Designing Marketing Program

to Build Brand Equity

A presentation by:
Varqa Shamsi Bahar
The significance of marketing strategy

Marketing
Strategy

What value
Which customers
(benefit) are we
are we serving?
providing?

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 The significance of marketing mix or the
marketing program.
• The marketing mix are the set of tools which execute
the marketing strategy. In other words, they bring
the marketing strategy to life. They are the tools that
can be utilized to perform the marketing strategy.
• i.e. they are the elements that aid to provide the
superior value (positioning) to the customers (target
customers).
• The marketing mix elements are: product, price,
place and promotion.

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 Why Integrate the elements of the
marketing mix?
• All the 4 elements of the marketing mix have to work TOGETHER
effectively to achieve marketing objectives.
• Marketing objectives are usually defined in terms of specific,
measurable, numeric outcomes such as: sales volume, market
share, profits, or return on investment.
• The marketing objectives are achieved by the whole marketing
program (product, price, place, promotion).
• Example: of magic and how the 4 parameters of the marketing mix
was taken into account. The end result: market share increased by
8% in 4 months. Around 60,000 consumers shifted from non
branded to magic. Even pepsodent’s market share declined.

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 Integrated Marketing program and activities
Note 1: The touch points
TVC
to reach the target market
BTV
focused was crucial.
Trade RDC
Incentive – Betar Note 2: There was
12:1 Focused integration and there was
personalization.

Note 3: All the activities

have the same message so
Cinema effectiveness of the
Wholesale
Hall
Drive campaign was enhanced.
Exposure

Note 4: Unconventional
means to enhance brand
In-Shop Slum
equity.
Poster Activation
Note 5: Without
unconventional means its
is difficult to break into the
Figure: Magic’s integrated marketing programs, 2011
clutter.

Set of tightly focused activities that are meaningful to TG Note 6: Failure to boost
A presentation by Varqa Shamsi Bahar 30gm SKU sales. 6
 Introduction to the chapter

• How do marketing activities in general—and

product, pricing, and distribution strategies in
particular—build brand equity.
• How can marketers integrate these activities to
enhance brand awareness, improve the brand
image, elicit positive brand responses, and
increase brand resonance.

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Presentation Outline
• New Perspectives on Marketing

• Product Strategy to build brand equity.

• Pricing Strategy to build brand equity.

• Distribution strategy to build equity.

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New Perspectives on
Marketing

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Personalizing Marketing

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 Personalizing Marketing

• Personalizing Marketing:
• There is a continuous shift from undifferentiated to
individual marketing.
• Companies are now focusing on each individual
consumer, considering their likings and
preferences, and delivering customer value and
satisfaction better than their competitors.
• Hence, personalizing marketing is a new strategy,
a new game plan to outperform the competitors.
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 The new perspectives

• Personalizing Marketing embraces of three

important parameters:
– Experiential Marketing
– One to One Marketing
– Permission Marketing

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 Experiential Marketing

• Experiential marketing promotes a product

by not only communicating a product’s
features and benefits but also connecting it
with unique and interesting experiences. The
5 senses of humans should be capitalized to
connect the consumers to the brand.
• Hence, brand judgments and brand feelings
are strengthened via experiential marketing.
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 One to One Marketing

• One to one marketing focuses on building and maintaining

profitable customer relationships. In one to one marketing,
the marketer focuses on individual customers and
personalizes products/services for that individual customer.
One marketing mix is designed for each separate consumer.
• Three important factors facilitate one to one marketing:
1. The focus should be on individual customers
2. Information should be collected about the customer’s
likings and preferences
3. Based on that information, products and services are
customized.
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 One to One Marketing

• Important point: In one to one marketing,

customer loyalty is enhanced which enhances
brand resonance.
• Remember: The concept of one to one
marketing is similar to individual marketing and
mass customization.

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 Permission Marketing

• Currently customers are bombarded all the time with so many advertisements
which they don’t have any interest, of which they don’t listen to either. That is
why permission marketing comes into perspective.
• Permission marketing is when a company asks permission from a customer to
inform them about their product or service.
• Example 1: A sales representative from Eastern Bank Limited taking permission
to talk about their service from an officer.
• Example 2: Agora supermarket asking permission whether a customer wants a
membership card
• Hence, the right profitable relationship is built with the right customer. Either
you are creating true friends or butterflies.
• Conclusion: Hence, permission marketing signifies the customer’s willingness to
be involved with the brand. This is turn strengthens customer loyalty & brand
resonance.

