Post on 31-Mar-2020
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EXECUTIVE EDUCATION© Imperial College Business School
Managing Products and Brands
EXECUTIVE EDUCATION© Imperial College Business School
Course Lecturer and Resources
Dr Omar Merlo, Imperial College Business School
o.merlo@imperial.ac.uk
Lecture slides
Readings
Case studies
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EXECUTIVE EDUCATION© Imperial College Business School
Assessment
Class participation and contribution
o 25% of final course grade.
o A number of tasks, workshops and presentations will be carried out in
the course. Your performance on these tasks, as well as your general
contribution and participation in lectures, will determine this grade.
Final paper
o 75% of final course grade.
o This is an individual task.
o To be submitted within 1 month of the final session of the class.
o The question will be provided in day 3.
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Course Overview: Day 1
1. Fundamental concepts in product and brand management
• Course introduction
• Contextualising strategic market management
• Value-based product marketing
• Customer relevancy in product management
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Course Overview: Day 2
2. Marketing management, organisational culture and innovation
• Product development and market orientation
• Innovation in product management
• Market driven and market driving strategies
• Euro Disney: The First 100 Days
3. Building brands
• The strategic brand management process
• How to build a strong brand
• Segmentation and brand positioning
• A Rose by Any Other Name
• The Birth of the Swatch
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Course Overview: Day 3
4. Brand communicatons
• Developing marketing communications for a product or brand
• Mountain Dew
5. Measuring brand equity and growing and sustaining brand equity
• Measuring and interpreting brand performance
• Managing brand equity over time
• Brand reinforcement and revitalisation
• New Coke
6. Digital product and brand management
• Fundamentals of online marketing and product management
• Brand advertising online
• Trends and challenges in product and brand communications
• Pets.com: The Rise and Decline of a Pet Supply Retailer
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1. Fundamental Concepts
1. Contextualising strategic market management
2. Value-based product marketing
3. Customer relevancy in product management
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What is marketing?
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• Customer value is only a means to an end
• The ultimate objective is financial value creation
Customer value
Financial value
Marketing and Value
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The Value PropositionA successful strategy focuses on the Customer Value ratio:
Value =
All tangible and intangible attributes of the product/service
BenefitsPrice
All tangible and intangible costs to the customer
Superior Perceived Value: The customer perceives highervalue than any competitive alternative
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Workshop
• Think of a product or brand that failed in the marketplace.
• Using the value equation, how would you explain the failure of that product
or brand?
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The Fox and the Hedgehog
• In an old tale by Aristochulus, the hedgehog is an animal that knows a lot about one thing, while the fox knows many little things...
• This tale provides useful insights into product management
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Customer Relevancy
Effective value propositions require tradeoffs:
What elements should we offer the customer?
What elements should we deny the customer?
Yet businesses often seek all possible sources of advantage.
Successful propositions are based on good performance on all the basic
dimensions, and on excelling in one or two.
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The myth of excellence is the false belief that a value propositions should
be based on being good at everything.
Business need to focus on “customer relevancy”: the ability to see business
through customers’ eyes and conduct business on terms that customers
find meaningful.
Assume that there are 5 key attributes that determine competition in an
industry:
1. Price: Customers value honest price
2. Product: Customers look for consistently good products
3. Service: Customers values services that meet their basic, everyday
requests
4. Experience: Customers want to be respected and be offered
customised solutions
5. Access: Customers want to get what they want how they want it
The Myth of Excellence
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Customer Relevancy
• Rule 2: Anything less than 3 is not sustainable
• Rule 3: Domination or differentiation on more than one attribute is not sustainable, resulting in resources being wasted
• Rule 4: The definition of a 3 can continually change. Failure to keep up with changing requirements can cause the score to drop.
