michael g. warner 1 chartered marketer emba dipm fcim fidm chartered marketer emba dipm fcim fidm...
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Michael G. Warner
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Chartered Marketer
EMBA DipM FCIM FIDM
Chartered Marketer
EMBA DipM FCIM FIDM
Michael G.Warner MBA DipM FCIM FIDM
CIM Post Graduate Diploma
Marketing Leadership & Planning
Michael G.Warner MBA DipM FCIM FIDM
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Course Objectives
To deliver a coherent and deliverable
market oriented internal culture to encourage flexibility
which is SMART enough for your employer to understand and give you the go ahead.
To follow the CIM guidelines so as not to throw away marks
To maximise the LSM on-line resources=
SUCCESS3Michael G.Warner MBA DipM FCIM FIDM
Assessment tasks
CIM registration deadline 29th March 2013
Introduction to the assessment.
What do you have to do to pass?
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Session 2
Developing marketing strategies and value
proposition
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Strategic Choice – Product Market strategies
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Brand: A DefinitionACCORDING TO MARKETING THEORY:“…a name, term, symbol or design, or a combination of them, which is intended to signify the
goods of one seller or groups of sellers and to differentiate them from those of competitors”Kotler (1994), Marketing Management
RATHER DEFINE A BRAND IN RELATION TO THE CUSTOMER:…is the means by which the company establishes a relationship with the customer (because a
brand has an identity and a personality and a product not)…
…A sum of all available information about the company, product or service, gained from experience (functional and emotional), differentiating it from another. The appeal is both rational and emotional level; tangible and intangible…
…The space in consumers’ hearts and minds that belongs to you…
…The reason to choose you over the other guys… INSIGHT
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What is a Brand? Product vs Brand
A product is something that is made in a factory; A brand is something that is bought by a customer.
A product can be copied by a competitor; a brand is unique.
A product can be quickly outdated; a successful brand is timeless.
Stephen King (WPP Group, London)
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Strategic Choice
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The Total Product Concept
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Physical v Psychological/ emotional intelligence
©Michael Warner & Snowpine Ltd
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The brand blueprint
Inner Outerdirected directedvalues values
Core Propositionraison d’etre to the consumer
EssenceCore Valuesfundamental values
that define the brand
Functional Emotional elements elements
Supports
How thebrandmakes mefeel
What thebrand saysabout me
Brand PersonalityHow the brand speaks to me
Peripherals:values to be reduced
Absentees:desirable elements currentlylacking from the brand and needto be developed into it
Generics:Entry stakes to the category
Interbrand Newell and Sorrell
An approach to defining the brand and how to strengthen it
Boston Consulting Group (BCG) Growth-Share Matrix
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G E Business Screen
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What makes a Strong Brand? It must work as a product or service – no fancy advertising or clever logo will
compensate
Must appeal on both the rational and emotional level – products may all work well; price premium is justified by additional intangible, emotional benefits.
Must be integrated and coherent – tangible and intangible benefits must be consistent with each other to present a coherent and believable “brand personality” (TAG-Heuer)
What it offers must be wanted by the customer and mean something to him/her – what is relevant may change over time: e.g. “environmentally friendly” is a relevant benefit now for products from motor cars to holidays; 30 years ago – no premium paid for these products.
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Michael Waner for Snowpineltd.com 15
What is customer-based brand equity
Customer-based brand equity is the differential effect of brand knowledge on consumer response to the marketing of a brand.
• market oriented internal culture to encourage flexibility
Aaker model
Brand Equity
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Aaker model
©Michael Warner & Snowpine Ltd17
Service quality gaps model
CUSTOMER
PROVIDER
Word-of-mouthcommunications Personal needs Past experience
Expected service
Perceived service
Servicedelivery
Service qualityspecifications
Management perceptionsof customer expectations
Externalcommunications to
customers
Gap 5
Gap 4
Gap 1
Gap 3
Gap 2
Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a; Asubonteng et al ., 1996; Wisniewski and Donnelly, 1996).
Customer Relationship Marketing (CRM)Customer Relationship Management CRM)
CRM strategies are important for all organisational aspects and industries and segments. However, they are a must in heterogeneous markets. In homogeneous markets the rules
can, perhaps, be relaxed to an extent.
