Designing Marketing

Programs to Build
Brand Equity
https://www.youtube.com/watch?
v=lhwECfsvOQ8

Building Customer-Based Brand Equity

BRAND BUILDING TOOLS AND OBJECTIVES

CONSUMER KNOWLEDGE EFFECTS

BRANDING BENEFITS

Choosing Brand Elements

Brand name
Logo
Symbol
Character
Packaging
Slogan

Memorability
Meaningfulness
Likability
Transferability
Adaptability
Protectability

Brand Awareness
Depth

Recall
Recognition

Breadth

Purchase
Consumption

Tangible and intangible benefits

Value perceptions
Integratepush and pull
Mix and match options

Leverage of Secondary Associations

Company
Country of origin
Channel of distribution
Other brands
Endorsor
Event

Awareness
Meaningfulness
Transferability

Greater loyalty
Less vulnerability to competitive
marketing actions and crises
Larger margins
More elastic response to price
decreases

Developing Marketing Programs

Product
Price
Distribution channels
Communications

Possible Outcomes

More inelastic response to price

increases
Brand Associations

Greater trade cooperation and

support

Strong

Relevance
Consistency

Increased marketing communication

efficiency and effectiveness

Favorable

Desirable
Deliverable

Possible licensing opportunities

Unique

Point-of-parity
Point-of-difference

More favorable brand extension

evaluations

Building Customer-Based Brand

Equity

Strategic Brand Management is about

creating the right brand knowledge
structures through

Marketing Programs / Activities create

brand knowledge structures - which will result
in Brand Positioning and Equity

Choice for the Brand Elements

Supporting marketing programs and activities that

are planned, centered around the brand

Other associations (indirectly transferred to the

brand by linking it to some other entities) carefully
chosen

Sub-Dimensions of CBBE
Pyramid
LOYALTY
ATTACHMENT
COMMUNITY
ENGAGEMENT

QUALITY
CREDIBILITY
CONSIDERATION
SUPERIORITY

PRIMARYCHARACTERISTICS&
SECONDARYFEATURES
PRODUCTRELIABILITY,DURABILITY
&SERVICEABILITY
SERVICEEFFECTIVENESS,
EFFICIENCY,&EMPATHY
STYLEANDDESIGN
PRICE

WARMTH
FUN
EXCITEMENT
SECURITY
SOCIALAPPROVAL
SELFRESPECT

USERPROFILES
PURCHASE&USAGE
SITUATIONS
PERSONALITY&
VALUES
HISTORY,HERITAGE,
&EXPERIENCES

CATEGORYIDENTIFICATION,NEEDSSATISFIED

The Key Drivers of Brand Equity

Performance

Judgment

Resonance

Imagery

Feelings

New Perspective on
Marketing
Strategy and tactics behind marketing programs
have changed dramatically in recent years because
of shifts in the external marketing environments
New economy - major drivers

Digitalization and connectivity

Customization and customerization (tailored products
and ingredients to make products themselves)
Disintermediation and reintermediation (new middlemen)
Industry convergence (blurring of industry boundaries)

New Economy - New

Capabilities
Consumers have a substantial increase in
power because of greater

Variety of available goods and services

Amount of information
Ability to chat with strangers and compare notes
on products and services
Ease in interacting with the company, placing and
receiving orders, giving feedback, etc.

New Economy - New

Capabilities

Companies have a substantial increase in

power because of Internet etc. New information, new sales channels, augmented
geographic reach to inform, promote

Can collect new and fuller information

Can facilitate two-way communication and transaction
efficiency
Can customize offering for individual customers
Can send ads, promotion material, information by email,
Can improve purchasing, training, recruitment, and
internal communication

New Economy - Implications

for the Practice of Brand
Mass-market strategies are increasingly being
Management

abandoned by Marketers for new approaches

Creative and original thinking necessary to create
fresh new marketing programs to break through the
noise in the marketplace and connect with
customers
Unconventional means of building brand equity
must be attempted
Possible because of internet and other digital
devises

New Economy Implications

- Personalizing Marketing

Personalizing Marketing (PM) has

become an important powerful brandbuilding force because it

Can get brand on to consumer radar

Create unique brand associations
Reinforce brand imagery and feelings, brand attitude
and response and brand resonance

PM approaches are a means to create deeper,

richer, and more favorable brand associations.

