Chapter 6-9 PBM
Chapter 6-9 PBM
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2. Personalizing Marketing
To adapt to the increased consumer desire for and competitive forces impelling toward
personalization, marketers are embracing concepts such as experiential marketing, one-to-one
marketing, and permission marketing.
Experiential marketing
Experiential marketing is the concept of creating an experience that integrates elements of
emotions, logic, and general thought processes to connect with the consumer.
Experiential marketing promotes a product by not only communicating a product’s features
and benefits but also connecting it with unique and interesting experiences.
One marketing writer describes experiential marketing by,” the idea is not to sell something,
but to demonstrate how a brand can enrich a customer’s life”.
This unique concept is associated with brands and the experience consumer has with them.
Columbia University’s Bernd Schmitt describes how experiential marketing differs from
traditional marketing in several distinct ways.
Focuses on customer experience
Focuses on consumption situation
View consumers as rational and emotional animals
Engages all 5 senses i.e. see, hear, touch, smell & touch
Objective of experiential marketing is to establish the connection in such a way that the
consumer responds to a product offering based on both emotional and rational
response levels.
Nowadays striking displays with powerful visual elements: such as websites, visual
media such as print ads are made visually appealing.
One-To-One Marketing
One-to-one marketing is thus based on several fundamental strategies:
• 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.”
Another tenet of one-to-one marketing is treating different consumers differently because of their
different needs, and their different current and future value to the firm.
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Permission marketing
Permission marketing encourages 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. E.g. Amazon takes permission from the consumer before
sending recommendations.
This permission marketing enables companies to build a unique brand images leading to
strong brand equity.
Permission marketing is capturing marketers’ interest because of the powerful technology
that now exists on the internet.
With the help of large databases and advanced software, companies can store customer data
and process this information to send targeted, personalized marketing messages to customers.
Five Steps in Permission Marketing
• Must offer overt, obvious, and clearly delivered incentive to prospect to volunteer
• Must offer a curriculum over time, teaching the consumer about the product or service
• Must reinforce the incentive over time
• Must increase the level of permission the marketer receives from the customer
• Must leverage permission to generate profits
6.1. Product Strategy
At the heart of a great brand is invariably a great product. Designing and
implementing a product or service that fully satisfies consumers’ needs
and wants is a prerequisite for successful marketing, regardless of
whether the product is tangible or intangible. This section considers two
topics:
I. Perceived quality and value
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Research identified the following general dimensions of product quality:
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The customer profit rate tends to increase over the life of the
retained customer.
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The term after marketing describes a necessary new mind-set that
reminds business of the importance of a lasting relationship with
customers, to extend their lifetimes.
After marketing can also involve the sale of related,
complementary products that are ingredients, help to make up a
system.
Seven after marketing activities:
Establishing and maintaining customer information file (tracking all
current, potential, inactive, and past customers).
“Blueprinting” customer contacts.
Analyzing customer feedback (explore nature of satisfaction and
dissatisfactions).
Conducting customer satisfaction surveys
Formulating and managing communication programs (sending
customers proprietary magazines newsletters).
Hosting special customer events or programs (celebrating
relationship with the brand).
Identifying and reclaiming lost customers (one of the best source of
new customers).
Loyalty programs: loyalty or frequency of programs have become
one popular means by which marketers can create strong ties to
customers.
The purpose of frequency marketing has been defined as
“identifying, maintaining, and increase the yield from a firm’s ‘best’
customers through long-term, interactive, value-added
relationships.
Loyalty programs which are practiced by many business
organizations include: membership reward program, incentives,
free trip, etc.
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Some tips for building effective loyalty programs as follow:
Know your audience: most loyalty marketers employed
sophisticated databases and software to determine which customer
segment to target with a given program. It is important to target
consumers whose purchasing behavior can be changed by the
program.
Change is good: marketers must consistently update the program to
attract new customers and prevent other companies in their category
from developing “me-too” programs. “Any loyalty programs that stays
static will die”, said one executive.
