05 Designing Marketing Programs To Build Brand Equity - Ismail

23/07/16
Figure 1.12 - Strategic Brand

Management Process
CHAPTER 5:
DESIGNING MARKETING PROGRAMS TO
BUILD BRAND EQUITY
Copyright 2013 Pearson Education
DESIGNING MARKETING PROGRAMS TO

BUILD BRAND EQUITY
Learning objectives
Identify some of the new perspectives and
developments in marketing
Describe how marketers enhance product
experience
Explain the pricing related strategies
List some of the direct and indirect channel options
New Approaches Embraced by

Marketers
New Perspectives on Marketing
As firms are dealing with enormous shifts in their

external marketing environments:
The
marketing strategies and tactics have changed

dramatically
Figure 5.1 - The New Capabilities of the

New Economy
Rapid technological developments

Greater customer empowerment
Fragmentation of traditional media
Growth of interactive and mobile marketing options
Channel transformation and disintermediation
Increased competition and industry convergence
Globalization and growth of developing markets
Heightened environmental, community, and social
concerns
Severe economic recession
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Integrating Marketing
Personalizing Marketing
Reconciling the Different Marketing Approaches
Personalizing Marketing
The rapid expansion of the Internet and continued

fragmentation of mass media have brought the need
for personalized marketing into sharp focus.
Modern economy celebrates the power of the
individual consumer.
To adapt to the increased consumer desire for
personalization, marketers have embraced concepts
such as experiential marketing and relationship
marketing.
Experiential
Marketing
The different approaches of personalizing

marketing help reinforce a number of important
marketing concepts and techniques.
According to the customer-based brand equity
(CBBE) model these different approaches
emphasize different aspects of brand equity.
Relationship
Marketing
Experiential marketing
Experiential marketing promotes a product by not

only communicating a products feature and benefit
but also connecting it with unique and interesting
experiences.
The idea is not to sell something, but to demonstrate

how a brand can enrich a customers life
Pine and Gilmore, the pioneers argue that we are on the
threshold of the Experience Economy. They make the
following assertions:
-
-
-
If you charge for stuff, then u r in the Commodity

Business
If u charge for tangibles, then u r in the Goods Business
If u charge for the activities u perform, then u r in the
Service Business
If u charge for the time consumers spend with u, then
and only then u r in the Experience Business.
Figure 5.2 - Brand Experience Scale
Columbia University's Bernd Schmitt shows how

experiential marketing is different from traditional
marketing. EM is different from TM due to the following
factors
- Focuses on customer experience
- Focuses on the consumption situation
- Views customers as rational and emotional animals.
- Uses eclectic methods and tools.
Schmitt details five different types of experiencessense, feel, think, act and relate.
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Relationship marketing
Attempts to provide a more holistic, personalized brand
experience to create stronger consumer ties.
Benefits:
CUSTOMERS WANT TO BE
Acquiring
new customers can cost five times as much as

satisfying and retaining current customers.
The average company loses 10 percent of its customers
each year.
A 5 percent reduction in the customer defection rate can
increase profits by 25 to 85 percent, depending on the
industry.
The customer profit rate tends to increase over the life of
the retained customer.
ENTERTAINED, STIMULATED,
EMOTIONALLY AFFECTED AND
CREATIVELY CHALLENGED
Relationship Marketing
Mass Customization
Making products to fit the customers exact specifications.
One-to-One Marketing
Consumers help add value by providing information to marketers and
Marketers add value by taking that information and generating
rewarding experiences for consumers.
Permission Marketing
The practice of marketing to consumers only after gaining their express
permission.
One-to-One Marketing
Don Peppers and Martha Rogers have popularized this concept.
According to them with the changing environment the basic
rationale of one-to-one marketing is that consumers help to add
value by providing information to marketers; marketers add
value, resulting rewarding experiences for consumers. The
fundamentals of this concept are:
-focus on individual consumers through consumer databases-we
single out consumers.
-respond to consumer dialogue via interactivity-the consumer
talks to us.
-customize products and services-we make something unique for
him or her.
One-to-One Marketing: Competitive

Rationale
One-to-One Marketing: Consumer

Differentiation
Consumers help to add value by providing information.

