Kotler 6 al 10
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This document discusses market segmentation and targeting. It begins by defining a market segment as a group of customers who share similar needs and wants. It then describes different ways to segment consumer markets, including geographic, demographic, psychographic, and behavioral segmentation. Geographic segmentation divides the market by factors like climate or population density. Demographic segmentation divides the market by age, gender, income, and other demographic factors. Psychographic segmentation considers personality, values, and lifestyles. Behavioral segmentation examines usage patterns, benefits sought, and loyalty status. The document provides examples of each type of segmentation and discusses how segmentation can help companies identify target markets.
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Kotler 6 al 10
- 2. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-2 Chapter Questions How do consumer characteristics influence buying behavior? What major psychological processes influence consumer responses to the marketing program? How do consumers make purchasing decisions? In what ways do consumers stray from a deliberate rational decision process?
- 3. Consumer Behavior Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-3
- 4. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-4 What Influences Consumer Behavior? Cultural Factors Social Factors Personal Factors
- 5. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-5 What is Culture? Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions.
- 6. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-6 Subcultures Nationalities Religions Racial groups Geographic regions
- 7. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-7 Fast Facts About American Culture The average American: chews 300 sticks of gum a year goes to the movies 9 times a year takes 4 trips per year attends a sporting event 7 times each year
- 8. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-8 Social Classes Upper uppers Lower uppers Upper middles Middle Working Upper lowers Lower lowers
- 9. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-9 Social Factors Reference groups Family Social roles Statuses
- 10. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-10 Reference Groups Membership groups Primary groups Secondary groups Aspirational groups Disassociative groups
- 11. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-11 Family Distinctions Affecting Buying Decisions
- 12. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-12 Personal Factors Age Life cycle stage Occupation Wealth Personality Values Lifestyle Self-concept
- 13. Age and Stage of Lifecycle Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-13
- 14. Occupation and Economic Circumstances Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-14
- 15. Personality Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-15
- 16. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-16 Brand Personality Sincerity Excitement Competence Sophistication Ruggedness
- 17. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-17 Table 6.2 LOHAS Market Segments (Lifestyles of Health and Sustainability) Sustainable Economy Healthy Lifestyles Ecological Lifestyles Alternative Health Care Personal Development
- 18. Figure 6.1 Model of Consumer Behavior Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-18
- 19. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-19 Motivation Freud’s Theory Behavior is guided by subconscious motivations Maslow’s Hierarchy of Needs Behavior is driven by lowest, unmet need Herzberg’s Two-Factor Theory Behavior is guided by motivating and hygiene factors
- 20. Maslow’s Hierarchy Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-20
- 21. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-21 Perception Selective attention Selective retention Selective distortion Subliminal perception
- 22. Learning Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-22
- 23. Emotions Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-23
- 24. Memory Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-24
- 25. Figure 6.3 State Farm Mental Map Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-25
- 26. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-26 Figure 6.4 Consumer Buying Process Problem Recognition Information Search Evaluation of alternatives Purchase Decision Postpurchase Behavior
- 27. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-27 Sources of Information CommercialPersonal Public Experiential
- 28. Figure 6.5 Successive Sets in Decision Making Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-28
- 29. Table 6.4 A Consumer’s Brand Beliefs about Laptop Computers Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-29
- 30. Figure 6.6 Steps Between Alternative Evaluation and Purchase Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-30
- 31. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-31 Non-Compensatory Models of Choice Conjunctive Lexicographic Elimination-by-aspects
- 32. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-32 Perceived Risk Functional Physical Financial Social Psychological Time
- 33. Figure 6.7 How Customers Use or Dispose of Products Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-33
- 34. Low-Involvement Decision Making Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-34
- 35. Decision Heuristics Availability Representativeness Anchoring and adjustment Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-35
- 36. Framing Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-36
- 37. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-37 Mental Accounting Consumers tend to… Segregate gains Integrate losses Integrate smaller losses with larger gains Segregate small gains from large losses
- 38. For Review How do consumer characteristics influence buying behavior? What major psychological processes influence consumer responses to the marketing program? How do consumers make purchasing decisions? In what ways do consumers stray from a deliberate rational decision process? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-38
- 40. Chapter Questions What is the business market, and how does it differ from the consumer market? What buying situations do organizational buyers face? Who participates in the business-to- business buying process? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-40
- 41. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-41 Chapter Questions How do business buyers make their decisions? How can companies build strong relationships with business customers? How do institutional buyers and government agencies do their buying?
- 42. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-42 What is Organizational Buying? Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers.
- 43. Top Marketing Challenges Understanding customer needs in new ways; Identifying new opportunities for growth; Improving value management techniques Calculating better marketing performance and accountability metrics; Competing and growing in global markets Countering the threat of product and service commoditization Convincing C-level executives to embrace the marketing concept Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-43
- 44. Characteristics of Business Markets Fewer buyers Close supplier- customer relationships Professional purchasing Many buying influences Multiple sales calls Derived demand Inelastic demand Fluctuating demand Geographically concentrated buyers Direct purchasing Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-44
- 45. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-45 Buying Situation Straight Rebuy Modified Rebuy New Task
- 46. Systems Buying And Selling Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-46
- 47. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-47 The Buying Center Initiators Users Influencers Deciders Approvers Buyers Gatekeepers
- 48. Of Concern to Marketers Who are the major decision participants? What decisions do they influence? What is their level of influence? What evaluation criteria do they use? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-48
- 49. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-49 Stages in the Buying Process: Buyphases Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review
- 50. Table 7.1 Buygrid Framework Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-50
- 51. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-51 Forms of Electronic Marketplaces Catalog sites Vertical markets Pure play auction sites Spot markets Private exchanges Barter markets Buying alliances
- 52. Table 7.2 An Example of Vendor Analysis Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-52
- 53. Methods for Researching Customer Value Internal engineering assessment Field value-in-use assessment Focus-group value assessment Direct survey questions Conjoint analysis Benchmarks Compositional approach Importance ratings Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-53
- 54. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-54 Order Routine Specification Stockless purchase plans Vendor-managed inventory Continuous replenishment
- 55. Categories of Buyer-Seller Relationships Basic buying and selling Bare bones Contractual transaction Customer supply Cooperative systems Collaborative Mutually adaptive Customer is king Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-55
- 56. Institutional Markets Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-56
- 57. For Review What is the business market, and how does it differ from the consumer market? What buying situations do organizational buyers face? Who participates in the business-to-business buying process? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-57
- 58. For Review How do business buyers make their decisions? How can companies build strong relationships with business customers? How do institutional buyers and government agencies do their buying? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7-58
- 59. 8 Identifying Market Segments and Targets 1
- 60. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-60 Chapter Questions What are the different levels of market segmentation? How can a company divide a market into segments? What are the requirements for effective segmentation? How should business markets be segmented? How should a company choose the most attractive target markets?
- 61. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-61 Effective Targeting Requires… Identify and profile distinct groups of buyers who differ in their needs and preferences Select one or more market segments to enter Establish and communicate the distinctive benefits of the market offering
- 62. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-62 What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants.
- 63. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-63 Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral
- 64. Geographic Segmentation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-64
- 65. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-65 Claritas’ Prizm Education and affluence Family life cycle Urbanization Race and ethnicity Mobility
- 66. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-66 Demographic Segmentation Age and life cycle Life stage Gender Income Generation Social class Race and Culture
- 67. Age and Lifecycle Stage Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-67
- 68. Gender and Income Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-68
- 69. Generational Influences Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-69
- 70. Race and Culture Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-70
- 71. Psychographic Segmentation and The VALS Framework Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-71
- 72. Behavioral Segmentation Based on Needs and Benefits Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-72
- 73. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-73 Behavioral Segmentation: Decision Roles Initiator Influencer Decider Buyer User
- 74. Behavioral Segmentation: Behavioral Variables Occasions Benefits User Status Usage Rate Buyer-Readiness Loyalty Status Attitude Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-74
- 75. Figure 8.2 Example of a Brand Funnel Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-75
- 76. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-76 Loyalty Status Hard-core Split loyals Shifting loyals Switchers
- 77. Figure 8.3 Behavioral Segmentation Breakdown Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-77
- 78. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-78 Segmenting for Business Markets Demographic Operating variable Purchasing approaches Situational factors Personal characteristics
- 79. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-79 Steps in Segmentation Process Need-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment acid test Market mix strategy
- 80. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-80 Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable
- 81. Porter’s 5 Forces Model Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-81 Threat of Rivalry Threat of Supplier Bargaining Power Threat of Buyer Bargaining Power Threat of New Entrants Threat of Substitutes
- 82. Figure 8.4 Possible Levels of Segmentation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-82
- 83. For Review What are the different levels of market segmentation? How can a company divide a market into segments? What are the requirements for effective segmentation? How should business markets be segmented? How should a company choose the most attractive target markets? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-83
- 85. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-85 Chapter Questions What is a brand and how does branding work? What is brand equity? How is brand equity built, measured, and managed? What are the important decisions in developing a branding strategy?
- 86. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-86 Steps in Strategic Brand Management Identifying and establishing brand positioning Planning and implementing brand marketing Measuring and interpreting brand performance Growing and sustaining brand value
- 87. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-87 What is a Brand? A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.
- 88. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-88 The Role of Brands Identify the maker Simplify product handling Organize accounting Offer legal protection
- 89. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-89 The Role of Brands Signify quality Create barriers to entry Serve as a competitive advantage Secure price premium
- 90. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-90 What is Branding? Branding is endowing products and services with the power of the brand.
- 91. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-91 What is Brand Equity? Brand equity is the added value endowed on products and services, which may be reflected in the way consumers, think, feel, and act with respect to the brand.
- 92. Advantages of Strong Brands Improved perceptions of product performance Greater loyalty Less vulnerability to competitive marketing actions Less vulnerability to crises Larger margins More inelastic consumer response Greater trade cooperation Increased marketing communications effectiveness Possible licensing opportunities Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-92
- 93. Virgin Atlantic’s Brand Promise Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-93
- 94. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-94 What is a Brand Promise? A brand promise is the marketer’s vision of what the brand must be and do for consumers.