Customer Acquisition
CR
Mgt.
Customer Retention
Customer Enhancement
Marketing Mix
Augmentation of product/service offer
Branding strategies
MIS MkIS DSS Other
Sustainable competitive advantages and increase in shareholder value
Knowledge Management
CR
Mark.
© Dr George Panagiotou 2009
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Ethical stance - Four types of Firm on Ethical Issues
Ethically dependentFirms whose ethical standing is a key aspect of their product offeringExamples: Oxfam, The Body Shop, Innocent
Ethically positiveFirms whose ethical standing is important to their credibility but not itself a key attributeExamples: Honda, Sainsbury’s, ,Virgin,
Ethically NeutralFirms whose ethical standing is less significant though unethical behaviour would be damagingExamples: British Gas, British Airways
Ethically NegativeFirms perceived as being a business with negative ethical connotationsExamples: Shell, BAT, Banks
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International Marketing Strategies
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International investment opportunities based on the directional policy matrix
Source: Harrel, G.D. and R.D. Kiefer (1993), ‘Multinational market portfolio in global strategy development’, International Marketing Review 10 (1); Phillips, C., I. Duole, and R. Lowe, International Marketing Strategy, Routledge 1994, pp. 137–8.
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Value Proposition • Value proposition refers to total benefits of using company’s
products and services. In other words, value proposition summarises why a customer should buy company’s products or services.
Generally there are three approaches/ strategies of developing a value proposition.
• Product leadership – value proposition created through best quality innovative products. Value focus on quality.
• Operational excellence – lowest cost achieved through operational excellence. Value focus on cost.
• Customer intimacy – total solution providers with greater focus on relationship building. Value focus on relationship/ service
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Characteristics & design of the Value Proposition
Characteristics
Clear
Concise
Credible
Consistent over time
Core elements
Service
Price
Quality
Image
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Key Business Concepts: Ikea Example
Ikea is a low-cost retail service provider
Sells home furnishing items at retail directly to the public
Provides low-cost, easy-to-assemble items in a pleasant shopping environment
Businessmodel
Revenuemodel
Valueproposition
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Balanced ScorecardKaplan and Norton 1992
is a management system (not only a measurement system) that enables organisations to clarify their vision and strategy and translate them into action.
It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.
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The Balanced Scorecard (1992)
Kaplan and Norton
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Agenda
Strategic choice
Environmental analysis
Industrial and consumer markets
Segmenting, targeting and positioning
Warfare Strategies
Total product concept and Branding
International marketing strategies
Balanced score card
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Methods of growth Advantages of acquisitions / mergers
Alliance Advantages
Marketing advantages e.g. Market power
Shared investment risk
Production advantage economies of scale
Complementary resources
Overcome entry barriers Possible government condition
Resource and competencies Joint financial strength
Disadvantages of acquisitions / mergers
Alliance Disadvantages
Costly Difficult to select and agree with partner
Integration issues E.g. Cultural clashes Managing relationship
Conflicts of objectives Loss of competitive advantage through imitation
Potential for diseconomies of scale Limits integration/coordination of activities across countries
Michael G.Warner MBA DipM FCIM FIDM
Methods of growth Advantages of licensing Advantages of joint
ventures
Capital not tied to operations Synergies through Shared resources and competencies
Contractually agreed income Flexibility
Limit financial/economic risk Shared risk
Greenfield – state of art and government finance
Disadvantages of licensing Disadvantages of joint ventures
Difficult to select and agree with partner
Integration issues
Loss of competitive advantage through imitation
Imbalanced level of expertise and investment
Limits participation Greenfield – time consuming and unpredictable cost
Licensees become competitors Diminished control over Michael G.Warner MBA DipM FCIM
FIDM
Invest or hold
If the business position is strong of the company and the industry environment is favorable then the
company should try to retain in the market as there are still opportunity for the organisation to make
profits.
However the company should take different measures to increase its performance at this level. Following
could be considered:
Exploit new markets
Exploit new products
Exploit new applications
Exploitation of growth of sub markets.
Government stimulated growth.
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Be a profitable survivor
This could be achieved by different measures. Majorly the company could encourage
competitors to exit from the market. Following alternatives could be identified;
Be Visible About Commitment to Survive
Raise the Costs of Competing
Introduce New Products & Cover New Segments
Reduce Competitor’s Exit Barriers
Create a Dominant Brand in Fragmented Declining Market
Purchase a Competitor’s Market Share or Production Capacity.
