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International UniversitySchool of BusinessMBA class 02 - Group 6
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Tran Ngoc Son
Nguyen NgocDieu Thi
Tran Thi TuongVi
Le NgocTrung
Phan Minh Nhat
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Chapter 09: Creating Brand Equity
Chapter 10: Crafting the Brand Positioning
Chapter 14: Developing Pricing Strategy &Programs
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Creating Brand
Equity
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What is a brand & How does
branding work?What is brand equity?
How is brand equity built, measured,and managed?
What are the important decisions indeveloping a branding strategy?
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A brand is a name, term, sign, symbolor design, or a combination of them,
intended to identify the goods orservices of one seller or group of sellersand to differentiate them from those ofcompetitors.
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Identify the maker
Simplify product handling
Organize accounting
Offer legal protection
Signify quality
Create barriers to entry
Secure price premium & competitiveadvantage
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Branding is endowingproducts and services withthe power of the brand.
Brand equity is the added value endowed
on products and services, which may bereflected in the way consumers, think, feel,and act with respect to the brand.
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Improved perceptionsof productperformance
Greater loyalty
Less vulnerability to
competitivemarketing actions
Less vulnerability tocrises
Larger margins
More inelasticconsumer response
Greater tradecooperation
Increased marketingcommunicationseffectiveness
Possible licensing
opportunitiesAdditional brandextension opporunities
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A brand promise is the marketers visionof what the brand must be and do for
consumers.
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Brand Asset Valuator
- Differentiation, Energy, Relevance,Esteem, Knowledge)
BRANDZ
- Follow a squential series of steps- Challenge : help people be high earnings& high potential customers
Aaker Model- Brand identity, Core identity elements,Extended identity elements, Brand essence)
Brand Resonance
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Brand Resonance Pyramid
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Choosing brand elements
Trademarkable devices that identify anddifferentiate the brand
Designing holistic marketing activitiesBrands are not built by ad alone.
Leveraging secondary associations
The associations indirectly transferred to thebrand by linking the brand to other entities(company, distribution channels,...)
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Brand buildingBrand building DefensiveDefensive
Memorable
Meaningful
Linkable
Transferable
Adaptable
Protectable
Criteria of choosing
DevelopingDeveloping brand elements (brand name, slogan, URL, Logo,brand elements (brand name, slogan, URL, Logo,
Symbol) can play a number of brand building rolesSymbol) can play a number of brand building roles
SlogansSlogans: an extremely efficient means to build brand equity: an extremely efficient means to build brand equity
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PersonalizationMaking sure the brand and itsmarketing are as relevant as possible,to as many customers as possible
Integration
Mixing and matching marketingactivities ==> reinforce the brandpromise
Internalization"Walk the walk" to deliver the brand
promiseChoose the right moment
Link internal & External marketing
Bring the brand alive for employees
When You're Here, You're
Family
Answers That Matter
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BRAND
Things
OtherBrands
People Places
Alliances
Ingredients Company
Extensions
Country ofOrigin
Channels
Employees
Endorsers
Events
Causes
3rd partyendorsemen
ts
Secondary Sources of Brand Knowledge
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Brand audits
Brand trackingBrand valuation
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The World's 10 Most Valuable Brands in 2010Source: Millward Brown Optimor, BrandZ Top 100 Most Valuable Global Brands ranking
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Brand reinforcement
Brand revitalization
Brand crises
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Market segmentation
Financial analysis
Role of brandingBrand strength
Brand value calculation
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Develop new brand elementsApply existing brand elements
Use a combination of old and new
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Crafting the Brand
Positioning
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1. What is positioning?
2. How to create an effective positioning
strategy?
3. How to differentiate brands?
4. What marketing strategies are
appropriate at each stage of the
product life cycle?
