Lecture 5: Designing

Marketing Programs to

Build Brand Equity

(Chapter 5)
 1. Identify some of the new
perspectives and developments in
marketing

2. Describe how marketers enhance

product experience

3. Explain the rationale for value pricing

4. List some of the direct and indirect

Learning channel options

Objectives
 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

Channel strategies, communication strategies, pricing strategies, and other

marketing activities can all enhance or detract from brand equity.
Creativity

Personalizing Marketing Reconciling the Different

Marketing Approaches
 Pop-up Stores
Customer experience management (CEM):
process that involves monitoring three different patterns: past Branded Events

Personalizing
patterns (evaluating completed transactions), present patterns
(tracking current relationships), and potential patterns Experiential Stunts
(conducting inquiries in the hope of unveiling future

Marketing
opportunities). Product Sampling

Brand Activism

Guerilla Marketing

Interactive Installations

Rapid expansion of the Internet and continued

fragmentation of mass media
Have brought the need for personalized
marketing
Modern economy celebrates the power of the
individual consumer
Marketers have embraced concepts such as
experiential marketing and relationship
Experiential marketing: promotes a product not marketing
only by communicating a product’s features and benefits but also
by connecting it with unique and interesting consumer
experiences
Relationship
Marketing
The role of relationship marketing is to put customers’ needs front and center of
everything that is done in marketing.

Relationship marketing attempts to provide a more holistic, personalized brand

experience to create stronger consumer ties. It expands both the depth and the
breadth of brand-building marketing programs.

Mass customization One-to-one marketing Permission marketing

• 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.
• Consumers help add value by
• The practice of marketing to
providing information to marketers.
consumers only after gaining their
• Marketers add value by taking that
express permission.
information and generating
• An influential perspective on how
rewarding experiences for
companies can break through the
consumers.
clutter and build customer loyalty.
 Subscription email
updates are a good example
of permission marketing.
Users can opt-in to receive
periodic emails with
updates and offers based on
the interests they expressed
when they registered on a
website or other consumer
touchpoint.

Ecommerce giant Amazon

has recommended products
down to a science. Amazon
will use the data you’ve
provided to surface
products you would be
more likely to buy.

Nike enables customers to put their own personalized

message on a pair of shoes with the NIKEiD program.
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 the customer-based brand equity model:
Different approaches emphasize different aspects of
brand equity
 Perceived Quality
Customers’ perceptions of overall quality
or superiority of a product or service
Compared with alternative
With respect to its intended purpose

Managing Customers Post-Purchase

Product Strategy
• Product strategies should focus on both
purchase and consumption
At the heart of a great brand is invariably a great product.
• Particularly important in the context of e-
commerce
• Processes or programs that can help with
managing customers post-purchase
– User manuals
– Customer service programs
– Loyalty programs
Pricing
Consumer Price Perceptions

Strategy
• Choosing a pricing strategy to build
brand equity means determining
– A method for setting current prices, and
– A policy for choosing the depth and
duration of promotions and discounts
• Factor related to costs of making and
selling a product and relative price of
competing product are important
determinant in pricing strategy
Price is the one revenue-generating element of – However, firms are putting greater
the traditional marketing mix importance on consumer perceptions
Price premiums are among the most and preferences
important benefits of building a strong brand
Figure 5.3 Price Tiers in the Ice Cream Market
Figure 5.4 Services Provided by Channel Members

Source: Reprinted from Donald Lehmann and Russell Winer, Product Management, 2nd
ed. (Burr Ridge, I L: Irwin, 1997), Figure 13-8 on p 379. © The McGraw-Hill Companies.
razor-and-blades pricing model freemium model

pay-as-you-wish pricing
 Setting Prices to Build Brand Equity

Value Pricing Communicating

Value

lue

ng
Price Everyday Low Reasons for
Segmentation Pricing Price Stability
Successful value-pricing strategy should

Value pricing
strike a balance among
– Product design and delivery
– Product costs, and
– Product prices

Objective is to uncover the right blend of product

quality, product costs, and product prices
That fully satisfies the needs and wants of
consumers
As well as the profit targets of the firm
Communicating
Value

Just delivering good value is not sufficient

for achieving pricing success
Consumers need to understand and
appreciate the value of the brand
Value is not always obvious
At times, must be communicated
 Setting Prices to Build Brand Equity
• Price segmentation
– Sets and adjusts prices for appropriate market
segments
• Everyday low pricing
– Avoids the sawtooth pattern of alternating price
increases and decreases
– Avoids discounts
• In favor of a more consistent set of “everyday”
base prices on products
• Reasons for price stability
– Forward buying
– Diverting
 Channel Strategy

Channel Indirect Direct Online

Design Channels Channels Strategies

Selling through third-party Selling through personal

intermediaries: Agents, broker contacts from the company to
representatives, wholesalers or prospective customers: Mail,
distributors, or retailers or phone, electronic means, or in-
dealers person visits
Indirect Channels
Retailers tend to have the most visible and
direct contact with customers
– Has the greatest opportunity to affect
brand equity
• Push and pull strategies
• Channel support
• Retail segmentation
• Cooperative advertising
Direct Channels
Manufacturers may choose to sell directly to
consumers
Brand equity issues of selling through direct
channels include:
• Company-owned stores
• Store-within-a-store
• Other means may be by phone, mail, or
electronic means
 Which channels Nike
sells its shoes, apparel,
and equipment
products?

• Branded Nike Stores

• NikeStore.com
• Outlet stores
• Retail
• Catalog retailers
• Specialty stores

OMNICHANNEL INTEGRATION
 • Integrated channels allow consumers to
shop when and how they want.
• Integrating channels benefits
Online manufacturers, retailers, and consumers.

Strategies