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Milk or harvest
The main objective here is to generate cash flow by reducing investment and
operating expenses, even if that causes sales and market share to decrease.
Conditions Favoring a Milking Strategy Decline rate is pronounced, but not excessively steep.
Stable price structure is profitable for efficient firms.
Business position is weak, but customer loyalty will still produce sales and profit.
Business is not central to strategic direction.
A milking strategy can be successfully managed.
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Exit or liquidate
This strategy is appropriate both the business position and the industry environment is not
favorable to the entity. The logic here is to exit or to liquidate the business and avoid loss
making as soon as possible, since there is no profitability with the current market condition.
Following areas are identified as features of these markets;
Rapid and Accelerating Decline Rate
Extreme Price Pressures
Business Position is Weak; Losing Money
No Longer Part of Strategic Direction
Exit Barriers Can be Overcome
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INTEGRATED COMPETITOR PROFILES AND GAP ANALYSIS Titan Swiss J apan Key Factors for Success (KFS)
India Europe UK
USA India Europe UK
USA India Europe UK
USA
Innovation
Top end
Timex
Design
Needs to adapt to preferences
Quality
Needs Communications
?
Cost Base
Produce in India and export abroad
Skill
Comp. Awareness
Brand Recognition
Needs improvement
Increa-sing
After sales serv.
? ? ? ? ?
Access to supply and SMS
Varied range
?
Management skill
?
Distribution
Increa-sing
Increa-sing
Facilities
? ? ?
Operational Efficiency
Market Knowledge
? ? ?
Marketing Comms.
Needs improvement
Increa-sing
Example of a Competitor Profile
A student example 36Michael G.Warner MBA DipM FCIM FIDM
A student example37Michael G.Warner MBA DipM FCIM FIDM
Strategic Wear-out
Strategic and tactical wear-out is the problem that any organisation will face if it continues with its current strategies and tactics without considering the changes happening in the macro and micro environment.
Followings can be identified as main reasons for strategic wear-out Market changes – customer preferences and requirements, distribution
requirements etc Competitor innovations Internal factors – poor cost control, lack of consistent investment, ill advised
change of successful strategies
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Industrial and Consumer markets
Variable Industrial Markets Consumer Markets
Volume of sales Low High
Value of sales High Low
Supplier bargaining power Shifting - depending upon number of suppliers and organisational size and
importance
Usually high
Buyer bargaining power Shifting - depending upon number of buyers and organisational size and
importance
Usually low
Service requirements High Low
Buying decision making DMU Individual
Availability of information Usually low Usually High
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Low
High
Business Orientations
Product Orientation
Marketing Orientation
High
Industrial Markets
Not-for-Profit
Markets
Consumer Markets
•Capital equipment
•Business-to-business
•R&D labs
•Charities
•Schools
•Hospitals
•Gov. Agencies
•FMCG
•Service-offer
•Retailing
Second Hand
Markets
•Auctions
© Dr George Panagiotou 2009
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Main organisational Market Approaches
Producer Whole Seller
Retailer Consumer
Producer Whole Seller
Retailer Consumer
Push-Selling Techniques
Product Orientation (emphasis on own products)
Marketing Orientation (emphasis on customer needs and wants)
Pull-Selling Techniques
Flow of sales
Flow of sales
Research and development and marketing communications
© Dr George Panagiotou 2009
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1. Identify the organisation’s position, strengths, weaknesses and capabilities relative to competition, given aims and objectives.
2. Identify desired segments in the industry and segmentation variables within.
3. Develop profiles for each segment
The Stages of the Segmentation, Targeting, Positioning (STP) Process
4. Evaluate the attractiveness of each potential segment(s).
5. Select segment(s) to enter
6. Identify the positioning concept within each target segment.
7. Select and develop the appropriate positioning concepts.
8. Develop a relevant marketing mix for each segment
Situational analysis
Market Segmentation
Market Targeting
Product Positioning
The 7 Ps-based Marketing Mix
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Customer Related
•Geographic
•Continent; Country; Region; City; Rural; Urban; population Density
•Demographic
•Age; Gender; Family Size; Family Lifecycle (old/New); Income; Occupation; Education;
Race; Nationality; Social Class.
