CHAPTER 5:

DESIGNING MARKETING
PROGRAMS TO BUILD BRAND
EQUITY
PART I-Developing a Brand Strategy
Chapter 2 Customer-based Brand Equity and Brand Positioning
Chapter 3 Brand Resonance and the Brand Value Chain

PART II-Designing and Implementing Brand Marketing Programs

Chapter 4 Choosing Brand Elements to Build Brand Equity
Chapter 5 Designing Marketing Programs to Build Brand Equity
Chapter 6 Integrating Marketing Communications to Build Brand Equity
Chapter 7 Branding in the Digital Era
Chapter 8 Leveraging Secondary Brand Associations to Build Brand Equity

PART III- Measuring and Interpreting Brand Performance

Chapter 9 Developing a Brand Equity Measurement and Management
System
Chapter 10 Measuring Sources of Brand Equity: Capturing Customer Mind-
Set
Chapter 11 Measuring Outcomes of Brand Equity: Capturing Market
Performance

PART IV- Growing and Sustaining Brand Equity

Chapter 12 Designing and Implementing Branding Architecture Strategies
Chapter 13 Introducing and Naming New Products and Brand Extensions
Chapter 14 Managing Brands Over Time
Chapter 15 Managing Brands Over Geographic Boundaries and Market
Segments
 New Perspectives on Marketing

As firms are dealing with enormous shifts in their external

marketing environments:

• The marketing strategies and tactics have changed

dramatically.
 New Perspectives on Marketing
Started in 1990 by avid cyclist Gary Erickson and named to honour
his father, CLIF.

With very little advertising support, it grew in popularity through

the years via word-of-mouth and PR.

CLIF Bar products is a strong socially and environmentally

responsible.

The company is active in its local community and known for its
passionate employees, who are allowed to do volunteer work on
company time.

It uses extensive organic ingredients, relies on biodiesel-powered

vehicles, and supports the constructions of farmer- and Native
American–owned wind farm through carbon offsets.
https://www.youtube.com/watch?v=IGbfgQFAL0M
 New Approaches Embraced by
Marketers
• 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

 Integrating Marketing

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
 Personalizing Marketing
Experiential marketing
• Promotes a product by communicating a product’s features
and benefits and connecting it with unique and interesting
consumer experiences.

Assertions of Pine and Gilmore:

• Commodity business - Charge for stuff
• Goods business - Charge for tangible things
• Service business - Charge for the activities you perform
• Experience business - Charge for the time customers spend
with you

https://www.youtube.com/watch?v=IQovoot_ZUM
Coke-Zero
 Experiential marketing
“Experiential marketing is usually broadly defined as any form
of customer-focused marketing activity, at various touchpoints,
that creates a sensory-emotional connection to customers.”
https://www.youtube.com/watch?v=MOZ47F_l5P8
❖ When Rolls-Royce customers complained in the 1990s that the
new cars weren’t as good as the old models, researchers tracked
the problem to a surprising source: the car’s smell. The company
then recreated the aroma of a 1965 Rolls and now sprays it in all
the new models.

❖ Las Vegas casinos have long infused scents into gaming areas to
encourage gamblers to stay a little longer.

❖ Victoria’s Secret has long used vanilla scents in its stores, but
now retailers like the Samsung Experience concept store are
starting to get in on the action as a way to distinguish themselves
from competitors.

❖ Westin Hotels carefully developed a new fragrance, White Tea, to

infuse into the hotels’ public spaces. The scent is designed to
have international appeal and contribute to a subtle, relaxing vibe
in the lobbies.

❖ Travelers also encounter a unique scent on Singapore Airlines

through the scented towels handed out during all flights.
 Personalizing Marketing
Relationship marketing
• Attempts to provide a more holistic, personalized brand
experience to create stronger consumer ties.
• Benefits:
• 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.
 SOUTH WEST AIRLINE

➢ $179,310,000(Annual Profit)
➢ 624,476(Total Flight flown)
➢ $287 Profit Per flight
➢ $58 Average one way fare
➢ 5 Customers per flight

➢ Bottom line only 5 customers per flight accounted

for total profit.
➢ Hence, to lost business of only one customer per
flight would have meant 20% reduction in profit.
 Relationship Marketing
1.Mass customization
• Making products to fit the customer’s exact
specifications.

• The advent of digital-age technology enables

companies to offer customized products on a
previously unheard-of scale.

• Many services such as banks are also using mass

customization.

• Mass customization also offers supply side benefits.

https://www.youtube.com/watch?v=xD5e-aFYDKU
 Relationship Marketing
2.One-to-one marketing
• Consumers help add value by providing information
to marketers.

• Marketers add value by taking that information and

generating rewarding experiences for consumers.

• Focus on individual consumers through consumer

databases—“We single out consumers.”

• Customer not always wanted to repeat the same

behaviours.
https://www.youtube.com/watch?v=UgwaO8JkXYU
 Relationship Marketing
3.Permission marketing
• The practice of marketing to consumers only after
gaining their express permission.

• An influential perspective on how companies can

break through the clutter and build customer loyalty.

• The worse the clutter gets, the more profitable your

permission marketing efforts become.