Wal-Mart Dell
Price
Product
Service
Experience
Access
SCORING EXAMPLES (1-5)
• Rule 1: The most sustainable ‘score’:
1. Dominate on one dimension (5/5)
2. Differentiate on a second dimension (4/5)
3. Achieve industry-par levels on the remaining dimensions (3/5)
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Examples
Price Product Service Experience Access
Price TargetStaplesDixonsMazda
Geico Club MedGateway
Southwest Airlines
AvonE*Trade
Product Wal-MartZara
CitibankCircuit City
Boots
Disney StoresHarrodsBMW
Amazon.comCokeCNN
Service TescoSaturn
CaterpillarHome DepotFerragamo
Gucci
Four SeasonsKraft
UPSMcDonald’s
Gerber
Experience Honda OracleBest Buy
BoseIntel
NordstromSingapore
Airlines
AOLHallmark
Access Charles SwabPriceline
CasioCarrefour
Sony3M
WhirlpoolGE
American Express
Dell
Starbucks Marlboro
PRIMARY ATTRIBUTES
SE
CO
ND
AR
Y A
TT
RIB
UT
ES
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How do you communicate with
customers based on customer relevancy
factors?
Actual Desired
Price
Product
Service
Experience
Access
Workshop
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High
Offerings
Low
Entertain-ment Meals
Lounges
Connections
Seating Choice Speed
Friendly service Frequent
departures
Factors ofCompetition
Other airlines
Southwest Bus
An Alternative View:
The Strategy Curve of the US Short-haul Airline Industry
Low price
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2. Marketing, Culture & Innovation
1. Product development and market orientation
2. Innovation in product management
3. Market driven and market driving strategies
4. Disney case study
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Marketing as Culture
• Being market oriented involves ensuring that every person and
department throughout your firm acts in an integrated way to create
value for customers.
• Thus, marketing is not just a set of activities, but a culture, mindset, or
philosophy of doing business.
• Everyone throughout the organisation should embrace this
orientation.
• It is not sufficient for your customer-facing employees to be customer
focused. Everyone, including service and product development
employees, need to adopt this orientation!
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The Marketing Concept at GE
• Our philosophy introduces the marketing man at the beginning rather than the end of the production cycle and would integrate marketing into each phase of the business. Thus marketing will establish for the engineer, the designer and the manufacturing man what the customer wants in a given product, what price he is willing to pay, and where and when it is wanted.
– GE, Annual Report (1952)
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Lunch Time. Dinner Time. Prime Time.
Built by the world leader
in appliance and LCD
manufacturing, the
LG Refrigerator with
built-in LCD TV is a
sight to behold. So
whether you’re
looking for an
afternoon snack or the
evening news, you’ll
find everything you
need in one
convenient place.
Why integrate a TV into an LG refrigerator? Why not?
Counter space is at a premium in kitchens today and that is where the TV is typically located.
British families are spending more time in the kitchen cooking, gathering and eating. For usewith cable or satellite TV, the LG refrigerator with built-in LCD TV has a coaxial cableoutput behind the right door hinge. An RG-179 cable (67' long) is included for easyinstallation. The TV refrigerator can also be used with any DVD player or VCR that has acoaxial output.
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A market oriented company...
• “Marketing is the whole business seen
from the point of view of its final result…the
customer”
- Peter Drucker
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One that is not market oriented...
• “A company with its face towards the CEO
and ass towards the customer”
- Jack Welch, GE
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Market Orientation: How it works
Customers Competitors Collaborators
Interfunctional Coordination
Product Price Place Promotion
Intelligence Generation
Dissemination
Response
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Market Intelligence Generation
Gathering of Data
– Secondary sources, such as databases, records, etc…
– Commissioning market research (e.g., of intermediaries and buyers)
– Benchmarking & competitive intelligence (e.g., reverse engineering)
– Market observation & customer visits
– Etc…
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Customers and product insights
• Sometimes it makes more sense to give customers a passive role
in the insights generation process
• In order to fit a solution to a need and give customers what they
truly need, it is often necessary to observe customers and the
problems they face
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Ethnographic Market ResearchToyota: Toyota uses a system called “Genchi Genbutsu”, which means "go and see for yourself". For
example, Chief Engineer Yuji Yokoya drove the second-generation Toyota Sienna 53,000 miles across
North America in order to experience the highways his minivan would be driven on. This experience from
the point of view of the customer eventually allowed the design team to introduce features that truly met
customer needs.
