + Brand preference—a stronger degree of brand loyalty where a customer prefers one brand. ‘to competitive brands and will usually purchase this brand if tis available. For example, ‘a customer may hold a brand preference for Diet Coke. However, if this brand is not available, the customer will usually accept a substitute such as Diet Pepsi or Coke Zero rather than expending extra effort to find and purchase Diet Coke. + Brand insistence—the strongest degree of brand loyalty, occurs when customers will 0 out oftheir way to find the brand and will accept no substitute. Customers who are brand insistent will expend a great deal of time and effort to locate and purchase their favourite brand. ‘Marketers clearly want to develop brand insistence for their products. However, brand loyalty is declining overall because of increasing commoditization and the overuse of sales promotion activities. For example, users of Uber ofien also use Lyft (and vice versa), indicating good brand recognition but limited loyalty A recent study revealed the top brands having the highest cus- tomer loyalty: Amazon, Google, Samsung, Apple, and Netflix! Brand loyalty also remains quite high in many product categories, including cigarettes, mayonnaise, toothpaste, coffee, bath soaps ‘medicines, body lotion, makeup, soft drinks, ketchup, and diapers. Note that most ofthese exam- piles include products that customers put in their mouths or on their bodies—a common trait of products that enjoy strong brand loyalty. ‘The value of a brand to the firm is often referred to as brand equity. Another way of Jooking at brand equity is the marketing and financial value associated with a brand's position in the marketplace. Brand equity usually has ties to brand name awareness, brand loyalty, brand quality, and other attributes shown in Exhibit 7. Brand awareness and brand loyalty increase customer familiarity with a brand. Customers familiar or comfortable with a specific brand are more likely to consider the brand when making a purchase. When this familiarity is combined with a high degree of brand quality, the inherent risk in purchasing the brand and associations include the brand’s image, attributes, or benefits that either directly or indirectly give the brand a certain personality. For example, customers associate Allstate Scanned with CamScanner ‘Chapter 7: Branding and Positioning insurance with “Mayhem,” Coca-Cola with happiness, and KFC with “Finger Lickin’ Good” Associations like these are every bit as important as quality and loyalty, and they also take many years to develop. Unfortunatly, itis also possible for brand associations (and brand equity) to be negative. For instance, Tide PODS became irreversibly associated with the so-called Tide POD Challenge, where people joked about eating the colourful laundry detergent. Though rela- tively few people actually ate the PODS intentionally, the media coverage was relentless, causing Procter & Gamble to issue a statement and Tide to release public service announcements.’ For ‘many, Princess Cruise Lines brand equity was damaged as several of its cruise ships were the focus of high-profile COVID-19 outbreaks, garnering media coverage and associating the virus with cruise travel! Thus, brands are not static and at times can become more ofa problem than a solution as a marketing strategy. Although brand equity is hard to measure, it represents a key asset for any firm and an important part of marketing strategy. Exhibit 7.4 lists the world’s most valuable brands. Inter- estingly, the majority of them are inthe technology industry. Typically, brands lke these take UT i COA UC ELC UT 3 Microsoft 162.9 Technology sa | toe 5 Facebook 703 ‘Technology n Toyota a5 8 Nike 384 rs ams 15 seo x60 Technology ‘Source“The Words Most Valuable Brands” Fore, 2020, ps /www frbescom/powerful-randslis (accessed May 20,2022) 207 Scanned with CamScanner 208 Part 3: Developing Marketing Strategy years to develop and nurture into the valuable assets that they have come to represent, This reality usually makes it easier and less expensive for firms to buy established brands than to develop new brands from scratch, For example, Microsoft's purchase of Skype and Facebook's purchase of Instagram added powerful brands to each company's portfolio. The equity associ- ated with these brands would have taken Microsoft and Facebook decades to develop on their ‘own. However, as the start-up culture permeates many industries, some brands have grown at a faster rate than in the past. For example, Amazon (1994), Google (1998), and Facebook (2004) grew from start-up to well known in a much shorter time than companies such as Coca-Cola and AT&T, which have grown their brands across decades and centuries. This trend seems to be continuing as Uber (2009), Zoom (2011), and DoorDash (2013) all moved from non-existent to well-known brand in a short period of time. Only the future will tell us if this trend continues with brands quickly developing and sustaining or declining as technology and consumer preferences evolve, Given the value of brands like these, it is no surprise that firms go to great lengths to protect their brand assets. Registering a brand with the Canadian Intellectual Property Office is only the First step in protecting the value ofa brand, While the Canadian legal system provides many laws to protect brands, most of the responsibility for enforcing this protection falls on the company to find and police abuses. Firms must diligently monitor competitive behaviour for signs of potential brand infringement that could confuse or deceive customers. Disney has a reputation for strongly defending its trademarks, even going after small businesses and Etsy sellers.’ Due to the differing and often lax legal systems in other nations, brand abuse is quite common in foreign Cynthia 77) Barbie Gets a Makeover® ‘Mattel, Inc. launched Barbie in 1959. Barbie, designed by Mattel ‘cofounder Ruth Handler, became a globalicon.The company began ‘marketing versions of Barble as a nurse, an astronaut, a firefighter, and a pilot. More recently, the company has launched Barbie dolls bbased on female role models in many fields, from president of the United States toa game developer. Mattel has successfully reinvigo- rated Barbie's sales after a period of sharp decline, ‘Mattel strategy of taking advantage of trends in the real world has been a success. For instance, Barbe has embraced diversity with Increasing representation of race, body type, halt types, and abiltes toaddress potential concers about negative self-image, The Barbie Fashionistas line includes 176 dolls, 9 body types, 35 skin tones, and ‘4 hairstyles The range also includes adoll with a wheelchat, 2 doll with a prosthetic leg, @ doll with no hai, and a doll with vitiligo (a ‘common skin-pigment condition) The Fashionista line has been a success with Mattel facing repeated stockouts ofits vitligo dol, Beyond Barbie and Ken, Mattel has pursued growth with the Introduction of Creztable World, ts first line of gender-neutral dolls with micand-match outfits and features, In response to shifting ‘gender norms. Instead of being aspirational like Barble, Mate says Creatable World dolls are intended to be relatable. Though Mattel acknowledges the generational divide on the subject of gendered toys, Mattel is clearly investing in parents of the future. In May 2022, Mattel introduced its first Barbie transgender doll, modelled after Laverne Cor, one of the stars ofthe hit Netflix show, Orange ls the ‘New Black. Overall, Mattel is adapting its product offerings to reflect new digital, social, and environmental impact preferences of consumers that have, in