New Economy Implications

Personalizing Marketing
Personalizing Marketing activities - are
Concepts
personalized, holistic brand experiences
that create strong consumer ties
(Relationship Marketing)

It expands the depth and breadth of brandbuilding marketing programs

Different marketing approaches adopted

Experiential Marketing
One-2-One Marketing
Permission Marketing

Experiential Marketing
(Pine and Gilmore)
When you charge for the time customers
spend with you, then and only then you
are in the experience business

EM views consumers as rational and

emotional
Combines brand education with
entertainment because.

Experiential Marketing
EM connects the brand with unique, interesting
experiences by demonstrating how it enriches
life
Focus is on

Consumer experiences - 5 different types of

experiences sense, feel, think, act, relate
In Consumption situations

Eclectic methods, tools used to connect the

brand

With multiple touch points, stimulating multiple

senses
Through special events, contests, promotions,
sampling, on-line activities, etc.

One-to-One Marketing
(Don Peppers and Martha
Rogers)
Fundamental concepts

Focus is on individual customers (data base)

Response is a dialogue using interactivity
Customization of products and services

Consumer Differentiation
Treats different consumers differently
because of
1.
2.

Different needs
Different values to firm in terms of both

Current value
Future life-time value

One-to-One Marketing:
Maximum marketing effort on most
valuable consumers high spenders,
high lifetime value customers

Five Key Steps

Identify consumers, individually,

addressably
Differentiate by needs and value
Interact cost-efficiently and effectively
Customize some aspect of the firms
behavior
Brand the relationship

One-to-One Marketing
Competitive Rationale basic premise

Consumers provide information and add value

Firm generates rewarding experiences and adds
value

Maximize utility for consumers

Builds strong profitable relationships with consumers

Thus

Reduces transaction costs for consumers

Creates switching costs for consumers

Permission Marketing (Seth

Godin)

Permission marketing - Marketing after

gaining customers permission (unlike
Interruption Marketing with mass media)

Encourages consumers to participate in a long-term

interactive marketing campaign, and
Rewards them for paying attention to increasingly
relevant messages

Communication impact is greater. Messages

break out of clutter and build customer loyalty
because they are -

Anticipated
Personal
Relevant

Permission Marketing
Draw back of PM
PM presumes that the client knows
what they want to some extent

But they may need guidance for

forming and communicating their
preference
Participatory Marketing is a more
appropriate term and concept to
employ as the consumers and
marketers work together.

Permission Marketing
5 Steps
1. Incentive - overt, obvious, and clearly delivered

incentive to a prospect to volunteer samples,

discount, contest
Incentives that can potentially develop a relationship for
further communication
But customer wishes are respected and consumers must be
willing to become involved
2.
3.
4.

5.

Over time, teach the consumer about the product

Reinforce the incentive over time
Increase the level of permission the marketer receives
from the customer
Leverage permission to generate profits

Permission Marketing
10 Questions to Evaluate
1. Whats the bait?
2. What does an incremental permission cost?
3. How deep is the permission that is granted?
4. How much does incremental frequency cost?
5. Whats the active response rate to
communications?
6. What are the issues regarding compression?
7. Is the company treating the permission as an
asset?
8. How is the permission being leveraged?
9. How is the permission level being increased?
10. What is the expected lifetime of one permission?

Reconciling
New and Old Marketing Approaches

Personalizing Marketing /Relationship

Marketing)

Creates personalized, holistic brand experience - effective

means of getting consumers actively involved with a
brand and create strong consumer ties

New marketing approaches reinforce brand

building concepts and techniques

Gets customers actively involved with the brand and

deepens awareness
Creates deeper, richer, more favorable brand associations
Elicits a positive brand response
Creates brand resonance and builds BE by working
differently in the CBBE model context

Reconciling New and

Traditional Marketing
Approaches

Traditional marketing activities are

still important

Control and predictability of traditional

marketing activities is important
Models of BE provide direction and focus to the
marketing programs

Integrating the Brand into

Supporting Marketing Programs
Combine Traditional Marketing Approach & New Economy
Approach to enhance, establish desired brand performance & image
Product Strategy
Perceived quality and
value

Brand performance
Brand intangibles / imagery
Value chain
ROQ rather than TQM

Relationship Marketing

Mass customization
After-marketing
Loyalty programs

Pricing Strategy

Value based pricing

Everyday low pricing
Price variance policy

Channel Strategy

Channel design

direct, indirect , hybrid

Channel Support

Retail segmentation activities

Cooperative advertising

Communication Strategy

Optimum mix and match of

communication options

Product Strategy
The objective

Create a positive image - unique, strong,

favorable associations
Create favorable judgments and feelings
and
Foster greater brand resonance