Listen to best customers: suggestions and complaints from top
customers must be carefully considered, because they can lead to
improvements in the program.
Engaging people: it is important to make customers want to join the
program. This includes making the program easy to use and offering
immediate rewards when customers sign-up. Once they become
members, customers must be made to “feel special”, for example by
send them birth day greetings, special offerings or invitations to
special events.
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Pricing is crucial for brand image. To establish price, product cost should
not be the only consideration. But consumer perception for potential
product value and sensitivity to price is also of equal importance.
Competitor’s price also cannot be ignored because price war will not
benefit anyone in the market. An effort has to be made to educate the
consumer about cost of serving them, for them to understand price of
product.
Choosing a pricing strategy to build brand equity involves determining the
following:
A method or approach for how price will be set.
A policy or set of guidelines for the depth and duration of promotions and
discounts over time.
Chanel design
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Product information needs are high
Product customization is high
Product quality assurance is important
Purchase lot size is important
Logistics are important
On the other hand, indirect channels may be profitable when:
A broad assortment is essential
Availability is crucial
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Television- is the most powerful medium because it allows for sight,
sound and motion and reaches a broad spectrum of consumers.
Print media- offer a stark contrast to broadcast media. Most important,
b/c of their self-placed nature, magazines and newspapers can provide
detailed product information. The two main print media magazines and
news-papers have many of the same advantages and disadvantages.
Magazines are effective at building user and usage imagery. News-
papers are more timely and pervasive.
Direct response- refers to the use of mail, telephone and other non
personal contact tools.
Online- the two crucial online brand-building tools are Web site and
interactive ads.
Event marketing and sponsorship- refers to public sponsorship
events related to sport, art, entertainment or social causes.
Consumer promotion- are designed to change the choices, quantities,
or timing of consumers’ product purchase. e.g. samples,
demonstrations, coupons, refund, contest, bonus, price-off, etc.
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CHAPTER - 7. DESIGNING AND IMPLEMENTING BRANDING STRATEGIES
4 1
2
The matrix (or grid) has the brands of a firm as rows and the
corresponding products as columns.
The rows of the brand-product matrix represent brand-product
relationships and capture the brand extension strategy of the firm in
terms of the number and nature of products sold under the firm’s
brands.
A brand line consists of all products—original as well as line and
category extensions—sold under a particular brand.
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Thus, a brand line would be one row of the matrix. A potential new
product extension for a brand must be judged by how effectively it
leverages existing brand equity from the parent brand to the new
product, as well as how effectively the extension, in turn, contributes
to the equity of the parent brand.
The columns of the brand-product matrix, on the other hand,
represent product-brand relationships and capture the brand
portfolio strategy in terms of the number and nature of brands to be
marketed in each category.
The brand portfolio is the set of all brands and brand lines that a
particular firm offers for sale to buyers in a particular category.
The branding strategy for a firm reflects the number and nature
of common and distinctive brand elements applied to the different
products sold by the firm.
In other words, branding strategy involves deciding which brand
names, logos, symbols, and so forth should be applied to which
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products and the nature of new and existing brand elements to be
applied to new products.
A branding strategy for a firm can be characterized according to
its breadth (i.e., in terms of brand-product relationships and brand
extension strategy) and its depth (i.e., in terms of product-brand
relationships and the brand portfolio or mix).
For example, a branding strategy can be seen as both deep and
broad if the firm has a large number of brands, many of which
have been extended into various product categories.
In other words, branding strategy involves deciding which brand
names, logos, symbols, and so forth should be applied to which
products and the nature of new and existing brand elements to be
applied to new products.
Today, branding is such a strong force that hardly anything goes
unbranded. Assuming a firm decides to brand its products or
services, it must choose which brand names to use. Three
general brand strategies are popular:
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Sales of the new product are likely to be strong if the
manufacturer’s name is good. Corporate-image associations
of innovativeness, expertise, and trustworthiness have been
shown to directly influence consumer evaluations.