- 95. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-95 Brand Equity Models Brand Asset Valuator (BAV) Brandz Brand Resonance
- 96. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-96 Figure 9.1 BAV Model
- 97. Figure 9.2 Universe of Brand Performance Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-97
- 98. Figure 9.3 Brand Dynamics Pyramid Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-98
- 99. Figure 9.4 Brand Resonance Pyramid Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-99
- 100. Brand Building Blocks Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-100
- 101. MasterCard Created An Emotional Bond to its Brand Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-101
- 102. Drivers of Brand Equity Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-102
- 103. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-103 Brand Elements Brand names Slogans Characters Symbols Logos URLs
- 104. Brand Element Choice Criteria Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-104 Memorable Meaningful Likeable Transferable Adaptable Protectable
- 105. Slogans Like a good neighbor, State Farm is there Just do it Nothing runs like a Deere Save 15% or more in 15 minutes or less We try harder We’ll pick you up Nextel – Done Zoom Zoom I’m lovin’ it Innovation at work This Bud’s for you Always low prices Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-105
- 106. Figure 9.5 Secondary Sources of Brand Knowledge Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-106
- 107. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-107 Internal Branding Choose the right moment Link internal and external marketing Bring the brand alive for employees
- 108. Figure 9.6 Brand Value Chain Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-108
- 109. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-109 Measuring Brand Equity Brand audits Brand tracking Brand valuation
- 110. Table 9.4 The 10 Most Valuable Brands Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-110
- 111. Figure 9.7 Interbrand Brand Valuation Method Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-111
- 112. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-112 Managing Brand Equity Brand reinforcement Brand revitalization
- 113. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-113 Devising a Branding Strategy Develop new brand elements Apply existing brand elements Use a combination of old and new
- 114. Branding Terms Brand line Brand mix Brand extension Sub-brand Parent brand Family brand Line extension Category extension Branded variants Licensed product Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-114
- 115. Reasons for Brand Portfolios Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-115
- 116. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-116 Brand Roles in a Brand Portfolio Flankers Cash cows Low-end, entry-level High-end prestige
- 117. Brand Extensions Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-117
- 118. For Review What is a brand and how does branding work? What is brand equity? How is brand equity built, measured, and managed? What are the important decisions in developing a branding strategy? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9-118
- 120. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-120 Chapter Questions How can a firm develop and establish an effective positioning in the market? How do marketers identify and analyze competition? How are brands successfully differentiated? What are the differences in positioning and branding with a small business?
- 121. What is Positioning? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-121
- 122. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-122 Value Propositions Perdue Chicken More tender golden chicken at a moderate premium price Domino’s A good hot pizza, delivered to your door within 30 minutes of ordering, at a moderate price
- 123. Competitive Frame of Reference Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-123
- 124. Table 10.2 Customer Ratings of Competitors Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-124
- 125. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-125 Defining Associations Points-of-difference Attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand Points-of-parity Associations that are not necessarily unique to the brand but may be shared with other brands
- 126. Point-of-Difference Criteria Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-126 Desirable Deliverable Differentiating
- 127. POP versus POD Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-127
- 128. Figure 10.1a Perceptual Map: Current Perceptions Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-128
- 129. Figure 10.1b Perceptual Map: Possibilities Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-129
- 130. Brand Mantras Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-130
- 131. Designing a Brand Mantra Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-131 Communicate Simplify Inspire
- 132. Constructing a Brand Positioning Bull’s-Eye Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-132
- 133. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-133 Conveying Category Membership Announcing category benefits Comparing to exemplars Relying on the product descriptor
- 134. Examples of Negatively Correlated Attributes and Benefits Low-price vs. High quality Taste vs. Low calories Nutritious vs. Good tasting Efficacious vs. Mild Powerful vs. Safe Strong vs. Refined Ubiquitous vs. Exclusive Varied vs. Simple Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-134
- 135. Differentiation Strategies Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-135
- 136. Means of Differentiation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-136 Employee Channel Image Services
- 137. Emotional Branding Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-137 Strong culture Communication style Emotional hook
- 138. Market Share, Mind Share, and Heart Share Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-138
- 139. Brand Narratives and Storytelling Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-139
- 140. For Review How can a firm develop and establish an effective positioning in the market? How do marketers identify and analyze competition? How are brands successfully differentiated? What are the differences in positioning and branding with a small business? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-140
Editor's Notes
- The aim of marketing is to meet and satisfy target customers’ needs and wants better than competitors. Marketers must have a thorough understanding of how consumers think, feel, and act and offer clear value to each and every target consumer.
- Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Marketers must fully understand both the theory and reality of consumer behavior. Table 6.1 provides a snapshot profile of U.S. consumers.
- A consumer’s buying behavior is influenced by cultural, social, and personal factors. Of these, cultural factors exert the broadest and deepest influence.
- Culture, subculture, and social class are particularly important influences on consumer buying behavior. Culture is the fundamental determinant of a person’s wants and behavior. Through family and other key institutions, a child growing up in the United States is exposed to values such as achievement and success, activity, efficiency and practicality, progress, material comfort, individualism, freedom, external comfort, humanitarianism, and youthfulness. A child growing up in another country might have a different view of self, relationship to others, and rituals
- Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups, and geographic regions. When subcultures grow large and affluent enough, companies often design specialized marketing programs to serve them.
- The average American chews 300 sticks of gum a year, goes to the movies 9 times a year, takes 4 trips a year, and attends a sporting event 7 times each year.
- Virtually all human societies exhibit social stratification, most often in the form of social classes, relatively homogeneous and enduring divisions in a society, hierarchically ordered and with members who share similar values, interests, and behavior. One classic depiction of social classes in the United States defined seven ascending levels: (1) lower lowers, (2) upper lowers, (3) working class, (4) middle class, (5) upper middles, (6) lower uppers, and (7) upper uppers. Social class members show distinct product and brand preferences in many areas, including clothing, home furnishings, leisure activities, and automobiles. They also differ in media preferences; upper-class consumers often prefer magazines and books, and lower-class consumers often prefer television.
- In addition to cultural factors, social factors such as reference groups, family, and social roles and statuses affect our buying behavior.
- A person’s reference groups are all the groups that have a direct (face-to-face) or indirect influence on their attitudes or behavior. Groups having a direct influence are called membership groups. Some of these are primary groups with whom the person interacts fairly continuously and informally, such as family, friends, neighbors, and coworkers. People also belong to secondary groups, such as religious, professional, and trade-union groups, which tend to be more formal and require less continuous interaction. Reference groups influence members in at least three ways. They expose an individual to new behaviors and lifestyles, they influence attitudes and self-concept, and they create pressures for conformity that may affect product and brand choices. People are also influenced by groups to which they do not belong. Aspirational groups are those a person hopes to join; disassociative groups are those whose values or behavior an individual rejects. Where reference group influence is strong, marketers must determine how to reach and influence the group’s opinion leaders. An opinion leader is the person who offers informal advice or information about a specific product or product category, such as which of several brands is best or how a particular product may be used. Opinion leaders are often highly confident, socially active, and frequent users of the category.
- The family is the most important consumer buying organization in society, and family members constitute the most influential primary reference group. There are two families in the buyer’s life. The family of orientation consists of parents and siblings. From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, self-worth, and love. Even if the buyer no longer interacts very much with his or her parents, parental influence on behavior can be significant. Almost 40 percent of families have auto insurance with the same company as the husband’s parents. A more direct influence on everyday buying behavior is the family of procreation—namely, the person’s spouse and children. In the United States, husband–wife engagement in purchases has traditionally varied widely by product category. The wife has usually acted as the family’s main purchasing agent, especially for food, sundries, and staple clothing items. Now traditional purchasing roles are changing, and marketers would be wise to see both men and women as possible targets.
- Personal factors that affect consumer decisions include age, life cycle stage, occupation, wealth, personality, values, lifestyle, and self-concept. We’ll take a closer look at a few of these in the coming slides.
- Our taste in food, clothes, furniture, and recreation is often related to our age. Consumption is also shaped by the family life cycle and the number, age, and gender of people in the household at any point in time. U.S. households are increasingly fragmented—the traditional family of four with a husband, wife, and two kids makes up a much smaller percentage of total households than it once did. The average U.S. household size in 2008 was 2.6 persons. In addition, psychological life-cycle stages may matter. Adults experience certain “passages” or “transformations” as they go through life. Their behavior as they go through these passages, such as becoming a parent, is not necessarily fixed but changes with the times. Marketers should also consider critical life events or transitions—marriage, childbirth, illness, relocation, divorce, first job, career change, retirement, death of a spouse—as giving rise to new needs.
- Occupation also influences consumption patterns. Marketers try to identify the occupational groups that have above-average interest in their products and services and even tailor products for certain occupational groups: Computer software companies, for example, design different products for brand managers, engineers, lawyers, and physicians. As the recent recession clearly indicated, both product and brand choice are greatly affected by economic circumstances: spendable income (level, stability, and time pattern), savings and assets (including the percentage that is liquid), debts, borrowing power, and attitudes toward spending and saving. Luxury-goods makers such as Gucci, Prada, and Burberry are vulnerable to an economic downturn. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and reprice their products or introduce or increase the emphasis on discount brands so they can continue to offer value to target customers. Some firms—such as Snap Fitness—are well-positioned to take advantage of good and bad economic times to begin with. twice—24 hour Snap Fitness actually expanded the number of its clubs, and its revenue doubled. The franchise chain did all this despite charging members only $35 per month with easy cancellation fees. Its secret? A no-frills approach reinforced by the motto, “Fast, Convenient, Affordable.”
- Each person has personality characteristics that influence his or her buying behavior. By personality, we mean a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli (including buying behavior).We often describe personality in terms of such traits as self-confidence dominance, autonomy, deference, sociability, defensiveness, and adaptability. Personality can be a useful variable in analyzing consumer brand choices. People from the same subculture, social class, and occupation may lead quite different lifestyles. A lifestyle is a person’s pattern of living in the world as expressed in activities, interests, and opinions. It portrays the “whole person” interacting with his or her environment. Marketers search for relationships between their products and lifestyle groups. In this content from Joie de Vivre we see a focus on the consumers’ personality.
