This Document Contains Chapters 3 to 5 Chapter 3 Brand Resonance and the Brand Value Chain Chapter Objectives 1. Define brand resonance. 2. Describe the steps in building brand resonance. 3. Define the brand value chain. 4. Identify the stages in the brand value chain. 5. Contrast brand equity and customer equity. Overview This chapter deals in greater detail with two interlinking models, which, along with the brand positioning model, make up the brand planning system. The chapter first discusses the brand resonance model, which describes how to create intense, active loyalty relationships with customers. The model considers how brand positioning affects what consumers think, feel, and do and the degree to which they resonate or connect with a brand. The chapter begins by presenting the four steps to building a strong brand. This will help students consider brand salience, performance, imagery, judgments, feelings, and resonance as brand building blocks. The chapter talks in detail about each of these characteristics including the attributes and benefits that underlie brand performance. The chapter also highlights the types of brand judgments, namely, judgments about quality, credibility, consideration, and superiority. Resonance is characterized in terms of intensity, or the depth of the psychological bond that customers have with the brand, as well as the level of activity engendered by this loyalty. Next, the chapter presents some of the main implications of the brand resonance model and moves on to confer how brand resonance and these loyalty relationships, in turn, create brand equity or value. The brand value chain model is discussed next. It is a means by which marketers can trace the value creation process for their brands to better understand the financial impact of their marketing expenditures and investments. Based in part on the customer-based brand equity (CBBE) concept, it offers a holistic, integrated approach to understanding how brands create value. The chapter points out that brand value is created at a stage when customers have (1) deep, broad brand awareness; (2) appropriately strong, favorable, and unique points-of-parity and points-of-difference; (3) positive brand judgments and feelings; (4) intense brand attachment and loyalty; and (5) a high degree of brand activity. The chapter then moves on to discuss the implications of the brand value chain model and concludes by reviewing both the models and then throwing light on customer equity by calling it the sum of lifetime values of all customers. Several different concepts and approaches relevant to the topic of customer equity have been discussed. Brand Focus 3.0 at the end of the chapter provides a detailed overview of the topic of customer equity. Science of Branding THE SCIENCE OF BRANDING 3-1 LUXURY BRANDING Brand and its image are often competitive terms and, hence, luxury brands are one of the purest examples of branding. A number of characteristics define luxury branding and suggest strategic and tactical guidelines such as: • Maintaining and controlling a premium, prestige image with luxury branding is crucial and a priority. • Luxury branding often relies on an aspirational image that benefits from a trickle-down effect to a broader audience via PR and word-of-mouth. • To ensure pleasurable purchase and consumption experiences, marketers of luxury brands must control all aspects of the marketing program. • Distribution for luxury brands should be carefully controlled via a selective distribution strategy. • Luxury brands are enhanced by a premium pricing strategy and few discounts. • Brand architecture for luxury brands must be managed very carefully with only selective, strategic licensing and extensions. Brand hierarchies and portfolios must be employed. • Luxury brands can sometimes benefit from secondary associations with linked personalities, events, and countries. • Brand elements can be important drivers of brand equity for luxury brands. • Luxury brands can compete with luxury brands from other categories for discretionary consumer dollars. • Luxury brands must legally protect all trademarks and aggressively combat counterfeits. THE SCIENCE OF BRANDING 3-2 PUTTING CUSTOMERS FIRST According to authors Larry Selden and Geoffrey Colvin, a few companies, such as Dell, Best Buy, and Royal Bank of Canada, have been solid stocks for shareholders through the years because of their customer-centric approach. Customer-centricity means that all employees understand how their actions affect share price. Selden and Colvin maintain that customer-centric companies are a good bet for investors because they hold an advantage that can lead to a jump in share price. To determine whether a company is truly customer-focused, Selden and Colvin suggest customers ask themselves the following five questions: • Is the company looking for ways to take care of you? Only a few companies identify customer needs first, and then create ways to meet them. Too many companies try to make customers buy the products and services they already offer. • Does the company know its customers well enough to differentiate between them? True differentiation means knowing who your various customer segments are, what each group wants, where the groups are shopping, and how to serve the customers individually. • Is someone accountable for customers? At most companies, various departments own pieces of customer segments, but no one owns any specific one. At companies with customer-centric approaches, however, things are different. • Is the company managed for shareholder value? If a company is managed for shareholder value, employees know about earning a return on invested capital that exceeds the cost of capital, plus investing increasing amounts of capital at that positive spread and maintaining that spread for as long as possible. Customer-centric companies apply those criteria to customer segments. • Is the company testing new customer offers and learning from the results? Constant learning about what customers want and a formal process for sharing it are critical to customer-centricity. Branding Briefs BRANDING BRIEF 3-1 BUILDING BRAND COMMUNITIES Apple Apple encourages owners of its computers to form local Apple user groups, many of which offer monthly meetings, an informative newsletter, member discounts, special interest groups, classes, and one-on-one support. The user groups provide Apple owners with opportunities to learn more about their computers, share ideas, friendships with fellow Apple users, as well as sponsor special activities and events and perform community service. A visit to Apple’s Web site helps customers find nearby user groups. Harley-Davidson The first-time buyer of a Harley-Davidson motorcycle gets a free one-year membership. HOG benefits include a magazine called Hog Tales, a touring handbook, emergency road service, a specially designed insurance program, theft reward service, discount hotel rates, and a Fly & Ride program enabling members to rent Harleys while on vacation. The company also maintains an extensive Web site devoted to HOG, which includes information about club chapters and events and features a special members-only section. Jeep Jeep owners can convene with their vehicles in wilderness areas across the United States as part of the company’s official Jeep Jamborees and Jeep Rocks and Road. Jeep Jamborees bring Jeep owners and their families together for two-day off-road adventures in more than 30 different locations throughout the United States from spring through autumn each year. Promising to be “every bit as muddy,” the 2010 Jeep Rocks and Road tour hit 11 different venues across the country to allow existing and prospective Jeep owners to put the 2011 vehicle lineup through their paces on- and off-road. Brand Focus BRAND FOCUS 3.0 CREATING CUSTOMER VALUE Customer–brand relationships are the foundation of brand resonance and building a strong brand. Many firms are now more carefully defining the financial value of prospective and actual customers and devising marketing programs to optimize that value. Marketers have long recognized the importance of adopting a strong consumer and customer orientation. The customer-based brand equity concept makes it clear that the power of a brand resides in the minds of consumers and customers. However, too many firms still find themselves paying the price for lacking a customer focus. Discussion questions 1. Pick a brand. Attempt to identify its sources of brand equity. Assess its level of brand awareness and the strength, favorability, and uniqueness of its associations. Answer: Answers will vary. Students may be asked to pick brands on different levels ranging from luxury to economy brands. To assess the level of brand awareness, the students may be divided into groups. Each group may take turns to come up with some unique characteristic of a brand, while the other groups have to recognize the brand. This can also be played vice-versa where a group may suggest a brand and the others have to come up with the characteristics. Sources of Brand Equity: • Brand Loyalty: Strong customer base, high repeat purchase rate. • Brand Associations: Innovation, premium quality, user-friendly technology. • Perceived Quality: High-quality products, strong performance reputation. • Brand Awareness: Globally recognized, high visibility through marketing and product placement. Level of Brand Awareness: Very high; Apple is one of the most recognized brands worldwide. Strength of Associations: • Strength: Very strong; Apple is synonymous with innovation and high-end technology. • Favorability: Highly favorable; known for excellent design and user experience. • Uniqueness: Unique in its seamless integration of hardware, software, and services, setting it apart from competitors. 