Maximizing Customer Equity Through Narrow Brand Focus
1. Customer Equity and Brand Equity
NAME -SUMIT KUMAR DHANWAR
CLASS – M.COM 2ND
SEMESTER
ADMISSION NO. – 52234
SUBJECT – MARKETING
SUBMITTED TO -: JATIN ANAND SIR
2. What is CE & BE?
• Customer equity - the sum of the lifetime
values(LTV) of all the firm’s customers, across
all the firm’s brands.
• Brand equity - the sum of customers’
assessments of a brand’s intangible qualities,
positive or negative.
Note: LTV is the projected revenue that a customer will generate during their lifetime.
3.
4.
5. What Managers Talk & Act?
• How ? Maximize customer lifetime value?
• Focus? Managing customer relationship as
finite universe of buyers are out there.
• Talk? Customer, Customer & Customer
• Act ? Its all about the Brand
7. Brand Management
• Brand management still trumps customer management in most
large companies.
EXAMPLE
• Ad Age article by Jack Neff ( June 30th 2014) – “It's the End of
'Marketing' As We Know It at Procter & Gamble”.
• Organization re-design - P&G announced in February, in which the
marketing organization becomes "Brand Management" with
"single-point responsibility for the strategies, plans and results for
the brands“.
• Hundreds of marketing directors and associate marketing directors
at the world's biggest advertising spender will officially become
brand directors and associate brand directors.
8. OLDSMOBILE
Tragedy…
• 1980s - enjoyed outstanding brand equity.
• 1988 - ad campaign featuring the slogan,
“This is not your father’s Oldsmobile”.
• 1990 - ad campaign featuring the slogan “A
New Generation of Olds.”
• By 2000, Oldsmobile’s market share had
sputtered to 1.6%, from 6.9% in 1985.
• And in December 2000, General Motors
announced that the Oldsmobile brand would
be phased out.
• Question?
• Why did General Motors spend so many years
and so much money trying to reposition and
refurbish such a tired image?
• It’s because, in large consumer-goods
companies like General Motors, brands are the
raison d’être.
• Absolute focus is on brands not on customers.
9. How to avoid such problems?
• Reinvention of Brand Management.. Change the
thinking style of management
• Larger goal…..Growing Customer Equity
10. It’s OK, I’m with the
Brand
• George Clinton- songwriter and performer.
Known as one of the founders of funk
music.
• In the 1970s he sought the attention of two
different segments of record buyers—
mainstream listeners, who liked vocal soul
music with horns, and progressive listeners,
who liked harder-edged funk.
• Clinton knew that his band was
accomplished enough to play both kinds of
music, but he realized that alternating
between the styles would muddy the band’s
image and serve neither audience well.
• The same group of musicians, essentially,
recorded and performed under two
different band names: Parliament, when the
music was aimed at popular tastes, and
Funkadelic, when it was edgier.
• His branding reflected his customers’
identities instead of his band members’.
11. Honda’s Successful
Brand Strategy
• In the 1980s, U.S. buyers, much more
than their counterparts elsewhere,
associated the Honda brand with
economy cars.
• Rather than work to change that image
(which served the company well with
other models), management decided to
launch a new brand “Acura Legend ” in
the United States.
• The same car was introduced in most
other countries, including Japan, as the
Honda Legend.
• “Acura” had no positive equity
established with upscale buyers, but
neither did it have baggage to
overcome.
12. Volkswagen..
Disappointment … with
Phaeton Brand
• Volkswagen is one of the world’s most
recognizable brands and has excellent
brand equity among buyers of low- to
medium-priced cars.
• The Phaeton, however, is a high-priced
luxury car, positioned to compete with
such icons as BMW and Mercedes.
• Unfortunately, the company’s brand is
defined not so much by its exacting
producers as by its customers.
• When the Phaeton was launched in
Europe in 2003, Volkswagen predicted
15,000 would be sold.
• Several months later, it admitted that
only about 2,500 had been.
13. WiLL– Japanese Brand
• Marketing approach shared by a small group of Japanese
companies from August 1999 until July 2004 in Japan.
Kao Corporation Toyota Asahi Breweries
Ezaki Glico Candy Kokuyo Co., Ltd. Panasonic
14. WiLL Brand
• Target segment of consumers—“new
generation” women in their twenties or
thirties who like things that are “genuine”
and fun—defines the WiLL brand.