Product Strategy
CBBE models general dimensions of
product quality tangible and intangible
Consumers perceive quality and value
in

Performance level (low, medium, high) at which the

primary characteristics of the product operates
Features secondary elements that complement the
primary characteristics
Conformance quality degree to which the product
meets specifications, and is absent of defects
Reliability consistency of performance over time, and
consistency from purchase to purchase
Durability expected economic life of the product
Serviceability ease and efficiency of servicing
Style and design appearance or feel of quality

Product Strategy
Perceived quality and value - Brand
Intangibles

Brand imagery could be the basis of

brand choice symbolism / brand
personality, type of users, etc. are
important

Imagery is important as decisions may

not always be made / weighed on the
basis of product performance quality
because of

Inability to evaluate product

Lack of time, opportunity or inclination to do so

Product Strategy
Product strategy should consider
consumers cost perceptions
Consumers assess product value, not only
by quality perceptions, but also cost
perceptions (opportunity, psychological
involvement, time, energy cost, etc.)

Michael Porters Value Chain is a useful

strategic tool to derive and deliver customer
value from core business processes

Internally - cross functional integration and

cooperation is important
Externally to gain competitive advantage by
partnering with other members of the value chain

Product Strategy
Perceived quality and value - Value
chain

5 primary value creating activities

Competitive advantage and

Inbound logistics

reduction of cost can be created in

Operations

Out bound logistics

every activity

Marketing and sales

Service

4 support activities

Firms infrastructure
Technology development
Human Resource management
Procurement

Product Strategy
Perceived quality and cost
perceptions

Return on Quality (ROQ) more than

Total Quality management (TQM)

TQM may be noncustomer focused at

times
ROQ (return on quality) focuses only on
improvements on what produces tangible
consumer benefits, lowers costs,
increases sales, etc.

Product Strategy
Product Strategy - Relationship

Marketing
RM provides more holistic and personalized
brand experiences to create stronger
consumer ties
Benefits of RM (researched in the US)

Average company loses 10% of customers

annually
Acquiring new customers is 5 times more
expensive than satisfying and retaining them
5% reduction in defection rate can increase
profit by 25% to 85% depending on the industry
Customer profit rate increases over life

Product Strategy
Personalization and Relationship
Marketing set of activities to enrich
brand experience and build resonance
using new marketing approaches

Experiential Marketing
Permission Marketing
One-to-One Marketing

3 issues
1.
2.
3.

Mass customization
After-marketing
Loyalty programs

Product Strategy
Personalization and Relationship Marketing
3 important issues
Mass customization e.g. Asian Paints Mix
Your Own Choice

1.

Digitalization allows mass customization on a mass scale

Customers interact directly with marketers NIKEiD
program
Internet sites allows it to be done more effectively
Services are also customized

Other advantages

Supply side benefits reduces inventory etc.

Limitations

Not every product is easily customized, or all demands

customizable

Product Strategy
Relationship Marketing 3 important
issues
2. After marketing to improve the brand
use experience
User manuals (multimedia / illustrated),
training, help-lines, call centers, also aftersales-service centers, etc.
Sale of complementary products, upgrades,
etc.
Retention activities that build relationships
to last a life-time

Product Strategy
Relationship Marketing 3 important
issues
3. Loyalty Programs (Frequency Marketing)
to identify, maintain and increase
yields from the best customers through longterm, interactive, value added relationships

Uses programs that are a mixture of specialized

services, incentives, news letters
Sometimes involves co-branding or brand alliances

Advantages

Creates switching costs for consumers

Reduces price competition amongst brands

Product Strategy
Relationship Marketing 3 important
issues
3. Loyalty Programs tips

Know your audience determine user

segments based on purchase behavior. Use
data base, software, etc.
Listen to your best customer both
suggestions and complaints
Engage people to make them want a
program easy of use, immediate reward to
sign-up, made to feel special
Change is good update / change programs
to avoid being a me-too program

Product Strategy
Product Strategy - Summary
Perceived quality and value - important brand
associations that drive consumer decisions and BE

Product strategy - includes desired tangible and intangible

benefits

Embodied in the product and in brand imagery

Delivered by Marketing activities and programs

Relationship Marketing strategy is important to build loyalty

After Marketing activities, Loyalty programs and CRM to improve
product experience and build Resonance

