marketing management debatesm

7/28/2019 Marketing management debatesm

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Chapter 10

Brand extensions Good or Bad:

Brand extensions are a good business growth strategy as it allows the company to organically

grow revenue. However, extensions must be carefully evaluated and chosen to ensure that therelated affect is what is expected. For example, the company needs to make sure that anyextension to the brand supports those brand elements or attributes that customers associatewith the brand. Any product extensions that conflict, deteriorate or dilute the brand.Brand extensions can be a profitable business growth strategy by associating the new productwith the existing strong brand that the company has developed. For example, Nike started outas a running shoe manufacturer. They built their brand equity by developing the brandelements of being memorable by:

Memorable & Meaningful - have a simple tag line of just do it was easy to remember and evoked an emotion of accomplishment/satisfaction,Likeable - their products were well made and designed,Protectable their innovated waffle pattern on the show sole as well as their name waspatented and copy write protectable, andAdaptable they expanded their shoe product line to include hiking, walking and crosstrainers.

The last criteria of the brand elements, transferable, is what made Nike more profitable andsuccessful. Leveraging the strong market position and brand equity, Nike extended their brandout into active clothing wear. This extension decision was a great growth-strategy, as theproduct(s) complemented and enhanced their brand image. By offering active wear, then couldcreate additional associations to affiliations to professional athletes (non-runners) as well asfashion conscious consumers.

Brand Equity Model:

Brand Equity is measured based on how well the brand is recognised and favoured over itscompetitors. It is the added value endowed on products and services. The value-addition may bereflected in the way consumers think, feel, and act with respect to the brand as well as in the prices,market share and profitability the brand commands for the firm.If a brand has a positive perception in the consumers mind, we can say it has a positive brand equity.Brands with positive brand equity will consistently generate, maximize, and grow cash flows. Theyachieve this by commanding a price premium, allowing for brand extensions and licensing, attracting

an retaining more valuable customers, and reducing the costs of customer acquisition. Coca-Cola isthe brand with the highest brand-equity and a brand valued at $70 billion.As defined, the value-addition is not always tangible and measurable. There are several marketingorganizations which came up with their own metrics, analytics, and models to measure and managebrand equity. Advertising agency Young and Rubicam (Y&R) developed a brand equity model calledBrand Asset Valuator (BAV). Please refe rwww.thebrandbubble.com/explore . Young and Rubicam,based on its research with almost 500,000 consumers in 44 countries, has come up with five keycomponents or pillars of brand equity. They are:
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- Differentiation or Uniqueness measures the degree to which the brand is seen as different fromothers.- Energy measures the brands sense of momentum. - Relevance or Appropriateness measures the breadth of a brands appeal. - Esteem or Likeability measures how well the brand is measured and respected.- Knowledge or Awareness measures how familiar and intimate consumers are with the brand.The relationship among these factors form the Power Grid ( as shownin www.thebrandbubble.com/explore ). Select brands like Coca-Cola, Google, etc, and you will quicklyrealize that they are shown on the top right corner of the grid. These are the leaders with high earningand high potential. Similarly, brands like Safeway will appear in the fourth quadrant, which is anindication of an aging brand and has some serious challenges. Virgin Atlantic appears in theNew/Indifferent category of the PowerGrid.Other important Br and Equity models are: Milward Browns Brand Dynamics, Brand MetricsDNA, BrandResonance Model, and Aaker model.
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Chapter 9

To develop an effective positioning, a company must study competitors as well as actual and potentialcustomers. Marketers need to identify competitors strategies, objectives, strengths and weaknesses.Developing a positioning requires the determination of a frame of reference by identifying target

market and the resulting nature of the competition and the optimal point of parity and points of difference brand associations

optimal point of parity and points of differentiation; that points of differences are associationsand are strongly held and favorably evaluated by consumers; the key to competitive advantageis relevantbrand differentiation; emotional branding is becoming a way to create product and branddifferentiation: brand stories are growing in importance as are brand journalism, andcultural branding.

