CH 12 CREATING BRAND EQUITY

1. Brand: A symbol, sign, name or term that a company/product uses to differentiate it from its
competitors
2. THE ROLE OF BRANDS
a. For consumers: Meet/exceed consumer expectations and reduce risk
b. Gains customer loyalty and provides desired services/experiences
c. For Firms: Act to organise finance, inventory etc.
d. Brand name can be protected plus legal facets
3. Why brand loyalty?
a. Assures a certain level of quality to consumers
b. Provides predictability and security of demand
c. Creates barriers to entry for new entrants
d. Loyalty can lead to willingness to pay more price
e. Can be used as a competitive advantage
4. Brand helps consumers differentiate one product from others in the market
5. Brand equity: added value that is associated with services and goods that are being supplied
to the consumers
6. Customer based brand equity: a. Make sure your brand is differentiated and is not a
commodity
b. Consumers brand knowledge
c. Brand effects on the perception, preferences, behaviour etc.

7. Brand Promise: marketers vision of what the brand must be and do for the consumers
8. BrandAsset Valuator Model: Differentiation, Relevance, Esteem and Knowledge
9. Brand Strength and brand stature
10. (Strength, Stature): (H,L-Niche, momentum),(H,H-Leadership),(L,L-New,Unfocused),(L,H-
Eroding)
11. BrandDynamics Model: a. Power- Volume of sales
b. Premium- price premium
c. Potential- future growth opportunities

12. Brand Resonance Model- Create broad brand awareness-points of difference- positive
reactions- deep active loyalty
13. Salience-Performance/imagery-Judgements/Feelings-resonance
14. Brand equity drivers- a. initial choice for brand elements
b. Product/service accompanying brand and marketing activities
c. Other associations indirectly transferred to the brand

15. Brand Element Choice Criteria- Memorable, Meaningful, Likable, Transferable, Adaptable
and Protectable
16. Brand contact- any information bearing experience that a consumer has had along the
market journey about the brand
17. Internal branding- ensure employees live through the brand promise. To do this: a. Choose
the right moment
b. Link the external and internal marketing
 c. Bring the brand alive for employees
d. keep it simple

Measuring brand equity; brand audit and brand tracking studies

18. Brand reinforcement- ensuring that brand value does not depreciate, continuously improve
products services and marketing.
Two ways to do this; a. core ideas and benefits provided to consumers b. how it is different
from other products

19. Brand introducing new products- brand extension

20. New brand with already existing brand- sub brand
21. Brand owning brand extensions and sub-brands called parent brand
22. Line extension- same product offering but different variations, category extension- use
parent brand to penetrate into new product segment
23. Brand mix- set of all brand lines that a seller makes
24. Branded variants- specific brand lines pushed to different sellers
25. Licensed products- brand name lent to other manufacturers

Alternative branding strategies- individual names, company brand name, sub brand name

** House of brands, branded house (beneficial to have flagship product)

26. Why to introduce new brands?

a. Increase shelf presence and retailer dependence
b. Avoid diversity seeking consumer to move to other brands
c. Promote internal competition
d. Utilise economies of scale for advertising, supply etc.

Brand portfolio- set of all brands a firm offers for sale within a particular market/product segment

Brand portfolio aspects;

a. Flankers- create new brand to meet competition but not outperform flagship brand
b. Cash cow- brands low on maintenance but still earns profits
c. Low end entry level- brand with cheaper offerings targeting new customers
d. High end prestige- using a high end product to push up overall brand image

Advantages of brand extensions;

a. Improved odds of new product success

b. No need to establish both brand and product, only product works
c. Reduces cost of marketing
d. Helps clarify core values and build consumer loyalty
e. Renew interest and liking for the brand
Disadvantages of brand extension;

a. Brand dilution
b. Brand cannibalization

Customer equity factors;

a. Acquisition
b. Retention
c. Add on spending
CH 13 SETTING PRODUCT STRATEGY

*Product- anything that can be offered to a market to satisfy a want/need

 Customer value hierarchy; core benefit-basic product-expected product-augmented product

