..5.3• How do marketing activities in general—andproduct, pricing, and distribution strategies inparticular—build brand equity?• How can marketers integrate these activitiesto enhance brand awareness, improve thebrand image, elicit positive brand responses,and increase brand resonance?
..The four major drivers of this new economy are:1. Digitalization and connectivity(internet, intranet, mobile devices)2. Disintermediation and reintermediation(middlemen)3. Customization and customerization( tailored products and ingredients provided to customers to make their ownproducts)4. Industry convergence(blurring of industry boundaries)
..Customers: - Have more power- Have a large variety of available goods andservices- Can obtain more information- Can easily interact with marketers in placingand receiving orders- Can interact with other consumers andcompare notesCompanies: - Can collect fuller and richer informationabout markets, customers, competition- Better communication technologies andtransaction efficiency- Can use the internet and e-mail to sendpromotional messages to customers- Can customize their offerings to individualcustomers
..5.7Implications for the Practice of BrandManagement• They have a number of implications for thepractice of brand management. Marketers areincreasingly abandoning the mass-marketstrategies that built brand powerhouses in the1950s, 1960s, and 1970s to implement newapproaches.• Even marketers in staid, traditional industriesare rethinking their practices and not doingbusiness as usual.
.. There is a move away from mass-market strategies• The 21st century has forced marketers to change howthey develop their marketing programs.• Integration and Personalization are crucial factorsin building and maintaining strong brands
..• Expression of individuality• Consumer desire for personalizationExperiential Marketing; One-to-One Marketing; Permission Marketing“The idea is not to sell something, but to demonstrate how a brandcan enrich a customer’s life”Experiential marketing connects a product to unique and interesting experiences
..Consumers ----------------------------Marketers---------------------------------ConsumersINFORMATIONGENERATEEXPERIENCESThe Fundamental Strategies of One-to-One Marketing:- Focus on individual consumers through consumer databases- Respond to consumer dialogue via interactivity- Customize products and servicesMarketing to consumers only after gaining their express permission“anticipated, personal and relevant” - Godin
..“At the heart of a great brand is invariably a greatproduct”• How do consumers form their opinions of the quality and valueof a product?• How can marketers use the relationship marketing perspectivein formulating product strategy and offerings?
..Dimensions of Quality:• Performance• Features• Conformance Quality• Reliability• Durability• Serviceability• Style and DesignBrand Intangiblesspeed, accuracy, delivery and installation, courtesy, helpfulness ofcustomer service and training
..1. Functional benefits: Product and performance attributes2. Process benefits: ease of access to product information; broadproduct selection; convenient transactions3. Relationship benefits: personalized service; strong emotionalrelevance; loyalty rewards(McKinsey)“By improving the fuller customer experience, companiescan keep consumers happier and hold on to them longer”
..quality perceptions + cost perceptions = assessment of valueopportunity costs of time, energy and psychological involvement in the decisionThe firm is a collection of activities that are performed todesign, produce, market, deliver and support productsFirms can achieve competitive advantages byimproving performance and reducing costs inany or all of the value creating activities
..current customers are the key to long term brand success- Mass Customization- Aftermarketing- Loyalty ProgramsCustomization addresses the need for individualityNIKEiDTo achieve the desired brand image, product strategies should focus onboth purchase and consumptionActivities that occur after customer purchase (User Manuals, Complimentary Products)Loyalty programs offer different mixtures of services, newsletters, premiums and incentives for afirm’s “best” customerCo-branding arrangements: Discovery – Ster-kinekor, Kulula, Pick ‘n Pay
.. Revenue generating element from of the mix Its belongs in the performance CBBE model( Chapter 2 ) Consumers willing to pay price premiums , when there is aperceived added value = Stronger brands Aspects of pricing Strategy :1. Price perceptions2. Setting prices
..• Consumers rank brand according to prices• Price Bands = range of acceptable prices• price – product meaning- value and quality they received• perception of value received < cost to the company