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Competitive frame of reference
Points-of-parity (POPs)
Points-of-difference (PODs)
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Frame of referenceCategory membership
Announcing category benefitsComparing to exemplars
Relying on the product descriptor
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Associations that are not necessarily
unique to the brand but may be sharedto other brands
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DesirabilityCriteria
DeliverabilityCriteria
Relevance Feasibility
Distinctiveness Communicability
Believability Sustainability
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PersonalPersonal
ProductProduct
ImageImage
ChannelChannel
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Product form
Features
Performance
Conformance
Durability
Reliability
Reparability
Style
Design
Ordering ease
Delivery
Installation
Customer training
Customer consultingMaintenance
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Source: www.bauer.uh.edu/pgalvani/files/MARK6361/kotler10.ppt
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"To remove the SingaporeGirl icon from SIA is like removing MickeyMickeyMouse from Disneyland... - Singapore's The Straits Times
http://en.wikipedia.org/wiki/The_Straits_Timeshttp://en.wikipedia.org/wiki/The_Straits_Times -
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VS
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The product life circle
Marketing strategies for each stage inPLC
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Source: www.bauer.uh.edu/pgalvani/files/MARK6361/kotler10.ppt
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Improve product quality and add newproduct features and improved styling
Add new models and flanker products
Enter new market segmentsIncrease distribution coverage and enternew distribution channels
Shift from product-awareness advertisingto product-preference advertising
(www.suu
.edu/.../Kotler
%20Keller%20PwrPt/Kotler
_MM_13e_Basic_10
.ppt)
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Expand number of brand users by:Converting nonusers
Entering new market segments
Winning competitors customersConvince current users to increase usageby:
Using the product on more occasions
Using more of the product on each occasion
Using the product in new ways
Shift from product-preference advertising toproduct-reminding advertising
(www.suu.edu/.../Kotler%20Keller%20PwrPt/Kotler_MM_13e_Basic_10.ppt)
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Increase firms investment
Decrease the firms investment levelselectively by dropping unprofitable customergroups, while simultaneously strengtheningthe firms investment in lucrative nichesHarvesting (milking) the firms investmentto recover cash quickly
Get rid of the business quickly by disposing ofits assets as advantageously as possible.
(www.suu
.edu/.../Kotler
%20Keller%20PwrPt/Kotler
_MM_13e_Basic_10
.ppt)
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Quality improvements
Feature improvements
Style improvements
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Developing Pricing
Strategy & Programs
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Understanding pricing
Setting the price
Adapting the price
Initiating and responding to PriceChanges
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Although nonprice factors have become more important inmodern marketing, price is the most important elementsdetermining market share and profitabilityEffectively designing and implementing pricing strategiesrequires a thorough understanding of consumer pricingpsychology and a systematic approach to setting, adapting,and changing pricesConsumer pricing psychology how consumers arrive attheir perceptions of price, the marketers must think of:
a. Reference price: consumers get pricing information from internalreference price (used as habitual decision making) or externalreference price (used as limited decision making and extendeddecision making)
b. Price-quality inferences: many consumers use price as an indicator ofquality whenever the information is not available
c. Price cues: consumers tend to process prices in a left to right
manner rather than by rounding e.g. stereo amplifier priced at 299instead $300 as a price in the $200 range rather than $300 range
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In setting pricing policy, a company follows a Six-Stepprocedures :
Step1: Selecting the Pricing Objective
Step 2: Determining Demand : price elasticity of demand
Step 3: Estimating costs
Step 4: Analyzing Competitors Costs, Prices, and Offers
Step 5: Selecting a Pricing methods
Step 6: Selecting the final price
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Step1: Selecting the Pricing Objective through Survival: face overcapacity, intense competitionor changing consumer wants.