(exceed expectations)-potential product
 Types of good; a. durable; survive multiple uses over long term (b) non durable- single/short
term use (c) services
 Consumer goods classification- (a)convenience goods: purchased frequently and with less
efforts (a) staples; consumer goods purchased on regular basis (b)impulse goods (c)
emergency goods
Shopping goods- comparatively more thought goes into this (a) homogenous- almost same
offerings but differ in price (b) heterogenous- different offerings at different prices (c)
speciality goods (d) unsought goods

 Industrial goods- materials and parts, capital items, supplies and business services
 Materials and parts- raw materials (farm produce, natural materials), manufactured
materials (component materials, component parts)
 Capital items- installation and equipment
 Supplies- maintenance and repair, operating supplies
 Business services- maintenance and repair, business advisory services
 Product differentiation- form, feature or performance quality, conformance quality,
durability, reliability, repairability, style, customization
 Services differentiation- ease of ordering, delivery, installation, customer training, customer
consulting, maintenance and repair and returns (controllable and uncontrollable)

** design thinking- observation, ideation and implementation

Product hierarchy- need family, product family, product class, product line, product type and item

a. Product system- group of different products that work in a compatible manner

b. Product mix- set of products manufacturer offers for sale

o Width- different product types

o Length- different types of products serving same purpose
o Depth- types of variation under same product
o Consistency- close relation between the product lines

Line stretching- company lengthens its existing product line

Down market stretch, up market stretch, two stretch

Types of product mix pricing; a. product line pricing b. optional feature pricing c. captive
product pricing d. two part pricing e. by product pricing f. product bundling pricing ( regular
bundling, mixed bundling)
 o Co branding- same company co branding, joint venture co-branding, multiple sponsor
co-branding, retail co-branding
o Advantages of co branding- easy to position, possibility of greater sales, newer
consumer base, lower cost of product introduction and means to collect information
about consumers
o Disadvantages of co-branding- risks and lack of control over other brand, failure to meet
expectations will affect both brands negatively, dilute brand image
o Ingredient branding

** why packaging?

Self-service, consumer affluence, company and brand image, innovation opportunity

CH 15 INTRODUCING NEW MARKET OFFERINGS

Why do new products fail?

o Fragmented markets
o Social economic and government constraints
o Cost of development
o Shortage of capital
o Lack of sufficient development time
o Poor launch timing
o Shorter product lifecycles
o Lack of organizational support

Organizing new product development;

 Cross functional teams

 Crowd sourcing
 Stage gate systems

Generating ideas;

 Interacting with employees

 Interacting with outsiders
 Studying competitors
 Adopting creativity techniques

Methods of stimulating creativity;

 Attribute listing
 Morphological analysis
 Reverse assumption analysis
 Forced relationships
 New contexts
 Mind mapping

** Companies must try to avoid DROP error wherein they forego a good idea too early on in the
process

(overall probability of success) = (probability of technical completion) x (probability of

commercialization given technical completion) x (probability of economic success given
commercialization)

Product dimensions can be answered through questions like;

 Communicability and believability

 Need level
  Gap level
 Perceived value
 Purchase intention
 User targets, purchase occasions and frequency

Marketing strategy development;

1. Determine target market size, characteristics and behaviour, planned brand positioning,
sales, market shares and estimated profits for first couple of years
2. Next determine price, distribution channels, and budgeting for the initial first year
3. Lastly plan long term sales and profit goals along with marketing strategies

Business Analysis; a. estimating total sales b. estimating costs and profits

** Survival age distribution: number of units that fail in year1, 2, 3 etc.

PRODUCT DEVELOPMENT;

a. Physical prototypes
b. Customer tests

MARKET TESTING;

a. Consumer Goods Market testing;

i. Sales Wave Research
ii. Simulated test marketing
iii. Controlled test marketing
iv. Test markets
b. Business goods market testing