3 Cs of positioning: Be Crystal clear: Be Consumer based:

Be relevant and credible to the consumer Write in consumer language and from consumers view point

Be Competitive: Be distinctive Focus on building brand elements into powerful discriminator Be persuasive

Be sustainable

Attributes and benefits:

Functionality and price: products and/or services with many features but at a low price computers, automobiles, home appliances. Ease and completeness: products that are easy to use and contain everything the consumer wants in the products computers, home entertainment products.

Fun to drive and good gas mileage: for cars, this is an ongoing challenge along with safe and good gas mileage and large and good gas mileage.

Safe and scary amusement rides, movies, television shows, books. Choices and convenience: variety in our shopping but sized for convenience (has the rightmix of products but is not too big convenience stores). Close but not too close shopping centers and large mega- stores close enough but not in my backyard. Simple to use yet not complic ated computer and game programs.A firm may use dual strategies to communicate these negatively correlated attributes and


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benefits. Although more expensive to use dual marketing strategies, for a product or serviceconsisting of negatively correlated attributes, such strategies will appeal to both sets of consumers for the product.Additionally, the marketer may anchor the PODs and POPs, with other brands or otherassociations that emulate the desired characteristics or communicate the desired emotional

appeals.

Chapter 8

Do brands have finite lives?

I disagree with the idea that brands cannot be expected to last forever. Some brands have lasted for

decades, even centuries. (Brand survival, 2007) From a marketing managers perspective brands thatcan be expected to last forever have continuously built, measured, and managed the proper brandequity that allows for a brand to survive forever. Continuously building, measuring, and managing brandequity will be discussed further to support the idea that brands can be expected to last forever.

According to Kotler and Keller, Brand equity is the added value endowed on products and services. Itmay be reflected in the way consumers think, feel, and with respect to the brand, as well as in theprices, market s hare, and profitability the brand commands for the firm. (2009, p. 240) When creatingbrand equity marketing managers must first create the right brand elements that will attract andidentify with consumers. Marketing managers utilize six main criteria for choosing brand elements such

as, ensuring their brands are memorable, meaningful, likable, transferable, adaptable, and protectable.(Kotler & Keller, 2009 p. 246) For example, Nike has multiple brand elements in which consumers canidentify with such a s, the distinctive swoosh logo, the empowering Just Do It slogan, and the Nikename based on the winged goddess of victory. (Kotler & Keller, 2009, p. 246) Consumers recognizebrand elements and are more likely to continuously purchase the brand due to their familiarity with theproduct and/or service.

In order for a brand to last forever marketing managers must continuously measure brand equity.Marketing managers must conduct brand audits and brand- tracking studies. Conducting brand auditson a regular basis, such as annually, allows marketers to keep their fingers on the pulse of their brandsso they can manage them more proactively and responsively.

In short, it is not the brand that decides whether its life will be finite or infinite. It is the way that thebrand is presented and treated by the company that has created it. A company that wants to stay on thecutting edge and continue to have high market share will adapt its brand to meet the demands of consumers. A company that is not willing to address this issue may see the brand and the entirecompany die out. As unfortunate as it is, this is what has happened throughout time to some goodbrands and good companies that as simply not around anymore


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Market Leader Strategies: The market leader generally leads the other firms in price changes,new-product introductions, distribution coverage, and promotional intensity. The marketleader must maintain a constant vigilance as other firms keep challenging its strength or tryingto take advantage of its weaknesses. To remain number one, dominant firms must find ways(1) to expand total market demand, (2) to protect its current market share through good

defensive and offense actions, and/or (3) try to increase its market share further, even if marketsize remains constant.

Market Challenger Strategies: Challengers can attack the leader and other competitors in anaggressive bid for further market share. The strategic objective of most challengers is toincrease their market shares. An aggressor can choose to attack the market leader, to attackfirms of its own size that are not doing the job or are under-financed, or attack small local andregional firms that are not doing the job or are under-financed. The attack strategies includefrontal attack, flank attack, encirclement attack, bypass attack, and guerilla attack.