some ways, moved consumers away from purchasing physical toys. The company is planning on opening up an amuse- ‘ment parkin Arizona in 2023 called Mattel Adventure Park. The new ‘venture will include Hot Wheels Roller Coaster and a Barbie Beach House experience. Today, Mattel also licenses brands for dolls and action figures based on Jurassic World, DC Comics, WWE, and Disney, among ‘others. Consumers can watch for more brands and more product lines as Matte continues building on its marketing success for future growth. Though sales have improved, theres still along road ahead for Mattel to top its record sales of $1.2billon in 2012, Thus, Mattel Is an example of how brands must adapt and change to their envi- ronment, if they desire to retain strong brand loyalty and equity across time, Scanned with CamScanner ‘markets, It is not surprising that patent, copyright, and intellectual property law has become a growth industry both in Canada and around the world, Without these protections in place, firms run the real risk of having their brand become synonymous with an entire product category. Uber, Skype, Band-Aid adhesive bandages, Coca-Cola, FedEx, and Kleenex constantly fight this battle. To protect their brands, firms obtain trademarks to legally designate that the brand owner hhas exclusive use ofthe brand and to probibit others from using the brand in any way. Former brand names that their parent companies did not protect sufficiently include aspirin, escalator, nylon, linoleum, kerosene, and shredded wheat. 7.2d Packaging and Labelling At first glance, the issues of packaging and labelling might not seem like important con- siderations in branding strategy. Although packaging and labelling strategy does involve different goals than branding, the two often go hand-in-hand in developing a product, its benefits, its differentiation, and its image. Consider, for instance, the number of products that use distinctive packaging as part of their branding strategy. Obvious examples include the brand names and brand marks that appear on all product packaging. The colour used on 1a products package or label is also a vital part of branding, such as Gain’s consistent use of bright green on its line of laundry detergents. The size and shape of the label is sometimes a key to brand identification. For example, Heinz uses a unique crown-shaped label on its ketchup bottles. The physical characteristics of the package itself sometimes become part of the brand. Pringles’ potato chip canister, Kikkoman’s angular soy sauce bottles, and the bottles used by Crown Royal whiskey are good examples. Finally, products that use recyclable packaging are gaining favour. For instance, Gerber, the world’s biggest baby food company, introduced a single-material baby food pouch made from recyclable polypropylene. Replac- ing the previous multilayer packaging with a single-material design is much friendlier for the recycling industry? Packaging serves a number of important functions in marketing strategy. Customers take some functions—such as protection, storage, and convenience—for granted until the package fails to keep the product fresh, or they discover that the package will not conveniently fit in the refrigerator, medicine cabinet, or backpack. Packaging can also play a role in product modifi- cations and repositioning. An improved cap or closure, an “easy open” package, a more durable box or container, or the introduction of a more conveniently sized package can create instant market recognition and a competitive advantage. Sometimes, a change in package design can create major problems for a brand. Product labels not only aid in product identification and promotion; they also contain a great deal of information to help customers make proper product selections. Labelling is also an important legal issue as several federal laws and regulations specify the information that ‘must be included on a product’ packaging, In 2007, nutritional labelling became mandatory ‘on most pre-packaged foods sold in Canada." In 2016, Health Canada introduced an update to nutritional labelling, specifically focusing on improving the nutrition facts table and thelist of ingredients to make them easier to understand, For example, the update included changes to serving sizes and changes to the information on sugars (see Exhibit 7.5). These changes were significant enough that food companies were given until December 2021 to comply." Howev- et, with the challenges food producers faced due to the pandemic, they requested more time to meet the requirements, and so the Canadian Food Inspection Agency (CFIA) announced that it will focus its efforts on education and compliance promotion for the first year until December 2022. Scanned with CamScanner 210. Part 3: Developing Marketing Strategy Exhibit 7.5 Health Canada Changes to Nutrition Facts Table ean Cala (Nutrition Facts Nutrition Facts Sinateateoe Valeur nutritive Valeur nutritive Seema Pa 25 p20 Perteap esoml), 4d Sn ae er SEEES| ctmynene [pms tee cso ole Sere | © Seegmtoe + [oaioree to Semmens] atte Thebeiow lat Unces og om Non uty vue _ | rerererien TESTE Renae > [-Ravoaa va se ne ‘Source: Health Canada Food Labeling Changes: Changes to Nutrton Facts Table, igre 1 Nution facts able changes, tps /wwecanada calea/helth-canada/serviced {od labeling dhanges nuttin fct-able ml (accessed July 2, 202). 7.3 Differentiation and Positioning Although we have focused solely on branding issues to this point in the chapter, it is vital to remember that branding is intricately tied to differentiation and positioning within the marketing program. People sometimes confuse differentiation and positioning with market segmentation and target marketing, Differentiation involves creating differences inthe firmis product offering that setit apart from competing offerings, Differentiation typically has its bass in distinct prod- uct features, additional services, or other characteristics. Positioning refers to creating a mental mage of the product offering and its differentiating features in the minds of the target market. ‘This mental image can be based on real or perceived differences among competing offerings. ‘Whereas differentiation is about the product and the marketing program, positioning is about ‘customers’ perceptions of the real or perceived benefits that the offering possesses. Although differentiation and positioning can be based on actual product features or char acteristics, the principal task for the firm is to develop and maintain a relative position for the product in the minds ofthe target market, The process of creating a favourable relative position involves several steps: 1, Identify the needs, wants, and preferences desired by the target market. 2, Evaluate the differentiation and positioning of current and potential competitors. 3. Compare the firm's current relative position vis-4-vis the competition across the needs ‘wants, and preferences desired by the target market. 4. Incorporate a vision of disruptive technologies and competition to continually update the position in an evolving market. 5, Identify unique differentiation and positioning not offered by the competition that matches the firm’s capabilities. 