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CHAPTER -8
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Figure 8.1, Ansoff’s Growth Share Matrix
Product
Existing New
New
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The existing brand that gives birth to a brand extension or sub-brand is the
parent brand. If the parent brand is already associated with multiple
products through brand extensions, it can also be called a master brand or
family brand.
8.1.1 Brand Extensions
A Brand Extension occurs when a firm uses an established brand name to
introduce a new product (approaches 2 or 3). When a new brand is combined
with an existing brand (approach 3) also called a sub-brand. An existing
brand that gives birth to a brand extension is the parent brand. If the
parent brand is already associated with multiple products through brand
extensions, then it may also be called a family brand.
Types of Brand Extension
Line Extension
The parent brand is used to brand a new product that targets a new market
segment with in a product category currently served by the parent brand.
A line extension often adds a different flavor or ingredient variety, a different
form or size, or a different application for the brand. E. g: Head & Shoulders
Category Extension
The parent brand is used to enter a different product category from that
currently served by the parent brand.
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Permit consume variety-seeking
Increase the probability of gaining distribution and trial
Increase efficiency of promotional expenditures
Reduce costs of introductory & follow-up marketing programs (save
40-80%) E.g. Apple iPods
Avoid costs of developing a new brand
Allow for packaging & labeling efficiencies
Provide Feedback Benefits to the Parent Brand and Company
Clarify Brand meaning – e.g. Cadbury’s means ‘sweetness and
celebration’
Enhance the Parent brand image – by adding new brand
associations
Bring in new customers and increase market coverage.
Revitalize the brand
Permit subsequent extensions
Disadvantages of Brand Extensions
Despite their potential advantages, brand extensions have a number of disadvantages
Can confuse or frustrate consumers: a Different variety of line extensions may confuse
and perhaps even frustrate consumers about which version of the product is the “right
one” for them.
Can encounter retailer resistance: retailers often feel that many line extensions are
merely “me-too” products that duplicate existing brands in a product category and should
not be stocked even if there is space. Wal-Mart, the biggest retailer in the United States,
attempts to stock the items that sell best, dropping as many as 20 percent of slow-moving
items from its shelves annually.
Can fail & hurt parent brand image: The worst possible scenario for an extension is not
only to fail, but to harm the parent brand image in the process. Unfortunately, these
negative feedback effects can sometimes happen. Understanding when unsuccessful
brand extensions may damage the parent brand is important.
E.g Xerox Computers-synonymous with copiers & no one believed they could
make computers
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Can succeed but cannibalize sales of parent brand: Even if sales of a brand extension
are high and meet targets, success may result merely from consumers switching from
existing offerings of the parent brand—in effect cannibalizing it.
Amul Butter-”reduced salt butter” is slowly eating up Amul normal butter.
Can dilute brand meaning: The potential drawbacks of a brand extension’s lack of
identification with any one category and a weakened image may be especially evident
with high-quality or prestige brands. To protect their brands from dilution, many up-and-
coming fashion companies and designers seeking to establish their brand through a
family of brand extensions are now forging exclusive licensing partnerships with a single
retailer.
Can cause the company to forgo the chance to develop a new brand
One easily overlooked disadvantage of brand extensions is that by introducing a new product as
a brand extension, the company forgoes the chance to create a new brand, with its own unique
image and equity.
8.3 How Consumers Evaluate Extensions
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Negative associations are not created by the brand extension:
consumers must also not infer any new attribute or benefit
associations that did not characterize the parent brand but which they
see as a potential drawback to the extension.
The more these four assumptions hold true, the more likely it is that
consumers will form favorable attributes towards an extension.
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CHAPTER -9: MANAGING BRANDS OVER TIME
One of the obvious challenges in managing brands is constant change in the marketing
environment.