Maximum current profits: knowledge ofcustomer demand and cost function
Maximum market share: set the lowest priceassuming the market is price sensitive
Maximum market skimming: setting higherprice as to communicate superior product
Product-Quality leadership: high levels ofperceived quality, taste, and status with a pricee.g. Jaguar car
Other objectives: suitable to nonprofit and publicorganization
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Step 2: Determining Demand :
Price sensitivity:
Price $15
$10
100 105
$15
$10
50 150
------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
(a) Inelastic Demand (b) Elastic Demand
Quantity Demanded per Period Quantity Demanded per Period Estimating demand curves
Survey: how many units customers would buy atdifference priceExperiments: can vary the prices of different
products in a storeStatistical analysis: past prices, quantities sold,
other relationship
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Step 3: Estimating costs
Type of costs and levels of production andAccumulated productionFixed costs: not vary with production level or sales revenue
Variable costs: material, office expenses
Average costs: is the cost per unit at that level of production
Total costs: Comprise variable costs and fixed costs
Accumulated Production
Costp
erunit
$2
$4$6
$8
$10
100,000 200,000 400,000 800,000
-----------------------------------------------------------------------B
II
A
IIII
IIIII
TI
Current price
Experiencecurve
I I I
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Step 4: Analyzing Competitors Costs, Prices, andOffers:
Consider the nearest competitors price The introduction of any price or change of any existing
price can provoke a response from customers,competitors, distributors, suppliers, and even +government
Anticipating a competitors reactionsHigh price
(Nopossibledemandat this
price)
Low price(No
possibleprofit at
this price)
Ceiling
price
Customersassessmentof uniqueproductfeatures
Orienting point
Competitorsprices andprices of
substitute
Costs Floorprice
Advantages:
Easy to perform, especially difficult to
estimate costs
Avoid a war of price
Disadvantages:
Not count the factors of price for self-
company
Skip profits at higher price levels
Setting high price maybe attract more
rivals to enter the market
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Step 5: Selecting a Pricing methods:
MARKUP PRICINGVariable cost per unit $ 10Fixed costs $ 300,000Expected $ 50,000The manufactures unit cost is given by:
Unit cost = variable cost + = $10 += $16
$300,000$50,000
Fixed costUnitsales
Markup Price = = =$20
Unit cost
1 desired return on sales
$16
1 0.2
Assume the manufacturer wants to earn a 20% markupon sales. The manufacturers markup price is given by:
TARGET-RETURN PRICING
Markup Price = unit cost + = $16 +
= $20
desired return x investedcapital unit sales
0.2 x $1000,000
50,000
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Step 5: Selecting a Pricing methods (cont)
Advantages:Compensated costs
Rapidly and easilyConsidered equal price,decreasing pricecompetition
Disadvantages:Unit cost depend on sold
products
wrong pricingDisregarding rivals andfluctuation of demand levelsSkip profits at higher levels
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Step 6: Selecting the final price : the company mustconsider additional factors such as:
Impact of other marketing activities: the final pricemust take the brands quality, advertising media,channel selection and services provided
The salespeople quote prices that are reasonable tocustomer and profitable to the company
Risk and gain sharing pricing: the company mustaware the risk of pricing such as consumers willsee uncompetitive price for homogeneous productsor loss of customers if it does not deliver the fullpromised value for non homogeneous products.
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Companies usually do not set a single price, but
rather a pricing structure that reflects variation in:a. Geographical pricing: the company decides how to price itsproducts to different customers in different locations andcountries
b. Price discounts and allowance: most companies will adjusttheir list price and give discounts and allowances for earlypayment, volume purchases, and off-season buying
c. Promotional pricing: companies can use several pricingtechniques to stimulate early purchases or attractcustomers attention such as loss leader pricing, specialevent pricing, longer payment terms
d. Differentiated pricing or price discrimination: companiesoften adjust their basic price in customer segment pricing
(adult vs child), product form pricing (1 for $10, 2 for $15),location pricing and time pricing
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Companies face situations where they needto cut or raise price
Initiating Price Cuts: as a drive to dominatethe market through lower cost and excessplant capacity. A price-cutting strategyinvolves possible traps:
a. Low quality trapb. A low price buys market share but not market loyaltyc. Little cash receives due to price wars
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Initiating Price Increases: as a drive to face thecost inflation and the over demand. A price-
increase strategy involves different impact onbuyers:a. Delayed quotation pricing: the company does not set a final
price until the product is finished or deliveredb. Unbundling: the company prices separately one or more
elements that were part of the offer such as delivery and
installation costc. Reduction of discounts: the price increase makes the companyto instruct its sales force not to offer its normal cash e.g. 30%discount but price already changes
Market leaders attacked by lower-pricedcompetitors can choose: to maintain price, raise
the perceived quality of their product, reduceprice, increase price and improve quality, orlaunch a low-priced fighter line
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International UniversitySchool of BusinessMBA class 02 - Group 6