6. Developa marketing program to create the firms positon inthe minds of the target market 7. Continually reassess the target market, the firms position, and the position of competing offerings to ensure that the marketing program stays on track and to identify emerging positioning opportunities. Scanned with CamScanner Chapter 7: Branding and Positioning ‘The concept of relative position can be addressed using a number of tools. One of the most commonly used tools is perceptual mapping. A perceptual map represents customer percep- tions and preferences spatially by means of a visual display. A hypothetical perceptual map for automotive brands is shown in Exhibit 7.6. The axes represent underlying dimensions that cus- tomers might use to form perceptions and preferences of brands. Any number of dimensions can be represented using computer algorithms such as multidimensional scaling or cluster analysis. However, simple two-dimensional maps are the most common form because a limited number of dimensions are typically the most salient for consumers, A second commonly used tool is the strategy canvas, which we discussed in Chapter 4 and Exhibit 4.11. In addition to its usefulness in the planning process, the strategy canvas is an excel- lent tool for demonstrating the firms relative position in terms of the competitive factors that are important to the target market. A hypothetical strategy canvas for the ride-sharing market shown in Exhibit 7.7. The perceptual map and strategy canvas illustrate two basic issues in positioning strategy. First, they indicate products/brands that are similar in terms of relative mental position. In the ‘example perceptual map, customers are likely to see the offerings of Toyota and Honda as being very similar. Positioning a brand to coincide with competing brands becomes more difficult when many brands occupy the same relative space. Second, these tools illustrate voids in the current mindscape for a product category. In the perceptual map, note the empty space in the bottom-left corner. This indicates that consumers do not perceive any current products to be both conservative and inexpensive. This lack of competition within the mindspace might occur because (1) customers have unmet needs or preferences, or (2) customers have no desire for a product offering with this combination of dimensions. In the case ofthe strategy canvas, Uber is reflected as the leader in most categories, as it was established first and has aggressively worked to maintain nearly 70 percent ofthe ride-sharing market. However, Lyftis seen as having slight lead in consumer perceptions in the areas of pricing, promotions, and safety. Exhibit 7.6 A Hypothetical Perceptual Map of the PTL a Scanned with CamScanner 22 Part3: Developing Marketing Strategy Exhibit 7.7 Hypothetical Strategy Canvas for the PeSeot liens ide USCties Global Other ‘Rewards Promotions Percelved Pricing Options Served-—Ces»Delvey Program Safety Sewed Services @ ryt © ver 7.3a Bases for Differentiation Generally, the most important tool of differentiation is the brand, Customer perceptions of a brand are of utmost importance in differentiation because differences among competing brands ccan be based on real qualities (eg. product characteristics, features, or style) or psychological ‘qualities (eg. perception and image). In addition to the brand, other important bases for differ- entiation include product descriptors and customer support services. Product Descriptors Firms generally provide information about their products in one of three contexts, as shown in Exhibit 78. The first context is product features, which are factual descriptors of the product and its characteristics. For example, Apple's Macbook Air includes key features such as an Apple Ml chip processor and 512GB SSD storage. However, features— although they tell something about the nature of the product—are not generally the pieces of information that lead customers to buy. Features must be translated into the second context, advantages. Advantages are performance characteristics that communicate how the features make the product behave, hopefully in a fashion that is distinctive and appealing to customers. The advantages of the MacBook Air include a lightweight, compact design, fast graphics, and long battery life. However, as we have said before, the real reason customers buy products is to gain bbenefits—the positive outcomes or need satisfaction they acquire from purchased products. Thus, the benefits of the MacBook Ait include ultimate mobility and rugged entertainment on the road, Other benefits, like increased productivity and connectivity, might also be implied and communicated in Apple’ promotional program, One aspect of a product's description that customers value highly is quality. Product charac- teristics that customers associate with quality include reliability, durability ease of maintenance, ‘ease of use, and a trusted brand name. In business markets, other characteristics, such as technical suitability, ease of repair, and company reputation, become included in this lis of quality indica- tors, In general, higher product quality—real or imagined—means that a company can charge a higher price for their product and simultaneously build customer loyalty. In the case of Apple and the MacBook Air, thisis certainly true, The relationship between quality and price (inherent in the concept of value) forces the firm to consider product quality carefully when making decisions regarding differentiation, positioning, and the overall marketing program. Scanned with CamScanner Chapter snding and Positioning 213, Exhibit 7.8 Using Product Descriptors as a Basis for Differentiation Apple Retina display Very lightweight and Ukimate mobility Macbook Air ‘Apple M1 Chip, 8-core CPU compact Job performance efficiencies Intel Iris Plus Graphics Fast graphics Rugged entertainment on ‘8GB unified memory configurable | Superior display the road 10 1668 Out-oF the-box photo, Noneed to purchase 1256GB and 512GBSSD storage | video, and audio editing | separate photo-or video- Touch ID Long-lasting battery editing software Force Touch trackpad Hassle-free connectivity | Stay connected wherever ‘Two ThunderbolY/USB 4 ports ware MacOS operating system Tesla Model 3 | Dual motor all-wheel drive Long battery life Enhanced selt-image Heart- From 0 to 100 kph in 3.2 seconds | Safe design é racing performance {652-kilometre range ‘Autopilot assistance Easy to drive "©" |Top speed of 322 km/h 17-inch Fuel savings “ Safety eotih touchscreen display Bounty Sheets can be torn in varying Great for any size cleaning | More control over cleaning Select-2Size PaperTowels | sizes job Reduces cost of buying More sheets per roll Less waste oper towels Increased wet strength Supetior absorbency Canbe sized foruse as. Wor'trun out as often placemats Customer Support Services A firm may have difficulty differentiating its products when all products in a market have essentially the same quality, features, or benefits. In such cases, providing good customer support services—both before and after the sale—may be the only way to differentiate the firm’s products and move them away from a price-driven commodity status, For example, over the past 10 years, bookstores have disappeared at an alarming rate as ‘competition from Amazon and digital alternatives have taken their toll. The stores that have remained in business thrive because of focusing on either customer service or a broader set of product lines outside of books and magazines. Many local bookstores create customer loyalty by being actively involved in the community, including contributing to local schools and charities. Many customers value this level of personalization so highly that they will pay slightly higher prices and remain loyal to their bookstore. Larger chains like Indigo have diversified their product offerings into areas such as games, toys, clothing, and baby products. Support services include anything the firm can provide in addition to the main product that adds value to that product for the customer, Example nce in identifying and software, financing