STRATEGIC ROLE of Brands

FOR BUYERS, brands can:

•Reduce CUSTOMER SEARCH COSTS by

identifying products quickly and accurately

• Reduce the BUYER’S PERCEIVED RISK by

providing an assurance of quality and
consistency

• Reduce the SOCIAL AND PSYCHOLOGICAL

RISKS associated with owning and using
the “wrong” product by providing
psychological rewards for purchasing
brands that symbolize status and
prestige.
 STRATEGIC ROLE of Brands
FOR SELLERS,
brands can facilitate: •REPEAT PURCHASES that enhance the company’s financial
performance because the brand enables the customer to identify and
re-identify the product compared to alternatives,

• the INTRODUCTION OF NEW PRODUCTS, because the customer is

familiar with the brand from previous buying experience,

• PREMIUM PRICING by creating a basic level of differentiation

compared to competitors,

• MARKET SEGMENTATION by communicating a coherent message to

the target audience, telling them for whom the brand is intended and
for whom it is not,

• BRAND LOYALTY, of particular importance in product categories

where loyal buying is an important feature of buying behavior.
Strategies for Improving Product Performance

Product Alter
improvement marketing
Cost strategy
reduction

Add Eliminate
new Product line specific
product(s) Strategy product(s)
Illustrative Pricing Strategies
High Active Strategy: Role of Price

 Emphasize a high price in promotional Active Passive

activities to convey buyer for superior
& expensive brand value
High Active Strategy High Passive Strategy
 Used on a very limited basis to

High
symbolically position products .
 Less subject to retaliation by
competitors if differentiated properly .

Low
Low Active Strategy Low Passive Strategy
High Passive Strategy:
 Essential to gain the margins
necessary to serve small target
markets & Produce high quality
products
 Marketed by featuring non-price
factors rather than using high active
strategies.
Illustrative Pricing Strategies (Cont’d)

Role of Price
Low Active Strategy:
Active Passive
 Appropriate when competition for a market

High
is not heavy . High Active High Passive
Strategy Strategy
 Used When price is important factor for a
large segment of buyers .
 More Attractive option when a company

Low
Low Active Low Passive
has cost advantages & Strong position in Strategy Strategy
product market .

Low Passive Strategy:

 Used by small producers whose brands
are not familiar .
 Marketed by featuring price factors
through conventional distribution
channel .
Legal & Ethical Consideration

Price Fixing :

 When two or more competitors plot to explicitly

or implicitly set prices is called horizontal Price
Fixing
 Controlling agreements between independent
buyers and sellers whereby sellers are required
to not sell below a pre -fixed price. .

Deceptive Pricing :
This occurs when a firm offers a very low price on a
product to attract customers on a store , but once
in a store , sellers -
 Degrading the promoted item
 Not having the promised item in the stock
Legal & Ethical Consideration (Cont’d)

Price Discrimination :

 The practice of charging different prices

to different buyers for goods of same
grade & quality .
 Not all illegal only those which create
monopoly.

Predatory Pricing :
 Charging a very low price for a
product with the intent of driving
competitors out of business
 Once have been driven out , the
firm raised its price .
E-Commerce Marketing Practices – Overview
• E-business:
• electronic means & platforms to do business

• E-commerce:
• transact/facilitate selling of offerings online

• E-purchasing: firms purchase offerings online

• E-marketing: market offerings online

• Pure-click firms: website, no past existence

• Brick-and-click firms: current firms + website

Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Affordable budget
method sets the
budget at an
affordable level
• Ignores the effects
of promotion on
sales
Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Percentage of salesmethod sets the budget at a

certain percentage of current or forecasted
sales or unit sales price
• Easy to use and helps management think
about the relationship between promotion,
selling price, and profit per unit
• Wrongly views sales as the cause rather than
the result of promotion
Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Competitive-parity method sets the budget to match competitor

outlays
• Represents industry standards
• Avoids promotion wars
Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Objective-and-task method forces management to spell out

its assumption about the relationship between outlays
and results but is difficult to use.

Objective-and-task method sets the budget based on what

the firm wants to accomplish with promotion and
includes:
• Defining promotion objectives
• Determining tasks to achieve the objectives
• Estimating costs