2. Which brands do you have the most resonance with? Why? Answer: Answers will vary. Students may be provided with examples of luxury brands and brands of economy products they use in daily life. They may then compare the resonance they have with each and reason out the difference. Nike is a brand with high resonance for me. Reasons: • Emotional Connection: Nike's marketing often emphasizes personal achievement and motivation, which resonates with my values and aspirations. • Brand Experience: High-quality products and a strong community presence through events and partnerships enhance my connection to the brand. • Consistent Messaging: Nike’s “Just Do It” slogan and endorsements with athletes I admire reinforce its alignment with my personal goals and identity. 3. Can every brand achieve resonance with its customers? Why or why not? Answer: Answers will vary. Some students may argue that every brand may not necessarily achieve resonance with its customers. Some others may argue that while resonance is achieved with every brand, the degree of resonance varies with each customer because resonance relates to the extent to which customers feel that they are “in sync” with the brand. Not every brand can achieve resonance with its customers. Reasons: • Differentiation: Brands must offer unique value or emotional connections that set them apart from competitors. Without distinctiveness, achieving resonance is challenging. • Consistency: Resonance requires consistent messaging and brand experience over time. Brands that fail to deliver on their promises may struggle to build strong connections. • Target Audience Fit: Brands need to align with their target audience's values, needs, and preferences. If a brand's offerings or values do not match those of its audience, resonance is unlikely. • Market Saturation: In highly competitive markets, standing out and creating a meaningful connection can be difficult, affecting the likelihood of achieving resonance. 4. Pick a brand. Assess the extent to which the brand is achieving the various benefits of brand equity. Answer: Answers will vary. To assess better, students may be asked to choose a brand that they are extremely familiar with. It must be a brand that they have / had experience with. Brand: Tesla Benefits of Brand Equity: • Brand Loyalty: High; Tesla owners are often very loyal, with strong repeat purchase rates and brand advocacy. • Perceived Quality: Strong; Tesla is perceived as a leader in electric vehicle technology and innovation. • Brand Awareness: Very high; Tesla is widely recognized and frequently mentioned in media and discussions about electric vehicles and sustainable technology. • Brand Associations: Positive; Tesla is associated with cutting-edge technology, sustainability, and luxury. The brand’s image benefits from high-profile endorsements and innovative advancements. Overall, Tesla is successfully achieving significant benefits of brand equity through strong customer loyalty, high perceived quality, widespread awareness, and favorable brand associations. 5. Which companies do you think do a good job managing their customers? Why? Answer: Answers will vary. Students may be given examples of companies and discuss the extent to which each company has achieved customer equity. Students may consider the various approaches discussed in the chapter to assess the customer equity. Amazon and Apple are examples of companies that excel in managing their customers. Amazon: • Customer Service: Offers responsive, 24/7 support and a hassle-free return policy. • Personalization: Uses data to provide personalized recommendations and a tailored shopping experience. • Convenience: Streamlines the purchasing process with features like one-click ordering and fast delivery. Apple: • Customer Experience: Provides seamless integration across its product ecosystem and high-quality customer support through Apple Stores and online. • Innovation: Regularly updates products with new features based on customer feedback and market trends. • Loyalty Programs: Creates strong brand loyalty through its ecosystem and personalized services like AppleCare. Both companies focus on exceptional service, personalized experiences, and innovation, which effectively manage and enhance customer satisfaction and loyalty. Exercises and assignments 1. Have students pick a brand of their choice. Then have them answer how they would go about establishing the six brand building blocks with customers if the brand was their own. The students may then compare the steps taken by them with the steps taken by the company to establish loyalty relationships with customers. This activity will help the students in understanding brand building and the subdimensions contained within. Answer: Brand Choice: Nike Establishing the Six Brand Building Blocks: 1. Brand Identity: Create a distinct logo and consistent messaging. 2. Brand Meaning: Communicate innovation and performance through storytelling. 3. Brand Response: Ensure high product quality and address feedback. 4. Brand Resonance: Build emotional connections with engaging experiences and loyalty programs. 5. Brand Loyalty: Foster loyalty with rewards and exceptional service. 6. Brand Advocacy: Encourage advocacy through social media and influencer partnerships. Comparison: Nike effectively uses these strategies with strong brand identity, clear messaging, high-quality products, emotional connections, loyalty programs, and active advocacy. 2. Tell students to imagine they are sitting in a room with two doors. When a knock sounds at each, the butler (!) announces that a particular brand is at one entrance to the room (e.g., Target), while another brand is at the other (e.g., Wal-Mart). Ask students to describe each brand in terms of what it would look like, what it would be wearing, what it would say when you went to the door, and what its reason for visiting was. (Alternatively, you can have students conduct this assignment outside of class by talking to consumers.) This projective technique, when used in the context of pairs of brands, helps uncover different beliefs, knowledge, images and opinions that consumers hold. Other possible examples are: Nike vs. Reebok California vs. Nebraska Your university vs. another Mountain Dew vs. Sprite E*Trade vs. Charles Schwab Answer: Brand Pair: Nike vs. Reebok Nike: • Appearance: Athletic and sleek, wearing a modern sports outfit. • What It Would Say: “I’m here to inspire you to push your limits and achieve greatness.” • Reason for Visiting: To motivate and engage in discussions about performance and innovation. Reebok: • Appearance: Casual and comfortable, wearing classic sportswear. • What It Would Say: “I’m here to offer a solid, reliable option for your fitness needs.” • Reason for Visiting: To discuss practical, everyday athletic wear and emphasize value and reliability. Comparison: • Nike focuses on inspiration and high performance, while Reebok emphasizes comfort and reliability. 3. Have students create mental maps for several well-known brands. Have them use these mental maps to develop brand mantras that capture the core values and attributes of the brands. Then have the students compare the mantras they generated with the actual brand mantras. Are they similar? Why or why not? Possible companies include Nike (Authentic Athletic Performance), and Disney (Fun Family Entertainment). Answer: Brand Choice: Apple Mental Map Attributes: • Innovation: Cutting-edge technology, sleek design. • User Experience: Seamless integration, intuitive interface. • Premium Quality: High-end materials, exclusive features. • Brand Image: Modern, sophisticated, aspirational. Brand Mantra Created: “Innovative Elegance, Seamless Experience” Comparison with Actual Brand Mantra: Apple's actual mantra might be considered as “Think Different” or “Designed by Apple in California.” Both emphasize innovation, premium quality, and a distinctive user experience, aligning closely with the created mantra, though Apple’s actual mantra focuses more on uniqueness and creativity. 4. Provide the students with examples of brands (E.g. Budweiser, California Milk Processor Board, Minute Maid, and 7UP) and discuss why their marketing programs were a success or failure. Have the students be in the shoes of a marketer and have them design a well-integrated marketing program for any of these brands. The students must consider factors such as distinctiveness, relevance, integration, value, and excellence of the program. This activity will help the students better understand the concept of program quality multiplier. Answer: Brand Chosen: 7UP Reasons for Past Success/Failure: • Success: Known for its distinctive lemon-lime flavor and refreshing taste. • Failure: Struggled with inconsistent marketing messages and brand identity issues compared to competitors like Sprite. Integrated Marketing Program: 1. Distinctiveness: Emphasize 7UP’s unique lemon-lime flavor and natural ingredients. Create a distinct brand personality focusing on freshness and fun. 2. Relevance: Target health-conscious consumers by highlighting 7UP’s lower calorie options and natural ingredients. 