Motorola: Motorola ethnographers found that Chinese businessmen working in rural areas with no
telephone coverage had developed a complex system of using pagers to send coded messages. The
discovery led Motorola to develop a two-way pager for the Chinese market.
3M: Ethnographers from 3M observed how customers use and interact with digital photography. They
noticed that when customers wanted to share their pictures with someone, the process was difficult,
involving either scrolling through myriads of unsorted photos on their cameras, or looking for the few
photos that had been printed on paper. This information led to the development of Post-it Picture Paper.
Pfizer: Pfizer used ethnographic market research to identify what prevented consumers to switch from
conventional over-the-counter pain relievers to TX Celebrex, a new product offered by Pfizer. This
enabled the company to tailor closely their advertising campaign to customers’ needs.
Starbucks: Starbucks leverages the fact that its employees have constant face-to-face contact with
customers to collect customer insights from them. It also takes employees on "inspiration" field trips
around the world to learn more about their customers and trends.
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Intelligence Dissemination
Sharing of information throughout the organization (horizontal and
vertical flows)
– Cross functional teams
– Job rotation
– Internal reporting and documentation
– Social capital
– Internal marketing, etc…
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Responsiveness to Intelligence
Use of intelligence to develop marketing plans
– Product, service, and branding decisions
– Distribution and logistics decisions
– Communication decisions
– Pricing decisions
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Market Orientation: Why?
MarketOrientation
1. Organisational PerformanceProfitability, sales, market share
2. Customer ConsequencesPerceived quality, customer satisfaction,
customer loyalty
3. Innovation ConsequencesInnovativeness, new product performance
4. Employee ConsequencesPride, commitment, team orientation,
satisfaction
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MarketOrientation
What Facilitates it?
1. Top Management factorsShould emphasise a market
orientation
3. Organisational systemsReduce formalisationReduce centralisation
Implement market-orientedrewards and employee training
2. Interdepartmental factorsIncrease connectednessImprove communication
Reduce conflict
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– Answer all questions by indicating to what extent you agree or
disagree with the statements.
– Sum the scores at the end of each table.
– At the end, sum the three totals and compare with this guideline:
– Where is room for improvement? What are some key organisational
hurdles that you need to overcome in order to improve in those
areas?
86-120 = High
60-85 = Moderate
24-59 = Low
The Market Orientation Scorecard
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Assessment of Market Intelligence Generation Strongly Disagree
DisagreeNeither
Agree nor Disagree
AgreeStrongly
Agree
1. We have interdepartmental meetings at least once a quarter to discuss market trends and developments
1 2 3 4 5
2. We are quick to detect fundamental shifts in our industry (e.g., competition, technology, regulation)
1 2 3 4 5
3. We periodically review the likely effect of changes in our business environment (e.g., regulation) on customers
1 2 3 4 5
4. We are fast to detect changes in our customers’ products and service preferences 1 2 3 4 5
5. People here spend time discussing customers’ future needs with other functional departments/groups
1 2 3 4 5
6. We do a lot of in-house market research 1 2 3 4 5
7. We survey key customers at least once a year to assess the quality of our products and services
1 2 3 4 5
8. In this business, we meet with key clients at least once a year to find out what products/services they will need in the future
1 2 3 4 5
Total Score: _____________________
29-40 = High
20–28 = Moderate
8-19 = Low
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Assessment of Market Intelligence DisseminationStrongly Disagree
DisagreeNeither
Agree nor Disagree
AgreeStrongly
Agree
1. When something important happens to a major customer or market, the whole business knows about it in a short period
1 2 3 4 5