Market Follower Strategies: Followers tend not to want to steal others customers, butinstead they present similar offers to buyers, usually by copying the leader. Follower marketshares show a high stability. Each follower tries to bring distinctive advantages to its targetmarket. The follower is a major target of attack by challengers. Therefore the follower mustkeep its manufacturing costs low and its product quality and service high. Following does notmean the firm is passive or a carbon copy of the leader. The specific strategies are: thecloner, which lives parasitically off the leader; the imitator, which copies some things from theleader but maintains differentiation in terms of packaging advertising, pricing, etc; and theadapter, which takes the leader s products and adapts and often improves them.

Market Nicher Strategies: An alternative to being a follower in a large market is to be a leader in a small market or niche. Smaller firms normally avoid competing with larger firms bytargeting small markets of little or no interest to the larger firms. Firms with low shares of thetotal market can be highly profitable through small niching. The nicher ends up knowing thetarget customer group so well that it can meet their needs better than other firms casually sellingto this niche could. The nicher receives high margins in contrast to the high volume of themass marketer. The key idea is specialization. Nichers need to create niches, expandniches, and protect niches.

Take a positi on: The best way to challenge a leader is to attack its strengths versus the best way toattack a leader is to avoid a head-on assault and to adopt a flanking strategy.

Pro: What are some of the strengths of a market leader? A market leader as defined here, generally,has the largest market share in the relevant product, market, usually leads the other firms in price


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changes, new-product introductions, distribution coverage, and promotional intensity. Market leadersmay also have products that generally hold a distinctive position in consumers minds. These strengthsand competitive advantages can be formable when used by a savvy and seasoned firm. Trying toattack the leader on its strengths requires point-of-differences in brands, sophisticated marketing

positioning, and deep pockets for the challenger.

The underling strategy for performing a head on attack to a market leader is: If the attacking firm seesthat the market leader is not serving the market well; that the attacker has out-innovated the marketleader through product innovations or other differentials; or if the market leader is conservativelyspending or is milking the market.

Con: A flanker attack can be directed along two strategic directions geographic and segmental. In ageographic attack, the challenger spots areas where the opponent is underperforming. In segmental,the challenger uncovers underserved market needs and attempts to penetrate these markets with its

products. Flanking is in the best tradition of modern marketing that holds that the purpose of marketing is to discover needs and satisfy them. Flanking is particularly attractive to challengers withfewer resources.

MARKETING DISCUSSION

Pick an industry. Classify firms according to the four different roles they might play: leader,challenger, follower, or nicher. How would you characterize the nature of competition? Do the firmsfollow the principles described in the chapter?

Suggested Response:

Student answers wil l differ according to the industries picked and the role the fir ms play in th at in dustry. Al l answers shoul d contain some of the fol lowing:

Leaders: largest market share, leads on price changes, new-product introductions, distribution

coverage, and promotional intensity. Have products that generally hold a distinctive position in theminds of the consumers.

Can use strategies that expand the total market demand: (new customers market-penetrationstrategies, new-market segment strategies, geographic-expansion strategies).

More usage (level of quantity or frequency of consumption).

Protect its current market share through good defensive (position defenses, flank defense, preemptivedefense, counteroffensive defense, mobile defense, contraction defense).

Challengers, followers: can attack the leader for increased market share, (challengers), or followers(not rock the boat), through:

Frontal attack. Encirclement attack.

Flank attack.

Bypass attack.

Guerrilla warfare.


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Instead, they will do smaller marketing campaigns, using Internet websites, blogs, socialnetworking, and word-of-mouth advertising. While mass marketing may be on the wane,companies such as Coca-Cola and Nike use it extensively to retain their brand's appealthroughout the world. Here are some known benefits of mass marketing:

Uses mass media to build brands

Reinforces a company's mission statement

Creates an image, or lifestyle, associated with a brand name

Gets attention from millions of people

Mass marketing also has it drawbacks. This may include:

Expenses - mass marketing costs a lot of money

The money spent on ads may not be recouped through sales

This marketing doesn't connect with niche audiences

Smaller marketing initiatives can be low-cost or free; often, creative or "guerilla"advertising is used to attract attention without access to radio, TV, etc. For those whobelieve that mass marketing is dead, finding a niche market and targeting that marketsegment in ads is preferred over spending a lot of money on a mass marketingcampaign.