3. Integration: Use a unified campaign across digital, social media, and traditional platforms. Incorporate interactive content, influencer partnerships, and engaging advertisements. 4. Value: Offer promotions and loyalty rewards that emphasize value, such as discounts on multi-pack purchases and special offers in collaboration with fitness brands. 5. Excellence: Ensure high-quality production and consistency in branding, from packaging to customer service, to reinforce the brand’s commitment to excellence. This approach leverages the program quality multiplier by aligning distinctiveness, relevance, integration, value, and excellence for a cohesive and impactful marketing strategy. Key take-away points 1. Brand planning is aided by three interlocking models that can both qualitatively guide and interpret possible marketing actions as well as quantitatively measure marketing effects 2. Building a strong brand involves establishing brand salience, performance, imagery, judgments, feelings, and resonance with customers. 3. Building brand awareness helps customers understand the product or service category in which the brand competes and what products or services are sold under the brand name. 4. A highly salient brand is one that has both depth and breadth of brand awareness. 5. Brand performance describes how well the product or service meets customers’ more functional needs. 6. Brand imagery refers to more intangible aspects of the brand, and consumers can form imagery associations directly from their own experience or indirectly through advertising. 7. Brand meaning is what helps produce brand responses, or what customers think or feel about the brand. 8. Warmth, fun, excitement, security, social approval, and self-respect are the important types of brand feelings. 9. The power of the brand and its ultimate value to the firm reside with customers. 10. Brand value creation begins with marketing activity by the firm. 11. Modifications to the brand value chain can expand its relevance and applicability. Chapter 4 Choosing Elements to Build Brand Equity Chapter Objectives 1. Identify the different types of brand elements. 2. List the general criteria for choosing brand elements. 3. Describe key tactics in choosing different brand elements. 4. Explain the rationale for “mixing and matching” brand elements. 5. Highlight some of the legal issues surrounding brand elements. Overview Chapter 4 examines the elements that marketers can use to identify and differentiate a brand. Names, logos, symbols, characters, slogans, URLs, jingles, and packages all influence a company’s ability to build awareness and image for a brand and, consequently, have a direct impact on the degree of positive brand equity that can be established. Brand elements can be judged on the merits of their brand-building ability by isolating the element in a consumer survey and measuring consumers’ response to the brand based solely on the isolated element. If the consumers infer or assume a certain valued association or response, the element is said to contribute positively to brand equity. Six general criteria should govern a firm’s choice of brand elements. First, an element should be memorable, or easy to recognize and recall. Second, an element should be meaningful, or descriptive, persuasive, inherently fun and interesting, and rich in visual and verbal imagery. Third, an element should be likeable to consumers, in an aesthetic sense and in an emotional sense. Fourth, an element should be transferable within and across product categories, and across geographical and cultural boundaries. Fifth, an element should be adaptable, or flexible, and capable of being updated over time. Sixth, an element should be protectable, both legally and competitively. Next, the chapter discusses the benefits and drawbacks inherent in the choice of each type of brand element. For example, selecting a familiar-sounding name for a brand would likely lead to high recallability, but recognition often requires brand names to be different, distinct, or unusual. Fictitious or coined names are often used to satisfy these criteria. Brand characters are beneficial because they typically aid awareness, reinforce key brand strengths, add elements of fun, excitement, humor, etc., and can be transferred across product categories. Consumer associations with a brand character can be so strong, however, that they actually dampen awareness by dominating other brand elements. Also, brand characters must be updated over time. The chapter ends by discussing how brand elements can be “mixed and matched” for maximum equity building. For instance, brand elements must be mixed to achieve different positioning objectives.. It is also important to match brand elements by ensuring that they harbor similarities that reinforce some shared meaning. Taken together, the entire set of brand elements makes up the brand identity, which reflects the contribution of all the elements to awareness and image. Brand Focus 4.0 discusses legal issues for branding. These include trademark protection from counterfeit and imitator brands, historical and legal precedence, trademark issues with generic names, and trademark issues with packaging. Science of Branding THE SCIENCE OF BRANDING 4-1 COUNTERFEIT BUSINESS IS BOOMING The current size of the counterfeit market is estimated to be $600 billion, representing costs of $200 to $250 billion annually to U.S. businesses. The fakes are soaking up profits faster than multinationals can squash counterfeiting operations, and they’re getting tougher and tougher to distinguish from the real thing. The difference can be as subtle as lesser-quality leather in a purse or fake batteries inside a cell phone. And counterfeiters can produce fakes cheaply by cutting corners on safety and quality, as well as by avoiding paying for marketing, R&D, or advertising. The World Health Organization says up to 10 percent of medicines worldwide are counterfeited besides luxury items and consumer electronics. Counterfeiting has become increasingly sophisticated and pervasive. To avoid being detected, counterfeiters are knocking off smaller brands that don’t have the resources to fight back, focusing on fewer high-end brands given the recent economic downturn, and increasing prices on fake goods sold over the web to counter consumer suspicions. These days, 81 percent of counterfeit goods in the United States come from China. Other sources are Russia, Ukraine, Pakistan, India, Mexico, and several countries in Southeast Asia and Latin America. The operations are financed by such varied sources as Middle East businessmen who invest in facilities in Asian countries for export, local Chinese entrepreneurs, and criminal networks. The replication process has also speeded up as counterfeiters have honed their engineering skills and increased their speed. Producing counterfeit goods is as profitable as trading in illegal drugs but does not carry the same risk. Some companies have decided to target the end users of knockoff products, hoping manufacturers will eventually be forced to get a license and pay royalties. And some patent holders are beginning to get creative and target anyone on the supply chain who knowingly ignores counterfeit businesses. Some provocative academic research shows that fake products are not uniformly bad for companies. While some who cannot afford to buy genuine luxury items may always buy fakes, other consumers will find that buying a counterfeit motivates them to later buy the real thing. THE SCIENCE OF BRANDING 4-2 BALANCE CREATIVE AND STRATEGIC THINKING TO CREATE GREAT CHARACTERS Great characters can embody a brand’s story and spark enthusiasm for it. But bringing a character to life through advertising requires navigating a host of pitfalls. Character, a company based in Portland, Oregon, helps create new corporate brand characters and revitalize old ones. During three-day “Character” camps, a team from a client company learns to flesh out a new or current brand character through improvisational acting, discussion, and reflection. Some tips for brand characters presented at Character Camps: • Don’t be a shill—Human traits are appealing. • Create a life—Create a full backstory to fill out the character. This ensures that the character can evolve over time and continue to connect with consumers. • Make characters vulnerable—Even superheroes have flaws. • Imagine the long run—Don’t get rid of older characters just to make room for new ones. Consumers can get very attached to longtime characters. • Don’t ask too much—Characters with a simple task or purpose work best. Using characters for new lines or other purposes can dilute their effectiveness. To be truly effective, brand characters have to be engaging in their own right while staying true to the brand. Most characters though, are conceived as short-term solutions to solve specific problems. If the audience likes a character, companies face the challenge of turning it into an asset. At this point some companies try to freeze all the character’s attributes and preserve them. Characters that are mass-marketed too heavily can also crash and burn, but static characters can lose their appeal and fail to emotionally connect with consumers. Viewers connect