Brand Positioning
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Brand Positioning Brand Positioning Document Transcript

  • Brand Positioning – Attributes February 1, 2005 Cola Wars: Pepsi versus Coca Cola 1. What attributes and benefits do soft-drinks offer? Which are physical and which are psychological? Which are "essential" and which are consumers willing to be flexible on? 2. Why did people react so strongly when New Coke was introduced? 3. Comment on the design of the New Coke study – what would you have changed? Case Discussion 1
  • STRATEGIC MARKET MARKET BRAND QUESTIONS DEFINITION SEGMENTATION POSITIONING What geographic area e.g., domestic US will we operate in? What timeframe have e.g., calendar 2003, 4 we in mind? Brand with attributes What will we offer? Some version of product responsive to DCCg category X Identify kinds of To whom will we offer Define prospects demand-creating condition Prospects who experience it? e.g., people who buy/use (DCCa - n); DCCg, i.e., targets product category X or Assess state of want- engage in corresponding satisfaction for each kind; activity Y. Order DCC with a view to Specific price (e.g., $1.79) roi and choosing DCCx to What price will we State broad price band target charge? (e.g., discount, premium) How will we let them State tentative ideas for Media vehicles, know about our media type Attentional strategy, offering? Brand claims How/where will we State tentative ideas for Specific exchange venues engage in exchange exchange venue type with them? Whom will we compete State competitors implicated Competitors with? by choices on other Implicated by DCCg dimensions Conceptualizing User Wants Personal Systems Brands As Perceived (Brand Beliefs); Motivating Desired Brand Action, Conditions Attributes Consideration Including Set; Brand Use Brand Environmental Preference Systems Ordering Ex-Ante Analysis Ex-Post Analysis Theory 2
  • How to Learn What Customers Want? Ask Direct Questions about preference: What brand do you prefer? What Interest Rate would you like? What Annual Fee would you like? What Credit Limit would you like? Answers often trivial and unenlightening (e.g. respondents prefer low fees to high fees, higher credit limits to low credit limits) Conjoint Overview Introduction Analysis for Brand Positioning Conjoint analysis is a regression based technique where: – you measure consumers’ preferences, – by confronting them with different product profiles that contain tradeoffs and – letting them rate their relative preferences. Dependent variable: Relative Preference Statements Independent variables: Attributes Conjoint Analysis 3
  • Basic Assumption Product is a bundle of attributes who importance is driven by customer needs. – Should we offer our business travelers more room space or a fax machine in their room? – Should we offer more leisure-time activities (sauna, exercise room, tennis courts) or more food related services (several dining options, vending machines, in-room kitchen facilities)? – Should we use a steel or aluminium casing to increase customer preference for our new extrusion equipment? Conjoint Analysis Outboard Engine Attributes Brand Name Durability Evinrude, Force, Vibration and Noise Johnson, Mariner, Mercury, Yamaha Acceleration Price Speed Fuel Economy Emissions Reliability Technology Conjoint Analysis 4
  • Credit Card Attributes Bank Annual Fee current, local, out-of- $50, $25, $0 state Rebates Interest Rates 1%, .5%, none 8%, 7%, 6% , variable Credit Line Reward Programs $2000, $5000 free checking, greater Grace Period interest on savings 45 days, none Conjoint Analysis Mathematical Representation y = x1β1 + x2β2 + x3β3 + ... + ε or y = Xβ + ε where y = the overall value of the product X = product attributes β = the value placed on the attributes Conjoint Analysis 5
