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03.branding as a competitive advantage


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Brand as a Competitive advantage

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03.branding as a competitive advantage

  2. 2. In strategic device, companies invest on brands considering Growth plans of organization Long term objectives Competitive advantage compared with rivals AOT - 2
  3. 3. AOT - 3
  4. 4.  Cost Driven brands thrives because actions are taken to curtail cost. Their total cost is always lower Profits could be always as equal as the average competitor. The cost leadership strategy a brand would adopt - Concentrates on features than added values E.g. 3M post it pad/Mazda/Mruti AOT - 4
  5. 5.  Economic of scale Reducing Quality More selective raw materials Introduction of new technology and streamlining the product range Dealing with only large orders Improve the production efficiency/system line the process – Garment industry Eliminating un-relevant add ups Maruti -800 AOT - 5
  6. 6.  Cost reduction in R & D (Low brands low competitive advantage) High dependency on technology advancement Marketers fails to foresee market changes, due to too much focus on cost reduction E.g. Ford and GM AOT - 6
  7. 7.  These brands offer more added benefits than the competitor at an extra cost. Companies follows total differentiation competitor strategy Value added brands successful due to functional, psychological and emotional stimulants it offers. E.g. Big Mac vs Bun AOT - 7
  8. 8. Cost leadership and value added brand leadership are two extremesscenarios on competitive advantage. There for many companies adopt middle path. (CDC – Cost driven characteristics) AOT - 8
  9. 9.  Dialog, Toyota, Maruti are few examples that adopt a value addition along with cost drive branding strategy When companies adopt this theory they can improve on following factors 01. Target segment 02. Competitive strength 03. Organization strength AOT - 9
  10. 10.  Porters value chain is a tool that managers could use to get out of dilemma by identifying the brands competitive advantage. This transforms the raw materials to profitable sale and divided in to following stages1. Inbound logistics2. Operations3. Outbound logistics4. Marketing and Sales5. Servicing AOT - 10
  11. 11. 1. Purchasing2. Technical Development3. HR4. Firms infrastructure AOT - 11
  12. 12. AOT - 12
  13. 13. Based on Porter, marketers are able to refine their strategies by considering Cost driven Value addition competitive advantagePorters 4 brand generic model explains in following ways Competitive scope – Broad or Narrow Competitive advantage – Low cost or value added AOT - 13
  14. 14.  Focus Cost – Significantly lower cost targeted at small narrow markets .(Hutch) Broad Cost – Lower price to a broader market achieved through economic of scale.(signal/sunlight) Broad differentiation – Value added to larger market/ concentrated market. Where cost and value adding strategy both implement to serve a larger segment.IBM/Voda/Dialog/Toyota) Focus differentiation – Niche market/ products, which are very much focused on a particular segment at a greater profits. (BMW/ Mercedes) AOT - 14
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  19. 19.  The core for successful brand is it offers more benefits which others cant offer E.G. Toyota/Lux A winning successful brand has characteristics other than offering benefits that competitors cant offer. AOT - 19
  20. 20.  Pretax return on investment is high Gains economies of scale Leading brands attracts quality people E.g. HSBC/Unilever Instills confidence in risk aversive consumers Profitable brands are committed to high quality AOT - 20
  21. 21.  Successful brands instill high perceived quality, invest more on R&D (Mercedes/3M) - As a result marketers can charge premium price Winning brands are memorable - Communication and branding attributes, makes brands to be memorable - Cross pen/Hilton Winning brands capitalize on environment - these brands grab the opportunity in the environment faster than the others – proactive - Toyota-Hybrid/ Philips energy saving bulbs. AOT - 21
  22. 22.  Cost of building brands- to build a brand organizations have to go through a long process. The level of good will undisclosed in balance sheet – it is so much difficult to find this How fast the organization needs to enter the market- if the company could think of a potential opportunity in the future then they could think of investing in building bards E.g. Confify group hotels were bought by LOLC Wyeth was bought over by Pfizer AOT - 22
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  26. 26.  Same product in different form- Coke-Diet coke Companion product – Eveready torches with Eveready battery Same customer franchise- Ceylinco life/VIP Expertise brands – Bajaj bikes/Three wheelers Unique benefits , attributes or features owned by the brand - Panadol tabs-syrup Distinctive taste, ingredient or component –Kraft cheese – Cheese spread AOT - 26
  27. 27. Kodak Picture Maker AdExploiting a positive deviation? AOT - 27
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  31. 31.  Brand stretching refers to the use of an established brand name for products in unrelated markets. E.g. Yamaha AOT - 31
  32. 32. AOT - 32