with characters whose struggles are familiar. THE SCIENCE OF BRANDING 4-3 THE PSYCHOLOGY OF PACKAGING Cornell University’s Brian Wansink has conducted a series of research studies into the consumer psychology of packaging. Four of his fascinating findings: • Packaging Can Influence Taste—Our sense of taste and touch is very suggestible, and what we see on a package can lead us to taste what we think we are going to taste. The right words and image on a package can have a big influence on our expectations. • Packaging Can Influence Value—Most people believe the bigger the package, the better the price per ounce. Yet even the shape of a package can influence what we think. • Packaging Can Influence Consumption—Studies of 48 different types of foods and personal care products have shown that people pour and consume 18–32 percent more of a product as the size of the container doubles. A big part of the reason is that larger sizes subtly suggest a higher “consumption norm.” • Packaging Can Influence How a Person Uses a Product—One strategy to increase the use of mature products has been to encourage people to use the brand in new situations, like soup for breakfast, or for new uses, like baking soda as a refrigerator deodorizer. Part of the reason such on-package suggestions are effective is that they are guaranteed to reach a person who is already favorable to the brand. Branding Briefs BRANDING BRIEF 4-1 UPDATING BETTY CROCKER In 1921, Washburn Crosby Company, makers of Gold Medal flour, launched a picture puzzle contest. The contest was a huge success—the company received 30,000 entries—and several hundred contestants sent along requests for recipes and advice about baking. To handle those requests, the company decided to create a spokesperson. Managers chose the name Betty Crocker because “Betty” was a popular, friendly sounding name and “Crocker” was a reference to William G. Crocker, a well-liked, recently retired executive. The company merged with General Mills and introduced the Betty Crocker Cooking School of the Air as a national radio program. During this time, Betty was given a voice and her signature began to appear on nearly every product the company produced. Prim and proper, Betty was shown with pursed lips, a hard stare, and graying hair. Her appearance has been updated a number of times over the years and has become more friendly, although she has never lost her reserved look. Prior to a makeover in 1986, Betty Crocker was seen as honest and dependable, friendly and concerned about customers, and a specialist in baked goods, but also out-of-date, old and traditional, a manufacturer of “old standby products,” and not particularly contemporary or innovative. The challenge was to give Betty a look that would attract younger consumers, but not alienate older ones who remembered her as the stern homemaker of the past. Finally, Betty Crocker’s look was also designed to appeal to men. A few years later, Betty Crocker received another update as an ultramodern model,—the current one. Betty Crocker now appears on cookbooks, advertising, and online, where she has over 1.5 million Facebook friends, a Twitter account, and a mobile app downloaded by millions. BRANDING BRIEF 4-2 BENETTON’S BRAND EQUITY MANAGEMENT Benetton built a powerful brand by creating a broad range of basic and colorful clothes that appealed to a wide range of consumers. Their corporate slogan, “United Colors of Benetton” embraces both product considerations and user considerations, providing a strong platform for the brand. Benetton’s ad campaigns reinforced this positioning by showing people from a variety of different racial backgrounds wearing a range of different-colored clothes and products. In the 1980s, Benetton print ads and posters featured such unusual and sometimes disturbing images as a white child wearing angel’s wings alongside a black child sporting devil’s horns; a priest kissing a nun; an AIDS patient and his family in the hospital moments before his death; and 56 close-up photos of male and female genitalia. Critics labeled these various campaigns gimmicky as “shock” advertising and accused Benetton of exploiting sensitive social issues to sell sweaters. Although the campaigns may have succeeded with a certain market segment, they were certainly more “exclusive” in nature by distancing the brand from many other consumers. U.S. sales of Benetton products shrank by 50 percent to $52 million between 1993 and 2000. By 2001, the number of Benetton stores in the United States dropped to 150 from 600 in 1987. Since 2001, Benetton’s advertisements have featured more conventional images—teenagers in colorful Benetton clothing. Benetton maintained that the company would maintain its “socially responsible” status by focusing on noncontroversial themes like racial discrimination, poverty, child labor, AIDS awareness, and so forth. BRANDING BRIEF 4-3 DO-OVERS WITH BRAND MAKEOVERS Logos, symbols, packaging, and even brand names are being updated to create greater meaning, relevance, and differentiation. Some high-profile examples and the challenges and difficulties their brand makeovers encountered: • Tropicana In February 2009, Pepsi introduced a dramatic overhaul to its category-leading orange juice. Gone was the visual image of an orange with a straw protruding from it; in its place was a close-up image of a glass of orange juice and the phrase “100% Orange.” Consumer reaction was swift and largely negative. Customers complained about being unable to differentiate between the company’s pulp-free, traditional, and other juice varieties. Even worse, customers also felt the look was too generic. • The Gap After unexpectedly unveiling a new logo, the company asked consumers on its Facebook page for comments and further logo ideas. Feedback was far from kind, and after enduring a long week of criticism, Gap management reverted to its iconic white text logo and unique brand font. • Gatorade & Pepsi Pepsi completely overhauled its Gatorade brand as well as its classic Pepsi-cola product lineup. The new brand goal was to reach athletes in a wide range of sports and experience levels while positioning itself as the one-stop source for hydration and other needs before, during, and after their workouts. Pepsi’s makeover included a new logo—a white band in the middle of the Pepsi circle that appeared to loosely form a smile. Both brand makeovers received some negative feedback and the products experienced sluggish sales afterwards. • Lessons When changing a well received or even iconic brand element—a character, logo, or packaging—two issues are key. One, the new brand element must be inherently highly regarded. Two, regardless of the inherent appeal of a new brand element, changes are hard for consumers and should be handled carefully and patiently. Brand Focus BRAND FOCUS 4.0 LEGAL BRANDING CONSIDERATIONS According to Dorothy Cohen, under common law, “a ‘technical’ trademark is defined as any fanciful arbitrary, distinctive, and nondescriptive mark, word, letter, number, design, or picture that denominates and is affixed to goods; it is an inherently distinctive trade symbol that identifies a product.” Trademark strategy involves proper trademark planning, implementation, and control. A few key legal branding considerations: • Counterfeit and Imitator Brands Some products attempt to gain market share by imitating successful brands. These copycat brands may mimic any one of the possible brand elements, such as brand names or packaging. Many copycat brands are put forth by retailers as store brands, putting national brands in the dilemma of protecting their trade dress by cracking down on some of their best customers. Many national brand manufacturers are responding through legal action. For national brands, the key is proving that brand clones are misleading consumers, who may think that they are buying national brands. The burden of proof is to establish that an appreciable number of reasonably acting consumers are confused and mistaken in their purchases. • Historical and Legal Precedence Legally, a brand name is a “conditional-type property”—protected only after it has been used in commerce to identify products (goods or services) and only in relation to those products or to closely related offerings. To preserve a brand name’s role in identifying products, and the authors’ note, federal law protects brands from actions of others that may tend to cause confusion concerning proper source identification. Trademark appropriation is identified as a developing area of state law that can severely curtail even those brand strategies that do not “confuse” consumers. Appropriation resembles theft of an intangible property right. Trademark dilution is the protection from dilution—a weakening or reduction in the ability of a mark to clearly and unmistakably distinguish the source. Dilution can occur in three ways: blurring, tarnishment, and cybersquatting. • Trademark Issues Concerning Names Without adequate trademark protection, brand names can become legally declared generic, as was the case with vaseline, victrola, cellophane, escalator, and thermos. Legally, the courts have created a hierarchy for determining eligibility for registration. In descending order of protection, these categories are fanciful, arbitrary, suggestive, descriptive, and generic. Secondary meaning refers to a mark gaining a meaning other than the older (primary) meaning. The secondary meaning must be the meaning the public usually attaches to the mark and that indicates the association between the mark and goods from a single source. • Trademark Issues Concerning Packaging In general, names and graphic designs are more legally defensible than shapes and colors. The issue of legal protection of the color of packaging for a brand is a complicated one. Discussion questions 1. Pick a brand. Identify all of its brand elements and assess their ability to contribute to brand equity according to the choice criteria identified in the chapter. Answer: Answers will vary. The class may be divided into groups of six and each may take up one criteria (memorable, meaningful, likeable, transferable, adaptable, and protectable) and assess the same for the brands chosen. For Nike: 1. Name: Memorable and meaningful. 