• The permission can be obtained by using some

inducement- a free sample, a sales promotion or
discount, a contest, and so on.
https://www.youtube.com/watch?v=axhjLLi0wLg
 Reconciling the Different Marketing
Approaches
According to customer-based brand equity (CBBE) model:
• Different approaches emphasize different aspects of brand
equity.

• Mass customization , one-to-one, and permission marketing

are effective at creating greater relevance, stronger
behavioural loyalty, and attitudinal attachment.

• Potentially effective means of getting consumers more actively

engaged with a brand.

• Experiential marketing , is effective at establishing brand

imagery and tapping into variety of different feelings.
 Product Strategy
Perceived quality
• Customers’ perception of the overall quality or superiority of a
product or service compared to alternatives and with respect to
its intended purpose.

• Product reliability, durability , serviceability, style , and design.

After-marketing
• To achieve the desired brand image: Product strategies should
focus on both purchase and consumption.

• The strongest and most favourable association take place from

actual product experience (Second moment of truth the first
one occurs at purchase)
 Aftermarketing
User manuals –
• An afterthought, put together by engineers who use overly
technical terms and convoluted language.

• Online help forums put the consumer at the mercy of other

equally ignorant consumers or so called experts who may not
able to understand the obstacles face by average consumer.

• This results in initial product experience frustrating or , even

worse, unsuccessful.

• The consumer who figure out the basic functions, may not
able to learn and appreciate its advance features which is
unique to the brand.
 Aftermarketing
Customer service programs –
• After-marketing is more than the design and communication of
product instructions.

• It is about building a lasting relationship with the customer, to

extend their lifetimes.

• Research by Accenture found that two in three customers

switches companies due to poor customer service.

• Three quarter of revenue in defense and aerospace comes

from after market support and related sales
https://www.youtube.com/watch?v=6IfZdR-ACjY
 Aftermarketing
Loyalty programs –
• Purpose is identifying, maintaining, and increasing the
yield from a firm’s ‘best’ customers through long-term,
interactive, value-added relationships.

• It reduces defection rate and increases retention

 Pricing Strategy
Consumer Price Perceptions
• The pricing strategy can dictate:
• How consumers categorize the price of the brand.
• How flexible they think the price is, based on how deeply or
how frequently it is discounted.

• Consumers rank brands according to price tiers in a category.

• Price bands: Range of acceptable prices that indicate the

flexibility and breadth marketers can adopt in pricing their
brands within a tier.

• Value-based pricing strategies: Attempting to sell the right

product at the right price to better meet consumer wishes.
Price Tiers in the Ice
Cream Market
 Pricing Strategy

Setting Prices to Build Brand Equity

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.

https://www.youtube.com/watch?v=2sCeMTB5P6U
Mexican Ad
Setting Prices to Build Brand Equity
Value pricing
• Objective is to uncover the right blend of product design &
delivery, product costs, and product prices that fully satisfies
the needs and wants of consumers and the profit targets of
the firm.

• Communicating value - Marketers may need to engage in

marketing communications to help consumers better
recognize the value.

https://www.youtube.com/watch?v=1pqq-kY2txo
Setting Prices to Build Brand Equity
Product Design & Delivery
❖ Consumers are willing to pay premiums when they perceived
added value in products and services.

❖ It is a myth by some of the critics that assisted online

searches would results in only low cost providers surviving.
Setting Prices to Build Brand Equity
Product costs
The cost should be reduced by finding additional cost saving
through productivity gains, outsourcing, material substitution,
product reformulation, automation etc.

Product Price
How much value consumers perceive in the brand and thus to
what extent they will pay the premium over product costs.
Setting Prices to Build Brand Equity
Price segmentation
Sets and adjusts prices for appropriate market segments.
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.

Everyday low pricing (EDLP)

• Has received increased attention as a means of determining
price discounts and promotions over time.
• Reasons for Price Stability:
✓ Forward buying
✓ Diverting
 Channel Strategy

Channel Design

Indirect Channels

Direct Channels

Online Strategies
 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.

• Nike use various channels to sell its products

-Branded Nike Store
-NikeStor.com: NIKEiD
-Outlet store
-Retail
-Catalogue retailers
-Speciality store
https://www.youtube.com/watch?v=5VAAeiZdC7Q
 Channel Strategy
Indirect channels
• Retailers - Can have a profound influence on the equity of the
brands they sell, in terms of the brand-related 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.
 Channel Strategy
• 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.

https://www.youtube.com/watch?v=z1APG3HjO4Q
 Channel Strategy
• Benefits:
• 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:
• Some companies lack the skills, resources, or contacts to
operate effectively as a retailer.

• Potential conflict with existing retail channels and

distributors.
 Channel Strategy
Store-Within-a-Store
• This concept can take hold through actual leasing
arrangements or less formal arrangements where branded
mini-stores are used.
• Goal in all these situations is to find “win–win” solutions
that benefit channel partners and consumers alike.
• Other Means - Sell directly to consumers via phone, mail,
or electronic means.
 Channel Strategy
Online strategies
• 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.

• They have established distribution and fulfilment systems.

• They can cross-sell between Web sites and stores.

• Most profitable customers are those who shopped multi-channel.

• Multi-channel shoppers spent 82 percent more in each

transaction than those who shopped in only one store.
Services Provided by
Channel Members
Thank you.