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Product Strategy – to build brand
equity

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Product Decisions: three levels of a product

•The core customer value

signifies the core benefit and
the positioning of the brand
(example: removes bad
Core breathe).
customer
value •The actual product level
signifies WHAT IS the actual
Actual product/service which delivers
product the core customer value
(example: toothpowder).
Augmented
product •The augmented product level
signifies the additional
customer services and benefits
(example: after sales service,
warranty).
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 Introduction

• At the heart of every great brand is a great

quality product. Quality is a key parameter to
build a strong brand.
• Designing and delivering a product or service
that fully satisfies consumer needs is a pre-
requisite in brand management.
• For brand loyalty to exist, performance of the
product must at least meet if not surpass
customer’s expectations.
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 Perceived Quality and Customer Value

Significance of perceived quality and customer value

in product strategy.

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 Brand Intangibles

• Marketers used to succeed by providing superior

products and other distinctive functional benefits.
Today this is no longer enough, for such benefits can
readily be imitated.
• E.g. in the automobile industry, quality and
performance parameters are increasingly met.
• This is where the brand comes into perspective: brands
should have duality according to the brand equity
model in order to build a strong brand. In other words,
it should have a functional and an emotional route.
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 Relationship Marketing

• Relationship marketing is based on the premise that

current customers are the key to long term brand
success.
– An average company loses 10% of its customers every
year.
– A 5% reduction in the customer defection rate can
increase profits by 25% - 80%.
• Three important relationship marketing issues: Mass
customization, AfterMarketing, loyalty programs.

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 Mass Customization

• Mass Customization addresses the need for individuality on a “mass” scale. It

is when a company designs a marketing mix for each individual customer.
• E.g. Dell’s built to order computers sold directly over the internet or
telephone to the consumers.

• E.g. NIKEiD website, visitors can make customized shoes according to their
color liking, size even give a personal message also!

• E.g. Ecards for birthdays is also customized.

• Positive sides: minimum inventory, maximize sales.

• Challenges: Sophisticated production line, high investment, high risk.

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 Loyalty Programs

• Loyalty program is an INCENTIVE PROGRAM engaging the

customer with a program. Once the customer engages into
the program, he/she will continuously do repeat purchases for
a long time. Hence, customer loyalty is increased.
• The purpose is “identifying, maintaining, and increasing the
yield from the firm’s best customers through long term,
interactive, value added relationships.
• E.g. Subway – My Subcard, Nandos loyalty card, Tesco
Clubcard, American Airline’s A advantage.
• Consumer’s don’t tend to switch, retention is increased,
purchasing share belongs to the brand.
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 AfterMarketing

• Once the customer has purchased a brand,

Aftermarketing process starts. Aftermarketing
are all the marketing activities to build long
lasting relationships with the customer so that
the customers buy your brand again and again
in the future. Hence, customer lifetime value is
enhanced by strengthening attitudinal and
behavioral loyalty.

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 AfterMarketing activities continued

• Aftermarketing can also include the sale of

complementary products: e.g. gillette blade
cartridges, HP injet cartridges for printers.

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Lexus After Marketing Case Study

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Pricing Strategy – to build brand equity

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 Introduction to pricing

• Price is the only revenue generating element of

the traditional marketing mix. All the other
elements make the company incur costs.
• Price premiums are among the most important
brand equity benefits of building a strong
brand.
• A positive co-relation exists between perceived
quality and price as well.

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Philip Van Heusen covers a wide range of prices at different retail outlets. And
interestingly, at different retail outlets different branded clothing lines are sold.
Discussion: Why different brands are created/launched for different retail stores?
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 Value Based Pricing Strategy

• The objective of value based pricing strategy is to

uncover the right blend of product quality, product
cost, and product prices that fully satisfies the needs
and wants of the consumer and profitability of the
firm.
• Hence, value based pricing strategy makes sure that
– consumers get a good quality product to satisfy their needs
which they can afford (consumer’s perspective).
– company makes profit (company’s perspective)
• Therefore it’s a win-win situation.
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 How to set a value based pricing strategy?

• An effective value pricing strategy should strike

the proper balance among the following:
1. Product design and delivery
2. Product cost
3. Product prices
• The right kind of product has to be made the
right way and sold at the right price.

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 How to set a value based pricing strategy?

1. Product design and delivery:

• Product design means the creation of a product. i.e. companies
understand needs of the consumers and in turn design (create) a product
to satisfy their needs. Simple rule “make sure that the product/service
has quality which is better than the competitors”.
2. Product Cost:
• Lower costs as much as possible: via outsourcing, material substitution
(less expensive/less wasteful materials), process changes like
automation.
• Its something the local companies are suffering at. Their product cost is
very high, gross profit is less that 20%. E.g. of laundry bar.
• MNC’s are doing good because of better supply chain management, and
effective product cost management.
• Caution: Cost reduction should NEVER sacrifice quality.
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 How to set a value based pricing strategy?

3. Product prices: Understand exactly how much value

consumers perceive in the brand and thus to what
extend they will pay a premium over product cost.
Talk to consumers. In order words, value pricing
should be consumer driven.