Shifts in consumer behavior, competitive strategies, government regulations, technological
advances and other areas can profoundly affect the fortunes of a brand. Besides these external
forces, the firm’s own strategic focus may force minor or major adjustments in the way it
markets its brands. Effective brand management thus requires proactive strategies designed to at
least maintain—if not actually enhance—customer-based brand equity in the face of all these
different forces.
9.1 Reinforcing Brands
Because consumer responses to marketing activity depend on what they
know and remember about a brand, short-term marketing actions, by
changing brand knowledge, necessarily increase or decrease the long-term
success of future marketing actions.
As a company’s major enduring asset, a brand needs to be carefully
managed so its value does not depreciate. Marketers can reinforce brand
equity by consistently conveying the brand’s meaning in terms of (1) what
products it represents, what core benefits it supplies, and what needs it
satisfies; and (2) how the brand makes products superior, and which strong,
favorable, and unique brand associations should exist in consumers’ minds.
NIVEA, one of Europe’s strongest brands, has expanded from a skin cream
brand to a skin care and personal care brand through carefully designed and
implemented brand extensions that reinforce the brand promise of “mild,”
“gentle,” and “caring.”
Reinforcing brand equity requires that the brand always be moving forward—
in the right direction and with new and compelling offerings and ways to
market them. In virtually every product category, once-prominent and
admired brands—such as Fila, Oldsmobile, Polaroid, and Circuit City— have
fallen on hard times or gone out of business.
An important part of reinforcing brands is providing consistent marketing
support and Protecting Sources of Brand Equity.
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Maintaining Brand Consistency
Without question, the most important consideration in reinforcing brands is consistency in the
nature and amount of marketing support the brand receives.
Brand consistency is critical to maintaining the strength and favorability of brand
associations.
Consistency doesn’t mean uniformity with no changes: While there is little need to
deviate from a successful position, many tactical changes may be necessary to maintain
the strategic thrust and direction of the brand.
When change is necessary, marketers should vigorously preserve and defend sources of
brand equity.
Protecting Sources of Brand Equity
Although brands should always look for potentially powerful new sources of brand
equity, a top priority is to preserve and defend those that already existed.
Ideally, the key sources of brand equity are of enduring value. Unfortunately, marketers
can easily overlook that value as they attempt to expand the meaning of their brands and
add new product-related or non-product-related brand associations.
9.2 Brand Revitalization
Expand the depth and/or breadth of awareness by improving consumer
recall and recognition of the brand during purchase or consumption
settings.
Often, the first thing to do in revitalizing a brand is to understand
what the sources of brand equity were to begin with.
Are positive associations losing their strength or uniqueness? Have
negative associations become linked to the brand? Then decide
whether to retain the same positioning or create a new one, and if so,
which new one.
Sometimes the actual marketing program is the source of the problem,
because it fails to deliver on the brand promise. Then a “back to
basics” strategy may make sense.
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Strategies to Revitalize Brands
There is obviously a continuum of revitalization strategies, with pure “back
to basics” at one end, pure “reinvention” at the other and many
combinations in between. The following are revitalizing strategies:
4. Marketers often focus on taking action with one or more of four key target market segments:
Retaining vulnerable customers
Recapturing lost customers
Identifying neglected segments
Attracting new customers
9.3 Adjustments to the Brand Portfolio
A brand can only be stretched so far, and all the segments the firm
would like to target may not view the same brand equally
favorably. Marketers often need multiple brands in order to pursue
these multiple segments.
Management brand equity and brand portfolio requires taking long
term view of the brand. It is necessary to carefully consider the role of
different brands and the relationship among different brands in the
portfolio over time. In particular, a brand migration strategy needs to
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be designed and implemented so that customers could understand
how various brands in the portfolio can satisfy their needs as they
potentially change over time.
Several options are possible to deal with a fading brand. One is, reduce
the number of product types (e.g. packaging size or variations).
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