COMMERCIALIZATION; When (First entry, parallel entry, late entry)- to whom – how

**CPS- Critical Path Scheduling (chart showing simultaneous and sequential marketing plans)

STAGES IN ADOPTION PROCESS;

a. Awareness
b. Interest
c. Evaluation
d. Trial
e. Adoption

FACTORS INFLUENCING ADOPTION PROCESS;

a. Readiness to try new products and personal influence

i. Innovators
ii. Early adopters
iii. Early majority
 iv. Late majority
v. Laggards
b. Characteristics of the innovation;
i. Relative advantage
ii. Compatibility
iii. Complexity
iv. Divisibility
v. Communicability
c. Organizations readiness to adopt innovations
CH 16 DEVELOPING PRICING STRATEGIES AND PROGRAMS

Buyers can

i. Compare prices from thousands of vendors

ii. Check prices at points of purchase
iii. Name their price and have it met
iv. Get free products

Sellers can

i. Monitor customer behaviour and offer tailor made prices to individuals

ii. Give certain customers access to special prices

Both buyers and sellers can;

i. Negotiate across platforms to reach a conclusive price

Reference prices: a consumers internal mapping system for prices. Eg fair price, typical price,
expected future price etc.

Price quality inferences- higher price must mean better quality

Price endings- not rounding off prices, psychology of consumers

1. SELECTION OF PRICING CRITERIA;

 Survival
 Maximising current profit
 Maximum market share
 Market skimming
 Product quality leadership
 Other objectives
2. DETERMINING DEMAND
 Price sensitivity
 Estimating demand curves (surveys, price experiments, statistical analysis)
 Price elasticity of demand

ESTIMATING COSTS;

 Types of costs and levels of production (variable cost, fixed cost, total cost)
 Accumulated production ( average cost increases as experience of production increase-
called learning curve)
 Target costing (reduction in costs due to improved manufacturing/business processes)

ANALYZING COMPETITORS COSTS, PRICES AND OFFERS

Value based competitors; low cost but high quality product offering

SELECTING A PRICING METHOD;

 Markup pricing- adding additional amount to estimated costs

 Target return pricing- set prices so as to meet desired targets
 Perceived value pricing- price based on what the consumer perceives or feels about the
product
 Value pricing- charge loyal customer low prices for good quality
 ELDP- Everyday low pricing without any special sales promotion
 High-low pricing- Charge slightly higher daily prices but go for sales promotions and periodic
discounts
 Going rate pricing- pricing based on competitors prices
 Auction type pricing
i. English auctions (price from low to high)
ii. Dutch auctions (price from high to low)
iii. Sealed bid auctions (buyers can submit only one bid and not know the bids of
others)

SELECTING THE FINAL PRICE:

a. Impact of other marketing activities (brand quality, advertisement)

b. Company pricing policies
c. Gain and risk sharing pricing ( is the risk worth the price)
d. Impact of price on other parties (dealers, distributors reactions to the set prices)

GEOGRAPHICAL PRICING;

 Barter (exchange of goods)

 Compensation deal ( accept some amount of money and the rest in goods)
 Buyback agreement (sell facilities to another company and accept money in form of
products made by that company)
 Offset (receives full payment in cash for sales overseas but has to spend substantial amount
of money in that country within a stated time period)

PRICE DISCOUNTS AND ALLOWNACES;

 Discount
 Quantity discount
 Functional discount
 Seasonal discount
 Allowances

PROMOTIONAL PRICING;

 Loss leader pricing

 Special event pricing
 Special customer pricing
  Cash rebate
 Low interest financing
 Longer payment terms
 Warranties and service contracts
 Psychological discounting

DIFFERENTIATED PRICING;

 Customer segment pricing (same product, different prices to different consumer groups)
 Product form pricing (same product, different versions with different prices)
 Image pricing (same product but due to perceived image different pricing)
 Channel pricing (depends on which channel it is being sold)
 Location pricing ( based on location)
 Time pricing(vary with time)

**yield pricing- airline pricing model

WHY PRICE CUTS?

a. Reduce excess plant capacity

b. Drive to dominate market with lower prices

Problems with price cuts;

a. Low quality trap- consumers perceive that the quality is low

b. Fragile market share trap- might attract consumers for the short run but loyalty is low
c. Shallow pockets trap- competitor reduces prices, but can survive longer in market due to
more cash reserves
d. Price war