..PricingStrategyNeeds and wants ofconsumersCosts of producing the product Relative prices ofcompetitionProfit margin of thecompanyGreater emphasis on theend consumerValue strategiesEveryday low pricing EDLPstrategiesSell the right product and theright price- to better meetconsumer needs
..1. Asses what value the customer places on your brand2. Look for variation in assessing customers value3. Asses customers price sensitivity4. Identify an optimal pricing structure5. Consider competitors reactions6. Monitor prices at a transaction level7. Asses customer emotional response8. Analyse if the returns are worth the cost
.. Value pricingProductdesign anddeliveryProduct costsProductpricesInnovations , improvements , and convenienceOutsourcing , material substitution , technology,product reformulation , factory improvement .Cost reductions can’t sacrifice qualityUnderstand what consumers are willing to pay, ifthere are premiums and then adjust it for cost andcompetition
..Everyday low pricing EDLP)Discount andpromotions over timeBuilds brand loyalty andawarenessIncentives toconsumers to buyEveryday base pricesConsistent low prices on major itemswill bring consumers back to buy- Forward buying versus diverting
.. Marketing channels =“ a set of interdependent organizationsinvolved in the process of making a product / service availablefor use “ This involves designing a channel and managingintermediaries. Channel design :1. Indirect - sell through third party intermediaries2. Direct – sell through personal contacts Try develop : “integrated shopping experiences “
.. DIRECT Product info is high Customisation Quality assurance is important Lot size is important Logistics are importantINDIRECT Broad assortment is essential Availability is critical After sales service is important-Hybrid approach = combing the both , must be careful not tohave too many not too little- The goal is to maximize channel coverage and effectivenesswhile minimizing cost and conflict
..Example: Nike (sell its shoes, apparel, and equipment product)• Retail: Nike products are sold in retail locations such as shoestores, sporting goods stores, department stores, and clothingstores.• Branded Nike Town Stores: Nike Town Stores, located in primeshopping avenues in metropolitan centers .• Niketown.com: Nike’s e-commerce site allows consumers toplace internet orders for a range of products.• Catalog retailers: Nike’s product appear in numerous shoe,sporting goods, and clothing catalogs.• Outlet Stores: outlet stores feature discounted Nikemerchandise.• Specialty stores: Nike equipment from product lines such asNike Golf, Nike Hockey.
..- It concentrates on retailers even though there are many otherintermediaries- Retailers have the most contact to customers – affect brand equity- The image of the product and the image of the retailer is importantto consider as customers tend to form associations.- Consider : 1. Push and pull strategies2. Channel support- Retail segmentation- Cooperative advertising
.. 1. Push and pull strategiesRetailers have power over manufactures and directly affect brand equity.- Demand lucrative and frequent trade promotions- Compensation to stock a new brand- Cash payments for shelf space (slotting allowances)- Introductory deals (“ one free with three”)- Postponed billing- Advertising or promotion to supports a new brandManufactures can overcome this power by creating unique products theconsumer demandsDevoting marketing efforts to the end consumer = PULL STRATEGY( broaddistribution)Devoting marketing efforts to the channel members , offering them incentivesto buy the brand = PUSH STRATEGY( selective distribution)
..2. Channel supportServices provided by channel members may help enhance the value to consumers andthe brand. Establish “ Marketing partnership with retailers is critical to ensurechannel support ( FIGURE 5-7)Two channel support strategies are :1. Retail segmentation – segmenting the retailers according to similar characteristics , asdifferent retailers might need different product mixes , special delivery systems,customised promotions or even there own branded version of the product( Brandedvariants)2. Cooperative advertising- manufacturer pays for a portion of the advertising to promotethe product and the availability at the retailer. Ideal situation would be to achieve synergybetween the manufacturers own ad campaigns and the corresponding co-op ad campaignwith the retailer . Must be balance between pushing the brand and advertising the retailer
..Manufacturers who sell directly to the public1. Company owned stores – by means to showcase the brandand all its products. Helps build stronger relationships with it’scustomers. This may cause competition with the retailers.2. Other means - create there own shops within a department store ;sell through phone , mail or electronic means ( Catalogue)3. Web strategies – online retail channel