  • How Does Conjoint Analysis Work? We vary the product features (independent variables) to build many (usually 12 or more) product concepts We ask respondents to rate/rank those product concepts (dependent variable) Based on the respondents’ evaluations of the product concepts, we figure out how much unique value (utility) each of the features added (Regress dependent variable on independent variables; betas equal part worth utilities.) Conjoint Overview Conjoint Analysis First Step: Create Attribute List Attributes assumed to be independent (Brand, Speed, Color, Price, etc.) Each attribute has varying degrees, or “levels” Brand: Coke, Pepsi, Sprite Speed: 5 pages per minute, 10 pages per minute Color: Red, Blue, Green, Black Each level is assumed to be mutually exclusive of the others (a product has one and only one level level of that attribute) Conjoint Attributes 6
  • Rules for Formulating Attribute Levels Levels are assumed to be mutually exclusive Attribute: Add-on features level 1: Sunroof level 2: GPS System level 3: Video Screen If define levels in this way, you cannot determine the value of providing two or three of these features at the same time Conjoint Attributes Traditional Conjoint: Full Profile Analysis Using a 100-pt scale where 0 means definitely would NOT and 100 means definitely WOULD… How likely are you to purchase… 1997 Honda Accord Automatic transmission No antilock brakes Driver and passenger airbag Blue exterior/Black interior $18,900 Your Answer:___________ Traditional Conjoint 7
  • Strengths of Traditional Conjoint • Good for both product design and pricing issues • Can be administered on paper, computer/internet • Shows products in full-profile, which many argue mimics real-world • Can be used even with small sample sizes Traditional Conjoint Credit Card Attributes Brand MasterCard, Visa, Discover Interest Rate 18%, 15%, 12% Annual Fee None, $10, $20 Credit Limit $1000, $2500, $5000 Conjoint Data 8
  • How much do you like this credit card offering? 0 = Terrible, 10 = Excellent MasterCard 18% interest No annual fee $1000 credit limit Score= ___________ (1) Conjoint Data How much do you like this credit card offering? 0 = Terrible, 10 = Excellent MasterCard 12% interest $20 annual fee $5000 credit limit Score= ___________ (2) Conjoint Data 9
  • How much do you like this credit card offering? 0 = Terrible, 10 = Excellent Visa 18% interest $10 annual fee $5000 credit limit Score= ___________ (3) Conjoint Data How much do you like this credit card offering? 0 = Terrible, 10 = Excellent Discover 18% interest $20 annual fee $2500 credit limit Score= ___________ (4) Conjoint Data 10
  • How much do you like this credit card offering? 0 = Terrible, 10 = Excellent Discover 12% interest $10 annual fee $1000 credit limit Score= ___________ (5) Conjoint Data How much do you like this credit card offering? 0 = Terrible, 10 = Excellent Discover 15% interest No annual fee $5000 credit limit Score= ___________ (6) Conjoint Data 11
  • How much do you like this credit card offering? 0 = Terrible, 10 = Excellent Visa 12% interest No annual fee $2500 credit limit Score= ___________ (7) Conjoint Data How much do you like this credit card offering? 0 = Terrible, 10 = Excellent MasterCard 15% interest $10 annual fee $2500 credit limit Score= ___________ (8) Conjoint Data 12
  • How much do you like this credit card offering? 0 = Terrible, 10 = Excellent Visa 15% interest $20 annual fee $1000 credit limit Score= ___________ (9) Conjoint Data Part-Worths of Attribute-Levels Some product attributes are “defining” All credit cards have a brand name, interest rate and credit limit. Not possible to estimate importance of a defining attribute, only importance of changes in the attribute- levels (e.g., 12% vs. 15% interest rate). Other product attributes are “optional” Apartments need not have balconies, so a natural zero “0” can occur for the attribute. Implication: One level of each attribute is not estimable Conjoint Data 13