2. Logo: Simple, distinctive, and recognizable. 3. Tagline: Motivates and aligns with brand values. 4. Color Scheme: Consistent and appealing. 5. Endorsements: Enhances credibility and association with success. All elements effectively contribute to Nike's strong brand equity. 2. What are your favorite brand characters? Do you think they contribute to brand equity in any way? How? Can you relate their effects to the customer-based brand equity model? Answer: Brand characters relate to the customer-based brand equity model because they can contribute to the differential effect in a consumer’s response to marketing. Characters can create positive associations and feelings toward the brands they represent, improve awareness, develop additional brand knowledge, and lead to consumer resonance with the brand. Favorite Brand Characters: 1. Ronald McDonald (McDonald's): • Contribution: Enhances brand equity by making the brand more approachable and memorable, especially for children. • Customer-Based Brand Equity Model: Builds brand awareness and positive associations, creating a strong, favorable brand image. 2. Tony the Tiger (Kellogg’s Frosted Flakes): • Contribution: Adds a fun, energetic personality to the brand, boosting its appeal to children and reinforcing the product's attributes. • Customer-Based Brand Equity Model: Strengthens brand recognition and perceived quality, fostering positive brand attitudes. 3. Jake from State Farm: • Contribution: Creates a relatable and trustworthy image, enhancing consumer confidence in the brand. • Customer-Based Brand Equity Model: Builds brand loyalty and trust by humanizing the brand and making it more relatable. These characters contribute to brand equity by enhancing recall, creating positive associations, and fostering consumer loyalty. 3. What are some other examples of slogans not listed in the chapter that make strong contributions to brand equity? Why? Can you think of any “bad” slogans? Why do you consider them to be so? Answer: Slogans could be considered “bad” for a variety of reasons. For example, a slogan might be “bad” if it seems outdated to consumers, if it focuses on an inappropriate or irrelevant aspect of the brand, if it strives for humor but falls short, if it is confusing, if it is overly complicated, and so forth. Strong Slogans: 1. “Think Different” (Apple): Contribution: Differentiates Apple as innovative and forward-thinking, enhancing brand equity by aligning with its core values of creativity and originality. 2. “The Ultimate Driving Machine” (BMW): Contribution: Reinforces BMW's image of superior driving performance and luxury, strengthening brand equity through a focus on quality and prestige. “Bad” Slogans: 1. “It Keeps Going, and Going, and Going” (Energizer): Reason: Although it was memorable, it became less effective as it did not differentiate Energizer from competitors over time. 2. “Have a Break, Have a Kit Kat” (Kit Kat): Reason: While initially strong, its effectiveness diminished as it became less relevant to changing consumer lifestyles and preferences. Considerations: Effective slogans should resonate with core brand values, differentiate the brand, and remain relevant over time. 4. Choose a package for any supermarket product. Assess its contribution to brand equity. Justify your decisions. Answer: Answers will vary. The students may be asked to assess if the package achieves its objectives, viz. identify the brand, convey descriptive and persuasive information, facilitate product transportation and protection, assist in at-home storage, and aid product consumption. Package: Coca-Cola Bottle Contribution to Brand Equity: 1. Design: Iconic contoured bottle shape. • Justification: The unique shape is instantly recognizable and reinforces Coca-Cola's brand identity, making it stand out on shelves. 2. Color: Red and white. • Justification: Consistent with the brand’s color scheme, enhancing recognition and creating a strong visual impact that aligns with Coca-Cola’s vibrant and energetic image. 3. Logo and Label: Prominent, classic Coca-Cola logo. • Justification: The logo’s classic design strengthens brand equity by maintaining a consistent and familiar look that builds consumer trust and loyalty. 4. Material: Glass or plastic with high-quality print. • Justification: High-quality packaging materials convey a sense of premium quality and reliability, supporting Coca-Cola’s image as a leading beverage brand. Overall, the package effectively contributes to Coca-Cola’s brand equity by enhancing brand recognition, conveying quality, and maintaining a strong, consistent brand identity. 5. Can you think of some general guidelines to help marketers “mix and match” brand elements? Can you ever have “too many” brand elements? Which brand do you think does the best job of “mixing and matching” brand elements? Answer: Guidelines for “mixing and matching” brand elements might touch on presenting a cohesive and consistent image for the brand, ensuring that brand elements are not too disparate, and reinforcing the brand’s positioning. Guidelines for Mixing and Matching Brand Elements: 1. Consistency: Ensure all elements (name, logo, slogan, colors) align with the brand’s core values and messaging. 2. Relevance: Choose elements that resonate with the target audience and reflect the brand’s positioning. 3. Distinctiveness: Use unique elements that differentiate the brand from competitors. 4. Flexibility: Allow for adaptations of elements across different mediums and contexts without losing brand identity. Too Many Brand Elements? Yes, too many elements can dilute the brand message and cause confusion. It’s important to focus on a cohesive set of elements that work well together. Best Example of Mixing and Matching: Nike: • Elements: Swoosh logo, "Just Do It" tagline, distinct color scheme, athlete endorsements. • Justification: Nike effectively combines these elements to create a powerful, consistent brand identity that resonates globally with a focus on performance and innovation. Exercises and assignments 1. Have students make a list of brand slogans, analyze what each communicates, and explain why the parent firm would select it. Answer: Brand Slogans: 1. Nike: "Just Do It" • Communicates: Motivation and action. • Reason: Aligns with performance and empowerment. 2. Apple: "Think Different" • Communicates: Innovation and creativity. • Reason: Reinforces Apple’s tech leadership. 3. McDonald’s: "I’m Lovin’ It" • Communicates: Enjoyment and satisfaction. • Reason: Builds positive emotional connections. 4. Coca-Cola: "Open Happiness" • Communicates: Joy and refreshment. • Reason: Enhances emotional appeal and brand connection. 5. BMW: "The Ultimate Driving Machine" • Communicates: Superior performance and luxury. • Reason: Emphasizes high-quality driving experiences. Each slogan supports the brand’s core values and strategic goals. 2. Ask students to develop a brand name, logo and symbol, slogan, package and, if appropriate, character for a new product. Discuss how the elements would change if the target market changed. Candidates might include a men’s fragrance, a laundry detergent, a battery-free wind-up flashlight, and a sparkling fruit drink. (Can be related to Branding Brief 4-1: Branding a New Soft Drink.) Answer: Product: Sparkling Fruit Drink 1. Brand Name: Fizz Burst • Change: Pure Fizz for health-conscious consumers. 2. Logo and Symbol: Colorful bubbles • Change: Sleek design for a premium market. 3. Slogan: "Bursting with Flavor!" • Change: "Naturally Refreshing" for health-focused consumers. 4. Package: Bright, playful bottle • Change: Elegant design for a premium audience. 5. Character: Fizz the Sparkling Star • Change: Sophisticated icon for a mature market. 3. Tell students to pick two brands from the same product category and compare their brand elements in terms of their memorability, likability, protectability, adaptability, meaningfulness, and transferability. Haagen-Dazs vs. Ben and Jerry’s ice cream, Aquafina vs. Dasani water, Michelin vs. Goodyear tires, Holiday Inn vs. Comfort Inn motels, Heineken vs. Michelob beer, and Budweiser vs. Miller beer could be used. Answer: Brands: Haagen-Dazs vs. Ben & Jerry’s Ice Cream 1. Memorability: • Haagen-Dazs: Unique and exotic. • Ben & Jerry’s: Fun and quirky. 2. Likability: • Haagen-Dazs: Elegant. • Ben & Jerry’s: Playful and socially conscious. 3. Protectability: • Haagen-Dazs: Strong trademark. • Ben & Jerry’s: Distinctive branding. 4. Adaptability: • Haagen-Dazs: Global premium markets. • Ben & Jerry’s: Social and environmental messages. 