•Lifestyle (psychographic)
•Tastes; Preferences; Motivation; Inclinations; Status.
Situation Related
•Benefits Offered/Benefits Sought
•Need Satisfiers; Product Features; Low Price; Reliability; Safety; Convenience.
Bases for Segmentation
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Macro Environmental Analysis Political environment Economic environment Socio-cultural environment Technological environment International environment Environmental and ecological environment
In addition to the above factors followings may also be considered. Business Life-Cycle Elasticity/Inelasticity of Demand and Supply Socio-Politico Frameworks Market Structures
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Meso Environmental AnalysisIndustry Market Place
Competitor Profiles (PIMS/Other databases)
Segmentation, Targeting, Positioning (STP)
Benchmarking Customer profiles
Industry Life-Cycle (ILC) Branding/communications Models
General Electric (GE) Matrix Product Life-Cycle (PLC)
Shell Directional Policy Matrix Consulting Group (BCG) Growth Share Matrix
Ansoff Matrix
Forces/Dynamics of competition & KFS
Strategic Groups
Positioning/Perceptual/Cognitive Maps
All positive and negative observations/ findings should be included in the opportunities and threats sections of the overall SWOT Analysis/ Telescopic
Observations Framework.
© Dr George Panagiotou 200945Michael G.Warner MBA DipM FCIM FIDM
Micro Environmental Analysis
Organisation’s vision, mission and values Corporate strategy and Resource and competency audit Portfolio analysis Value chain and resource utilisation Innovation audit Cost efficiency Product life cycle ‐ Degree of customer and market orientation Comparative and best practice analysis Core competencies Organisational culture Financial performance Critical factors for success
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Bases for Segmentation
Consumption or Use pattern
Rate of Use; Use with Other Products; Brand Familiarity.
Buying Situation
Kind of Shop or Distribution Channel; Kind of Shopping; Depth of Assortment; Type
of Product.
Questions to Ask:
Who is the customer?, What is their bargaining power?, What do they buy?,
Where do they buy from?, Why do they buy?, When do they buy?, From which
competitor can they buy from and why?
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Process of creating favourable relative position:
1. Identification of target market2. Determination of target market's needs, wants,
preferences and desired benefits 3. Examination and assessment of competitors’
characteristics and positioning4. Comparison of product offerings with competitors5. Identification of unique position6. Development and implementation of a marketing
program7. Continuous Review and reassessment
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Corporate positioning Market positioning
Product positioning Total Repositioning
Brand/Image Positioning Strategies
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Portfolio Analysis
Portfolio
A collection of products/ SBUs owned by one entity in which each
product/ SBU can be separately identified for decision-making and
performance measurement.
Portfolio Analysis
Analyzing elements of a firm's product mix to determine the optimum
allocation of its resources.
Portfolio Planning
The process of managing the products/ SBUs, including choosing and
monitoring appropriate markets & industries and allocating funds
accordingly.
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Shortcomings of BCG Matrix
Growth rate is only one aspect of industry attractiveness and high growth markets
are not always the most profitable.
Definition of the market is sometimes difficult.
It considers the product or business in relation to the largest player only. It ignores
the impact of small competitors whose market share is rising fast.
The use of four categories is too simplistic
It ignores interdependence and synergy.
Market share is only one aspect of overall competitive position.
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Determinants of Strengths and Attractiveness
Industry Attractiveness
Market size
Market growth
Demand variability
Price elasticity
Industry rivalry
Global opportunities
Industry profitability
Macro-environmental factors
• Business Strengths
• Market share
• Growth in market share
• Brand equity
• Distribution
• Production capacity
• Management skills
• Perceived differentiation
• Profit margins relative to
competitors
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Disadvantages of Portfolio Planning
Portfolio models do not reflect the uncertainties of decision making
Most of the models do not take risk in to account
Most of the models ignore the importance of niche markets
Most of the models ignore the opportunities for creative segmentation
Markets are assumed as given rather than created and nurtured
Complex assessments and calculations
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Shell Directional Policy Matrix
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Elements of a Brand
APPROACH: Separate the physical attributes from emotional benefits. What lies at the core of the brand’s identity?