  • Conjoint Data Question Rating Visa Discover 15% 12% $10 $20 $2,500 $5,000 1 0 0 0 0 0 0 0 0 2 0 0 0 1 0 1 0 1 3 1 0 0 0 1 0 0 1 4 0 1 0 0 0 1 1 0 5 0 1 0 1 1 0 0 0 6 0 1 1 0 0 0 0 1 7 1 0 0 1 0 0 1 0 8 0 0 1 0 1 0 1 0 9 1 0 1 0 0 1 0 0 Default Card: MasterCard; 18% interest; No annual fee; $1000 credit limit. All importances (part-worths) measured relative to these levels. Conjoint Data My Ratings Question Rating Visa Discover 15% 12% $10 $20 $2,500 $5,000 1 4 0 0 0 0 0 0 0 0 2 7 0 0 0 1 0 1 0 1 3 8 1 0 0 0 1 0 0 1 4 5 0 1 0 0 0 1 1 0 5 4 0 1 0 1 1 0 0 0 6 8 0 1 1 0 0 0 0 1 7 9 1 0 0 1 0 0 1 0 8 6 0 0 1 0 1 0 1 0 9 6 1 0 1 0 0 1 0 0 Default Card: MasterCard; 18% interest; No annual fee; $1000 credit limit. All importances (part-worths) measured relative to these levels. Conjoint Data 14
  • Multiple Regression y = β0 + β1x1+ … + βkxk + ε βi = the expected change in the dependent variable (y) for a unit change in xi, holding fixed the other independent variables (x’s). Allows for statistical adjustments and couter- factual analysis. Provides a measure of the effect of xj relative to xk. Regression Analysis Regression Results Rating = 4.00 + 2.00 Visa + 0.00 Discover +1.00 15% + 1.00 12% - 1.00 $10 - 1.00 $20 + 2.00 $2,500 + 3.00 $5,000 Default Card: MasterCard; 18% interest; No annual fee; $1000 credit limit. All importances (part-worths) measured relative to these levels. Part-Worth Analysis 15
  • Analysis of Part-Worths Brand Name: MasterCard = 0 Visa = 2 Discover = 0 Implication: MasterCard and Discover valued equally. Visa valued more. Part-Worth Analysis Analysis of Part-Worths Interest Rate: 18% = 0 15% = 1 12% = 1 Implication: Consumers are indifferent to a 15% or 12% rate, but both are preferred to an 18% rate. Part-Worth Analysis 16
  • Analysis of Part-Worths Annual Fee: None = 0 $10 = -1 $20 = -1 Implication: Consumers are indifferent to a $10 or $20 annual fee, but prefer no annual fee to either amount. Part-Worth Analysis Analysis of Part-Worths Credit Limit: $1000 = 0 $2500 = 2 $5000 = 3 Implication: Consumers prefer a $5000 to either a $2500 or $1000 limited. The change from $1000 to $2500 is twice as important as the chance from $2500 to $5000. Part-Worth Analysis 17
  • Analysis Across Attributes Brand Name: Interest Rate: Annual Fee: Credit Limit: MasterCard = 0 18% = 0 None = 0 $1000 = 0 Visa = 2 15% = 1 $10 = -1 $2500 = 2 Discover = 0 12% = 1 $20 = -1 $5000 = 3 Value of Visa vs. MasterCard = Value of $2500 vs. $1000 Credit Limit Value of 15% vs. 18% Interest = Value of $0 vs. $10 Annual Fee Value of $5000 vs. $2500 Credit Limit = Value of 15 vs. 18% Interest Part-Worth Analysis Attributes Play Two Roles Desired attributes are the basis of consideration set formation and preference orderings. Market Defining Attributes that form consideration sets are market defining – without them there is no hope of attracting a prospect. Brand Positioning Other attributes play a role in brand positioning – consumers are willing to tradeoff one attribute level for another. Theory 18