- Brands also have personalities, and consumers are likely to choose brands whose personalities match their own. We define brand personality as the specific mix of human traits that we can attribute to a particular brand. Research on brand personalities identified the following traits: 1. Sincerity (down-to-earth, honest, wholesome, and cheerful) 2. Excitement (daring, spirited, imaginative, and up-to-date) 3. Competence (reliable, intelligent, and successful) 4. Sophistication (upper-class and charming) 5. Ruggedness (outdoorsy and tough) Brands tend to be strong on one particular trait. For instance, Levi’s on “ruggedness”; MTV on “excitement”; CNN on “competence”; and Campbell’s on “sincerity.” These brands will, in theory, attract users high on the same traits. Best Buy has developed a personality image of sincerity using its Twelp Force on Twitter.
- Consumers who worry about the environment, want products to be produced in a sustainable way, and spend money to advance their personal health, development, and potential have been named “LOHAS,” an acronym for lifestyles of health and sustainability. One estimate placed 19 percent of the adults in the United States, or 41 million people, in the LOHAS or “Cultural Creatives” category. The market for LOHAS products encompasses organic foods, energy-efficient appliances and solar panels, alternative medicine, yoga tapes, and ecotourism. Taken together, these account for an estimated $209 billion market. Table 6.2 breaks the LOHAS demographic into five segments with estimated size, and product and service interests.
- The starting point for understanding consumer behavior is the stimulus-response model shown in Figure 6.1.Marketing and environmental stimuli enter the consumer’s consciousness, and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions. The marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions. Four key psychological processes—motivation, perception, learning, and memory—fundamentally influence consumer responses.
- Three of the best-known theories of human motivation—those of Sigmund Freud, Abraham Maslow, and Frederick Herzberg—carry quite different implications for consumer analysis and marketing strategy. Sigmund Freud assumed the psychological forces shaping people’s behavior are largely unconscious, and that a person cannot fully understand his or her own motivations. Someone who examines specific brands will react not only to their stated capabilities, but also to other, less conscious cues such as shape, size, weight, material, color, and brand name. Abraham Maslow sought to explain why people are driven by particular needs at particular times. His answer is that human needs are arranged in a hierarchy from most to least pressing—physiological needs, safety needs, social needs, esteem needs, and self-actualization. We discuss Maslow’s theory on the next slide. Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers (factors that cause dissatisfaction) from satisfiers (factors that cause satisfaction). The absence of dissatisfiers is not enough to motivate a purchase; satisfiers must be present.
- The slide illustrates Maslow’s Need Hierarchy. The theory suggests that people will try to satisfy their most important need first and then try to satisfy the next most important. For example, a starving man (need 1) will not take an interest in the latest happenings in the art world (need 5), nor in how he is viewed by others (need 3 or 4), nor even in whether he is breathing clean air (need 2), but when he has enough food and water, the next most important need will become salient.
- A motivated person is ready to act—how is influenced by his or her perception of the situation. In marketing, perceptions are more important than reality, because perceptions affect consumers’ actual behavior. Perception is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. It depends not only on physical stimuli, but also on the stimuli’s relationship to the surrounding environment and on conditions within each of us. Because we cannot possibly attend to all these, we screen most stimuli out—a process called selective attention. Selective attention means that marketers must work hard to attract consumers’ notice. Even noticed stimuli don’t always come across in the way the senders intended. Selective distortion is the tendency to interpret information in a way that fits our preconceptions. Consumers will often distort information to be consistent with prior brand and product beliefs and expectations. Because of selective retention, we’re likely to remember good points about a product we like and forget good points about competing products.
- When we act, we learn. Learning induces changes in our behavior arising from experience. Most human behavior is learned, although much learning is incidental. Learning theorists believe learning is produced through the interplay of drives, stimuli, cues, responses, and reinforcement. Two popular approaches to learning are classical conditioning and operant (instrumental) conditioning. A drive is a strong internal stimulus impelling action. Cues are minor stimuli that determine when, where, and how a person responds. Suppose you buy an HP computer. If your experience is rewarding, your response to computers and HP will be positively reinforced. Later, when you want to buy a printer, you may assume that because it makes good computers, HP also makes good printers. In other words, you generalize your response to similar stimuli. A countertendency to generalization is discrimination. Discrimination means we have learned to recognize differences in sets of similar stimuli and can adjust our responses accordingly.
- A brand or product may make a consumer feel emotions like pride and confidence . An ad may create feelings of amusement, disgust, or wonder. Emotions are connected to the choices we make as consumers.
- Cognitive psychologists distinguish between short-term memory (STM)—a temporary and limited repository of information—and long-term memory (LTM)—a more permanent, essentially unlimited repository. All the information and experiences we encounter as we go through life can end up in our long-term memory. Most widely accepted views of long-term memory structure assume we form some kind of associative model. For example, the associative network memory model views LTM as a set of nodes and links. Nodes are stored information connected by links that vary in strength. Any type of information can be stored in the memory network, including verbal, visual, abstract, and contextual. A spreading activation process from node to node determines how much we retrieve and what information we can actually recall in any given situation. When a node becomes activated because we’re encoding external information (when we read or hear a word or phrase) or retrieving internal information from LTM (when we think about some concept), other nodes are also activated if they’re strongly enough associated with that node. In this model, we can think of consumer brand knowledge as a node in memory with a variety of linked associations. The strength and organization of these associations will be important determinants of the information we can recall about the brand. Brand associations consist of all brand-related thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand node.
- We can think of marketing as a way of making sure consumers have product and service experiences to create the right brand knowledge structures and maintain them in memory. Companies such as Procter & Gamble like to create mental maps of consumers that depict their knowledge of a particular brand in terms of the key associations likely to be triggered in a marketing setting, and their relative strength, favorability, and uniqueness to consumers. Figure 6.3 displays a very simple mental map highlighting brand beliefs for a hypothetical consumer for State Farm insurance.
- Marketing scholars have developed a “stage model” of the process (see Figure 6.4). The consumer typically passes through five stages: problem recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior. Clearly, the buying process starts long before the actual purchase and has consequences long afterward. Consumers don’t always pass through all five stages—they may skip or reverse some. When you buy your regular brand of toothpaste, you go directly from the need to the purchase decision, skipping information search and evaluation. The model in Figure 6.4 provides a good frame of reference, however, because it captures the full range of considerations that arise when a consumer faces a highly involving new purchase.
- Major information sources to which consumers will turn fall into four groups: The personal sources include family, friends, neighbors, acquaintances. Commercial sources include advertising, Web sites, salespersons, dealers, packaging, and displays. Public sources refer to mass media and consumer-rating organizations. Experiential sources refer to the consumers’ experiences handling, examining, and using the product. The relative amount and influence of these sources vary with the product category and the buyer’s characteristics. Generally speaking, although consumers receive the greatest amount of information about a product from commercial—that is, marketer-dominated—sources, the most effective information often comes from personal or experiential sources, or public sources that are independent authorities.
- Figure 6.5 illustrates how consumers move through from developing an initial set of brands to consider to making a final decision. By gathering information, the consumer learns about competing brands and their features. The first box in Figure 6.5 shows the total set of brands available. The individual consumer will come to know a subset of these, the awareness set. Only some, the consideration set, will meet initial buying criteria. As the consumer gathers more information, just a few, the choice set, will remain strong contenders. The consumer makes a final choice from these.
- Table 6.4 illustrates the use of the expectancy-value model of attitude formation in decision making. The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs—the positives and negatives—according to importance. Suppose Linda has narrowed her choice set to four laptop computers (A, B, C, and D). Assume she’s interested in four attributes: memory capacity, graphics capability, size and weight, and price. Table 6.4 shows her beliefs about how each brand rates on the four attributes. If one computer dominated the others on all the criteria, we could predict that Linda would choose it. But, as is often the case, her choice set consists of brands that vary in their appeal. If Linda wants the best memory capacity, she should buy C; if she wants the best graphics capability, she should buy A; and so on. If we knew the weights Linda attaches to the four attributes, we could more reliably predict her laptop choice. Suppose she assigned 40 percent of the importance to the laptop’s memory capacity, 30 percent to graphics capability, 20 percent to size and weight, and 10 percent to price. To find Linda’s perceived value for each laptop according to the expectancy-value model, we multiply her weights by her beliefs about each computer’s attributes.
- Even if consumers form brand evaluations, two general factors can intervene between the purchase intention and the purchase decision (see Figure 6.6). The first factor is the attitudes of others. The influence of another person’s attitude depends on two things: (1) the intensity of the other person’s negative attitude toward our preferred alternative and (2) our motivation to comply with the other person’s wishes. The more intense the other person’s negativism and the closer he or she is to us, the more we will adjust our purchase intention. The converse is also true.
- The expectancy-value model is a compensatory model, in that perceived good things about a product can help to overcome perceived bad things. But consumers often take “mental shortcuts” called heuristics or rules of thumb in the decision process. With noncompensatory models of consumer choice, positive and negative attribute considerations don’t necessarily net out. Evaluating attributes in isolation makes decision making easier for a consumer, but it also increases the likelihood that she would have made a different choice if she had deliberated in greater detail. We highlight three choice heuristics here. 1. Using the conjunctive heuristic, the consumer sets a minimum acceptable cutoff level for each attribute and chooses the first alternative that meets the minimum standard for all attributes. For example, if Linda decided all attributes had to rate at least 5, she would choose laptop computer B. 2. With the lexicographic heuristic, the consumer chooses the best brand on the basis of its perceived most important attribute. With this decision rule, Linda would choose laptop computer C. 3. Using the elimination-by-aspects heuristic, the consumer compares brands on an attribute selected probabilistically—where the probability of choosing an attribute is positively related to its importance—and eliminates brands that do not meet minimum acceptable cutoffs.
- A consumer’s decision to modify, postpone, or avoid a purchase decision is heavily influenced by one or more types of perceived risk: 1. Functional risk—The product does not perform to expectations. 2. Physical risk—The product poses a threat to the physical well-being or health of the user or others. 3. Financial risk—The product is not worth the price paid. 4. Social risk—The product results in embarrassment in front of others. 5. Psychological risk—The product affects the mental well-being of the user. 6. Time risk—The failure of the product results in an opportunity cost of finding another satisfactory product. In this promotional message for QuickBooks, the money-back guarantee seeks to lower perceived risk.
- Marketers should also monitor how buyers use and dispose of the product (Figure 6.7). A key driver of sales frequency is product consumption rate—the more quickly buyers consume a product, the sooner they may be back in the market to repurchase it. Consumers may fail to replace some products soon enough because they overestimate product life. One strategy to speed replacement is to tie the act of replacing the product to a certain holiday, event, or time of year.