Arnold, D (1992), The Handbook of Brand Management)55Michael G.Warner MBA DipM FCIM FIDM
Benefits of brand equity
Brand awareness•Influences attitude and perceptions•Anchor for associations•Signal of substance
Perceived quality•Price premium•Differentiation /Positioning•Reasons to buy•Brand extension potential •Channel member interest
Strong brand associations •Differentiation /Positioning•High price premium•Memory retrieval potential•Reasons to buy •Brand extension potential
High brand loyalty•Reduced marketing costs•Trade leverage•Attracting new customers •Time to respond to competitive threats
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Measuring Brand Equity
Interbrand – tracks leading brands on a number of variables:
Sales Market growth Internationalisation Well protected in law, etc.
Good practice to measure your own and the competition brands – part of broader evaluation of strategic health of company.
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Brand Dimensions (according to Interbrand)
BRAND WEIGHT (dominance)
BRAND LENGTH (stretch)
BRAND BREADTH (franchise)
BRAND DEPTH (commitment)
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Brand Weight
Dominance in category or market
Dominant market share (market leaders)
Standard setter
McDonald’s, Coca-Cola, Kodak, Gillette
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Brand Length
Stretch and strechability into new categories and markets
Wide “area of competence”
Disney, Johnson & Johnson, Harrods, Virgin, Sony
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Brand Breadth
Breadth of franchise in terms of age spread, consumer types and international
appeal.
A “broad brand” can cross social, cultural and national boundaries.
Coca-Cola, MaDonald’s, Kodak, Somy, Visa, Microsoft
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Brand Depth
Degree of commitment the brand has achieved among its customer base and the
proximity, intimacy and loyalty they feel to the brand.
Intimate relationship with customers, usually on the basis of shared “central” or
“higher” values.
Apple Computer, Disney, Body Shop, Harley-Davidson, Camel
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Brand Identity
Must be relevant to customer needs and wants Must be clear and easy to understand Is at the heart of the relationship between customer and company Heart of any brand strategy Has a personality of its own Has human qualities which appeal to customers See brand as a person and ask:
If this brand were a person, what sort of car would it drive? What is its favourite drink? What would it say to you?
If answer is not obvious, the brand personality and also brand identity is not clear
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Brand Extension
A way of strengthening a brand’s positioning Recent example of classic line extension: McGraw-Hill --publisher of textbooks and
educational materials into children’s educational software. They started with the brand’s long-standing reputation for educational excellence. Virgin
Today’s definition of brand extension: Globalisation Demographic shifts – new classes of consumers Technology – new channels of marketing (Internet, Satellite TV) Industry consolidations – fewer brand choices; likely to become loyal to
one Increasing emphasis on relationships – customers want brands to be
accountable for their products and promises.
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Brand Chartering
Recent development (concept) Tough internal audit to charter the underlying strength of their brands on a regular
basis Brand Chartering – probes the organisation (strategic strengths) behind the brand Brand Equity – strength of the brand in the marketplace How to do brand chartering:
Is there a common interpretation of the brand’s essential meaning throughout the organisation?
What core competencies does the brand represent? Would the people be proud to be called manifestations of the brand?
Macrae, C (1996), The Brand Chartering Handbook
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Global Brands
Global brands can reap benefits of economies of scale in production, marketing and distribution. They must stay responsive of customer wants – may vary from one country or region to another. The issue is how to balance global economies of scale with local responsiveness. Country specific?
Other factors (youth, luxury?) – not country specific
Different type of channels?
Competition local or international?
Communication will have to be different even for global brands (Coke has more than 20 different advertisement versions)
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Positioning the Brand (Definition)
DEFINITION OF BRAND POSITIONING:
A company’s attempts to influence the customer’s (target market’s) perception of its brand by presenting (communicating) it in a certain way through:
Advertising Point of sale material Direct mail PR Etc
NB! The brand is actually positioned by the consumer – all the company can do is send “positioning prompts” to influence.