The objective

Create a positive image - unique, strong, favorable associations

Create favorable judgments and feelings and
Foster greater brand resonance

Pricing Strategy

Price premiums are one of the most

important BE benefits of building a strong
brand
But consumers price-value perceptions
must be considered for 2 reasons

increasing competition drives prices down

a debt-burdened consumer

Pricing Strategy- objective

Objective

Price should be perceived as appropriate

and reasonable

Lowering price may not be the answer

Value added costs yielding a price premium
may be more profitable

Pricing Strategy

Price Perceptions

Pricing Strategies

Price bands - high, low,

medium

Value based pricing based on

Product design and delivery
Product cost

Pricing strategy must consider pricing perceptions of different segments, and adopt pricing strategies

Price variability is
within the price band, the
flexibility and breadth of
pricing

Everyday low price

Pricing Strategy
Price Perceptions play multiple roles in
brand assessment

Consumers categorize Price - high, low, medium

Assess quality on bases of Price - high, low, medium
Consider how firm or flexible Price is at the time of purchas

Determine Pricing Strategy by Price

Perceptions

Determine Brands Price Tier associations

Determine the level of the brand in category

Range of the acceptable price or price band
Keep flexibility and breadth of pricing within the tier

Pricing Strategy
Recommended Pricing Strategies

Value Pricing charging a fairly low price for

high-quality items. Popular approach because of

Competition driving the price down

Consumers are more demanding

Everyday Low Price - a complementary pricing

strategy

Promotions and discounts policy- guidelines

establishes depth, duration and frequency of
Sales Promotions

Pricing Strategy
Consumer inferences of product quality,
value assessment

Value based pricing strategies - right

price for right product
Price premium is based on unique
aspects - tangible and intangible
Varying price volatility and variance to
plan time of purchase (frequency and
magnitude of discounts)

Pricing Strategy
Value Pricing keys of success
1. Product design and delivery increase
prices with new value-added product features
Gillette
2. Product cost lower costs without
compromising quality for productivity gains product reformulation, process changes,
material substitution (not stripped down
versions) Tata Nano
3. Pricing based on understanding value
perception - the extent of premium over
product costs that they are prepared to pay

Pricing Strategy
Techniques to determine value
perceptions

Seek consumer perception of price in different

ways

Ask direct questions what are you willing to pay..?

Different segments have different perceptions

Price segmentation can be considered depending on

demand and value perception

Summary - Price should be perceived as

appropriate and reasonable

Lowering price may not be the answer

Value added costs yielding a price premium may be
more profitable

Pricing Strategy
Everyday Low Price (EDLP)
complementary Pricing strategy

EDLP is a constant low price with few or

no Price Promotions or Special Sales

Helps build brand loyalty

Fends off private labels
Reduces manufacturing and inventory costs
Reduces over reliance on consumer and trade
promotions that lead to spurts in demand

But timely, well conceived sales promotions still

induce more sales

Pricing Strategy
Pricing strategy - Summary

Determine strategies for setting prices

Decisions must reflect the consumers perception

of value

Adopt value-based prices on major items

Adopt EDLP (a complementary pricing
approach) to maintain consistently low
prices on a day-to-day basis for basic
products
Adjust pricing over the short and long run
Determine carefully the nature of price
discounts, promotions

Channel Strategy
Marketing channels - a set of
interdependent organizations involved
in the process of making products
available for purchase or consumption
The manner by which a product is
sold or distributed has an impact
on the resulting equity and
ultimate sales success of a brand.

Channel Strategy
Two elements
1.

Channel Design

Direct channels - selling through personal contacts

of the company to prospective customers by mail,
phone, electronic means, in-person visits, etc.
Indirect channels - Selling through third-party
intermediaries agents or broker representatives,
wholesalers or distributors, dealers, retailers
Hybrid channel design Multiple channel types used.
Web strategies Direct , Indirect channels, or Hybrid

Channel Support with 2 strategies

Retail segmentation activities

Cooperative advertising

Channel Strategy
Goals of the 2 channel elements
Channel design the goal

1.

Maximize coverage and effectiveness

Minimize cost and conflict

Channel Support the goal

2.

Establish channel partnership

Enhance brand value delivered by them
2 channel support strategies 1.
2.