5. Meaningfulness: • Haagen-Dazs: Luxury. • Ben & Jerry’s: Fun and activism. 6. Transferability: • Haagen-Dazs: Premium markets. • Ben & Jerry’s: Effective across various markets. Summary: Haagen-Dazs conveys luxury, while Ben & Jerry’s emphasizes fun and social impact. 4. Bring in or have students bring in competing brands so that their packages can be compared. Discuss the reasons for the similarities and differences between them, as well as the pros and cons of each. Answer: Brands: Coca-Cola vs. Pepsi 1. Similarities: Both use bold colors and recognizable logos for brand recognition. 2. Differences: • Coca-Cola: Classic glass bottle, cursive logo, traditional feel. • Pepsi: Modern plastic bottle, bold logo, youthful image. 3. Pros and Cons: • Coca-Cola: Pros - Heritage and classic appeal; Cons - May seem outdated. • Pepsi: Pros - Modern and trendy; Cons - Less classic appeal. Summary: Coca-Cola emphasizes tradition, while Pepsi focuses on modernity. Key take-away points 1. Criteria for choosing brand elements include memorability, meaningfulness, likability, transferability, adaptability, and protectability. 2. All the brand elements for a particular brand create the brand identity, which conveys the contribution of these elements to image and awareness. 3. A brand’s identity is created through the choice of a name, URL, logo, symbol, slogan, package, jingle, and character. 4. The brand-building potential of brand elements can be gauged by asking consumers what they would think about the product if they knew only its name, logo, and other identity characteristics. Chapter 5 Designing Marketing Programs to Build Brand Equity Chapter Objectives 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 channel options. 5. Summarize the reasons for the growth in private labels. Overview This chapter explores the contribution of three of the four marketing Ps -- product, price, and place – to customer-based brand equity. The creation of equity effectively begins with the design of a product or service that satisfies consumer wants and needs. Perceived quality, which influences attitude and behavior, reflects consumer assessments of the relative superiority of a brand on dimensions related to performance, design, durability and other factors. Perceived value reflects consumer judgments about a brand’s price-quality relationship. The chapter also discusses some of the new developments in personalized marketing. Experiential marketing, where the marketer focuses on connecting the consumer to the brand through a unique experience, is one emerging personalized marketing technique. Others include one-to-one marketing, where the marketer uses technologies such as the Internet to target individual consumers with individualized marketing messages; and permission marketing, where the marketer seeks permission in advance from consumers to send them appropriate, relevant marketing materials. Pricing strategy can affect consumers’ perceptions of a brand’s position in its product category, and of its overall quality. Many firms now employ value pricing, in which a brand’s price is based on considerations of product quality, product costs, and product prices that satisfy consumer needs as well as the profit goals of the firm. Another popular strategy is everyday low pricing, which entails reducing or eliminating discounts and sales promotions in favor of an everyday fair price. A brand’s distribution strategy also has an important influence on the creation of customer-based equity. Channels are of two broad types: direct, which involves selling to customers by mail, phone, Internet, or personal visit, and indirect, which involves selling through intermediaries. The image a retailer has in the minds of consumers and the actions it takes with respect to stocking and selling products can affect the equity of the brands it sells. Therefore, it is in a firm’s interest to treat channel members as customers and assist in their selling efforts. The chapter concludes with a discussion of private labels in Brand Focus 5.0, noting that they primarily threaten brands that are overpriced, under-supported, or undifferentiated. It is important not to confuse private labels with generic brands, because private labels identify the source of the product. The source is usually the chain in which the private label is sold, which is why private labels are also called “store brands.” Major brands employ a number of strategies to fight private labels, from value pricing to continued product innovation. Science of Branding THE SCIENCE OF BRANDING 5-1 MAKING SENSE OUT OF BRAND SCENTS 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 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. Now the connection between scent and shopping experience is being explored in more venues than ever. More and more companies looking for an edge are tinkering with scent as a way to distinguish their brand or store. Retailers are looking to capitalize on scent as a way to lure customers into their stores and into lingering longer than they otherwise might. But experts caution that scents aren’t guaranteed to boost sales. The best scents are unobtrusive. Anything overwhelming can be a negative. And smells should appeal to the same gender the product is trying to appeal to. Scents that are appropriate or consistent with a product can influence brand evaluations and judgments. Some brands have a built-in sensory marketing advantage. Crayola Crayons were not originally designed to have a signature scent, but the manufacturing process left them with a recognizable odor. Of course, some products are all about scent. For example, Procter & Gamble built a $1 billion brand with Febreze air freshener. THE SCIENCE OF BRANDING 5-2 UNDERSTANDING CONSUMER PRICE PERCEPTIONS Consumers and customers often actively process price information, interpreting prices in terms of their knowledge from prior purchasing experience, formal communications such as advertising, informal communications from friends or family members, and point-of-purchase or online information. Consumer purchase decisions are based on consumers’ perceived prices. When examining or considering an observed price, consumers often compare it with internal frames of reference or external frames of reference. When consumers evoke one or more of these frames of reference, their perceived price can vary from the stated price. Most research on reference prices has found that “unpleasant surprises,” such as a stated price higher than the perceived price, have a greater impact on purchase likelihood than pleasant surprises. Consumer perceptions of prices are also affected by alternative pricing strategies. Even the competitive environment has been shown to affect consumer price judgments: deep discounts can lead to lower perceived prices over time than frequent, shallow discounts, even if the average prices are the same in both cases. Clearly, consumer perceptions of price are complex and depend on the pricing context involved. Branding Briefs BRANDING BRIEF 5-1 MARLBORO’S PRICE DROP On April 2, 1993, or “Marlboro Friday,” Philip Morris dropped a bombshell in the form of a three-page announcement. He announced four major steps to be necessarily taken to grow market share. The fourth of these steps was a major promotional cut in the price of Marlboro, which was expected to decrease earnings in Philip Morris’s most profitable unit by 40 percent. The action was justified by the results of a month-long test in Portland, Oregon. The stock market reaction to the announcement was swift. By day’s end, Philip Morris’s stock price had declined from $64.12 to $49.37, a 23 percent drop that represented a one-day loss of $13 billion in shareholder equity. There was a ripple effect in the stock market, with significant stock price declines for other consumer goods companies with major brands. A number of factors probably led Marlboro to cut prices so dramatically. The economy certainly was still sluggish, coming out of a recession. Private-label or store-brand cigarettes had been increasing in quality and were receiving more attention from customers and retailers. A prime consideration suggested by many was related to Philip Morris’s hefty price increases. An accurate interpretation of the whole episode is that it showed that new brands were entering the scene, as evidenced by the ability of discount brands to create their own brand equity on the basis of strong consumer associations to “value.” At the same time, existing brands, if properly managed, can command loyalty, enjoy price premiums, and still be extremely profitable. By cutting the difference between discount cigarettes and Marlboro to roughly 40 cents, Philip Morris was able to woo back many customers. Within nine months after the price drop, its market share increased to almost 27 percent. BRANDING BRIEF 5-2 GOODYEAR’S PARTNERING LESSONS A well-respected brand that once managed the top tire reseller network in the United States, Goodyear earned dealer loyalty in the 1970s and ‘80s through competitive pricing, on-time deliveries, and very visible marketing in the form of the Goodyear blimp. In the subsequent years, Goodyear managed to damage its own reputation through its apparent indifference to the distributors who sold its products. The company’s prices varied from month to month, and when distributors ordered