arrangements, training, extended warranties and guarantees, repair, layaway plans, convenient hours of operation, affinity programs (e.g. frequent flyer/buyer programs), and adequate parking. If you buy a Samsung refrigerator, for example, you can expect Lowe's to provide financing, delivery and installation, and warranty repair service, if necessary. Through research, the firm can discover the types of support services that customers value most. In some cases, customers may want lower prices rather than an array of support services. Low-cost Scanned with CamScanner 1214 Part 3:Developing Marketing Strategy airlines—such as Lynx Air and Swoop—and budget hotels—such as Super 8 and Days Inn—are good examples. The importance of having the proper mix of support services has increased in recent years, causing many firms to design their customer services as carefully as they design their products. Regardless of the bass for differentiation, reality is often not as important as perception. Firms that enjoy a solid image or reputation can differentiate their offerings based solely on the com- pany or brand name alone, Examples of firms with strong reputations include Patagonia, Disney, and Apple, But what ifthe firm doesn't have this ability? What if there are no credible bases for differentiation? In other words, what if your market is commoditized? In this case, creating a perception may be the firms only choice. Consider the car rental industry. In the industry's early years Hertz not only stood in first place, but also maintained a vast lead over second-place Avis, ‘The management of Avis, intent on capturing a larger portion of Hertz’s customers, asked its, advertising agency to develop an effective positioning strategy relative to Hertz. After searching for any advantage that Avis held over Hertz, the agency concluded that the only difference was that Avis was number two. Avis management decided to claim this fact as an advantage, using the theme “Were number two, We try harder!” Avis rentals soared, putting the company in a much stronger number-two position, 7.3b Positioning Strategies AA firm can design its marketing program to position and enhance the image of its offering in the minds of target customers. To create a positive image for a product, a firm can choose to strengthen its current position or find a new position. The Key to strengthening a product’ current position is to monitor constantly what target customers want and the extent to which customers perceive the product as satisfying those wants, Any complacency in today’s dynamic marketplace is likely to result in lost customers and sales. For example, a firm known for excel- lent customer service must continue to invest time, money, talent, and attention to its product position to protect its market share and sales from competitive activity. This is especially true for firms such as Zappos, Ritz-Carlton, and Nordstrom that pursue competitive advantage based. ‘on customer intimacy. Strengthening a current position is all about continually raising the bar of customer expectations. At times, a brand can become too similar to a competing brand, Lush Cosmetics, a UK based cosmetics retailer known for their handmade bath products, has faced competition due to the increasing number of beauty brands. To differentiate itself, Lush advocates for ethical buying, fighting animal testing, and responsible packaging. In fact, many of its products, such as its bubble bars and massage bars, eliminate the need for packaging entirely. Leaning into these values helps set Lush apart from other “clean” beauty brands.” Some of the most memorable marketing programs involve attempts to move to new positions. ‘One example is Buick’ attempt to reposition the brand because of the aging ofits traditional target- The erosion of Buick's share of the car market has forced the company to focus on and attract younger audiences tothe brand. The automaker’s marketing programs have been headlined by the “That's Not a Buick” tagline.” In some cases, repositioning requires a focus on new products. Apple has continued to show this is true. Apples launches of the iPod portable music player and iTunes ‘media library and marketplace were landmark moments for Apple, which had previously struggled with new products throughout is history (eg, the Lisa computer). These disruptive products firmly established Apple as an innovator at the head of the pack. Though iTunes has been reworked into ‘Apple Music and iPods have been discontinued, they forever changed the music and tech industries. 7.4 Managing Brands Over Decisions related to branding and positioning are ongoing strategic issues. So is managing the marketing program over time. To address this issue, we use the traditional product life cycle—shown in Exhibit 7.9—to discuss marketing strategy in terms of the brand or product’ Scanned with CamScanner Chapter 7:1 snding and Positioning 215 Ste AS a aet sd KS Development ntofucton Stage Stage conception, through its growth and maturity, and to its ultimate death. Our use of the product life cycle is based on its ability to describe the strategic issues and key objectives that should be considered during each phase of a brand’ life. We note, however, that the product life cycle hhas many limitations. For one, most new brands and products never get past development and ‘most successful brands and products never die. Second, the product life cycle really refers to the life of a product/market, industry, sector, or product category—not to specific brands or firms. Further, the length of each stage and the time involved in the overall cycle depends heavily on the actions of the firms within the industry. Firms and industries constantly reinvent themselves and can adjust to disruptive strategies, which can cause the life cycle to speed up, slow down, or even recycle. Despite these issues, the product life cycle offers a useful framework for discussing mar- keting strategy over time. Exhibit 7.10 summarizes the strategic considerations for each stage of the life cycle. It is important for firms to consider the stage of their market's life cycle with respect to planning in the current period, as well as planning for the future. Using the product life cycle as a framework has the distinct advantage of forcing firms to consider the future of their industry and their brand. Netflix, for instance, started as a DVD-by-mail rental service but was able to successfully pivot to streaming as the DVD industry and movie rental busi- nesses entered into decline. ‘The change in Netilix’s strategy over time also highlights the strong connections between the marketing program and branding. For many years, the Netflix brand stood for easy, convenient aceess to DVDs through a customizable, and relatively inexpensive, rental program. Distribution and price were the company's key strengths. Over time, however, movie distributors became threatened by Netflix and became less willing to work with the company over issues such as pricing and distribution rights. This caused Netflix’s operating costs to increase. As the technol- ogy shifted away from DVDs and more toward digital distribution, Netflix took the opportunity to begin its move in the same direction. This necessitated changes in the marketing program in terms of program structure, pricing, and distribution, Looking forward, however, Netflix will have to be mindful of streaming competition from Apple TV, Disney+, Hulu, Amazon Prime, and others. As it grapples with issues around costs of movie production and cracking down on sharing of passwords, Netflix should continue to focus on what factors made them successful in the