Retail segmentation activities

Cooperative advertising

Channel Strategy
Channel design considerations

Direct channels is preferable when

Product information needs are high

Product customization is necessary
Product quality assurance is important
Purchase lot size is important / large
Logistics are important

Indirect channel is preferable when

Availability is crucial
Broad assortment is essential
After-sales service is important

Channel Strategy
Indirect channel equity impact
Retailers affect BE the most as these are most
visible and have direct contact with customers

Consumers are attached to retailers for many

reasons
Retailers create their own equity through

Retailers image influences brand by

Product assortment, quality of service, store

ambience, pricing, credit policy, other unique
associations
Interplay between Store Image and Brand Image
Brand related services offered by retailer
Retailers other marketing activities advertising, etc.

Retailers come in many forms

Channel Strategy
Direct channel Promotion Strategy
Push and Pull strategies - Advertising,
Consumer Promotions combined with
some Trade promotions.
Pull strategy - creating brand pull through
brand building tactics Advertising,
Consumer Promotions, etc

Push strategy - marketing effort

focused on Trade incentives to stock and sell

brand

Trade promotions

Channel Strategy
Indirect channel Promotion

Strategy
Push and Pull strategies should be
used simultaneously

But Push Strategy should dominate

Manufacturers are vulnerable to the

retailers pressures and actions
Must increase their power over retailers
with Pull strategy

Channel Strategy
Channel Support - 2 partnership strategies
1.

Retail segmentation

2.

By location and
By customer profile
By marketing capabilities, etc.

Cooperative advertising

Manufacturers pay for a portion of the retailers

advertising to promote the manufacturers product
and its availability in the retailers place of business.

Channel Strategy
Channel partnership - 2 partnership
strategies
1.
Retail segmentation - based on
retailers marketing capability

Different product mix

Customized promotions
Special delivery systems
Sometimes own branded version of products branded variants

Channel Strategy
Channel partnership - both strategies are
critical
2. Cooperative advertising manufacturer pays
for a portion of the promotions that retailers run

For local impact and more relevance in selling

To create effective co-op ads the company must

Design the ad. campaign and stipulate the nature of brand

exposure in the ad (has to be followed to be eligible)
Sell the brand while pushing the store

But, brand image cannot be tightly controlled and may

run counter to the desired image of the brand (emphasis
could shift to the store / the promotion rather than the
brand)

Channel Strategy
Channel partnership Summary
Elicit channel support through -

Trade Marketing Programs and promotions

dealer-meets, discounts, etc.
Merchandising at the retail point

Consider if channel activity encourages -

Brand awareness, creating unique and

favorable associations, and eliciting a positive
brand response
Induces trial purchase
Communicates or demonstrates product
information

Channel Strategy
Direct Channel
Company owned stores
Other means

Shop-in-shop

Direct selling

Web strategies

Channel Strategy
Direct Channel to build strong
relationships

Company owned stores most expensive

form, but provides many benefits

Showcases the brand and its product variety

Bolsters brand image, educates, and builds BE more than

being a direct sales device Nike Town

Test markets alternative designs, presentation,

price, etc. (to keep a finger on the consumers
pulse and shopping habits)
A way to hedge bets with retailers who push their
own labels

May cause conflict with existing retail channel on

turf issues

Explain that it is not a threat but a show-case for the brand

Channel Strategy
Direct Channel Other means

Shop-in-Shop Firms own shop within a

departmental stores

Appeases retailers
Benefits from the retailers image
Retains control over design and product
presentation

Direct Selling via phone mail or electronic

means, magazines, web-sites

Not only sells but also

Builds BE by creating awareness, and
understanding of key benefits, etc.
Engages in a dialogue
Establishes relationship

Web Strategies

Advantageous to have both a physical

brick and mortar channel and a
virtual, online retail channel
Multichannel retailers are able to
acquire customers at half the cost of
Internet-only retailers The Boston
Consulting Group

Channel Strategy
Channel Strategy to build BE summary

Develop an integrated shopping experience using stores, website, telephone, catalogue, etc.
Design and manage direct and indirect channels to build
awareness, strength, favorability and uniqueness of brand
associations
Match their advantages and disadvantages carefully - maximize
coverage and efficiency, minimize conflict and cost

Direct channel can enhance BE through

Consumers understanding the depth, breadth of the variety of

products, and any distinguishing characteristics

Bolstering brand image

Indirect channel can influence equity through
Building partnerships to enable actions and support for the brand

Ensuring Retailers image transfer (secondary associations) to

brand
Developing both Push and Pull strategies