tires, often only 50 percent of their order would be filled. Distributors nationwide said it was just getting hard to do business with Goodyear and many began hawking other brands instead. Goodyear announced a distribution deal with Sears, even though the company had previously promised dealers that it would not sell tires through discount retailers, and then made similar deals with Walmart and Sam’s Club. To increase sales, the company began to offer the big retailers bulk discounts. As a result, smaller individually owned dealers had to pay as much for their tires as customers could pay at other retailers. Goodyear management annoyed many of its distributors instead of taking advantage of its competitor’s legal and image problems. Goodyear dealership owners complained of pressure to buy more tires than they needed, uneven pricing, and poor quality. Goodyear has taken a number of steps in trying to win back its dealers since that time, including originally selling its popular Assurance tires exclusively through authorized dealers. Recent Goodyear price hikes, however, have forced dealers to take lower profits in selling its tires. Brand Focus BRAND FOCUS 5.0 PRIVATE-LABEL STRATEGIES AND RESPONSES Private Labels Private labels can be defined as products marketed by retailers and other members of the distribution chain. Private labels can be called store brands when they actually adopt the name of the store itself in some way. The appeal to consumers of buying private labels and store brands often is the cost savings involved; the appeal to retailers of selling private labels and store brands is that their gross margin is nearly twice that of national brands. The recession of the 1970s saw the successful introduction of low-cost, basic-quality, and minimally packaged generic products that appealed to bargain-seeking consumers. Today, private-label makers have begun improving quality and expanding the variety of their private-label offerings to include premium products. In recognition of the power of bold graphics, supermarket retailers have been careful to design attractive, upscale packages for their own premium branded products. Private-Label Status Private-label appeal is widespread. In supermarkets, private-label sales have always been strong in product categories such as dairy goods, vegetables, and beverages. More recently, private labels have been successful in previously “untouchable” categories such as cigarettes, disposable diapers, and cold remedies. Nevertheless, private labels have been relatively unsuccessful in categories such as candy, cereal, pet foods, baby food, health and beauty, and beer. One implication is that consumers are being more selective in what they buy, no longer choosing to buy only national brands. Categories that are particularly vulnerable to private-label advances are those in which there are little perceived quality differences among brands in the eyes of a sizable group of consumers. Private-Label Branding Strategy Private-label growth could be seen in some ways as a consequence of cleverly designed branding strategies. In terms of building brand equity, the key point of difference for private labels in consumers’ eyes has always been “good value.” As a result, private labels can be extremely broad, and their name can be applied across many diverse products. Implementing a value-pricing strategy for private labels requires determining the right price and product offering. The challenge for private labels has been to determine the appropriate product offering. Specifically, to achieve the necessary points of parity, or even to create their own points of difference, private labels have been improving quality, and as a result are now aggressively positioning against even national brands. Sellers of private labels are also adopting more extensive marketing communication programs to spread the word about their brands. Major Brand Response to Private Labels Marketers of major brands have attempted to decrease costs and reduce prices to negate the primary point of difference of private labels and achieve a critical point of parity. In instances in which major brands and private labels are on a more equal footing with regard to price, major brands often compete well because of other favorable brand perceptions that consumers might have. One problem faced by marketers of major brands is that it can be difficult to actually lower prices even if they so desire. Marketers of major brands may not want to alienate retailers by attacking their store brands too forcefully, especially in zero-sum categories in which their brands could be easily replaced. Marketers of major brands have increased R&D expenditures to improve products and identify new product innovations. They have also increased advertising and promotion budgets and tracked store-brand growth more closely than in the past and are competing on a market-by-market basis. Marketers have also adjusted their brand portfolios. They have eliminated stagnant brands and extensions and concentrated their efforts on smaller number of brands. They have introduced discount “fighter” brands that are specially designed and promoted to compete with private labels. Marketers of major brands have also been more aggressive about legally protecting their brands. One controversial move by some marketers of major brands is to actually supply private-label makers. Future Developments Many marketers feel that the brands most endangered by the rise of private labels are second-tier brands that have not been as successful at establishing a clear identity as market leaders have. Highly priced, poorly differentiated, and under-supported brands are especially vulnerable to private-label competition. At the same time, if nothing else, retailers will need the quality and image that go along with well-researched, efficiently manufactured, and professionally marketed major brands, because of consumer demand. Discussion questions 1. Have you had any experience with a brand that has done a great job with relationship marketing, permission marketing, experiential marketing, or one-to-one marketing? What did the company do? Why was it effective? Could others learn from that? Answer: Answers will vary. Student names may be randomly called out to share their experiences. One notable example is Starbucks' use of relationship marketing through its rewards program. Starbucks has effectively implemented a loyalty program that not only rewards frequent customers but also personalizes offers and communications based on individual purchase history. This approach builds a strong customer relationship by providing value and relevance. The effectiveness lies in its ability to create a sense of exclusivity and personalization, making customers feel valued and understood. By tracking preferences and purchase behavior, Starbucks can tailor promotions and offers to individual tastes, enhancing customer satisfaction and loyalty. Others can learn from this by focusing on creating personalized experiences and rewards that resonate with customers' preferences, which helps in building stronger, long-term relationships with the brand. 2. Think about the products you own. Assess their product design. Critique their "after marketing" efforts. Are you aware of all of the products' capabilities? Identify a product for which you feel you are not fully capitalizing on all of its benefits. How might you suggest improvements? Answer: Products common with students that have many capabilities and benefits as well as after-marketing efforts are likely to be technological items, such as computers, software, digital assistants, and cell phones. Other common categories include sport and recreation equipment’s, automobiles, and entertainment electronics. One example is the smart thermostat, such as the Nest Learning Thermostat. While its design is sleek and intuitive, its after-marketing efforts, like user education and feature updates, could be improved. Often, users may not fully explore advanced features like energy-saving modes or integration with other smart home devices. Improving after-marketing efforts could include more interactive tutorials, regular feature updates, and enhanced customer support to educate users on maximizing the product's capabilities. This approach could help users better understand and utilize the product’s full potential, leading to increased satisfaction and brand loyalty. 3. Choose a product category. Profile all the brands in the category in terms of pricing strategies and perceived value. If possible, review the brands' pricing histories. Have these brands set and adjusted prices properly? What would you do differently? Answer: The cigarette industry is interesting for exploring pricing and its history. Major brands have altered pricing strategies over the years. They also established flanker or “fighter” brands to protect their premium price. The premium national brands, such as Marlboro, Camel, and Winston, currently keep their prices constant relative to one another. The cereal category is another interesting category to investigate. Consider the smartphone category. Brands like Apple, Samsung, Google, and OnePlus each have distinct pricing strategies: • Apple: Premium pricing, emphasizing high perceived value and innovation. Prices have remained relatively stable with occasional incremental increases. • Samsung: Offers a range of pricing from premium (Galaxy S series) to mid-range (Galaxy A series), with frequent adjustments to stay competitive. • Google: Mid-to-premium pricing for its Pixel phones, with occasional strategic discounts or promotions to boost sales. • OnePlus: Initially focused on high-value, low-cost offerings but has shifted to a premium pricing strategy with the OnePlus 10 series. Overall, Apple maintains high prices with strong perceived value, while Samsung and OnePlus adjust prices more dynamically to capture different market segments. Google uses strategic discounts to manage pricing. Recommendation: If I were managing one of these brands, I would focus on enhancing value through added features or services to justify price increases, while ensuring flexibility in pricing to respond to market changes and competitor actions effectively. 