first place. Scanned with CamScanner Overall Marketing | Stimulate product Increase market share | Maximize profit by Reduce expenses and Goals awareness andtrial | byacquiringnewcus- | defending market marketing efforts to tomers;discovernew | share or stealing it maximize the last needs and market from competitors opportunity for profit segments ProductStrategy | Introduce limited Introduce new models | Full model ine; Eliminate unprofitable models with imited | with new features; inctease supplemen- | _modelsand brands features; frequent pursue continuous tal product offerings product changes Innovation 10 aid in product differentiation Pricing Strategy | Penetration pricing | Prices fall dueto Prices continue to Prices stabilize at a toestablish amarket_ | competition price fall;pricetobeat the | lowerlevel presence or price tomatchorbeatthe | competition skimming to recoup | competition development costs Distribution Gradually rollout Intensify efor to Extensive product Maintain a level nec Strategy product to expand ‘expand product reach | availabilty; retain ‘essary to keep brand availabilty; get chan-. | and availability shelfspace; phase out | loyal customers; nel intermediaries on ‘unprofitable outlets or | continue phasing out board channels unprofitable channels Promotion Advertising and per- | Agaressive brand Stress brand differ Reduce to a minimal Stratesy sonal selling tobuild | advertising selling, | encesand benefits; _| levelor phase out awareness; heavy andsales promotion | encourage brand entirely sales promotion to toencourage brand | switching: keep the stimulate product tial] switching and contin- | brand/product fresh ued trial Source: Adapted from Willam M, ride and OC Ferel, Marketing (Mason, OH: Cengage Learning, 2020, pp. 315-318. 7.4a Development Stage As Exhibit 7.9 indicates, a firm has no sales revenue during the development stage. In fact, the firm experiences a net cash outflow due to the expenses involved in product inno- vation and development. For most innovations, the firm assumes a great deal of financial, market, and opportunity risk due to the uncertainty involved in developing new products and brands, For example, the pharmaceutical industry understands the challenges of new product development like no other industry, Firms such as Apotex, Pfizer, and AstraZeneca spend millions of dollars each year developing new drugs, Upon identifying a new drug, it takes years of testing before earning Health Canada’s approval. Then, once the new drug is on the market, the firm has only afew years to recoup their investment before patent protection expires and the market opens to generic competition. In this highly competitive industry. pharmaceutical firms live or die based on the number and quality of drugs they have in thei development pipelines. Scanned with CamScanner Chapter 27 ‘The development stage usually begins with a concept, which has several components: (1) an understanding of the specific uses and benefits that target customers seek in a new product; 2) a description of the product, including its potential uses and benefits; (3) the potential for creating a complete product line that can create synergy in sales, distribution, and promotion; and (4) an analysis of the feasibility of the product concept, including such issues as anticipated sales, required return on investment, time of market introduction, and length of time to recoup the investment. Given the odds stacked against most new products, itis not surprising that over 80 percent of all new products fail. This unfortunate fact of life underscores the need to correctly identify target customer needs before developing the product strategy. Through effective test mar- keting the firm can gauge customer response to a new product before the full-scale launch. New products that closely match customers’ needs and have strong advantages over competing prod- ‘ucts are much easier to market as the new product enters the introduction stage ofits life cycle, 7.4b Introduction Stage ‘The introduction stage begins when development is complete and ends when sales indicate that target customers widely accept the product. The marketing strategy devised during the development stage is fully implemented during the introduction stage and should be tightly integrated with the firm’s competitive advantages and strategic focus. Marketing strategy goals common to the introduction stage include: ‘+ Attracting customers by raising awareness of, and interest in, the product offering through advertising, public relations, and publicity efforts that connect key product benefits to customers’ needs and wants, + Inducing customers to try and buy the product through the use of various sales tools and pricing activities. Common examples include free samples ofthe product and the use of price incentives. ‘+ Engaging in customer education activities that teach members of the target market how to use the new product. + Strengthening or expanding channel and supply chain relationships to gain sufficient product distribution to make the product easily accessible by target customers. + Building on the availabilty and visibility of the product through trade promotion activities ‘that encourage channel intermediaries to stock and support the product. + Setting pricing objectives that will balance the firms need to recoup investment with the competitive realities of the market. Although all elements of the marketing program are important during the introduction stage, {800d promotion and distribution are essential to make customers aware that the new product is available, teach them how to use it correctly, and tell them where to purchase it. Although this is typically a very expensive undertaking, it does not have to be. Tesla, for example, does not buy traditional advertising and instead relies on publicity and word of mouith. ‘The length of the introduction stage can vary. In business markets, new products often have long introduction periods until buyers become convinced to adopt them. In consumer markets, many products experience an immediate upsurge in sales as consumers and retailers take advantage of special introductory offers. Afier the introduction, the firm must continually track market share, revenues, store placement, channel support, costs, and product usage rates to assess whether the new product pays back the firm's investment. Even when the firm has patent protection or hard-to-copy technology, it must carefully track competitors’ reactions. ‘Tracking this information is critical if the product is to make the grade, continue along the sradually rising sales curve, and enter the profitable growth stage. Unfortunately, most new product introductions start off very slowly and never enjoy rising demand or profits. Or, they start with a bang and decline rapidly. Failures during introduction are even more expensive than in the development stage, as marketing and distribution costs accrue to the total expenses involved in the product’ launch. Scanned with CamScanner Part 3: Developing Marketing Strategy 7.4c Growth Stage ‘The firm should be ready for the growth stage, as sustained sales increases may begin quickly, The product's upward sales curve may be steep, and profits should rapidly increase, and then decline, toward the end of the growth stage. The length of the growth stage varies according to the nature ofthe product and competitive reactions. For example, disposable diapers had a long growth stage as they experienced over 30 percent yearly growth for a decade. A short growth stage is typical for new technologies, such as the latest iPhone or new video games. Regardless ofthe length of the