Strategic Brand Management: Building,

Measuring, and Managing Brand Equity

Fifth Edition

Chapter 5
Designing Marketing
Programs to Build Brand
Equity
Learning Objectives
5.1 Identify some of the new perspectives and
developments in marketing
5.2 Describe how marketers enhance product experience
5.3 Explain the rationale for value pricing
5.4 List some of the direct and indirect channel options
5.5 Summarize the reasons for the growth in private labels
New Perspectives on Marketing
• As firms are dealing with enormous shifts in their external
marketing environments:
– Marketing strategies and tactics have changed
dramatically
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
Figure 5-1: The New Capabilities of the
New Economy (1 of 2)
Consumers
Can wield substantially more customer power.
Can purchase a greater variety of available goods and services.
Can obtain a great amount of information about practically anything.
Can more easily interact with marketers in placing and receiving
orders.
Can interact with other consumers and compare notes on products and
services.
Figure 5-1: The New Capabilities of the
New Economy (2 of 2)
Companies
Can operate a powerful new information and sales channel with
augmented geographic reach to inform and promote their company
and its products.
Can collect fuller and richer information about their markets,
customers, prospects, and competitors.
Can facilitate two-way communication with their customers and
prospects, and facilitate transaction efficiency.
Can send ads, coupons, promotions, and information by e-mail to
customers and prospects who give them permission.
Can customize their offerings and services to individual customers.
Can improve their purchasing, recruiting, training, and internal and
external communication.
Integrating Marketing
• Personalizing Marketing
• Reconciling the Different Marketing Approaches
 Personalizing Marketing
• 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
marketing
Relationship Marketing (1 of 3)
• Experiential Marketing
• Relationship Marketing
• Mass Customization
• Permission Marketing
Relationship Marketing (2 of 3)
• Experiential marketing
– Promotes a product by communicating features and benefits and
connecting it with unique and interesting consumer experiences
• Relationship marketing
– Transcend an actual product or service to create stronger bonds with
consumer
– Maximize brand resonance
 Figure 5-2: Brand Experience Scale
(Experiential Marketing)

Sensory This brand makes a strong impression on my visual sense or

other senses.
I find this brand interesting in a sensory way.
This brand does not appeal to my senses.
Affective This brand induces feelings and sentiments.
I do not have strong emotions for this brand.
This brand is an emotional brand.

Behavioral I engage in physical actions and behaviors when I use this

brand.
This brand results in bodily experiences.
This brand is not action oriented.
Intellectual I engage in a lot of thinking when I encounter this brand.
This brand does not make me think.
This brand stimulates my curiosity and problem solving.
Relationship Marketing (3 of 3)
• Mass customization
– Making products to fit customers’ exact specifications
▪ Digital-age technology enables customized products
• Permission marketing
– The practice of marketing to consumers only after
gaining their express permission
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
Product Strategy
• Perceived Quality
• Managing Customers Post-Purchase
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 (1 of 2)
• Product strategies should focus on both purchase and
consumption
• 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
Managing Customers Post-
Purchase (2 of 2)
• User manuals: Often an afterthought; put together by
engineers who often use overly technical terms and
convoluted language.

• Customer service programs: Aftermarketing is more than

the design and communication of product instructions.

• Loyalty programs: Purpose is identifying, maintaining, and

increasing the yield from a firm’s “best” customers through
long-term, interactive, value-added relationships.
Pricing Strategy
• Price is the one revenue-generating element of the
traditional marketing mix
– Price premiums are among the most important benefits
of building a strong brand
Consumer Price Perceptions
• 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
– However, firms are putting greater importance on
consumer perceptions and preferences
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, IL: Irwin, 1997), Figure 13-8 on p 379. © The McGraw-Hill Companies.
age
Setting Prices to Build Brand
Equity (1 of 4)
• Value Pricing
• Communicating Value
• Price Segmentation
• Everyday Low Pricing
• Reasons for Price Stability
Setting Prices to Build Brand Equity
(2 of 4)

• Value pricing
– 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
• Successful value-pricing strategy should
strike a balance among
– Product design and delivery- added value,
changes formula, new flavours, innovation
– Product costs –low cost through productivity gains,
outsourcing, material substitution, reformulation,
factory improvement
– Product prices- customers’ value perception
Setting Prices to Build Brand
Equity (3 of 4)
• 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 (4 of 4)
• 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 -retailers order more product than they plan to sell during the
promotional period so that they can later obtain a bigger margin by selling the remaining
goods at the regular price after the promotional period has expired.

– Diverting- retailers pass along or sell the discounted products to retailers outside the
designated selling area.
Channel Strategy (1 of 2)
• Channel Design
• Indirect Channels
• Direct Channels
• Online Strategies
Channel Strategy (2 of 2)
• Channel design
– Direct channels
▪ Selling through personal contacts from the company
to prospective customers
– Mail, phone, electronic means, or in-person visits
– Indirect channels
▪ Selling through third-party intermediaries
– Agents, broker representatives, wholesalers or
distributors, or retailers or dealers
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
– 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 support
▪ Retail segmentation
– Retailers may need to be divided into segments or even treated individually so that
they will provide the necessary brand support.

▪ Cooperative advertising
– One relatively neglected means of increasing channel support is well-designed
cooperative advertising programs.
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
TO SUM UP: