MarketingManagement

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Unit9

ProductManagement:ServicesAndBrandingStrategy

Structure

9.1. Introduction 9.2. Brand 9.2.1.Advantagesanddisadvantagesofbranding 9.3. Brandequity 9.4. Brandpositioning 9.5. Brandnameselection 9.6. Brandsponsorship 9.7. Branddevelopment 9.8. Natureandcharacteristicsofaservice 9.9. Strategiesforserviceorganizations. 9.10. Summary Terminalquestions AnswerstoSAQsandTQs

9.1Introduction Servicesaredeedsorperformances.TheimportanceofservicesinIndiaisgrowingeveryyear.The riseofInformationtechnology(IT)andInformationtechnologyenabledservices(ITES)isenhancing the contribution of services to the Indian economy. According to the National council of applied economicresearch(NCAER)servicescontributes55%tothetotalGDP.

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Table9.1.ShareofservicesinGDP Year 200102 200203 200304 200405 200506 200607 ShareofservicesinGDP(%) 50 52 52 53 54 55

(Source:CentralStatisticalorganization) Services may be used for intermediate consumption or final consumption. Transportation is an example of intermediate consumption whereas beauty saloons are part of final consumption. The increase in the purchasing power and professional retail services fuelled the growth of services in India.Deregulatedtelecomindustryandintegratedsupplychaincompaniescontributethemajorityof the service share in theGDP. Thus, we will discuss the importanceof service sector to the Indian economy. Brandingisanotherimportantareaintheproductmanagement.Ithelpsinprovidingtheidentityto theproductandbuildloyalcustomers.Organizationsusetheirexistingbrandnamestonewproduct orservices.Thesephenomenashowthatbrandsareassetsofthecompany.Brandmanagershould takevariousbranddecisionslikename,positioning,extension,imageandsoon.Companiesallover theworldspendhugeamountonacquiringbrands. LearningObjectives Afterstudyingthisunit,youwillbeableto 1. Understandtheconstituentsofbrandequity. 2. Analyzethetechniquesofbranddevelopment 3. Evaluatethebrandnameselectionstrategies. 4. Knowthecharacteristicsofservices.
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5. Discussthestrategiesusedinservicemarketingmanagement.

9.2.Brand Americanmarketingassociationdefinesthebrandas A name, term, design, symbol, or any other feature that identifies one seller's good or service as distinctfromthoseofothersellers. Thelegaltermforbrandistrademark.Abrandmayidentifyoneitem,afamilyofitems,orallitems ofthatseller.Ifusedforthefirmasawhole,thepreferredtermistradename Explanationofthedefinition: Brandisaname:TVS,Infosys,Santoor,Chandrika,andMysoreSandal. Brand is a term: victor means the person who won. TVS Company can protect this name from copyingbyanyotherautomobilecompany. Brandisadesign:theexteriorsofretailoutletwhichhelpsthecustomertoidentifyitveryquickly. Brandisasymbol:Mercedesisrecognizedbyitssymbol.

9.2.1.Advantagesanddisadvantagesofbranding Advantages 1. Helpsinidentifyingthegoodsandservices. 2. Itstimulatesthepurchasedecisionoftheconsumer. 3. Ithelpsincreatingcustomerloyalty. 4. Ithelpsthecompanytomaintaintheleadershippositioninthemarket(iftheyarealreadymarket leader) Disadvantages 1. Requireshugeinvestment. 2. Anunsuccessfulbrandwillbringnegativeimagetothecompany. 3. Customermaynotbewillingtopayextrajustbecauseitisbranded.

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9.3.Brandequity Brandequityissetofassetslinkedtoabrandsnameandsymbolthataddstothevalueprovidedby theproductoraservicetoafirmand/orthatfirmscustomer. Componentsofbrandequity: 1. Brandloyalty 2. Brandawareness 3. Perceivedquality 4. Brandassociations 9.3.1.Brandloyaltyisconsumer'scommitmenttorepurchasethebrandandcanbedemonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy.Truebrandloyaltyimpliesthattheconsumeriswilling,atleastonoccasion,toputaside theirowndesiresintheinterestofthebrand.Thiswillhelporganizationtoreducethepromotioncost. For example, many girls in India use only Ponds products though competitors products like Fa, Spinz,cuticura,andMysoresandalpresentinthemarketandviceversa. 9.3.2.Brandawareness: Thenumberofcustomersexposedtothebrandname.Higherthebrand awareness,higherwillbethebrandequity.Organizationsputalltheeffortintheintroductionstageof theproducttocreateawarenessamongthecustomers. 9.3.3.Perceivedquality:thecustomerperceptionabouttheactualqualityleveloftheproduct. 9.3.4.Brandassociations:Theattributeofthebrandthatcustomerassociateswithhis/herbelief.A personmayassociatethebrandforpower,strengthorprotectiveness. 9.4.Brandpositioning Aswediscussedinthesegmentation,targetingandpositioningunit,theimageoftheproductshould becreatedinthemindsofconsumer.Brandmanagersusethreelevelsofpositioningstrategiesto getthemindshareofthecustomer.