- The elaboration likelihood model, an influential model of attitude formation and change, describes how consumers make evaluations in both low- and high-involvement circumstances. There are two means of persuasion in their model: the central route, in which attitude formation or change stimulates much thought and is based on the consumer’s diligent, rational consideration of the most important product information; and the peripheral route, in which attitude formation or change provokes much less thought and results from the consumer’s association of a brand with either positive or negative peripheral cues. Peripheral cues for consumers include a celebrity endorsement, a credible source, or any object that generates positive feelings. Consumers follow the central route only if they possess sufficient motivation, ability, and opportunity. We buy many products under conditions of low involvement and without significant brand differences.
- The availability heuristic—Consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to mind. If an example comes to mind too easily, consumers might overestimate the likelihood of its happening. The representativeness heuristic—Consumers base their predictions on how representative or similar the outcome is to other examples. The anchoring and adjustment heuristic—Consumers arrive at an initial judgment and then adjust it based on additional information.
- Decision framing is the manner in which choices are presented to and seen by a decision maker. A $200 cell phone may not seem that expensive in the context of a set of $400 phones but may seem very expensive if those phones cost $50. Framing effects are pervasive and can be powerful. Marketers can influence consumer decision making through what they call the choice architecture—the environment in which decisions are structured and buying choices are made. According to these researchers, in the right environment, consumers can be given a “nudge” via some small feature in the environment that attracts attention and alters behavior.
- Mental accounting is based on a set of core principles: 1. Consumers tend to segregate gains. When a seller has a product with more than one positive dimension, it’s desirable to have the consumer evaluate each dimension separately. Listing multiple benefits of a large industrial product, for example, can make the sum of the parts seem greater than the whole. 2. Consumers tend to integrate losses. Marketers have a distinct advantage in selling something if its cost can be added to another large purchase. House buyers are more inclined to view additional expenditures favorably given the high price of buying a house. 3. Consumers tend to integrate smaller losses with larger gains. The “cancellation” principle might explain why withholding taxes from monthly paychecks is less aversive than large, lump-sum tax payments—the smaller withholdings are more likely to be absorbed by the larger pay amount. 4. Consumers tend to segregate small gains from large losses. The “silver lining” principle might explain the popularity of rebates on big-ticket purchases such as cars. The principles of mental accounting are derived in part from prospect theory. Prospect theory maintains that consumers frame their decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss-averse. They tend to overweight very low probabilities and underweight very high probabilities.
- This chapter addressed four key questions, shown in the slide.
- Some of the world’s most valuable brands belong to business marketers: ABB, Caterpillar, DuPont, FedEx, GE, Hewlett-Packard, IBM, Intel, and Siemens, to name a few. Many principles of basic marketing also apply to business marketers. They need to embrace holistic marketing principles, such as building strong relationships with their customers, just like any marketer. But they also face some unique considerations in selling to other businesses. In this chapter, we will highlight some of the crucial similarities and differences for marketing in business markets. The next slide includes additional questions to be addressed in this chapter.
- Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. The major industries making up the business market are agriculture, forestry, and fisheries; mining; manufacturing; construction; transportation; communication; public utilities; banking, finance, and insurance; distribution; and services
- Business marketers face many of the same challenges as consumer marketers. In particular, understanding their customers and what they value is of paramount importance to both. A survey of top business-to-business firms identified the challenges listed in the slide as key issues they faced.
- Business marketers contrast sharply with consumer markets in some ways. The business marketer normally deals with far fewer, much larger buyers than the consumer marketer does, particularly in such industries as aircraft engines and defense weapons. Because of the smaller customer base and the importance and power of the larger customers, suppliers are frequently expected to customize their offerings to individual business customer needs. Business goods are often purchased by trained purchasing agents, who must follow their organizations’ purchasing policies, constraints, and requirements. More people typically influence business buying decisions. Buying committees consisting of technical experts and even senior management are common in the purchase of major goods. The demand for business goods is ultimately derived from the demand for consumer goods. The total demand for many business goods and services is inelastic—that is, not much affected by price changes. The demand for business goods and services tends to be more volatile than the demand for consumer goods and services. The geographical concentration of producers helps to reduce selling costs. Business buyers often buy directly from manufacturers rather than through intermediaries, especially items that are technically complex or expensive such as mainframes or aircraft.
- The business buyer faces many decisions in making a purchase. How many depends on the complexity of the problem being solved, newness of the buying requirement, number of people involved, and time required. Three types of buying situations are the straight rebuy, modified rebuy, and new task. In a straight rebuy, the purchasing department reorders supplies such as office supplies and bulk chemicals on a routine basis and chooses from suppliers on an approved list. The buyer in a modified rebuy wants to change product specifications, prices, delivery requirements, or other terms. A new-task purchaser buys a product or service for the first time (an office building, a new security system). The greater the cost or risk, the larger the number of participants, and the greater their information gathering—the longer the time to a decision.
- NetApp is a Fortune 1000 company providing data management and storage solutions to medium- and large-sized clients Many business buyers prefer to buy a total problem solution from one seller. Called systems buying, this practice originated with government purchases of major weapons and communications systems. The government solicited bids from prime contractors that, if awarded the contract, would be responsible for bidding out and assembling the system’s subcomponents from second-tier contractors. The prime contractor thus provided a turnkey solution, so-called because the buyer simply had to turn one key to get the job done. Sellers have increasingly recognized that buyers like to purchase in this way, and many have adopted systems selling as a marketing tool. One variant of systems selling is systems contracting, in which a single supplier provides the buyer with its entire requirement of MRO supplies. During the contract period, the supplier also manages the customer’s inventory. Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial projects such as dams, steel factories, irrigation systems, sanitation systems, pipelines, utilities, and even new towns.
- The buying center consists of all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising from the decisions. The buying center includes all members of the organization who play any of the following seven roles in the purchase decision process. These roles are listed in the slide. Initiators are users or others in the organization who request that something be purchased. Users are those who will use the product or service. In many cases, the users initiate the buying proposal and help define the product requirements. Influencers are people who influence the buying decision, often by helping define specifications and providing information for evaluating alternatives. Deciders are people who decide on product requirements or on suppliers. Approvers are people who authorize the proposed actions of deciders or buyers. Buyers are people who have formal authority to select the supplier and arrange the purchase terms. Buyers may help shape product specifications, but they play their major role in selecting vendors and negotiating. Gatekeepers are people who have the power to prevent sellers or information from reaching members of the buying center.
- This slide lists specific questions that concern business marketers as they make buying decisions.
- These are the stages in the buying process. Notice that the buying process is similar to that for consumers.
- Table 7.1 is the buygrid framework. In modified-rebuy or straight-rebuy situations, some stages are compressed or bypassed. For example, the buyer normally has a favorite supplier or a ranked list of suppliers and can skip the search and proposal solicitation stages.
- Companies that purchase over the Internet are utilizing electronic marketplaces in several forms as listed in the slide.
- Before selecting a supplier, the buying center will specify and rank desired supplier attributes, often using a supplier-evaluation model such as the one in Table 7.2.
- Researchers studying how business marketers assess customer value found eight different customer value assessment (CVA) methods. Companies tended to use the simpler methods, although the more sophisticated ones promise to produce a more accurate picture of CPV.
- Orders can be made routine at times. Some techniques for managing ordering needs includes the use of purchase plans, vendor-managed inventory, and shifting to a system of continuous replenishment.
- A number of forces influence the development of a relationship between business partners. Four relevant factors are availability of alternatives, importance of supply, complexity of supply, and supply market dynamism. Based on these we can classify buyer–supplier relationships into eight categories. 1. Basic buying and selling—These are simple, routine exchanges with moderate levels of cooperation and information exchange. 2. Bare bones—These relationships require more adaptation by the seller and less cooperation and information exchange. 3. Contractual transaction—These exchanges are defined by formal contract and generally have low levels of trust, cooperation, and interaction. 4. Customer supply—In this traditional custom supply situation, competition rather than cooperation is the dominant form of governance. 5. Cooperative systems—The partners in cooperative systems are united in operational ways, but neither demonstrates structural commitment through legal means or adaptation. 6. Collaborative—In collaborative exchanges, much trust and commitment lead to true partnership. 7. Mutually adaptive—Buyers and sellers make many relationship-specific adaptations, but without necessarily achieving strong trust or cooperation. 8. Customer is king—In this close, cooperative relationship, the seller adapts to meet the customer’s needs without expecting much adaptation or change in exchange.
- Much of what we have said also applies to the buying practices of institutional and government organizations. However, we want to highlight certain special features of these markets. The institutional market consists of schools, hospitals, nursing homes, prisons, and other institutions that must provide goods and services to people in their care. In most countries, government organizations are a major buyer of goods and services. They typically require suppliers to submit bids and often award the contract to the lowest bidder. In some cases, they will make allowance for superior quality or a reputation for completing contracts on time. Governments will also buy on a negotiated contract basis, primarily in complex projects with major R&D costs and risks and those where there is little competition.
- This chapter has addressed several questions, identified in the slide for review.
- Companies cannot connect with all customers in large, broad, or diverse markets. But they can divide such markets into groups of consumers or segments with distinct needs and wants. A company then needs to identify which market segments it can serve effectively. This decision requires a keen understanding of consumer behavior and careful strategic thinking. To develop the best marketing plans, managers need to understand what makes each segment unique and different. Identifying and satisfying the right market segments is often the key to marketing success.
- Companies cannot connect with all customers in large, broad, or diverse markets. But they can divide such markets into groups of consumers or segments with distinct needs and wants. A company then needs to identify which market segments it can serve effectively. This decision requires a keen understanding of consumer behavior and careful strategic thinking. To develop the best marketing plans, managers need to understand what makes each segment unique and different. Identifying and satisfying the right market segments is often the key to marketing success.
- Market segmentation divides a market into well-defined slices. A market segment consists of a group of customers who share a similar set of needs and wants. The marketer’s task is to identify the appropriate number and nature of market segments and decide which one(s) to target. We use two broad groups of variables to segment consumer markets. Some researchers try to define segments by looking at descriptive characteristics: geographic, demographic, and psychographic. Then they examine whether these customer segments exhibit different needs or product responses. For example, they might examine the differing attitudes of “professionals,”“blue collars,” and other groups toward, say, “safety” as a car benefit. Other researchers try to define segments by looking at behavioral considerations, such as consumer responses to benefits, usage occasions, or brands.