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Positioning: How to Build a Brand that Sells
Focus Choose one distinctive thing that will give you the edge
Halo effect Invest in one positive image that will impact on the whole portfolio
Start with current position Turn current customer perceptions into benefits (if gap between
perception and reality is too big, they won’t make the leap) Be different
Positioning is about clear, positive difference Be distinctive
Message need to be unique, hard-hitting, sensory, creative
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Developing a Brand Positioning
3 ESSENTIAL COMPONENTS FOR DEVELOPING A CLEAR BRAND DEFINITION:
Clear vision – why are you in business?; where are you going? (3M: “to solve unsolved problems innovatively”)
Concise meaning – what your brand represents to the marketplace Understand parameters of relevance – what your brand is and
what it is not (limits to which you can extend your brand beyond its core meaning without compromising your credibility)
Examples – Disney (clear vision – “to make people happy”); Microsoft (vision – “a computer on every desk in every home”)
69Michael G.Warner MBA DipM FCIM FIDM
PositioningOrganisational Alignment
ORGANISATIONAL ALIGNMENT PROGRAMME
Use “tagline” or theme – can make or break brand building Identify a few words that communicate the full weight and force of brand message All activities get their energy from this positioning device. Tagline must:
Provide clear and recognisable differentiation Respond to customer’s most pressing needs in a believable
manner Provide guidance for management decision-making, hiring,
training and resource allocation
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Positioning the BrandKey Factors
Successful brands are not created overnight – result of careful positioning,
supported by long term strategies and consistent investment
Frequent change in brand positioning – customer becomes confused
Considerable time and effort must be spent in understanding how the customer
perceives the brand, before thought can be given to changing that perception
Changes in customer perception – only achieved in small steps over long periods of
time
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Communicating the Brand (cont)
Recently, experts have stressed the inadequacy of relying on mass media to communicate a brand:
Cost of mass media is increasing Poorly targeted for today’s increasingly fragmented markets
Use the “new media” -- direct marketing, database marketing and building relationships (vouchers, free samples, advice booklets – build relationship with customer). Rather rely on these to communicate brands successfully
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Brand Extension (cont)
4 WAYS TO EXTEND: Licensing
Pierre Cardin – to a variety of marginal products – brand weakened Co-branding
Disney and McDonald’s – there has to be a fit Sponsorships
E.g. Olympic Games – linking up with big events Brand agents
Individuals that are not only celebrities, but stir emotions that support the brand in a meaningful way (e.g. Tiger Woods & Nike)
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Brand Identity
DEFINITION OF BRAND IDENTITY
Brand identity is how the company wants the brand to be perceived.
Aaker (1996), Building Strong Brands
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Brand Loyalty
Customers become loyal if brand identity is communicated effectively and
positioned positively in their minds
However, this does not mean they will never buy any other brand
Customers tend to use “repertoires” of brands rather than single brands
The specific brand they buy on any one occasion will depend on other factors such
as availability, special price offers, recent advertising campaigns, point of sale
factors.
Highly educated and affluent groups are found to be less loyal! (not willing to pay a
price premium for branded products)
75Michael G.Warner MBA DipM FCIM FIDM
Positioning & Communication
Positioning is the development and communication of a differential advantage that
makes the organisation’s product or service superior and distinctive in the
perception of target customers.
Positioning should be meaningful to the target market segment, believable and
unique (biggest, most reliable, etc). Positioning involves giving the target market
segment the reason for buying your product.
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Communicating the Brand (cont)
INTERACTIVE BRAND COMMUNICATION
New phenomenon brought on by: Reduced effectiveness of mass media advertising Emergence of the new media Emphasis on relationship and database marketing
Other Free telephone numbers Care lines Eliciting feedback (not just complaints) from customers Loyalty cards and clubs (e.g. Voyager)
77Michael G.Warner MBA DipM FCIM FIDM
Brand Management in the New Economy
Brand used to guide all activities surrounding it Coordinate these activities Manage relationships with external partners and agencies (research companies,
advertising agencies, and channels) Whole organisation must understand brand Integrated approach to brand management – key issues:
Cross functional working Company culture Internal communication CEOs important role to personify the brand (e.g. Richard Branson, Bill
Gates, Raymond Ackerman) The corporate brand is of increasing importance (e.g. Virgin) – the corporate brand
sells the product! New corporate identities created if parent company has inappropriate or unclear
associations (Flora Food Co, Unilever)
78Michael G.Warner MBA DipM FCIM FIDM
New Keys to Brand Building
Use of marketing communications (mass-market advertising-agency model) as primary driver of corporate brand management is fast becoming obsolete.