  • Screening Rules “A Choice Model with Conjunctive, Disjunctive, and Compensatory Screening Rules” Conjunctive rule: alternative must be acceptable on all attributes. Disjunctive rule: alternative must be acceptable on a least one attribute. Compensatory rule: really good attributes can make up for really bad attributes. Challenge Paper A partial listing of offerings and features of digital cameras from Nov. 2002 Consumer Reports A selection of tested products (Within types, in performance order) Brand & model 3- TO 5-MEGAPIXEL CAMERAS Sony DSC-F707 MS 5x · · · · Canon PowerShot G2 CF 3x · · · · Olympus Camedia C-3040 Zoom SM 3x · · · Olympus Camedia D-40 Zoom SM 2.8x · · Fujifilm FinePix F601 Z SM 3x · · · Sony Cyber-shot DSC-S75 MS 3x · · · · HP PhotoSmart 812 SD 3x · Kodak EasyShare DX4900 CF 2x · Olympus Camedia E-10 CF, SM 4x · · · Canon PowerShot S40 CF 3x · · Casio QV-4000 CF 3x · · · · Kyocera Finecam S4 SD 3x · · · Panasonic Lumix DMC-LC5 SD 3x · · · · Sony Cyber-shot DSC-P71 MS 3x · · · Sony CD Mavica MVC-CD400 CD-R/RW 3x · · · Minolta Dimage S404 CF 4x · · Toshiba PDR-3310 SD 3x · · · Kyocera Finecam S3 SD 2x · · · Challenge Paper Source: http://www.consumerreports.org/main/detailv2.jsp?CONTENT%3C%3Ecnt_id=163145&FOLDER%3C%3Efolder_id=162691&bmUID=1034956296813 19
  • Empirical Application Alternatives are described on 8 attributes Attribute Levels Attribute Levels Basic body style Low Zoom None and standard Medium 2x features High 4x Mid-Roll None Viewfinder Regular Change* Manual Large Automatic Camera Settings None Annotation* None Feedback LCD Pre-Set Viewfinder Customized List Both Custom List 1 Price $41 - $499 Custom List 2 Custom List 3 *Attributes unique to APS cameras at Camera Operation No the time of the study Feedback* Yes Challenge Paper Alternative Approach Traditional choice model: Pr(i) = Pr(xi’β + εi > xk’β + εk for all k) Proposed choice model: Pr(i) = Pr(xi’β + εi > xk’β + εk for all k such that I(xk,γ) = 1) Threshold levels Challenge Paper 20
  • Empirical Application – Conjunctive Model Proportion Screening on Each Attribute 45% 40% 41% 40% 35% 30% 25% 22% 19% 20% 15% 10% 8% 6% 5% 4% 4% 4% 4% 5% 0% om e* * * * * * r e s e de n1 n2 n3 n4 ck ng yl ic ng St Pr ba Zo fin tio tio tio tio tti ha Se dy ew ed ta ta ta ta C no no no no Bo Fe Vi l ol An An An An p. -R O id M *Attributes unique to APS offerings at time of study. Challenge Paper Empirical Application – Conjunctive Model Distribution of Price Threshold 70% 59% 60% 50% 41% 40% 30% 30% 20% 20% 10% 10% 0% <$276 <$356 <$425 <$499 >$499 • Respondents who “almost always” take their camera when attending “social gatherings away from” home have higher price thresholds. Challenge Paper 21
  • Empirical Application Findings • Conjunctive model fits data best • 92% of respondents are forming consideration sets • Results show which attributes, which levels, and who is screening • Respondents tend to screen alternatives using familiar attributes • After controlling for the their effect in forming consideration sets, screening attributes are “less important” than indicated by the standard choice model Challenge Paper Market Simulations Make competitive market scenarios and predict which products respondents would choose Accumulate (aggregate) respondent predictions to make “Shares of Preference” (some refer to them as “market shares”) Market Simulators 22
  • Which Color is Preferred? Consider the following utilities: Blue Red Yellow Respondent #1 50 40 10 Respondent #2 0 65 75 Respondent #3 40 30 20 ---- ---- ---- Average: 30 45 35 Red has the highest average preference But, does any one respondent prefer red? Market Simulators Which Color is Chosen? Assume each respondent “chooses” preferred color: Blue Red Yellow Choice Respondent #1 50 40 10 Blue Respondent #2 0 65 75 Yellow Respondent #3 40 30 20 Blue ---- ---- ---- Average: 30 45 35 Blue “chosen” twice, Yellow once Market Simulators 23
  • Why Conduct Market Simulations? • Simulations better reflect real-world behavior – Represent idiosyncratic preferences of segments and individuals (remember, you don’t have to appeal to the “fat” part of the market to carve out a profitable business) • A “choice laboratory” for testing multitude of real- world possibilities • Results expressed in terms that make sense to management and are actionable Market Simulators 24