2. When one department finds out something important about competitors, it is quick to alert other departments
1 2 3 4 5
3. We would never ignore changes in our customers’ product/service needs 1 2 3 4 5
4. When we find that customers would like us to modify a product or service, the departments/groups involved make concerted efforts to do so
1 2 3 4 5
5. We periodically review our product/service development efforts to ensure they are in line with what our key customers want
1 2 3 4 5
6. We have effective communication systems in place that speed up the dissemination of important customer-related information
1 2 3 4 5
7. All of our business functions and departments are responsive to each other's needs and requests
1 2 3 4 5
8. When a customer complains or offers feedback, we are quick to share that information with anyone who can act on it
1 2 3 4 5
Total Score: _____________________
29-40 = High
20–28 = Moderate
8-19 = Low
EXECUTIVE EDUCATION© Imperial College Business School
Assessment of Responsiveness to Market IntelligenceStrongly Disagree
DisagreeNeither
Agree nor Disagree
AgreeStrongly
Agree
1. It takes very little time to decide how to respond to our competitors’ product and service changes
1 2 3 4 5
2. We are able to implement new ideas (e.g., R&D efforts, marketing plans, product and service redesigns/enhancements) in a timely fashion
1 2 3 4 5
3. Several departments/groups get together periodically to plan a response to changes taking place in our business environment
1 2 3 4 5
4. If a major competitor were to start targeting one of our key customers aggressively, we would consider a response immediately
1 2 3 4 5
5. We quickly act on customer complaints and feedback 1 2 3 4 5
6. Our customer-facing employees have the latitude to solve customer problems
quickly without much red tape and management involvement1 2 3 4 5
7. People here tend to talk more about opportunities rather than problems 1 2 3 4 5
8. When we see a new opportunity to create value for our customers, we act on
it quickly1 2 3 4 5
Total Score: _____________________
29-40 = High
20–28 = Moderate
8-19 = Low
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1984 1992
How Do We Explain this?
“Mainframes are the model of the industry and will
always be”
- Akers, CEO 1985-1993
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“I still can't believe this! All this hype for something so ridiculous! Who cares about an MP3 player? I want something new! I want them
to think differently!Why oh why would they do this?!
It's so wrong! It's so stupid!”
How do we explain this?(From MacRumors: Forums Thread: Apple’s
New Thing, October, 2001)
“gee! an mp3 player with a HD! how original! kinda
reminds me of a JUKEBOX I once knew..”
“OH NO! Just checked Apple Store - they want $399.00 for
this thing...Ouch!!!”
“All that hype for an MP3 player? Break-thru digital
device? The Reality Distiortion Field™ is starting to warp
Steve's mind if he thinks for one second that this thing is
gonna take off.”
“Great, just what the world needs, another freaking MP3 player. Go Steve! Where's the Newton?!”
“Are you really aiming to become a glorified consumer gimmicks firm?”
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• In product management, customers should not be trusted to come up
with solutions. They aren't expert or informed enough for that part of
the innovation process.
• Customers should be asked only for outcomes. I.e., what they want a
new product or service to do for them.
• What form the solutions take should be up to you.
Why Market Driving?
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Two Forms of Market Orientation
Market Driven
Shape
Shape
Given
Given
MarketStructure
Market Behaviour
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Shaping market structure
Deconstruction Construction Functional Modification
• Eliminate players in theindustry value chain
• For example:-Channels (Dell)-Competitors (BT and AT&T)- Suppliers (Intel, Samsung)
Add players into the industry value chain
For example:-Build a new network of players (web-based music retailers)-Add complementors(chip designers)
Shift the function performed by players in the market
For example:- Proactivelychanging the retail experience (Abercrombie, Virgin Megastores, Starbucks)
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Shape market behaviour directly Shape market behaviour indirectly
• Market behaviour can beshaped directly by changing how customers behave.