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Table9.2 Level Productattributes Character Ingredients: ingredients the that product company Illustration.

speaks about the innovative offers in the product. In the gore example the company explains the four way water pressure technology in the advertisement

Figure9.1 Taste:Kissansauceexplains how their product is different from others and how the targetcustomerlikesit

Figure9.2 Benefit Safety Caring Adventure Ontimedelivery Performance Beliefsandvalues Peaceful ICICILombard ITCAshrivad Mountaindew:Dothedew Dominos:30minutesnahitofree. Sharpguaranteeoffer BhartiAXA

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Happy

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9.5.BrandNameselection
Brand provides the image to the product. Brandmanager should be careful while selecting proper namefor thebrand. There are six suggestionsfrom the Philip Kotler to create a successful brand name.Theyare 1. ItshouldsuggestsomethingabouttheproductbenefitsandqualitiesFrootiorappyFizz 2. Itshouldbeeasytopronounce,recognize,andremember:Amul,Kissan,Ruchi 3. Thebrandnameshouldbedistinctive:cello,VIP 4. Itshouldbeextendable:Aashirwad,Wills 5. Thenameshouldbeeasilytranslatedintoforeignlanguage:Mr.White. 6. Itshouldbecapableofregistrationandlegalprotection

9.6. Brandsponsorship Brandmanagerhavefouroptionsofsponsoringthebrand.Theyare 1. Manufacturerbrand 2. Privatebrand 3. Licensing 4. Cobranding Manufacturer brand: The brand owned by manufacturer and promoted either directly or indirectly.Thistypeofstrategyisfollowedfromyears.Pillsburyattaisthemanufacturerbrand.In thebelow image you can see the Pillsbury is launching thePunjabi atta inthe market. (figure 9.4)

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PrivateBrand:

Figure9.3

Figure9.4

Private brands are also called as store brands. These brands bearing the store name or store selectedvendorname.Basicingredientsofprivatelabelsare 1. Itmustbeaunitpackage:ItisdifficulttoassignaPrivateLabelcharacterto,sayricesoldloose froma100kgbag.Eventhoughitmayenhanceconsumerloyaltyforwhatever reason,itdoesnotqualifyasaPrivateLabelproduct. 2. Relabeling: The unit pack must bear only the brand name of the particular store or any other partythestoremaychooseforitsPrivateLabelprogramme. Private labels will enhance the category profitability increase the negotiation power of the retailer and better value creates better consumer loyalty. All retailers cannot go for the private labeling. Privatelabelscanbeintroducedifandonlyif a. Theconsumerisnotgettingthetangiblevalue. b. Theretailerisnotmakingtheenoughreturnsfromthesaleofthebrandedgoods.
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Emergingissuesinprivatelabeling:

1. Theprivatelabelstrategyiseffective,profitableandreality. 2. Theretailermustunderstandtheprice,qualityandwillingnesstopay. 3. The retailer must have a sufficiently large base of loyal customers in the store before introducingtheprivatelabel. 4. Thefocusmustbeonconsumerneedandnotanyprivateagendaoftheretailers 5. There must be stringent system for the private label production. Quality control is a must sincethereisnoelsetoblame. 6. Privatelabelmustworktofillingapsinthecategoryandnottargetthebrandleader 7. Smart manufacturers may take a private label initiative of the retailer seriously and avoid valuegapsinthecategoriesasanimpedimenttogrowingprivatelabels. (Source:PraxisBusinessline)

Brand licensing: It is the legal authorization by the trade marked brand owner to allow another company to use itsbrandfor afee. For example, Hugo boss, Tommy Hilfiger,Lovable, Lacoste,andNikearesomeofthetextilebrandsthoselicensedtheirbrandsintheIndianmarket. The majorbenefitsofbrand licensing are low cost,free publicityand revenuefrom royaltyfees. Brand licensing also suffers from serious limitations like lack of manufacturing control, and licensingarrangementsmayfail. Co Branding: According to Kotler co branding is the practice of using the established brand names of two different companies on the same product. For example, ICICI and HPCL came together to sell ICICIHPCL petro cards to the customer. Here card is the co branding between the two companies. Co branding helps ICICI to utilize theirfinancial resources well. It adds another banking facility to the bank while HPCL can lock the customer from buying the petroleum products from competitors. HPCL also gets the benefit of financial power which it doesnt have. Both companies promote these products. Hence they can leverage brand image and can reduce the cost. All companies will not get benefit from cobranding. Some times companymayloosethebrandimageiftheproductfails.