growth stage, the firm has two main priorities: (1) establishing a strong, defensible market position, and (2) achieving financial objectives that repay investment and earn enough profit to justify @ long-term commitment to the product. Within these two priorities, there are a number of pertinent marketing strategy goals: + Leverage the product’ perceived differential advantages in terms of branding, quality, price, value, and so on, to secure a strong market position. + Establish a clear brand identity through coordinated promotional campaigns aimed at both customers and the trade, + Create unique positioning through the use of advertising that stresses the product's benefits for target customers relative to other available solutions or products. ‘+ Maintain control over product quality to assure customer satisfaction. ‘+ Maximize availability of the product through distribution and promotion activities that ‘capitalize on the product’s popularity. + Maintain or enhance the product ability to deliver profits to key channel and supply chain partners, especially retailers that control shelf space and product placement. ‘Find the ideal balance between price and demand as price elasticity becomes more important asthe product moves toward the maturity stage. ‘+ Always keep an eye focused on the competition. During the growth stage, the overall strategy shifts from acquisition to retention, from stimulat- ing product trial to generating repeat purchases and building brand loyalty. Ths is true not only for customers but also for wholesalers, retailers, and other supply chain members. The key is to develop long-term relationships with customers and partners to prepare for the maturity stage. ‘As the market matures, the firm will need loyal customers and good friends in the supply chain in order to remain competitive, Maintaining key relationships is a challenging and expensive proposition. For this reason, the growth stage is the most expensive stage for marketing, Pricing also becomes more challenging during the growth stage. As more competitors enter the market, the firm must balance its need for cash flow with its need to be competitive. The relationship between price and perceived quality is a complicating factor, as is the increasing price sensitivity of customers. It is not surprising during the growth stage to see competitors stake out market positions based on premium or value-based pricing strategies. Other firms solve the pricing dilemma by offering different products at different price points. You can see this strategy in action iri the wireless phone market, where each service provider offers tiered service offerings (ie, minutes and features) at different pricing levels. FedEx implements the same strategy with its tiered service offerings (First Overnight, Priority Overnight, Standard Overnight, 2Day Economy, etc.) Another major challenge during the growth stage is the increasing number of competitors entering the market. There is a tendency for many firms to pay less attention to competitors during the growth stage, After all, the market has grown rapidly and there is enough business for everyone to have a piece, Why not worry about competitors later? Because growth will eventually end and the market will become mature. To protect itself, the firm must build a defensible market position as it prepares for market maturity. This position may be based on image, price, quality, ot perhaps some technological standard. Eventually the market will go through a shakeout period and the dominant firms will emerge. In the United States, this process can be seen in the wireless phone, airline, and Internet technology markets, Scanned with CamScanner ‘Chapter 7: Branding and Positioning 7.4d Maturity Stage After the shakeout occurs at the end of the growth stage, the strategic window of opportunity will all but close for the market and it will enter the maturity stage, No more firms will enter the market unless they have found some product innovation significant enough to attract large numbers of customers. The window of opportunity often remains open, however, for new prod- uuct features and variations. A good example is the introduction of light, dry, ice, microbrew, low-alcohol, and low-carb products in the beer industry. These variations can be quite important as firms attempt to gain market share. In the face of limited or no growth within the market, ‘one of the few ways for a firm to gain market share isto steal it from a competitor. Such theft ‘often comes only with significant promotional investments or cuts in gross margin because of the lowering of prices. The stakes in this chess match are often very high. For example, just a fractional change in market share in the soft drink industry means millions in additional revenue and profit for the lucky firm. In the typical product life cycle, we expect maturity to be the longest stage. For the firm that has survived the growth stage, maturity can be a relatively status quo period of time. As long as one maintains sales volume to keep market share constant, a longer-term perspective can be taken due to decreasing market uncertainty. Typically, a firm has four general goals that can be pursued during the maturity stage: + Generate Cash Flow. By the time a market reaches maturity, the firms products should be yielding a very positive cash flow. This is essential to recoup the initial investment and to generate the excess cash necessary for the firm to grow and develop new products. + Hold Market Share. Marketing strategy should stress holding market share among the dominant brands in the market. Firms having marginal market share must decide whether they have a reasonable chance of improving their position. If not, they should consider pulling out of the market. + Steal Market Share. Any firm in a mature market can pursue this goal; however, it is more likely to be used by firms holding weaker market positions. The key to this strategy is to create incentives that encourage brand switching, even if only temporarily. Even small gains in market share can lead to large increases in profits. + Increase Share of Customer. Share of customer refers to the percentage of each customer's needs in a particular area met by the firm. This strategy is quite common in financial services. Likewise, many large grocery chains increase share of customer by adding features ranging from ready-to-eat meals to dry cleaning services in an effort to create one-stop shopping for family needs. To achieve these goals, the firm has at least four general options for strategy selection throughout the maturity stage: (1) develop a new product image, (2) find and attract new users to the product, (3) discover new applications and uses for the product, or (4) apply new technology to the product. For example, SodaStream, which was popular in the 1970s and 1980s, made a comeback in the late 2010s as the brand positioned itself asa way to ditch the plastic bottles associated with soft drinks."