Firm adds value by generating rewarding experiences
with consumers.
switching costs for consumers

Reduces transaction costs for consumers
Maximizes utility for consumers
Treat different consumers differently

Different
Different
needs
values to firm
n Current
Creates
n Future
(lifetime value)
Devote more marketing effort on most valuable

consumers (and customers)
5.17
5.18
23/07/16
One-to-One Marketing: Five Key

Steps
Identify consumers, individually and addressably
Differentiate them by value and needs
Interact with them more cost-efficiently and
effectively
Customize some aspect of the firms behavior
Brand the relationship
Permission Marketing (Seth Godin)
PM- the practice of marketing to consumers only

after gaining their express permissionEncourages
consumers to participate in a long-term interactive
marketing campaign in which they are rewarded in
some way for paying attention to increasingly
relevant messages.
Anticipated
Personal
Relevant
Permission marketing can be contrasted to

interruption marketing.
Reconciling the Different Marketing

Approaches
Mass customization and one-to-one and permission

marketing are:
Potentially
effective means of getting consumers more

actively engaged with a brand
According to customer-based brand equity (CBBE)

model:
Reconciling the Different Marketing

Approaches
The four approaches can build stronger consumer
brand bonds
Firms must still devise product, pricing, and
distribution strategies as part of their marketing
programs
Different
approaches emphasize different aspects of

brand equity- e.g. behavioral loyalty, attitudinal
attachment (MC, OtO and PM); brand imagery, feeling
and brand communities (EM)
To Sum Up..
Product Strategy
Implication of the new approaches:

The
traditional marketing mix concept and the notion

of the 4 Ps of marketing may not fully describe
modern marketing programs
Firms must still devise product, pricing, and distribution
strategies as part of their marketing programs
The product itself is at the heart of brand equity

because it is the primary influence on
what consumers experience with a brand
what they hear about a brand from others
what the firm can tell customers about the brand in
their communication.
At the heart of a great brand is invariably a

GREAT PRODUCT
23/07/16
Product Strategy
Perceived
Quality
Aftermarketing
Perceived quality and value
Customers perception of the overall quality

or superiority of a product or service
compared to alternatives and with respect to
its intended purpose.
To achieve the desired brand image: Product

strategies should focus on both purchase and
consumption.
Perceived quality has been defined as customers

perception of the overall quality or superiority of a
product or service relative to relevant alternatives
and with respect to its intended purpose.
Perceived quality is a global assessment based on
customer perception of what constitutes a quality
product and how well the brand rates on those
dimensions.
Consistent with the CBBE model the following

dimensions of product quality can be searched out
through market research
Consumers beliefs along these dimensions often underlie

Perceptions of the quality of the product that in turn can
influence attitude and behavior toward the brand.
a. Performance
c. Conformance quality
e. Durability
g. Style and design
Brand Intangibles
b. Features
d. Reliability
f. Serviceability
Product quality depends not only on functional product

performance but also on broader performance
considerations. Brand attitude also depends on product
imagery
23/07/16
Aftermarketing
To Sum Up..
User
Manuals
Aftermarketing is more
than the design and
communication of product
instructions.
An afterthought, put
together by engineers who
use overly technical terms
and convoluted language
The product is at the heart of brand equity

Product strategy entails choosing:
Tangible
and intangible benefits the product will

embody
Marketing activities that consumers desire and the
marketing program can deliver
Customer
Service
Programs
Purpose is identifying, maintaining, and

increasing the yield from a firms
best customers through long-term,
interactive, value-added relationships.
TIPS- know your audience, change is
good, listen to best customer, engage
people
Loyalty
Programs
Pricing Strategy
Setting Prices to Build Brand Equity

The pricing strategy can dictate:
How consumers categorize the price of
the brand.
How firm or how flexible they think the
price is, based on how deeply or how
frequently it is discounted.
Consumer Price Perceptions
Setting Prices to Build Brand Equity
Value Pricing
Price
Segmentation
Choosing a pricing strategy to build brand

equity means determining the following:
A method for setting current prices.
A policy for choosing the depth and
duration of promotions and discounts.
Everyday Low
Pricing
Value pricing
Price segmentation
Objective is to uncover the right blend of product quality, product

costs, and product prices that fully satisfies the needs and wants of
consumers and the profit targets of the firm.
It should strike the proper balance among three key components:
Sets and adjusts prices for appropriate market

segments.
Product design and delivery

Product costs
Product prices
Communicating value - Marketers may need to engage in

marketing communications to help consumers better recognize the
value.
23/07/16
Price segmentation
Sets and adjusts prices for appropriate market

segments.
Price segmentation
Because of wide adoption of the Internet, firms are increasingly

employing yield management principles or dynamic pricing to
vary their prices for different market segments according to their
different demand and value perceptions.
Price segmentation
Because of wide adoption of the Internet, firms are increasingly

employing yield management principles or dynamic pricing to
vary their prices for different market segments according to their
different demand and value perceptions.
Price segmentation
dynamic pricing to vary their prices for different market segments

according to their different demand and value perceptions.
Everyday low pricing (EDLP)
Has received increased attention as a means of

determining price discounts and promotions over time.
Everyday low pricing (EDLP)

Reasons for Price Stability in EDLP:
It reduces the tendency of
Forward
buying
Diverting
23/07/16
Channel Strategy
Channel Design
Classified into direct and indirect channels.