- The major segmentation variables—geographic, demographic, psychographic, and behavioral segmentation—are summarized in Table 8.1.
- Geographic segmentation divides the market into geographical units such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in one or a few areas, or it can operate in all but pay attention to local variations. In that way it can tailor marketing programs to the needs and wants of local customer groups in trading areas, neighborhoods, even individual stores.
- Some approaches combine geographic data with demographic data to yield even richer descriptions of consumers and neighborhoods. Nielsen Claritas has developed a geoclustering approach called PRIZM (Potential Rating Index by Zip Markets) that classifies over half a million U.S. residential neighborhoods into 14 distinct groups and 66 distinct lifestyle segments called PRIZM Clusters. The groupings take into consideration 39 factors in five broad categories: (1) education and affluence, (2) family life cycle, (3) urbanization, (4) race and ethnicity, and (5) mobility. The neighborhoods are broken down by zip code, zip+4, or census tract and block group. The clusters have descriptive titles such as Blue Blood Estates, Winner’s Circle, Hometown Retired, Shotguns and Pickups, and Back Country Folks. The inhabitants in a cluster tend to lead similar lives, drive similar cars, have similar jobs, and read similar magazines. Table 8.2 has examples of four PRIZM clusters.
- In demographic segmentation, we divide the market on variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social class. One reason demographic variables are so popular with marketers is that they’re often associated with consumer needs and wants. Another is that they’re easy to measure. Even when we describe the target market in nondemographic terms (say, by personality type), we may need the link back to demographic characteristics in order to estimate the size of the market and the media we should use to reach it efficiently.
- Consumer wants and abilities change with age. People in the same part of the life cycle may still differ in their life stage. Life stage defines a person’s major concern, such as going through a divorce, going into a second marriage, taking care of an older parent, deciding to cohabit with another person, deciding to buy a new home, and so on. These life stages present opportunities for marketers who can help people cope with their major concerns
- Men and women have different attitudes and behave differently, based partly on genetic makeup and partly on socialization. Women tend to be more communal-minded and men more self-expressive and goal-directed; women tend to take in more of the data in their immediate environment and men to focus on the part of the environment that helps them achieve a goal. A research study examining how men and women shop found that men often need to be invited to touch a product, whereas women are likely to pick it up without prompting. Men often like to read product information; women may relate to a product on a more personal level. Victoria’s Secret studied women and learned that while women need underwear, they want lingerie. It went on to develop the retail chain very successfully based on this insight. Income segmentation is a long-standing practice in such categories as automobiles, clothing, cosmetics, financial services, and travel. However, income does not always predict the best customers for a given product. Blue-collar workers were among the first purchasers of color television sets; it was cheaper for them to buy these sets than to go to movies and restaurants.
- Each generation or cohort is profoundly influenced by the times in which it grows up—the music, movies, politics, and defining events of that period. Members share the same major cultural, political, and economic experiences and have similar outlooks and values. Marketers often advertise to a cohort by using the icons and images prominent in its experiences. Millennials are also known as the Echo Boomers, these consumers have been “wired” almost from birth— playing computer games, navigating the Web, downloading music, connecting with friends via instant messaging and mobile phones. They have a sense of entitlement and abundance from growing up during the economic boom and being pampered by their boomer parents. Yet they are highly socially conscious and concerned about environmental issues. They are selective, confident, and impatient. Gen Xers feel self-sufficiency and the ability to handle any circumstance are key. Technology is an enabler for them, not a barrier. Unlike the more optimistic, team oriented Gen Yers, Gen Xers are more pragmatic and individualistic. With many baby boomers moving into their 60s and even the last and youngest wave bearing down on 50, demand has exploded for products to turn back the hands of time. According to one survey, nearly one in five boomers was actively resisting the aging process, driven by the mantra, “Fifty is the new thirty.”
- Multicultural marketing is an approach recognizing that different ethnic and cultural segments have sufficiently different needs and wants to require targeted marketing activities, and that a mass market approach is not refined enough for the diversity of the marketplace. The Hispanic American, African American, and Asian American markets are all growing at two to three times the rate of nonmulticultural populations, with numerous submarkets, and their buying power is expanding. Multicultural markets also vary in whether they are first and second (or more) generation, and whether they are immigrants or born and raised in the United States. The norms, language nuances, buying habits, and business practices of multicultural markets need to be factored into the initial formulation of a marketing strategy, rather than added as an afterthought. State Farm decided to make its Hispanic American marketing a priority in 2008. The firm sponsored local Latino community events, soccer matches, the Latin Music Awards, and Univision’s highly rated Saturday night variety show, Sabádo Gigante. Perhaps State Farm’s most original marketing activity, however, was the support and sponsorship of a new band. Los Felinos de la Noche (The Felines of the Night), as the six men (primarily Hispanic immigrants) are called, play the percussion heavy pop-rock sound of Norteño or Northern Mexico regional music. With State Farm’s support, the band recorded singles, shot music videos, and played live concerts to make a name for themselves.
- Psychographics is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values. People within the same demographic group can exhibit very different psychographic profiles. One of the most popular commercially available classification systems based on psychographic measurements is Strategic Business Insight’s (SBI) VALS™ framework. VALS, signifying values and lifestyles, classifies U.S. adults into eight primary groups 1. Innovators—Successful, sophisticated, active, “take-charge” people with high self-esteem. 2. Thinkers—Mature, satisfied, and reflective people motivated by ideals and who value order, knowledge, and responsibility. They seek durability, functionality, and value in products. 3. Achievers—Successful, goal-oriented people who focus on career and family. They favor premium products that demonstrate success to their peers. 4. Experiencers—Young, enthusiastic, impulsive people who seek variety and excitement. They spend a comparatively high proportion of income on fashion, entertainment, and socializing. 5. Believers—Conservative, conventional, and traditional people with concrete beliefs. They prefer familiar, U.S.-made products and are loyal to established brands. 6. Strivers—Trendy and fun-loving people who are resource-constrained. They favor stylish products that emulate the purchases of those with greater material wealth. 7. Makers—Practical, down-to-earth, self-sufficient people who like to work with their hands. They seek U.S.-made products with a practical or functional purpose. 8. Survivors—Elderly, passive people concerned about change and loyal to their favorite brands
- Needs-based or benefit-based segmentation is a widely used approach because it identifies distinct market segments with clear marketing implications. Constellation Wines identified six different benefit segments in the U.S. premium wine market ($5.50 a bottle and up). • Enthusiast (12 percent of the market). Skewing female, their average income is about $76,000 a year. About 3 percent are “luxury enthusiasts” who skew more male with a higher income. • Image Seekers (20 percent). The only segment that skews male, with an average age of 35. They use wine basically as a badge to say who they are, and they’re willing to pay more to make sure they’re getting the right bottle. • Savvy Shoppers (15 percent). They love to shop and believe they don’t have to spend a lot to get a good bottle of wine. Happy to use the bargain bin. • Traditionalist (16 percent). With very traditional values, they like to buy brands they’ve heard of and from wineries that have been around a long time. Their average age is 50 and they are 68 percent female. • Satisfied Sippers (14 percent). Not knowing much about wine, they tend to buy the same brands. About half of what they drink is white zinfandel. • Overwhelmed (23 percent). A potentially attractive target market, they find purchasing wine confusing.
- People play five roles in a buying decision: Initiator, Influencer, Decider, Buyer, and User. For example, assume a wife initiates a purchase by requesting a new treadmill for her birthday. The husband may then seek information from many sources, including his best friend who has a treadmill and is a key influencer in what models to consider. After presenting the alternative choices to his wife, he purchases her preferred model, which ends up being used by the entire family.
- Many marketers believe variables related to various aspects of users or their are good starting points for constructing market segments. Occasions mark a time of day, week, month, year, or other well-defined temporal aspects of a consumer’s life. We can distinguish buyers according to the occasions when they develop a need, purchase a product, or use a product. Every product has its nonusers, ex-users, potential users, first-time users, and regular users. We can segment markets into light, medium, and heavy product users. Heavy users are often a small slice but account for a high percentage of total consumption. Some people are unaware of the product, some are aware, some are informed, some are interested, some desire the product, and some intend to buy. Marketers usually envision four groups based on brand loyalty status. Five consumer attitudes about products are: enthusiastic, positive, indifferent, negative, and hostile.
- To help characterize how many people are at different stages and how well they have converted people from one stage to another, marketers can employ a marketing funnel to break down the market into different buyer-readiness stages. The proportions of consumers at different stages make a big difference in designing the marketing program.
- Loyalty Status Marketers usually envision four groups based on brand loyalty status: 1. Hard-core loyals—Consumers who buy only one brand all the time 2. Split loyals—Consumers who are loyal to two or three brands 3. Shifting loyals—Consumers who shift loyalty from one brand to another 4. Switchers—Consumers who show no loyalty to any brand A company can learn a great deal by analyzing degrees of brand loyalty: Hard-core loyals can help identify the products’ strengths; split loyals can show the firm which brands are most competitive with its own; and by looking at customers dropping its brand, the company can learn about its marketing weaknesses and attempt to correct them. One caution: What appear to be brand-loyal purchase patterns may reflect habit, indifference, a low price, a high switching cost, or the unavailability of other brands. People tend to be loyal to their favorite soda brand but less so to airline brands.
- Combining different behavioral bases can provide a more comprehensive and cohesive view of a market and its segments. Figure 8.3 depicts one possible way to break down a target market by various behavioral segmentation bases.
- We can segment business markets with some of the same variables we use in consumer markets, such as geography, benefits sought, and usage rate, but business marketers also use other variables. Table 8.5 shows one set of these. The demographic variables are the most important, followed by the operating variables—down to the personal characteristics of the buyer. The table lists major questions that business marketers should ask in determining which segments and customers to serve.