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9.7.BrandDevelopment Company can develop the brand on the basis of product category and brand name. Now we will discussthedifferentstrategiesadoptedbycompaniestodevelopthebrands. Productcategory ExistingNew BrandName Existing New Lineextension Multibrands Figure9.5 1. Lineextension:Companyusesitswellknownbrandnametointroduceadditionalitemsina givenproductcategorysuchasnewforms,flavors,ingredientsorpackagesizes. For example,Karnataka Milk federation, Uses its topbrandname Nandinito introducenew itemsliketonedmilk,fullcreammilk,curdandmilkpowder. Brandextension Newbrands

Figure9.6 Itislessriskyandrequiresfewerinvestmentstointroducetheproduct.Intheaboveexamplenandini usedtheextensiontomeettheexcesscapacitythatithas.Themilkprocurementwasmorethanthe demand from the customer. Hence it started producing the milk powder. But all the products introducedneednottobesuccessfulinthemarket.IncaseofKMFnandiniIcecreamsdidntclickin

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the market. Another risk of line extension is brand cannibalization i.e. companys brand/items competeeachother. 2. Brand extension: A strategy in which company uses one of its familiar brand names to new product categorys items. For example, United breweries (UB) limited group used its flagship brand kingfisher to different categories. Kingfisher was originally a beer brand extended to airlines. Figure9.7

Brand extension gives instant recognition to the brand. In the above example people requiredverylesstimetoknowkingfisherairlinebrandbecauseparentbrandwasverywell known.Brandextensionifitfailsthenitmayhurttheparentbrandreputationinthemarket. 3. Multibrands:Thetechniquesofintroducingtheproductoritemsinexistingproductcategory withanewbrandname.

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Figure9.8 For example, Hindustan Unilever uses different brand names for their home and personal care category.TheaboveexampleshowsusthatHULhavebreeze,Dove,LirilLux,LifebuoyandPearsin thebathsoapsegmentitself. It helps companyto comeout withnewfeatures in the productor product category.Organizations adoptthisstrategytoavoidbrandcannibalizationinthegivencategory.Themajordisadvantageof thisstrategyisnoneofthebrandswillenjoymajormarketshareandresultinlesserprofitability.In caseofHindustanUnilevercompanyhadmorethan100brandsandwasforcedtoreduceitto30 powerbrands.Otherbrandswerenotaddingenoughprofitforthecompany. 4. Newbrands: Thestrategyofcomingoutwithnewbrandfornewcategoryproducts.Inthis

strategy,companybelievesthatexistingbrandscannotbeextendedtothenewcategory.Thenew brandstrategyrequireshugeresourcestobuildit.Thenewcategoryifitalreadyhadsomebrands ofothercompanies,investmentrequirementwillgoup.Forexample,HindustanUnileverlaunched Pureitinthewaterpurifiercategory.Thecategoryandbrandisnewtothecompany SelfAssessmentQuestions1 1. Thenumberofcustomersexposedtothebrandiscalledas 2. Positioningtheproductonsafetybelongsto a. Productattributes b. Beliefsandvalues c. Benefits d. Alltheabove

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3. The practice of using the established brand names of two different companies on the same product a. Manufacturerbrand b. Privatebrand c. Brandlicensing d. Cobranding 4. Lineextensionstrategyusedinwhichofthefollowingsituation a. Newproductcategoryandnewbrandname b. Newbrandnameandexistingproductcategory c. Existingproductcategoryandexistingbrandname d. Newproductcategoryandexistingbrandname 5. Thetechniqueofintroducingtheproductoritemsinexistingproductcategorywithanewbrand nameiscalledas.

9.8. NatureAndCharacteristicsOfServices InthebeginningofthisunitwediscussedtheimportanceofservicestotheIndianeconomy.Services are becoming important part of companies. Manufacturing companies which are averse to the services earlier are now giving priority to them. Some manufacturing companies like IBM become more of Service Company today. In this context, we are discussing what makes services so important.Thiscanbeexplainedwithcharacteristicsofservices.

1.

Intangibility means services cannot be seen tasted, felt, hears or smelled before they are bought. For example, a patient undergoing surgery in Jaydev hospitals will not know how the surgeryisorwhatisthesmellofsurgeryis.Intangibilityoffersmanychallengestothemarketers. First customer can not evaluatethe service he/shegets. Second,though customer purchases the services but he/she will not posses any physical product for it. Third, it is very difficult to communicate to the consumer and finally setting the price for services will become difficult becauseofthischaracteristics.