* Finally, as described in Beyond the Pages 7.3, Nintendo used a rebranding strategy to attract casual gamers to its handheld and home ‘gaming systems. Stealing customers away from the competition involves creating incentives for noncustomers totry the firm’ product. This may entail heavy expenditures in sales promotion activities such as product sampling, couponing, or trade promotion to encourage prominent display of the product. ‘on the store's shelves. In some cases, once the brand switch has been accomplished, customers ‘an be locked in through the use of contractual agreements, This is common among wireless ‘hone providers, health clubs, and satellite television providers. A more common approach is to. simply match competitive prices, asis the case among many competing retail firms. For example, ‘most pizza chains will accept competitor's coupons and match their promotional incentives to sain business, 29 Scanned with CamScanner 220 Part3:Developing Marketing Strategy Beyond the Pages 7.3 Nintendo Bets Big on the Switch'® Nintendo's game systems—including Nintendo 64, GameCube, Wi, ‘Game Boy, and 305—are often viewedas being strictly for kids. However, ater several years of sles declines, Nintendo embarked con a long-term rebranding strategy to change everyone's opinions about video games and the gamers that enjoy them. The company alscovered that casual gamers, and even nongamers, were a much larger market than hardcore gamers. Since hardcore gamers pre- ferted the Microsoft Xbox and Sony PlayStation systems, Nintendo decided to specifically target casual gamer and nongamer audiences. “The shiftforNintendo began as early as 2006 withthe redesign of itsoriginal DShandheld game system. Dubbed the DS Lite the hand held was a smaller, lighter, brighter-screened version ofthe original DS system. To support the launch, Nintendo rebranded many of its popular puzzle and skl-building games under the “Touch Genera- tons" label to be targeted toward adults in thelr 40s and 50s in the so-called casual gamer market, Unlike younger games that enjoy playing forlong periods of time, casual gamers pefertoplay games in smaller chunks of time, similar to how people play mobile app games. Tat same year, Nintendo introduced the Wi home gaming console, which was designed to bring families together to play. Both theDS Lite and the Wi quickly became the best-selling gaming plat formsin the world. Nintendo believes theres alarge segment of dormant gamers in the market who enjoyed playing games children or young adits. Nostalgia marketing in general has been a succesful strategy for ‘many brands, Including Nintendo. In 2016, the company released mini versions of its classic gaming systems, the Nintendo Entertain- ‘ment System (NES) andthe Super NES. The company sold more than. 10 milion units in the aunch. Considering original NES players in ‘the mid-1980s are now middle-aged and many with children, It was a good opportunity for retro Nintendo tobe introduced to a new generation of players. ‘The following year, Nintendo further refined its strategy with the Introduction of the Nintendo Switch, a hybrid console that can act {as both a handheld game system and a home console. The hybrid nature ofthe Switch makes it appealing to a wide variety of audi- ‘ences For instance, the portable nature makes it ideal for children, hile the dock features particularly attractive to adults. The console was also much more appealing to third-party game publishers, so the Switch has more than a thousand titles for purchase in addition to cassie Nintendo games. The Switch was such a hit that the year ‘ater its release, Nintendo took he top spot in video game publisher software soles forthe fist time since 2009 with more than 30 million, units sold, Nintendo strives to take advantage of key trends in the gaming market and oer games forall ages and market segments. Investing inthe Switch has helped Nintendo reestablish selfs a strong com- petito inthe crowded video game market. The strenath of its fran- cise and the company's ability to find gaps inthe gaming market have helped Nintendo boost sales and grow its player base. With ‘competitorslke Sony (PSS) and Microsoft Xbox Series X) introducing new products since the launch ofthe Switch, itis vital that Ninten- do continue to see tis growth ofboth players and sales. But with onlya light update in the Switch withthe OLED edition in 2022, the ‘much-anticipated release ofthe Switch 2in 2024 willhave everyone's attention in the video game console market. 7.4e Decline Stage A product’ sales plateau will not last forever, and eventually a persistent decline in revenue begins. A firm has two basic options during the decline stage: (1) attempt to postpone the decline, or (2) accept its inevitability. Should the firm attempt to postpone the decline, the product’ demand must be renewed through repositioning, developing new uses or features for the product, or applying new technology. PepsiCo changed Pepsi Max to Pepsi Zero Sugar to help consumers better understand the product. This is also reflective ofa conscious move away from using the word “Diet” in North America and around the world.” Postponing a product's decline in this manner takes a great deal of time and a substantial investment of resources. Many firms, however, do not have the resources or opportunity to renew a product's demand and must accept the inevitability of decline. In such instances, the firm can either harvest profits from the product while demand declines or divest the product, taking steps to abandon it or sell it to another firm. Scanned with CamScanner Chapter 7:Branding and Positioning 221 ‘The harvesting approach calls for a gradual reduction in marketing expenditures and uses a less resource-intensive marketing mix. A harvesting strategy also allows the firm to funnel its increased cash flow into the development of new products. For example, GM phased out the Oldsmobile brand over several years by offering discounts and other special incentives, such as longer product warranties, to allay customer fears of limited product support. A com- pany using the divesting option withdraws all marketing support from the product. It may continue to sell the product until it sustains losses, or arrange for the product to be acquired by another firm. For example, General Mills sold its Hamburger Helper and other boxed food brands for $610 million in 2022. In the announcement, the company stated that the sale would allow it to *..focus on brands and categories where we have the best opportunities to drive profitable growth." ‘There are several factors that the firm should take into consideration before deciding on an appropriate marketing strategy during the decline stage: i + Market Segment Potential. The firm might have loyal customer segments that will continue to buy the product. If these segments are viable and profitable, the firm should postpone the decline or slowly harvest the product. + The Market Position of the Product. A product in a leading market position with a solid image may be profitable and generate excess cash by attracting customers from competitors’ abandoned products. + The Firm’s Price and Cost Structure. Ifthe firm is a low-cost producer in the industry and can maintain its selling price, the product can remain viable even in a declining market. The firm’ cost structure could also be enhanced by no longer having to invest in the product’ marketing program. + The Rate of Market Deterioration. The faster the rate of market deterioration, the sooner the firm should divest the product. Although the firm should carefully consider these factors, it should not be sentimental about dropping a failing product or brand. On the other hand, the firm should not quickly dismiss a renewal attempt, particularly if the firm does not have a better alternative use for its resources. ‘Throughout the product life cycle, it is imperative that the firm stays focused on changes in the market, not on its products or brands. Products and brands have life cycles only because markets and customers change. By focusing on changing markets, the firm can attempt to create new and better-quality products to match customers’ needs. Only in this way can a firm grow, prosper, remain competitive, and continue to be seen as a source of solutions by the target market. Key Points from