Kinds of price changes;

a. Delayed quotation pricing; pricing disclosed only after product is finally delivered
b. Escalator clauses- priced for original cost as of today plus any inflation increase
c. Unbundling- charging different for some elements of the product
d. Reduction of discounts
CH 17 DESIGNING AND MANAGING INTEGRATED MARKETING COMMUNICATIONS

Marketing communications- means by which companies plan on reaching out to firms

Marketing communications mix;

 Advertising
 Sales promotion
 Events and experiences
 Public relations and publicity
 Online and social media marketing
 Mobile marketing
 Database marketing
 Personal selling

Macro model of communication process- sender- receiver, message- media, encoding, decoding,
response and feedback and noise

Micromodel;

i. Awareness
ii. Knowledge
iii. Liking
iv. Preference
v. Conviction
vi. Purchase

Identify target audience- state objectives- design communications- select media channels- establish
budget- decide on media mix- measure results- manage integrated marketing communications

Communication objective;

a. Establish need for category

b. Build brand awareness
c. Build brand attitude
d. Build brand purchase decision

** principle of congruity

Personal communication channels- advocate, expert and social channels

Establishing marketing communications;

i. Affordable method
ii. Percentage of sales method
iii. Competitive parity method
iv. Objective and task method
a. Establish the market share goal
b. Select the percent of market that can be reached by advertising
c. Find the percentage of aware prospects who would try out the brand
d. Calculate number of advertising impressions per 1 percent
e. Find number of gross ratings points to be purchased
f. Calculate the advertising budget wrt to all the above
 CH 18 MANAGING MASS COMMUNICATIONS

Types of advertising;

a. Informative advertising
b. Persuasive advertising
c. Reminder advertising
d. Reinforcement advertising

Advertising budget factors;

a. Stage in product life cycle

b. Market share and consumer base
c. Competition and clutter
d. Advertising frequency
e. Product substitutability

Reach- number of people message is being sent to

Frequency- number of times

Impact- Qualitative measure

Total exposure = reach x frequency

Weighted exposure= reach x frequency x impact

TYPES OF ADVERTISING;

1. Continuous- appear evenly through a given period

2. Concentration- majority only through a particular period
3. Flighting- advertising followed for a specific period without any activity for consecutive
periods
4. Pulsing- continuous advertising at low levels

Forward buying; buy in bulk during deal and sell it off as fast as possible

Diverting; Buy in bulk in areas where deal is being offered and sell it to areas where no deal is
present
CH 19

** Viral marketing- online form of word of mouth

Customer loyalty ladder

1. Satisfaction
2. Repeated purchase
3. Word of mouth
4. Evangelism
5. Sense of ownership

CH 20

*Market demmasification

Lifetime value- good indicator of campaign success

Uses of data

a. Identify prospects
b. Determine which consumer gets which offer
c. Deepen customer loyalty
d. Reactivate customer purchases
e. Avoid customer mistakes

Sales force objectives- prospecting, targeting, communicating, selling, servicing, information

gathering, allocating

Principles of personal selling;

1. Prospecting and qualifying

2. Preapproach
3. Presentation and demonstration
4. Overcoming objections
5. Closing
6. Follow up and maintenance
CH 21 MARKETING CHANNELS

*Push and pull strategy

Omnichannel- selling only through one channel

Advantages of multiple channels;

i. Increased market coverage

ii. Lower channel cost
iii. Ability to do more customized selling

Sales channel- delivery channel- dervice channel

Channel levels- zero level, one level, two level, multi level

Channel outputs;

i. Desired lot size

ii. Waiting and delivery time
iii. Spatial convenience
iv. Product variety
v. Service backup

Types of distribution- exclusive, selective and intensive distribution

Terms and responsibilities of channel members;

a. Price policy
b. Conditions of sale
c. Distributors territorial rights
d. Mutual services and responsibilities

TYPES OF CHANNEL POWER;

i. Coercive power
ii. Reward power
iii. Legitimate power
iv. Expert power
v. Referent power