- There are many statistical techniques for developing market segments.53 Once the firm has identified its market-segment opportunities, it must decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller, better-defined target groups. Thus, a bank may not only identify a group of wealthy retired adults but within that group distinguish several segments depending on current income, assets, savings, and risk preferences. This has led some market researchers to advocate a needs-based market segmentation approach, as introduced previously. Roger Best proposed the seven-step approach shown in Table 8.6.
- To be useful, market segments must rate favorably on five key criteria: The size, purchasing power, and characteristics of the segments can be measured. The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. The segments can be effectively reached and served. The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments. Effective programs can be formulated for attracting and serving the segments.
- Five forces determine the intrinsic long-run attractiveness of a market or market segment: industry competitors, potential entrants, substitutes, buyers, and suppliers. The threats these forces pose are as follows: 1. Threat of intense segment rivalry—A segment is unattractive if it already contains numerous, strong, or aggressive competitors. 2. Threat of new entrants—The most attractive segment is one in which entry barriers are high and exit barriers are low. 3. Threat of substitute products—A segment is unattractive when there are actual or potential substitutes for the product. 4. Threat of buyers’ growing bargaining power—A segment is unattractive if buyers possess strong or growing bargaining power. 5. Threat of suppliers’ growing bargaining power—A segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied.
- Marketers have a range or continuum of possible levels of segmentation that can guide their target market decisions. As Figure 8.4 shows, at one end is a mass market of essentially one segment; at the other are individuals or segments of one person. Between lie multiple segments and single segments. We describe each of the four approaches next. With full market coverage, a firm attempts to serve all customer groups with all the products they might need. With selective specialization, a firm selects a subset of all the possible segments, each objectively attractive and appropriate. With single-segment concentration, the firm markets to only one particular segment. The ultimate level of segmentation leads to “segments of one,” “customized marketing,” or “one-to-one marketing.
- In this chapter we have reviewed answers to these questions.
- One of the most valuable intangible assets of a firm is its brands, and it is incumbent on marketing to properly manage their value. Building a strong brand is both an art and a science. It requires careful planning, a deep long-term commitment, and creatively designed and executed marketing. A strong brand commands intense consumer loyalty—at its heart is a great product or service. In this chapter, we focus on building brand equity and the benefits we derive from brand equity.
- Marketers of successful 21st-century brands must excel at the strategic brand management process. Strategic brand management combines the design and implementation of marketing activities and programs to build, measure, and manage brands to maximize their value. The strategic brand management process has four main steps: • Identifying and establishing brand positioning • Planning and implementing brand marketing • Measuring and interpreting brand performance • Growing and sustaining brand value deals with brand positioning.
- Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, enhance, and protect brands. The American Marketing Association defines a brand as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” A brand is thus a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need. These differences may be functional, rational, or tangible—related to product performance of the brand. They may also be more symbolic, emotional, or intangible—related to what the brand represents or means in a more abstract sense.
- Brands identify the source or maker of a product and allow consumers—either individuals or organizations—to assign responsibility for its performance to a particular manufacturer or distributor. Consumers may evaluate the identical product differently depending on how it is branded. They learn about brands through past experiences with the product and its marketing program, finding out which brands satisfy their needs and which do not. As consumers’ lives become more complicated, rushed, and time-starved, a brand’s ability to simplify decision making and reduce risk becomes invaluable. Brands also perform valuable functions for firms. First, they simplify product handling or tracing. Brands help to organize inventory and accounting records. A brand also offers the firm legal protection for unique features or aspects of the product.
- The brand name can be protected through registered trademarks; manufacturing processes can be protected through patents; and packaging can be protected through copyrights and proprietary designs. These intellectual property rights ensure that the firm can safely invest in the brand and reap the benefits of a valuable asset. A credible brand signals a certain level of quality so that satisfied buyers can easily choose the product again. Brand loyalty provides predictability and security of demand for the firm, and it creates barriers to entry that make it difficult for other firms to enter the market. Loyalty also can translate into customer willingness to pay a higher price often 20 percent to 25 percent more than competing brands.
- How do you “brand” a product? Although firms provide the impetus to brand creation through marketing programs and other activities, ultimately a brand resides in the minds of consumers. It is a perceptual entity rooted in reality but reflecting the perceptions and idiosyncrasies of consumers. Branding is endowing products and services with the power of a brand. It’s all about creating differences between products. Marketers need to teach consumers “who” the product is—by giving it a name and other brand elements to identify it—as well as what the product does and why consumers should care. Branding creates mental structures that help consumers organize their knowledge about products and services in a way that clarifies their decision making and, in the process, provides value to the firm.
- Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands. Marketers and researchers use various perspectives to study brand equity. Customer-based approaches view it from the perspective of the consumer—either an individual or an organization— and recognize that the power of a brand lies in what customers have seen, read, heard, learned, thought, and felt about the brand over time. Customer-based brand equity is thus the differential effect brand knowledge has on consumer response to the marketing of that brand. A brand has positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified, than when it is not identified. A brand has negative customer-based brand equity if consumers react less favorably to marketing activity for the brand under the same circumstances. There are three key ingredients of customer-based brand equity.
- Table 9.1 lists the advantages of strong brands.
- After flying for only a few years, Virgin America became an award-winning airline that passengers adore and that makes money. It is not unusual for the company to receive e-mails from customers saying they actually wished their flights lasted longer! Virgin America set out to reinvent the entire travel experience, starting with an easy-to-use and friendly Web site and check-in. In flight, passengers revel in Wi-Fi, spacious leather seats, mood lighting, and in-seat food and beverage ordering through touch-screen panels.
- Every brand makes a promise to its customers. The promise is expressed in the brand’s promotional work but must be delivered when the product is used.
- Although marketers agree about basic branding principles, a number of models of brand equity offer some differing perspectives.
- Advertising agency Young and Rubicam (Y&R) developed a model of brand equity called the BrandAsset® Valuator (BAV). Based on research with almost 800,000 consumers in 51 countries, BAV compares the brand equity of thousands of brands across hundreds of different categories. There are four key components—or pillars—of brand equity, according to BAV (see Figure 9.1). Energized differentiation measures the degree to which a brand is seen as different from others, and its perceived momentum and leadership. Relevance measures the appropriateness and breadth of a brand’s appeal. Esteem measures perceptions of quality and loyalty, or how well the brand is regarded and respected. Knowledge measures how aware and familiar consumers are with the brand. The relationships among these dimensions—a brand’s “pillar pattern”—reveal much about a brand’s current and future status.
- Energized differentiation and relevance combine to determine brand strength—a leading indicator that predicts future growth and value. Esteem and knowledge together create brand stature, a “report card” on past performance and a current indicator of current value. The relationships among these dimensions—a brand’s “pillar pattern”—reveal much about a brand’s current and future status. Energized brand strength and brand stature combine to form the power grid, depicting stages in the cycle of brand development in successive quadrants (see Figure 9.2). Strong new brands show higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are lower still. Leadership brands show high levels on all pillars. Finally, declining brands show high knowledge—evidence of past performance— a lower level of esteem, and even lower relevance, energy, and differentiation.
- Marketing research consultants Millward Brown and WPP have developed the BrandZ model of brand strength, at the heart of which is the BrandDynamics pyramid. According to this model, brand building follows a series of steps (see Figure 9.3). For any one brand, each person interviewed is assigned to one level of the pyramid depending on their responses to a set of questions. The BrandDynamics Pyramid shows the number of consumers who have reached each level. • Bonding. Rational and emotional attachments to the brand to the exclusion of most other brands • Advantage. Belief that the brand has an emotional or rational advantage over other brands in the category • Performance. Belief that it delivers acceptable product performance and is on the consumer’s short-list • Relevance. Relevance to consumer’s needs, in the right price range or in the consideration set • Presence. Active familiarity based on past trial, saliency, or knowledge of brand promise There are more consumers at the lower levels, so the challenge for marketers is to help them move up.
- The brand resonance model also views brand building as an ascending series of steps, from bottom to top: (1) ensuring customers identify the brand and associate it with a specific product class or need; (2) firmly establishing the brand meaning in customers’ minds by strategically linking a host of tangible and intangible brand associations; (3) eliciting the proper customer responses in terms of brand-related judgment and feelings; and (4) converting customers’ brand response to an intense, active loyalty. According to this model, enacting the four steps means establishing a pyramid of six “brand building blocks” as illustrated in Figure 9.4. The model emphasizes the duality of brands—the rational route to brand building is on the left side of the pyramid and the emotional route is on the right side.
- Creating significant brand equity requires reaching the top of the brand pyramid, which occurs only if the right building blocks are put into place. • Brand salience is how often and how easily customers think of the brand under various purchase or consumption situations. • Brand performance is how well the product or service meets customers’ functional needs. • Brand imagery describes the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers’ psychological or social needs. • Brand judgments focus on customers’ own personal opinions and evaluations. • Brand feelings are customers’ emotional responses and reactions with respect to the brand. • Brand resonance describes the relationship customers have with the brand and the extent to which they feel they’re “in sync” with it.
- MasterCard is a brand with duality, because it emphasizes both the rational advantages of the credit card—its acceptance at establishments worldwide—as well as the emotional advantages, expressed in the award-winning “Priceless” advertising campaign (“There are some things money can’t buy; for everything else, there’s MasterCard).
- The initial choices for the brand elements or identities making up the brand includes brand names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages, and signage. Microsoft chose the name Bing for its new search engine because it felt it unambiguously conveyed search and the “aha” moment of finding what a person is looking for. It is also short, appealing, memorable, active, and effective multiculturally. Marketers also have to choose the product and service and all accompanying marketing activities and supporting marketing programs. Liz Claiborne’s fastest-growing label is Juicy Couture, whose edgy, contemporary sportswear and accessories have a strong lifestyle appeal to women, men, and kids. Positioned as an affordable luxury, the brand creates its exclusive cachet via limited distribution and a somewhat risqué name and rebellious attitude. Other associations indirectly transferred to the brand by linking it to some other entity (a person, place, or thing)—The brand name of New Zealand vodka 42BELOW refers to both a latitude that runs through New Zealand and the percentage of its alcohol content.
- Brand elements are devices, which can be trademarked, that identify and differentiate the brand. Most strong brands employ multiple brand elements. Nike has the distinctive “swoosh” logo, the empowering “Just Do It” slogan, and the “Nike” name from the Greek winged goddess of victory. Marketers should choose brand elements to build as much brand equity as possible. The test is what consumers would think or feel about the product if the brand element were all they knew. Based on its name alone, for instance, a consumer might expect SnackWell’s products to be healthful snack foods and Panasonic Toughbook laptop computers to be durable and reliable.
- There are six criteria for choosing brand elements. The first three memorable, meaningful, and likable—are “brand building.” The latter three—transferable, adaptable, and protectable—are “defensive” and help leverage and preserve brand equity against challenges. These criteria can be assessed with the following questions: How easily do consumers recall and recognize the brand element, and when—at both purchase and consumption? Is the brand element credible? Does it suggest the corresponding category and a product ingredient or the type of person who might use the brand? How aesthetically appealing is the brand element? Can the brand element introduce new products in the same or different categories? How adaptable and updatable is the brand element? How legally protectable is the brand element? How competitively protectable?
- Like brand names, slogans are an extremely efficient means to build brand equity. They can function as useful “hooks” to help consumers grasp what the brand is and what makes it special. Can you name the brands that match these slogans?
- The third and final way to build brand equity is, in effect, to “borrow” it. That is, create brand equity by linking the brand to other information in memory that conveys meaning to consumers as shown in Figure 9.5. These “secondary” brand associations can link the brand to sources, such as the company itself (through branding strategies), to countries or other geographical regions (through identification of product origin), and to channels of distribution (through channel strategy); as well as to other brands (through ingredient or co-branding), characters (through licensing), spokespeople (through endorsements), sporting or cultural events (through sponsorship), or some other third party sources (through awards or reviews).
- Marketers must now “walk the walk” to deliver the brand promise. They must adopt an internal perspective to be sure employees and marketing partners appreciate and understand basic branding notions and how they can help—or hurt—brand equity. Internal branding consists of activities and processes that help inform and inspire employees. Brand bonding occurs when customers experience the company as delivering on its brand promise. All the customers’ contacts with company employees and communications must be positive. The brand promise will not be delivered unless everyone in the company lives the brand. 1. Choose the right moment. Turning points are ideal opportunities to capture employees’ attention and imagination. 2. Link internal and external marketing. Internal and external messages must match. use of Internet technology. 3. Bring the brand alive for employees. Internal communications should be informative and energizing.
- The brand value chain is a structured approach to assessing the sources and outcomes of brand equity and the way marketing activities create brand value (see Figure 9.6). It is based on several premises. First, brand value creation begins when the firm targets actual or potential customers by investing in a marketing program to develop the brand, including product research, development, and design; trade or intermediary support; and marketing communications. Next, we assume customers’ mind-sets, buying behavior, and response to price will change as a result of the marketing program; the question is how. Finally, the investment community will consider market performance, replacement cost, and purchase price in acquisitions (among other factors) to assess shareholder value in general and the value of a brand in particular. The model also assumes that three multipliers moderate the transfer between the marketing program and the subsequent three value stages. The program multiplier determines the marketing program’s ability to affect the customer mind-set and is a function of the quality of the program investment. The customer multiplier determines the extent to which value created in the minds of customers affects market performance. The market multiplier determines the extent to which the value shown by the market performance of a brand is manifested in shareholder value.
- A brand audit is a consumer-focused series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. Marketers should conduct a brand audit when setting up marketing plans and when considering shifts in strategic direction. Conducting brand audits on a regular basis, such as annually, allows marketers to keep their fingers on the pulse of their brands so they can manage them more proactively and responsively. Brand-tracking studies collect quantitative data from consumers over time to provide consistent, baseline information about how brands and marketing programs are performing. Tracking studies help us understand where, how much, and in what ways brand value is being created, to facilitate day-to-day decision making. Marketers should distinguish brand equity from brand valuation, which is the job of estimating the total financial value of the brand.
- Table 9.4 displays the world’s most valuable brands in 2009 according to one ranking. In these well-known companies, brand value is typically over half the total company market capitalization.
- Top brand-management firm Interbrand has developed a model to formally estimate the dollar value of a brand. It defines brand value as the net present value of the future earnings that can be attributed to the brand alone. The firm believes marketing and financial analyses are equally important in determining the value of a brand. Its process follows five steps as shown in Figure 9.7. 1. Market Segmentation—The first step is to divide the market(s) in which the brand is sold into mutually exclusive segments that help determine variances in the brand’s economic value. 2. Financial Analysis—Interbrand assesses purchase price, volume, and frequency to help calculate accurate forecasts of future brand sales and revenues. 3. Branding—Interbrand next attributes a proportion of Intangible Earnings to the brand in each market segment, by first identifying the various drivers of demand, then determining the degree to which the brand directly influences each. 4. Brand Strength—Interbrand then assesses the brand’s strength profile to determine the likelihood that the brand will realize forecasted Brand Earnings. Lastly we have the Brand Value Calculation—Brand Value is the net present value (NPV) of the forecasted Brand Earnings, discounted by the Brand Discount Rate.
- Marketers can reinforce brand equity by consistently conveying the brand’s meaning in terms of: (1) What products it represents, what core benefits it supplies, and what needs it satisfies, and (2) how the brand makes products superior, and which strong, favorable, and unique brand associations should exist in consumers’ minds. Often, the first thing to do in revitalizing a brand is to understand what the sources of brand equity were to begin with. Are positive associations losing their strength or uniqueness? Have negative associations become linked to the brand? Then decide whether to retain the same positioning or create a new one, and if so, which new one. The beginning of the 21st century was not kind to 165-year-old Pabst Brewing Company. Revenue from its portfolio of legacy brands—including Pabst Blue Ribbon, Old Milwaukee, Lone Star, Rainier, Stroh’s, and Schlitz—declined from an overall barrelage of 9.5 million in 2000 to 6.5 million in 2005. In response, new management set the company on a new course, including contract brewing with carefully selected partners and a new emphasis on its distributor network. PBR, as it became known as, was suddenly hip. The brand’s resurgence was marked by a 25 percent increase in sales in 2009 that far exceeded even other sub-premium brews.
- A firm’s branding strategy—often called the brand architecture—reflects the number and nature of both common and distinctive brand elements. Deciding how to brand new products is especially critical. A firm has three main choices: 1. It can develop new brand elements for the new product. 2. It can apply some of its existing brand elements. 3. It can use a combination of new and existing brand elements.
- A brand line consists of all products—original as well as line and category extensions—sold under a particular brand. A brand mix (or brand assortment) is the set of all brand lines that a particular seller makes. When a firm uses an established brand to introduce a new product, the product is called a brand extension. When marketers combine a new brand with an existing brand, the brand extension can also be called a sub-brand, such as Hershey Kisses candy, Adobe Acrobat software, Toyota Camry automobiles, and American Express Blue cards. The existing brand that gives birth to a brand extension or sub-brand is the parent brand. If the parent brand is already associated with multiple products through brand extensions, it can also be called a master brand or family brand. Brand extensions fall into two general categories:63 In a line extension, the parent brand covers a new product within a product category it currently serves, such as with new flavors, forms, colors, ingredients, and package sizes. In a category extension, marketers use the parent brand to enter a different product category, such as Swiss Army watches. Many companies are introducing branded variants, which are specific brand lines supplied to specific retailers or distribution channels. A licensed product is one whose brand name has been licensed to other manufacturers that actually make the product.
- A brand can only be stretched so far, and all the segments the firm would like to target may not view the same brand equally favorably. Marketers often need multiple brands in order to pursue these multiple segments. Some other reasons for introducing multiple brands in a category include increasing shelf presence and retailer dependence in the store, attracting consumers seeking variety, increasing internal competition within the firm, and yielding economies of scale in advertising, sales, merchandising, and distribution.
- Brands can also play a number of specific roles as part of a portfolio. Flanker or “fighter” brands are positioned with respect to competitors’ brands so that more important (and more profitable) flagship brands can retain their desired positioning. Some brands may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support. Companies can effectively “milk” these “cash cow” brands by capitalizing on their reservoir of brand equity. The role of a relatively low-priced brand in the portfolio often may be to attract customers to the brand franchise. Retailers like to feature these “traffic builders” because they are able to “trade up” customers to a higher-priced brand. The role of a relatively high-priced brand often is to add prestige and credibility to the entire portfolio.
- Many firms have decided to leverage their most valuable asset by introducing a host of new products under their strongest brand names. Most new products are in fact line extensions—typically 80 percent to 90 percent in any one year. Moreover, many of the most successful new products, as rated by various sources, are extensions. Two main advantages of brand extensions are that they can facilitate new-product acceptance and provide positive feedback to the parent brand and company.
- In this chapter, we have addressed the key questions listed above.
- In this chapter, we cover how marketers can position brands.
- Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market. The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. A good brand positioning helps guide marketing strategy by clarifying the brand’s essence, identifying the goals it helps the consumer achieve, and showing how it does so in a unique way. By creating a line of nontoxic, biodegradable household cleaning products with bright colors and sleek designs totally unique to the category, Method has crossed the line of $100 million in revenues with a phenomenal growth rate. Its big break came with the placement of its product in Target, known for partnering with well-known designers to produce stand-out products at affordable prices. Because of a limited advertising budget, the company believes its attractive packaging and innovative products must work harder to express the brand positioning.
- Table 10.1 provides examples of value propositions. Positioning requires that marketers define and communicate similarities and differences between their brand and its competitors. Specifically, deciding on a positioning requires: (1) determining a frame of reference by identifying the target market and relevant competition, (2) identifying the optimal points of parity and points of difference brand associations given that frame of reference, and (3) creating a brand mantra to summarize the positioning and essence of the brand.
- The competitive frame of reference defines which other brands a brand competes with and therefore which brands should be the focus of competitive analysis. A good starting point in defining a competitive frame of reference for brand positioning is to determine category membership—the products or sets of products with which a brand competes and which function as close substitutes. We can examine competition from both an industry and a market point of view. An industry is a group of firms offering a product or class of products that are close substitutes for one another. Marketers classify industries according to number of sellers; degree of product differentiation; presence or absence of entry, mobility, and exit barriers; cost structure; degree of vertical integration; and degree of globalization. Using the market approach, we define competitors as companies that satisfy the same customer need.