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Chapter 5

Is target marketing ever bad?

As marketers increasingly targeted their marketing efforts to specific target groups like Asians, Hispanic, and other

ethnic minority groups, it has become a marketing debate that whether this practice is ethical. Target marketing isone of the vital tools of marketing, which includes market segmentation on the basis of demographic, geographic, andpsychographic characteristics of consumers.

As marketers start directing their promotion campaigns to specific consumer groups on the basis of age, sex,ethnicity, income , and life styles, so that they can use this information to locate the specific group of people in societywho are existing or potential consumers of the company. The question marketing critics often raise is the eth icalaspect of this strategy. My position on this debate favour the argument that targeting minorities is a sound businessand it supports the promotion activities of the products suited the lifestyles and needs of this group.

As marketing activities target rational and independent individuals and groups to provide them necessary informationto facilitate consumer who is free to make own decision. As far as targeting minorities is exploitive, so as each form of

target marketing is exploitive because it exploits the needs, wants, and the gaps present in the segments of society.

In addition to this, certain types of products and services only address minorities, beingcompletely useless for other categories. In this case, target marketing represents the only marketing solution. Certain products have been particularly created or adapted to fit the needsof minorities. Therefore, target marketing begins with the development of the product,continues with its actual production, and is implemented by the marketing campaign. In other words, it is unfair to blame marketing for any negative aspects related to targeting minoritiesIn fact, target marketing has become a necessity in the complex context of todays globalization.The reason behind this situation consists in the fact that minorities groups are reportingcontinuous growth and development. Their needs expand also, and so does their power

Chapter 4

Online versus offline privacyPro: Privacy is a larger issue in the online world than the off-line world simply because theinformation has a greater opportunity to be exposed to more people than off-line transactions. Thetransmission of private information electronically travels through electronic channels each of which

presents opportunity for misdirection or comput er hacking activities. In many of these cases, the person, or firm transmitting this information, redirecting this information receiving this informationand storing this information is unknown to the consumer. In the off-line world, the consumer has theopportunity to know the company, personnel, or firm receiving this information and has the

opportunity to accept or decline sharing their personal information.

Consumers on the whole receive more benefit than risk from marketers knowingtheir personal information.Pro: With an active CRM program in place by a firm, consumers can receive more benefit than riskswith the marketer knowing their personal information. A firm with an active CRM program can and


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does allow the consumer to move through the Customer Development Process (from suspects to partners) thus establishing strong ties to the firm and the reception of increased specially designed promotional and service programs unavailable to the general public. This is seen in frequent flyer discounts, member discount, special shopping days, and advance notices of new products, promotions,and reminders for service opportunities (oil change reminders, medical appointment reminders, and

others). In todays fast paced world, consumers stand to benefit from su ch attention to detail.

Using CLV

A) CLV describes the net present value of the stream of future profits expected over the customerslifetime purchases. Each students example will differ but the main tenets of each report shouldinclude the following:

1) Add:

a) Profit from a sale (dollar or percent).

b) Number of sales per customer per year.c) Average age of a customer.

d) Average expected lifespan of a customer.

2) Subtract:

a) Appropriate discount rate.

b) Costs of attracting one customer.

c) Selling one customer.

d) Servicing one customer.

B) Organizations would change by beginning to take a long-term perspective rather than a short-term(quarter-to- quarter view). No longer viewing a customer as a transaction but rather as a lifetimevalue solidifies and demonst rates the impact that a single consumer has to a firm in a language theyunderstand dollars. Firms would begin to customize offerings and messages to each customer,ensure that retention strategies are in place, differentiate customers in terms of needs and value to thecompany, and build stronger relationships with key customers. Because of a change in the loci of focus for the firm, strategies, and actions based upon which would provide the best return on itsmarketing investments would be implemented.

marketing management debatesm

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