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 Cost Based Pricing
 Double Edge Blade cost based pricing Per Unit Cost
Item (in Tk)
Direct Materials Steel 0.4582
Direct Materials Packing 0.1687
Direct Labour 0.0800
Spare Parts & Chemicals 0.0740
Factory Overhead  
Depreciation  
Total Manufacturing Cost 0.7809
VAT 0.2000
Total Marketing Cost 0.1000
Total Admin/Finance/General 0.1000
Total Cost 1.1800
   
   
Selling Price 1.5000

•Cost based pricing only looks at how much it costs (COGS) to make a product or
service. And then a selling price is set.
•It however does not take into consideration the “consumer’s perspective”. Are
consumers ready to pay that money to buy the product/service?
•It does not even take into consideration the “competitor’s pricing” in terms of
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 Competition Based Pricing
• Competition based pricing is a pricing strategy based
on what all other competitors are doing. The price
can be set at, above, or below competitor’s price.
• Example of what LUX did to its competitors.

• Price of Competitors product is important: How Harpic

increased its price 3 times in a span of 3 months just
to make sure it is priced higher that the rest of the
competitors – Vanish, CleanMaster, and Shakti.
• Price of Magic against Pepsodent (to protect the
perception of quality).
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 Every Day Low Pricing Strategy (EDLP)

• EDLP pricing strategy signifies providing

moderately good quality products and charging
a constant everyday low price with few or no
price discounts.
• Case study discussion on Big Bazaar – Sabse
Sasta Din (Lowest cost day).

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 Discussion about discount policies
•Trade promotions, trade discounts make the retailers have a bad habit. This is because
they will want to purchase a product from you mostly when you are giving them an
incentive.

•Even the sales force become too dependent on discounts to achieve sales targets.

•During promotional period, factory capacity is at the fullest …but then production
suddenly falls down once the discount period is over…e.g. of Magic.

•When too much discounts are given, it might have an adverse effect on the “value” of the
brand and might diminish brand equity (only will create behavioral loyalty and not
attitudinal loyalty).

•It trains customers also to wait and wait for the time when a discount is there…thus
eroding its perceived value e.g BATA sale.

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Channel Strategy – to build brand
equity

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 Introduction to Channel Strategy

• The manner by which a product is sold or

distributed can have an impact on brand equity.
• Marketing channels are sets of independent
organizations involved in the process of making
a product or service available for use or
consumption.

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 Channel Design

• A number of possible channel types and arrangements exist, broadly

classified into direct and indirect channels.
• Direct Channels: means selling through personal contacts from the
company to prospective customers through email, phones, in person visits
and so on. Hence, no third party marketing intermediaries are utilized to
sell the product to the customer.
• Indirect Channels: selling through third party intermediaries such as
wholesalers and retailers.
• Winning channel strategies are the ones that integrate both direct and
indirect channels. E.g. physical stores, internet, telephone, other retailers.
• Example 2: Square’s sales department has a direct channel wing
(organizational sales) and an indirect channel wing (through
retailers/wholesellers).
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 Conventional Marketing Channel Vs. a Vertical
Marketing System
Conventional Marketing Vertical Marketing System
Channel
Manufacturer
Manufacturer
Manufacturer

Wholesaler
Wholesaler
Wholesaler
Retailer
Retailer
Retailer

Consumer Consumer

CMC: each is a separate business seeking to maximize its own profits.

VMS: act as a unified system. Ownership of the whole channel.

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 Indirect Channels

• There is a greater competition of shelf space, so

retailers have greater power. E.g. Unilever shelf
hiring program.
• When it’s a new brand, in supermarkets they
postpone bills and want to buy products only in
credit.
• Hence manufacturers are vulnerable to retailer’s
actions and the best way is tackle this is to
create strong brands.
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 Indirect Channel – link to brand equity

1. Retailers have the most direct contact with

consumers and so have the greatest opportunity to
influence brand equity by spreading +ve/-ve WOM
about brands. Hence, they can influence the
perception of quality in the minds of the consumers.
2. Retailers have their own equity …”this store sells
good quality products, so the brands it sells must be
good/high value”. Hence, a brand can leverage the
image of a retailer to enhance it’s own brand image.

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 Direct Channel – link to brand equity.

• “If you control your factory, you control your

quality….if you control your distribution, you
control your image”
• E.g. Company owned stores (Bata)
• It enhances brand equity by presenting the full
scope of the brand’s product range, educating
them on the value, quality and benefit.

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 Pull and Push strategies

• Pull strategies: Create that demand from the

consumer’s end. Retailers are then bound to buy
your brand to fulfill the demand of the consumers.
This is pursued to an IMC campaign.
• Push Strategies: incentives for channel members to
stock/shelve the product and sell to the consumer.
• Most successful program blends push and pull
strategies together.

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