- A company needs to gather information about each competitor’s real and perceived strengths and weaknesses. Table 10.2 shows the results of a company survey that asked customers to rate its three competitors, A, B, and C, on five attributes. Competitor A turns out to be well known and respected for producing high-quality products sold by a good sales force, but poor at providing product availability and technical assistance. Competitor B is good across the board and excellent in product availability and sales force. Competitor C rates poor to fair on most attributes. This result suggests that in its positioning the company could attack Competitor A on product availability and technical assistance and Competitor C on almost anything, but it should not attack B, which has no glaring weaknesses.
- Points-of-difference (PODs) are attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand. Associations that make up points-of-difference may be based on virtually any type of attribute or benefit. Strong brands may have multiple points-of-difference. Points-of-parity (POPs), on the other hand, are attribute or benefit associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in two basic forms: category and competitive. Category points-of-parity are attributes or benefits that consumers view as essential to a legitimate and credible offering within a certain product or service category. Competitive points-of-parity are associations designed to overcome perceived weaknesses of the brand. A competitive point-of-parity may be required to either (1) negate competitors’ perceived points-of-difference or (2) negate a perceived vulnerability of the brand as a result of its own points-of-difference.
- Three key criteria determine whether a brand association can truly function as a point-of-difference— desirability, deliverability, and differentiability. Consumers must see the brand association as personally relevant to them. The company must have the internal resources and commitment to feasibly and profitably create and maintain the brand association in the minds of consumers. The product design and marketing offering must support the desired association. Finally, consumers must see the brand association as distinctive and superior to relevant competitors.
- For an offering to achieve a point-of-parity on a particular attribute or benefit, a sufficient number of consumers must believe the brand is “good enough” on that dimension. There is a zone or range of tolerance or acceptance with points-of-parity. The brand does not literally need to be seen as equal to competitors, but consumers must feel it does well enough on that particular attribute or benefit. If they do, they may be willing to base their evaluations and decisions on other factors potentially more favorable to the brand. Often, the key to positioning is not so much achieving a point-of-difference as achieving points-of-parity! Visa’s POD in the credit card category is that it is the most widely available card, which underscores the category’s main benefit of convenience. American Express, on the other hand, has built the equity of its brand by highlighting the prestige associated with the use of its card.
- Marketers typically focus on brand benefits in choosing the points-of-parity and points-of-difference that make up their brand positioning. For choosing specific benefits as POPs and PODs to position a brand, perceptual maps may be useful. Perceptual maps are visual representations of consumer perceptions and preferences. They provide quantitative portrayals of market situations and the way consumers view different products, services, and brands along various dimensions. By overlaying consumer preferences with brand perceptions, marketers can reveal “holes” or “openings” that suggest unmet consumer needs and marketing opportunities. For example, Figure 10.1 (a) shows a hypothetical perceptual map for a beverage category. The four brands—A, B, C, and D—vary in terms of how consumers view their taste profile (light versus strong) and personality and imagery (contemporary versus modern). Also displayed on the map are ideal point “configurations” for three market segments (1, 2, and 3). The ideal points represent each segment’s most preferred (“ideal”) combination of taste and imagery.
- Also displayed on the map are ideal point “configurations” for three market segments (1, 2, and 3). The ideal points represent each segment’s most preferred (“ideal”) combination of taste and imagery. Consumers in Segment 3 prefer beverages with a strong taste and traditional imagery. Brand D is well-positioned for this segment as it is strongly associated in the marketplace with both these benefits. Given that none of the competitors is seen as anywhere close, we would expect Brand D to attract many of the Segment 3 customers. Brand A, on the other hand, is seen as more balanced in terms of both taste and imagery. Unfortunately, no market segment seems to really desire this balance. Brands B and C are better positioned with respect to Segments 2 and 3.
- To further focus the intent of the brand positioning and the way firms would like consumers to think about the brand, it is often useful to define a brand mantra. A brand mantra is an articulation of the heart and soul of the brand and is closely related to other branding concepts like “brand essence” and “core brand promise.” Brand mantras are short, three- to five-word phrases that capture the irrefutable essence or spirit of the brand positioning. Their purpose is to ensure that all employees within the organization and all external marketing partners understand what the brand is most fundamentally to represent with consumers so they can adjust their actions accordingly. Internally, Nike marketers adopted the three-word brand mantra, “authentic athletic performance,” to guide their marketing efforts. Thus, in Nike’s eyes, its entire marketing program—its products and how they are sold—must reflect those key brand values.
- Brand mantras are designed with internal purposes in mind. A brand slogan is an external translation that attempts to creatively engage consumers. Although Nike’s internal mantra was “authentic athletic performance,” its external slogan was “Just Do It.” Here are the three key criteria for a brand mantra. • Communicate. A good brand mantra should define the category (or categories) of business for the brand and set the brand boundaries. It should also clarify what is unique about the brand. • Simplify. An effective brand mantra should be memorable. For that, it should be short, crisp, and vivid in meaning. • Inspire. Ideally, the brand mantra should also stake out ground that is personally meaningful and relevant to as many employees as possible. Brand mantras typically are designed to capture the brand’s points-of difference, that is, what is unique about the brand. Other aspects of the brand positioning—especially the brand’s points-of- parity—may also be important and may need to be reinforced in other ways.
- A brand bull’s-eye provides content and context to improve everyone’s understanding of the positioning of a brand in the organization. Here we describe the components of a brand bull’s-eye, illustrating with a hypothetical Starbucks example. In the inner two circles is the heart of the bull’s-eye—key points-of-parity and points-of-difference, as well as the brand mantra. In the next circle out are the substantiators or reasons-to-believe (RTB)—attributes or benefits that provide factual or demonstrable support for the points-of-parity and points-of-difference. Finally, the outer circle contains two other useful branding concepts: (1) the brand values, personality, or character—intangible associations that help to establish the tone for the words and actions for the brand; and (2) executional properties and visual identity—more tangible components of the brand that affect how it is seen. Three boxes outside the bull’s-eye provide useful context and interpretation.
- There are three main ways to convey a brand’s category membership: 1. Announcing category benefits. To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers frequently use benefits to announce category membership. 2. Comparing to exemplars. Well-known, noteworthy brands in a category can also help a brand specify its category membership. 3. Relying on the product descriptor. The product descriptor that follows the brand name is often a concise means of conveying category origin.
- One common difficulty in creating a strong, competitive brand positioning is that many of the attributes or benefits that make up the points-of-parity and points-of-difference are negatively correlated.
- To build a strong brand and avoid the commodity trap, marketers must start with the belief that you can differentiate anything. Competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match. Few competitive advantages are sustainable. At best, they may be leverageable. A leverageable advantage is one that a company can use as a springboard to new advantages, Progressive gained a competitive advantage in the mid-1990s when it became one of the first auto insurance companies to sell direct to consumers via the Internet. The company’s early adoption of technology enabled it to offer a unique service: In addition to providing free online quotes for its own policies, Progressive also provided quotes from up to three competitors.
- In competitive markets, however, firms may need to consider dimensions they can use to differentiate market offerings. Companies can have better-trained employees who provide superior customer service. Companies can more effectively and efficiently design their distribution channels’ coverage, expertise, and performance to make buying the product easier and more enjoyable and rewarding. Companies can craft powerful, compelling images that appeal to consumers’ social and psychological needs. A service company can differentiate itself by designing a better and faster delivery system that provides more effective and efficient solutions to consumers. There are three levels of differentiation. The first is reliability: Some suppliers are more reliable in their on-time delivery, order completeness, and order-cycle time. The second is resilience: Some suppliers are better at handling emergencies, product recalls, and inquiries. The third is innovativeness: Some suppliers create better information systems, introduce bar coding and mixed pallets, and in other ways help the customer.
- Brand consultant Marc Gobé believes emotional brands share three specific traits: (1) strong people-focused corporate culture, (2) a distinctive communication style and philosophy, and (3) a compelling emotional hook. Saatchi & Saatchi CEO Kevin Roberts advocates that brands strive to become lovemarks. Brands that are lovemarks, according to Roberts, command both respect and love and result from a brand’s ability to achieve mystery, sensuality, and intimacy: 1. Mystery draws together stories, metaphors, dreams, and symbols. Mystery adds to the complexity of relationships and experiences because people are naturally drawn to what they don’t know. 2. Sensuality keeps the five senses of sight, hearing, smell, touch, and taste on constant alert for new textures, intriguing scents and tastes, wonderful music, and other sensory stimuli. 3. Intimacy means empathy, commitment, and passion. The close connections that win intense loyalty as well as the small perfect gesture.
- In general, the firm should monitor three variables when analyzing potential threats posed by competitors: 1. Share of market—The competitor’s share of the target market. 2. Share of mind—The percentage of customers who named the competitor in responding to the statement, “Name the first company that comes to mind in this industry.” 3. Share of heart—The percentage of customers who named the competitor in responding to the statement, “Name the company from which you would prefer to buy the product.” There’s an interesting relationship among these three measures. Table 10.3 shows them as recorded for three hypothetical competitors. Competitor A enjoys the highest market share but is slipping. Its mind share and heart share are also slipping, probably because it’s not providing good product availability and technical assistance. Competitor B is steadily gaining market share, probably due to strategies that are increasing its mind share and heart share. Competitor C seems to be stuck at a low level of market, mind, and heart share, probably because of its poor product and marketing attributes.
- Narrative branding as based on deep metaphors that connect to people’s memories, associations, and stories. There are five elements of narrative branding: (1) the brand story in terms of words and metaphors, (2) the consumer journey in terms of how consumers engage with the brand over time and touch points where they come into contact with it, (3) the visual language or expression for the brand, (4) the manner in which the narrative is expressed experientially in terms of how the brand engages the senses, and (5) the role/relationship the brand plays in the lives of consumers. Based on literary convention and brand experience, we can use this framework for a brand story: • Setting. The time, place, and context • Cast. The brand as a character, including its role in the life of the audience, its relationships and responsibilities, and its history or creation myth • Narrative arc. The way the narrative logic unfolds over time, including actions, desired experiences, defining events, and the moment of epiphany • Language. The authenticating voice, metaphors, symbols, themes, and leitmotifs McDonald’s has developed its story over the years using characters like Ronald and Hamburglar.
- We addressed these questions in Chapter 10.