Replaced by an array of communications channels that can target increasingly narrow customer segments.
All experiences affect brand image. Customer experience is key to brand building (e.g. Harley Davidson – owner groups, rallies)
Align communication of brand to all 4 main audiences – customers, investors, employees and regulators (media, public interest organisations). Align -- key to building brand equity.
Communication messages need to line up with experiences of customers. Ensure that entire business deliver the promise implicit in the brand (favourable
advertising versus negative service experience – the latter will be remembered)
79Michael G.Warner MBA DipM FCIM FIDM
Positioning & Communication Process
3 steps:
Choose brand identity Begin positioning Communicate (marketing mix):
Product / service (together with packaging, logo, design) Price (including discounts, etc) Place (where and how it is distributed) Promotion (advertising above and below the line, PR, sponsorship, etc)
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Traditional Marketing versus CRM
Traditional Marketing CRM
Aim is to expand customer base and to increase market share by mass marketing
Aim is to establish a profitable, long-term, one-to-one relationship with customers
Product oriented view Customer oriented view
Mass marketing / mass production
Mass customization, one-to-one marketing
Standardization of customer needs
Close customer-supplier relationship
Transactional approach/ relationship
Relational approach
Michael G.Warner MBA DipM FCIM FIDM
Porter’s Diamond
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Assessing country attractiveness
possible criteria
Attractiveness
Market size
Market growth
Absence of barriers
Profit potential
Competitive structure
Entry opportunities
Compatibility
Language
Currency
Legal systems
Technical standards
Culture
Consumption patterns
83Michael G.Warner MBA DipM FCIM FIDM
12C framework for analysing international markets
Country
Concentration
Culture/consumer behaviour
Choices
Consumption
Contractual obligations
Commitment
Channels
Communications
Capacity to pay
Currency
Caveats
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Direct export.
Indirect export
Licensing
Franchising
Contracting
Manufacturing abroad
Partnership/Alliance
Joint Venture
Organically Market Entry Methods
Slow
Time
Quick
Control Is
sues
Market Entry Methods
Less
More
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Inter-Country Differences
PESTILE differences
Barriers to entry
Market entry methods
Cross-Country Similarities
Power-distanceCollectivism vs. individualismFemininity vs. masculinityUncertainty avoidanceLong- vs. short-term orientation
International Strategies - Hofstede’s Cultural Similarities
Cultural Similarities: For example, Anglo-Saxons; Hispanic; Nordic; Germanic; Arabic; Other. 86Michael G.Warner MBA DipM FCIM FIDM
Hoftede’s Model of National Cultures
Power distance.
Uncertainty avoidance.
Individualism –collectivism.
Masculinity.
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Hofstede’s comparative analysis
Distinguished four dimensions:
Power distance (high or low)
High – accept inequality of wealth and power: e.g. France, Brazil
Low – do not accept inequality – e.g. Sweden, UK
Uncertainty avoidance
High – tolerate ambiguity - e.g. US, Australia
Low – uncomfortable with uncertainty, prefer clarity – e.g. Latin
America, southern Europe
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The Strategy Clock
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Examples of measures for the financial perspective
Return on capital employed (ROCE)
Operating margins
Economic value added (EVA)
Cash flow
Sales growth
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Examples of measures for the customer perspective
Market share
Brand image and awareness
Customer satisfaction
Customer retention
Customer acquisition
Ranking by key accounts
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Examples of measures for the internal perspective
Percentage of sales from new products
Manufacturing costs
Manufacturing cycle time
Inventory management
Quality indicators
Technological capabilities
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Examples of measures for the innovation & learning perspective
Product development
Purchasing
Manufacturing
Technology
Marketing and sales
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Strategic Choice – Competitive strategies
Differentiation A type of competitive strategy with which the organisation seeks to distinguish its products or services from competitors.
Cost Leadership A types of competitive strategy with which the organisation aggressively seeks efficient facilities, cuts costs , employs tight cost controls to be more efficient than competitors.
Focus Type of competitive strategy that emphasizes concentration on a specific regional market or buyer group.