4. Visit a department store and evaluate the in-store marketing effort. Which categories or brands seem to be receiving the biggest in-store "push?" What unique in-store merchandising efforts do you see? Answer: Visiting a department store, you might notice that high-end electronics and cosmetics often receive the biggest in-store push. These categories are typically placed in prominent locations with dedicated display areas. Unique in-store merchandising efforts might include: • Electronics: Interactive displays allowing customers to test products, prominent end-cap displays, and demo stations. • Cosmetics: Beauty counters with testers, free sample giveaways, and personalized consultation services. These efforts aim to attract customer attention and encourage immediate purchases by enhancing the shopping experience and showcasing product features. 5. Take a trip to a supermarket and observe the extent of private-label brands. In which categories do you think private labels might be successful? Why? Answer: Supermarkets use private labels extensively for “commodity products” like milk, cheese, and condiments; for “me-too” products like cereals, snack foods, and soups; and a variety of other products. Private labels are more likely to be successful in low-involvement categories where they can compete primarily on price. In a supermarket, private-label brands are often prominent in categories like groceries, household products, and personal care items. These categories can be particularly successful for private labels due to: 1. Staple Goods: Items such as canned goods, pasta, and cereals have consistent demand and are less dependent on brand differentiation. 2. Price Sensitivity: Shoppers are often more price-conscious with everyday essentials, making them more likely to choose cost-effective private-label options. 3. Basic Necessities: Products like cleaning supplies and personal hygiene items offer less variation in quality, so consumers may prioritize lower prices over brand names. Private labels succeed in these areas by offering competitive pricing and adequate quality, appealing to cost-conscious consumers while maintaining acceptable standards. Exercises and assignments 1. For each of the four Ps, have students identify an exemplary brand whose strategy is different from and superior to that of its competitors. Discuss the role the particular strategy plays in the brand’s success. For example, Microsoft has an outstanding record of new product hits; Walmart’s pricing strategy is a major factor behind the retailer’s market domination; BP’s policy of not locating gas stations on corner properties gives it a distribution cost advantage over rivals; Snapple’s unique advertising quickly built national awareness and preference for what initially was a tiny, unknown brand. Answer: 1. Product: Apple - Apple's product design and innovation set it apart with a focus on sleek, user-friendly, and high-quality devices. This strategy has built a strong brand reputation and loyal customer base. 2. Price: Costco - Costco’s pricing strategy of bulk purchasing and membership-based discounts provides exceptional value. This strategy attracts price-sensitive consumers and drives high sales volume. 3. Place: Amazon - Amazon’s distribution strategy, including extensive fulfillment centers and fast delivery options, ensures widespread availability and convenience, giving it a significant edge over competitors. 4. Promotion: Red Bull - Red Bull’s promotion strategy involves sponsoring extreme sports events and creating viral marketing campaigns. This unique approach has successfully positioned it as a leading energy drink brand with high brand awareness. Each strategy plays a crucial role in enhancing the brand’s market position and driving its success. 2. Ask students to survey consumers to identify product categories in which they engage in brand switching and determine what influences their behavior. Discuss the implications for marketing strategy of those influencing factors. Answer: Survey Findings: 1. Product Categories: Consumers frequently switch brands in categories like groceries (e.g., cereal, yogurt) and personal care (e.g., shampoo, toothpaste). 2. Influencing Factors: • Price Sensitivity: Promotional offers or discounts lead to brand switching. • Product Availability: Switching occurs when preferred brands are out of stock. • Quality Perceptions: Consumers switch due to perceived differences in quality or new product innovations. • Convenience: Easier access or better packaging can influence switching. Implications for Marketing Strategy: 1. Promotions and Pricing: Implement targeted discounts and loyalty programs to retain customers. 2. Stock Management: Ensure consistent availability of popular products. 3. Innovation and Quality: Regularly update products and maintain high quality to differentiate from competitors. 4. Distribution: Optimize packaging and improve product accessibility to enhance convenience. Addressing these factors can help reduce brand switching and strengthen customer loyalty. 3. NASCAR teams – and the collateral merchandise and sponsorships that go along with them – have been growing in popularity in recent years. Have students pick a NASCAR team and analyze the factors (team name, drivers, sponsors, licensing, promotions, etc.) that contribute to its brand equity. Answer: Let's analyze the Joe Gibbs Racing (JGR) NASCAR team: 1. Team Name: Joe Gibbs Racing has a strong legacy and is associated with the prestigious NFL coach Joe Gibbs, adding historical credibility and appeal. 2. Drivers: Notable drivers like Kyle Busch and Denny Hamlin enhance the team's visibility and fan engagement through their success and personality. 3. Sponsors: Prominent sponsors such as FedEx, M&M's, and NASCAR’s major partners provide significant financial support and increase brand visibility. 4. Licensing: JGR leverages merchandise (e.g., apparel, die-casts) that extends its brand presence and generates additional revenue. 5. Promotions: Engaging fan events, social media campaigns, and strategic partnerships amplify brand exposure and fan loyalty. Factors Contributing to Brand Equity: • Legacy and Leadership: The association with Joe Gibbs adds historical prestige. • Driver Influence: Successful and charismatic drivers boost visibility and fan connection. • Sponsorships: High-profile sponsors enhance financial stability and brand reach. • Merchandising: Licensing and merchandise extend brand visibility and engagement. • Promotional Activities: Effective promotions and fan interactions strengthen brand loyalty. Together, these factors enhance Joe Gibbs Racing's brand equity by creating a strong, recognizable, and engaging presence in NASCAR. 4. Ask students to find a brand whose sole or primary distribution channel is the Internet. Discuss the likely reasons for the brand’s highly focused strategy and the positive and negative consequences of it. Answer: Brand Example: Warby Parker Reasons for Online-Only Distribution: • Cost Savings: No physical store expenses. • Direct Customer Engagement: Personalized service and feedback. • Scalability: Easier to reach a global audience. Positive Consequences: • Lower Costs: Competitive pricing. • Wide Reach: Global market access. • Customer Insights: Better data collection. Negative Consequences: • No Physical Interaction: Can't try products before buying. • Tech Dependence: Vulnerable to website issues. • High Digital Marketing Costs: Expensive customer acquisition. This activity may be carried out after the class has been introduced to the concept of online retail strategy. Key take-away points 1. All of the four Ps – not just promotion – have important roles to play in the creation and maintenance of brand equity. 2. Personalized marketing is an emerging strategy to build brand awareness and brand loyalty. 3. The products and services that firms design are the cornerstones of customer-based brand equity. 4. Product strategy entails choosing both tangible and intangible benefits the product will embody, and the marketing activities that consumers desire and the marketing program can deliver. 5. Pricing strategy must be based on consumers and the competition, as well as cost and quality considerations. 6. Channel members should be thought of and treated as valuable customers whose image and actions can hurt or enhance brand equity. Instructor Manual for Strategic Brand Management: Building, Measuring, and Managing Brand Equity Kevin Lane Keller 9780132664257, 9780273779414
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