2.

Inseparability of production and consumption means services are produced and consumedsimultaneously.Toexplain,inhotelindustryfoodispreparedandsoldtocustomers

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immediately. This character results in more customization of the services rather than mass production.Incaseofmanufacturingofgoodscustomerinvolvementislessorwillnotbethere butinserviceslikeHaircutcustomerinvolvementisnecessary.Wordofmouthplaysanimportant roleincommunicatingtheservices.

3.

Perishabilitymeansservicecannotbestoredforlatersaleoruse.Thischaracterofservice leadstoimbalanceinthesupplyanddemandsituationintheorganization.Sometimedemandis morefortheservicesandsometimesdemandisveryless.Forexample,airlineserviceprovider will have hugedemandat thetimeofnew yearand may not behaving enoughdemand in the othertime.Socapacitymaybeexcessorinadequate.

4.

Heterogeneity or variability means quality of the service provided differs from person to person,placetoplace,timetotime.Toexplain,Tourismservicesprovidedbyanorganizationin KarwarisdifferentfromMumbai.Thisvariabilityoftheservicescreatesdifficultiesinmaintaining theservicequalityandstandardization.

9.9. StrategiesForServiceOrganizations 1 Servicedifferentiation a. Servicefirmsofferdifferentstrategiestoberecognizedinthecompetition.AirDeccanstarted nofrillairlineserviceswhenallthecompaniesweretryingtoputluxuryintheirairlineservices. b. Servicefirms differentiatetheir services insupply chain management practices. For example, Air Deccan started booking their tickets only on website and telephone. It didnt used agent networklikeothercompetitors. c. Servicefirmsdifferentiateonthebasisofimagetoo.Toexplain,Merrilllynchsbull,andINGs lionaretwosymbolsdifferentiatedthemfromtheothers. 2 Service quality: Managing the quality is very difficult because of service characteristics. Few organizations try to standardize their services to improve the service quality. They worked on followingdimensionstoensurebetterservicequality a. Reliability b. Responsiveness c. Assurance d. Empathyand
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e. Tangibility 3 Serviceproductivity:theserviceproductivitycanbeincreasedinthefollowingways a. Traintheexistingemployees. b. Recruitnewemployeeswhoworkbetter. c. Increasethequantityoftheirservices. d. Providephysicalevidencetotheservices. SelfAssessmentQuestions2: 1. Intangibilitycharacterofservicemeans a. Cannotbetasted. b. Producedandconsumedsimultaneously. c. Differsfromplacetoplace d. Alltheabove. 2. Heterogeneityisalsoknownas a. Intangibility b. Responsiveness c. Assurance d. Noneofthese 3. Pleasefindtheoddmanout a. Reliability b. Tangibility c. Responsiveness d. Empathy 4. meansservicecannotbestoredforlatersaleoruse. 5. meansservicesareproducedandconsumedsimultaneously

9.10 Summary 1. Abrandisaname,term,design,symbol,oranyotherfeaturethatidentifiesoneseller'sgoodor serviceasdistinctfromthoseofothersellers. 2. Components of brand equity are brand loyalty, brand awareness, brand association and perceivedquality
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3. Brand licensing: It is the legal authorizationby the trade markedbrand owner to allow another companytouseitsbrandforafee. 4. Companies use line extension, brand extension, multi brands and new brand strategies to developthebrand 5. Characteristics of services are intangibility, perishability, heterogeneity and inseparability of productionandconsumption. 6. The dimensions of service quality are reliability, responsiveness, assurance, intangibility and empathy. Terminalquestions. 1. Whatisbrandsponsorship?Explainhoworganizationsmaintaintheirsponsorshippositions. 2.Explaintheimportantcharacteristicsofagoodbrandname 3.Discussthedifferentstrategiesusedinthebranddevelopment. 4.Explainthecharacteristicsofserviceswithexample. 5.Writeanoteonbrandequity.

AnswerstoSelfAssessmentQuestions SelfAssessmentQuestions1 1. Brandawareness 2. Benefit 3. Cobranding 4. Existingproductcategoryexistingbrandname. 5. Multibrands SelfAssessmentQuestions2 1. Cannotbetasted 2. Noneofthese 3. Tangibility 4. Perishability 5. Inseparabilityofproductionandconsumption.
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AnswertoTerminalQuestions 1. Refer9.6 2. Refer9.5 3. Refer9.7 4. Refer9.8 5. Refer9.3

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