• Exclusively focused on narrow demographic
and psychographic profile.
• WiLL Vi (an automobile manufactured by
Toyota),
• WiLL PC (made by Panasonic),
• WiLL Beer (brewed by Asahi).
• These megabrands have chosen to become,
in essence, private label manufacturers
behind a brand they own jointly.
• Independently, none of them would have
invested so heavily in a branding effort.
• WiLL brand would remain strong—because
its meaning and value stem from its
customers.
15. Growing
Life time value
of Customer
Relationship
Building
Loyalty and
Retention
Fulfilling
more
customer
needs
Customer
Equity
Best Perspective
16. Emphasis….
• Forward thinkers like George Clinton, Honda, and the
WiLL consortium aside, most companies today are
geared toward aggrandizing(enhance) their brands, on
the assumption that sales will follow.
• But for firms to be successful over time, their focus
must switch to maximizing customer lifetime value i.e.
the net profit a company accrues from transactions
with a given customer during the time that the
customer has a relationship with the company.
• The attitude of the company should be that Brands
come and go but Customers must remain.
17. Brand Equity Customer Equity
More Focus on Customer Equity
The sum of the
lifetime values of all
the firm’s customers,
across all the firm’s
brands
The sum of
customers’
assessments of a
brand’s intangible
qualities, positive
or negative
18. Value of a Brand Depends on the
Customer
• The value of Brand is highly individualized.
• For some Coke is best and for others Pepsi is more valuable.
• One reader sees the Wall Street Journal as the pinnacle of
probity; another calls it a reactionary rag.
• For some people, Stouffer’s stands for taste and
convenience; for others, trans fats and carbs.
• A customer might grow tired of a brand, independent of
how other customers are responding to it.
• Most marketing managers measure brand equity with a
summary metric of brand strength. i.e.
– The “flaw of averages.”
• The value they arrive at is true for practically no one - and
hardly a useful management tool.
19. Customers Differ on Brand Equity
• Survey in two cities to measure brand equity for
23 brands in five industries.
• For American Airlines brand, customers had
widely varying perceptions of the value of the
brand.
• Managers defined value as average and took
actions which were not right for many customers.
• Assigning an average value to brand equity is
dangerous
– Because it obscures the fact that brand value is
individually assigned by the customer.
• In truth, with consumers in the United States
have very high equity while people in South
America were more likely to favor local brands.
• The company only redoubled its efforts at what
could be called brand imperialism, with limited
success.
21. This means creating or strengthen the role of the customer
segment manager.
Assigning Managers to specific customers.
In Business- to- Business World, this is known as managing key
accounts.
Companies like Ericsson and IBM assign account managers
and give them broad authority in marketing to important
customers.
1- Make brand decisions subservient to decisions
about customer relationship
22. Focus on the needs and requirements of a particular customer
segment.
Develop a product in such a way that consumers think that this
product is just for them..they are made for this product…
World largest Women Clothing Company Liz Claiborne has a similar
focus on the customers.
1. High- end Dana Buchman Brand for Professional Women
2. The stylish Ellen Tracy Brand for Sophisticated but
Casual Women
3. The young, upscale Laundry Brand for Individualistics
4. The Liz Claiborne Brand for its Traditional Casual Market
5. The Elizabeth Brand for Plus-Size Women
2- Build brands around customer segments, not the
other way around.
23.
24. 2- Build brands around customer segments,
not the other way around…
• Procter & Gamble markets an extensive portfolio of
soap brands, each targeted to a different
psychographic or demographic segment.
• Its laundry detergents, too—Tide, Gain, Cheer, Ivory,
Bold—are differentiated more by target customer
segment than by product features.
25.
26. The purpose of a brand here is to satisfy a small customer segment
as it is economically feasible.
Magzines:
Women Magzines, Fashion Magzines, Sports Magzines, Business
Magzines, Religious Magzines, Children Magzines.
Television Channels:
Women Channel, Movies Channel, Fashion Channel, Cooking
Channel, sports Channel, News Channel , Cartoon Channel etc...
3- Make your Brand as narrow as possible
27. 3- Make your brands as narrow as possible
• Henry Ford may have sold the Model T to a broad cross section of consumers,
but today there are men’s and women’s formulas of vitamins and distinct
television channels for Latinos, African-Americans, women, golfers, senior
citizens, and gays.
• A tighter focus can only enhance the clarity and value of the brand in
customers’ eyes.