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Examples of Companies along the Dimensions of the Generic Strategies in
Different Industries
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Assessing the value proposition - Strategy Clock MUST DO
Source: Bowman & Faulkner (1995)
Strategic Choice – Competitive strategies
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Strategic Choice – Institutional Strategies
There are number of different methodologies available for a company expand its
operations. management should identify the most appropriate, suitable as well as
feasible option when it comes to selection of the expansion strategy. Each expansion
strategy has its own merits as well as demerits and also constraints of which some are
company specific and some are external.
Growth Strategies
Organic growth Inorganic growth
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Hostile and declining markets
Characteristics of hostile and declining markets
1. Fall in over all demand level
2. Changes in the technology causing reduction in demand for a particular good or a
service
3. Change in customer needs, wants and taste
4. Changes or shifts the in government policy
5. Reduction in average margin earned by the firms.
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Strategic alternatives for declining markets
Revitalising the market
Be the profitable survivor
Milk or harvest
Exit or liquidate
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Strategic alternatives for declining markets
Invest or Hold Milk or Exit
Milk or Exit Exit
STRONG WEAK
FAVOURABLE
UNFAVOURABLE
Business position in the key segment
Industry Environment
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Environmental analysis
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Selecting Markets
Total marketing approach Designs a single marketing mix and directs it towards the entire market Assume that the needs of the target market for a specific kind of product or service are very
similar
Market segmentation approach Appropriate for heterogeneous markets Markets are sub-divided based on similarities
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Targeting Strategies
Undifferentiated marketing one marketing mix strategy that is appropriate for all
members of the total market.
Differentiated marketing The targeting of two or more market segments, with
separate and distinct market offerings, which have been designed to closely meet
the needs of those particular segments
Concentrated marketing Concentrating the firm’s market offering solely on the
needs of one defined target market..
Customised marketing specific individuals
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Warfare Strategies
Marketing Warfare is a term used to describe some of the techniques and tactics
marketers use.
There are two types of warfare strategies;
Defensive Strategies – These are followed by market leaders to defend their
market share. There are six defensive strategies.
Offensive strategies – Offensive strategies and followed by market challengers
and there are five Offensive strategies.
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Offensive Strategies
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Defensive Strategies
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Brand Equity Defined
Brand Equity can be defined as consisting of 5 asset categories:
Brand awareness Brand loyalty Perceived quality Brand associations in addition to perceived quality Other proprietary brand assets (patents, trademarks, etc)
Aaker, D (1996), Building Strong Brands
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Hofstede (continued)
Individual/collectivism
Individualist societies stress individual responsibility and success -
e.g. US, UK
Collectivist societies stress loyalty to group in return for support – e.g.
in South America, Asia
Masculinity/femininity
M. societies show assertive behaviour – e.g. Japan, Italy, Arab
countries
F. societies show modest behaviour, interest in quality of life – e.g.
Sweden, Norway, Denmark
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Brands are under ThreatSOURCES OF THREATS ON BRANDS: Educated consumers
Became marketing literate; brands had to offer real added value; trend: loyal customers became loyal to group of brands rather than to a single brand.
Powerful retailers Strong retailers dictate terms to manufacturers (e.g. Pick ‘n
Pay); retailer builds own brand (Woolworths) – customer loyal to retailer rather than product; only 1 label sold (power of the retail brand).
Both of the above leading to pressure on prices No added value – consumer will not pay price premium; trend –
demand both low prices AND added value
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Brands are under Threat (cont)
The growth of own label If the retailer represents some strong brand values itself, the way is
clear for own label products (Woolworths; Pick ‘n Pay) – e.g. own Colas
Brand extension instead of innovation Brands which in the past were built through real technical innovation
can no longer keep pace, and may choose instead to extend an existing brand into new areas or variants. Can enhance brand, but there is danger of brand dilution or of confusing the customer (e.g. Pierre Cardin).
New competition from outside the sector Existing strong brands looking to extend their franchise into other
areas also pose a threat (e.g. Virgin). NB! New competitors like this are hard to fight because they are playing a different game.
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Value Proposition - Examples
Intel: Intel insideIBM: Global solutions for a small planetLexus: Passionate pursuit of perfectionFedEx: When it absolutely, positively has to get there overnightVisa: It is everywhere you want to beMotorola University: Right knowledge, right nowNordstrom: Shopping humanized
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FIDM