Direct
channels sell through personal contacts from the

company to prospective customers by mail, phone,
electronic means, and in-person visits.
Indirect channels sell through third-party intermediaries
such as agents or broker representatives, wholesalers or
distributors, and retailers or dealers.
Channel Design
Indirect Channels
Direct Channels
Online Strategies
Indirect channels
Retailers - Can have a profound influence on the
equity of the brands they sell, in terms of the brandrelated services they can support or help create.
Pull strategy - Consumers use their buying power and
influence on retailers to pull the product through
the channel.
Push strategy - The manufacturer is attempting to
reach the consumer by pushing the product through
each step of the distribution chain.
Direct channels
Company-owned stores - To gain control over the

selling process and build stronger relationships with
customers:
Some
manufacturers are introducing their own retail

outlets, as well as selling their product directly to
customers through various means.
Direct channels
Benefits:
Direct channels
They
are a means to showcase the brand and all its

different product varieties in a manner not easily achieved
through normal retail channels.
Functioning as a test market to gauge consumer response to
alternative product designs, presentations, and prices.
Disadvantages:
in all these situations is to find winwin solutions

that benefit channel partners and consumers alike.
Goal
Some
companies lack the skills, resources, or contacts to

operate effectively as a retailer.
Potential conflict with existing retail channels and
distributors.
Store-Within-a-Store - This concept can take hold

through actual leasing arrangements or less formal
arrangements where branded mini-stores are used.
Other Means - Sell directly to consumers via phone,
mail, or electronic means.
23/07/16
Online strategies
Figure 5.5 - Services Provided by

Channel Members
Multichannel retailers were able to acquire customers

at half the cost of Internet-only retailers, citing a
number of advantages :
They
have market clout with suppliers.

have established distribution and fulfillment
systems.
They can cross-sell between Web sites and stores.
They
To Sum Up..
Channel members should be thought of and treated as

valuable customers whose image and actions can hurt or
enhance brand equity
WE ARE DONE FOR TODAY

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23/07/16

Figure 1.12 - Strategic Brand

Copyright 2013 Pearson Education

DESIGNING MARKETING PROGRAMS TO

Copyright 2013 Pearson Education

New Approaches Embraced by

Copyright 2013 Pearson Education

New Perspectives on Marketing

As firms are dealing with enormous shifts in their

marketing strategies and tactics have changed

Copyright 2013 Pearson Education

Figure 5.1 - The New Capabilities of the

Rapid technological developments

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Reconciling the Different Marketing Approaches

The rapid expansion of the Internet and continued

The different approaches of personalizing

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Experiential marketing promotes a product by not

The idea is not to sell something, but to demonstrate

Copyright 2013 Pearson Education

If you charge for stuff, then u r in the Commodity

Figure 5.2 - Brand Experience Scale

Columbia University's Bernd Schmitt shows how

Copyright 2013 Pearson Education

new customers can cost five times as much as

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

One-to-One Marketing: Competitive

One-to-One Marketing: Consumer

Consumers help to add value by providing information.

switching costs for consumers

Treat different consumers differently

Devote more marketing effort on most valuable

One-to-One Marketing: Five Key

Permission Marketing (Seth Godin)

PM- the practice of marketing to consumers only

Permission marketing can be contrasted to

Copyright 2013 Pearson Education

Reconciling the Different Marketing

Mass customization and one-to-one and permission

effective means of getting consumers more

According to customer-based brand equity (CBBE)

Copyright 2013 Pearson Education

Reconciling the Different Marketing

approaches emphasize different aspects of

Copyright 2013 Pearson Education

Implication of the new approaches:

traditional marketing mix concept and the notion

The product itself is at the heart of brand equity

At the heart of a great brand is invariably a

Copyright 2013 Pearson Education

Perceived quality and value

Customers perception of the overall quality

To achieve the desired brand image: Product