• Today, the Lifes, Looks, and Saturday Evening Posts are gone, and even the
idea of a women’s magazine is laughably vague.
• Depending on the woman, the right magazine might focus on general fitness
(Shape), health (Natural Health), self-esteem (Self), parenting (Working
Mother), high fashion (Vogue), high fashion in midlife (More), shopping
(Lucky), ethnic women (Essence), gay women (Curve)—the choices go on and
on.
• TOI April12, 2015 – Amazon (Ross School of Business, Michingan), McKinsey
(Kellogg School of Management, Northwestern), Apple ( Fuqua School , Duke),
Own company (Harvard Business School), Private Equity (Standford Graduate
School)…
28.
29. Brand extension are more likely to successful if .....
The customers are similar, even if the products are not similar.
1- Same customer but unsimilar products:
Virgin, for example has extended into a wide variety of unrelated products like Airlines,
music, stores, soft drinks, and mobilephones.
Value pricing, high quality and a hip, fun image that attracts a particular customer
segment.
Similarly Tiffany’s(expensive jewelry to perfumes – wealthy prestige buyer) and Disney
(movies, hotels, and amusement parks - the young and the young at heart who want to be
entertained) did…
2- Same customer & similar products:
Visa-credit cards to debit cards
Yamaha- organs to pianos to guitars
Attempts which failed- Customers of IBM’s PC (individuals) were entirely different from
customers of its mainframe computers (business buyers)
4- Plan Brand extensions based on Customer needs, not
component similarities
30. Future profits are driven not by repeat purchases of particular
product but by customer’s purchases across all brands.
There’s absolutely no sense in spending greatly to hold on to a
brand’s customer relationship if the customer is more natural fit
with another brand in the company portfolio.
Ex: Mariott Fairfield Inn Vs Mariott International
5- Develop the capability and the mind-set to hand
off customers to other brands in the company
31. Sometime a brand becomes very unattractive to a customers
segment.
Reversing that impression might simply be too hard to do.
ValueJet
In May 1996 one of its airline crashed, killing all abroad.
The national transport safety board accused ValueJet failing to
ensure safety related issue..
Then ValueJet dumped the name, and it merged with another
carrier, AirTran……
6- Take no heroic measure.
34. Brands are
important, but
they are not all-
important
Some Basic Concepts
• Value Equity:
• Quality, Price and Convenience
• Brand equity:
• Brand Equity is the value, both tangible and intangible,
that a brand adds to a product/service.
• Relationship Equity:
• Switching cost
• Simply as friendship with salespeople
• Customer equity:
• Customer equity may be defined as the sum of all
customer lifetime value in company
35. What Brands means
to Company?
• Monopoly creation
• New avatars
• Most valuable assets
• Targets of acquisition.
• Relationship management
• Drivers of financial
performance
• Legal protection
36. What Brands means
to Customers?
• Identification of the source
• Assignment of responsibility to
product maker
• Risk reducer
• Search cost reducer
• Promise, bond, or pact with
product maker
• Symbolic device
• Signal of quality
1.36
39. How has the word’s
(Brand)application
changed over time?
• Cattle , Distilleries, Potters
• Producer names
• Place names
• Scientific names
• Artificial names
• Descriptive names.
40. Brands that took the names of
Henry Royce &
Creators…. Karl Benz &
Charles Rolls Henry Ford Gottlieb Daimler
Levi Strauss Theron T. Pond Lewis Waterman
41. Brands that took names from Places
Island - Indonesia Hamburg -
Germany
Teak- Burma
Region - France
47. Do all brands
become Power
Brands?
Nirma, Amul, Parachute, Fevicol …… have
become large power brands
48.
49. Customer Engagement
Practices to enhance
brand equity
• IKEA – Make Small Spaces Big
• Dove – Brilliant audience insight
• Apple – 3Fs , abbreviation(Approach,
Probe, Present, Listen, End)
• For example, if the customer talks
about price issues, the Genius might
reply: “I can see how you’d feel this
way. I felt the price was a little high,
but found it’s a real value because of
all the build-in software and
capabilities.”
50. Brand Community
Charity Rides
HOG Website
Specially designed
Insurance
Discount Hotel Rates
Sponsor bike
Rallies
Touring
Handbook
Emergency
Road Service
HOG Tales -
Magazine
HOG Fly and Ride
1200 chapters
1mn members