Chapter 7 Branding strategy: + is critical to the effective differentiation and positioning of the complete offering. + involves selecting the right combination of name, symbol, term, or design that identifies a specific product or firm. ‘+ has two parts: the brand name (words, letters, and numbers) and the brand mark (symbols, figures, or a design). ‘+ involves more than developing a brand name or brand mark. To be truly successful, a brand should succinctly capture the product offering in a way that answers a question in the cus- tomer’s mind. + involves the many different attributes that make up the way customers think about brands: people (employees and endorsers), places (country of origin and channels), things (events, Scanned with CamScanner 222 Part3:Developing Marketing Strategy ‘causes, and third-party endorsements), and other brands (alliances, branded ingredients, the ‘company, and extensions). ‘typically starts with individual products, but the principles also apply to both physical and ‘online stores as well as services ‘+ also involves corporate branding, which includes activities aimed at to build and enhance the firm’ reputation, ‘is important because of the many advantages of branding, including product awareness, product identification, comparison shopping, shopping efficiency, risk reduction, product ‘acceptance, enhanced self-image, and enhanced product loyalty. ‘+ involves decisions such as selling manufacturer versus private-label brands. Although pri- vate label brands are generally more profitable, manufacturer brands have built-in demand, recognition, and product loyalty. ‘+ involves decisions related to individual versus family branding. + involves managing strategic brand alliances, such as co-branding or brand licensing, that involve developing close relationships with other firms. + involves developing customers’ loyalty to brands. Brand loyalty is a positive attitude toward ‘a brand that causes customers to have a consistent preference for that brand over all other ‘competing brands in a product category. Three levels of loyalty include brand recognition, brand preference, and brand insistence. + involves building the brand’ value to the firm with respect to its equity, or the marketing and financial value associated with a brand’ position in the marketplace. + also involves taking steps to protect brand names and brand marks from trademark infringe- ment by other firms. Packaging and labelling: + areimportant considerations in branding strategy because packaging often goes hand-i hhand in developing product, its benefits its differentiation, and its image. + include issues such as colour, shape, size, and convenience of the package or the product's container. + are often used in product modifications or co-branding to reposition the product or give it new and improved features. ‘+ are vital in helping customers make proper product selections. + canhave important environmental and legal consequences. Differentiation and positioning: vatiety of stakeholders ‘= involves creating differences in the firms product offering that set it apart from competing offerings (differentiation), as wells the development and maintenance of a relative position for a product offering in the minds of the target market (positioning). + can be monitored through the use of several tools including perceptual mapping (a visual, spatial display of customer perceptions on two or more key dimensions) and the strategy canvas (a visual tool that depicts how the firm stacks up against the competition across several ‘competitive factors that are important to the target market). + is fundamentally based on the brand but can include other bases for differentiation, including product descriptors (features, advantages, benefits) and customer support services. + includes the positioning strategies to strengthen the current position and repositioning. ‘Managing brands over time: + can be addressed via the traditional product life cycle, which traces the evolution of a prod- uct$ or a brands development and birth, growth and maturity, and decline and death over time of no sales revenue, negative cashflow, and high risk * introduction—a time of rising customer awareness, extensive marketing expenditures, and rapidly increasing sales revenue Scanned with CamScanner Chapter 7: Branding and Positioning + growth—a time of rapidly increasing sales revenue, rising profits, market expansion, and increasing numbers of competitors ‘+ maturity—a time of sales and profit plateaus, shift from customer acquisition to custom er retention, and strategies aimed at holding or stealing market share * decline—a time of persistent sales and profit decreases, attempts to postpone the decline, or strategies aimed at harvesting or divesting the product + can be influenced by shifts in the market, or by the actions of the firms within the industry as they constantly reinvent themselves. Endnotes 1, These concepts are adapted from Jennifer Ries ‘Brand Blog, Mantra Brand Consulting (htp/frand blogs. com). 2 BBCNews, “Canada Slaps Retalistory Tariff on [US Aluminium Goods? BBC, August 7, 2020, ttps//ww bbe.com/news/world-us-canada-53683569 (accessed September 32022); CBCNews, “Ontario Teen Makes'Buy (Canadian List in Response to Trump Trade Tariffs" CBC, lastupdated July 13,2018 btpel wrwechecalnewslcanadal hhamilton/onterio-teen-makes-buy-canadian-listin- response-to-trump-trade-tariffs-1.4742008 (accessed September 3,2022); Competition Bureau Canada, “Prod ‘cto Canad and Made in Canada Claims? Government of Canada, December 22, 2009, https/fwww.competition- Dureau gccaleicrsitech-be.nsfeng/03169.html (accessed September 3, 2022); Made in CA, “By Canadians, For (Canadians. Spend Your Money Wisely? ttps//madeinca. cu (accessed September 3, 2022). 3, Brett Bundale, The Canadian Press “Canadian Shoppers Shift to Discount Stores, No Name Brand Amid High Inflation: Loblaw” BNN Bloomberg, May 4, 2022, Lnpsdiwwwbnnbloomberg.a/lblaw-report-ql-profit- up-nearly-40-from-year-ago-raisesdividend-1.1760920 (cccesed May 20,2022) ‘4. "20194 Top Brands Ranked by Customer Loyaly? Marketing Chars, September 23,2019, psi workmarket- ingcharscomVbrand-related/top-brands-110227 (accessed ‘April 17, 2020) 5. Jamie Ducharme, “Here's How Common the Tide Pod Challenge Really Is? TIME, January 16,2018, iips// time.com/S1O422Sitide-pod-chllenge/ (accessed April 17,2020), 6 Chris Woodyard and Morgan Hines, “Inher tntly High-Risk Setting’: Are Cruise Ships Unsafe—and Will They Change?” USA Today, April 21,2020, https! worw.usatoday.com/story/travel/eruises/2020/04/21/ coronavirus-cruises-cruise-ships-unsafe-can-they- ‘hange/5163461002/ (accessed April29, 2020). 7. Kyle Jahner, “Disneys Rap as Trademark Bully Revive in Baby Yoda Crackdown” Bloomberg Law, Feb- rary 11, 2020, htps://newsbloomberglaw.com/ip-law/ Aisney-baby-yoda-crackdown-on-esy-skims-surface-of- eeperifs (accessed April 17,2020), 8 aNb Media, “Mattel and Epic Announce Addi tional Brand Experiences for Upcoming Mattel Adven- ture Park? aNb Media, Inc. httpsi/wwwanbmedia.com/ ‘news/2022/05/additional-brand-experiences-mattel sadventue-park/ (accessed May 25,2022); Barbie, “The History of Barbie” htps//barbie matte com/en-us! sbout/our-history.html (accessed April 17, 2020); Samantha Melntyre, “The Newest Barbie Fashionistas Doll Keeps Selling Out—But We Tracked It Down” Parenting, February 5, 2020, hitps://www.parent- ing.com/toys/kids/barbie-feshionistas-dll-vitiligo/ (accessed April 17,2020); Maya Salam, “Mattel, Maker of Barbie, Debuts Gender-Neutral Dolls” The New York Times, September 25,2019, htps:/wwrw.aytimes.

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