• For example:-Build or remove customer constraints (IKEA, eBay, expedia.com)
Market behaviour can be shaped indirectly by changing customers’ perceptions.
For example:-Create new customer preferences (iPod and iTunes)-Reverse existing customer preferences (The Body Shop)
Shaping market behaviour
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M.O. and Innovation
Market Driven
Shape
Shape
Given
Given
INCREMENTAL INNOVATION
RADICALINNOVATION
MarketStructure
Market Behaviour
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Market Driving Workshop
• Can you think of any products or brands, in any category, that are market
driving?
• How did they achieve that exactly?
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1. What makes Disney’s service concept successful? What are its core
elements? How does it create customer value?
2. Was Disney market-driven or market driving in France? In your view, what
choice would have been better?
3. How was the service concept changed for Europe and why? Were the
reasons for this change compelling?
4. Disney had hoped for a better start. What are the main factors that
account for Euro Disney’s disappointing initial performance? What would
you have done differently?
Euro Disney Case Study
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3. Building Brand Equity
1. Core ideas of brand management
2. The strategic brand management process
3. How to build a strong brand
4. Segmentation and brand positioning
5. A Rose by Any Other Name case study
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What is a Brand?
• A brand is a name, term, sign, symbol, or design which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. But a brand is also more…
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The “Core”Layer
The Expected Layer
The Augmented Layer
From Products to Brands
The Brand’s
dimensions of
differentiation
- Rational and tangible
- Symbolic, emotional and intangible
Differentiation
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Can anything NOT be branded?
• Even among commodities brands have emerged to dominate a product
category…
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How much would you pay for
toilet paper?
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Brands and market capitalisation
Brand Brand value ($b) % of market
capitalisation
Coca Cola 67.5 64
Microsoft 59.9 22
IBM 53.4 44
GE 47 12
Intel 35.6 21
Nokia 26.5 34
Disney 26.4 46
McDonald’s 26 71
Toyota 24.8 19 Inte
rbra
nd
& B
usi
nes
s W
eek
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The Concept of Brand Equity
• The brand equity concept stresses the importance of the brand in
marketing strategies.
• Brand equity is defined in terms of the marketing effects uniquely
attributable to the brand.
• Brand equity relates to the fact that different outcomes result in the
marketing of a product or service because of its brand name, as
compared to if the same product or service did not have that name.
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VOSS
Evian
Fiji
Highland
Volvic
San Pellegrino
Buxton
Volvic
Buxton
San Pellegrino
VOSS
Fiji
EvianAguila
Customer-based brand equity:
Blind Water Tests
Taste perceptions when drinkers know what they are drinking
Taste perceptions when drinkers do not know what they are drinking
Perrier
Perrier
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A Rose by Any Other Name
What’s the best marketing strategy for Rose Partyware?
Present your recommendations.
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Brand
Equity
High level of awareness and
familiarity
Strong, favourable, and unique brand
associations
Sources of brand equity
• Customer-based brand equity has two key elements:
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Brand awareness
• There are two elements
of brand awareness:
– Brand recognition
– Brand recall
• Brand awareness has
important advantages for
marketers Brand Awareness
Learning advantage
Evoked set advantage
Choice advantage
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Brand image
• Strong, favourable and unique associations with a brand
• There are many means through which these associations may be made
(e.g., experience, WoM, etc)
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RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
4. RELATIONSHIPS
What about you & me?
3. RESPONSE
What about you?
2. MEANING
What are you?
1. IDENTITY
Who are you?
The brand equity pyramid
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Identity: Salience dimensions
• There are two key elements:
1. Depth of brand awareness
• Ease of recognition and recall
2. Breadth of brand awareness
• Consumptions situations
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Meaning: Performance dimensions
• Primary characteristics & supplementary features
• Product reliability, durability, and serviceability
• Service effectiveness, efficiency, and empathy
• Style and design
• Price
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• The second type of brand meaning is concerned primarily with:
– User profiles
– Purchase & usage situations
– Personality and values
– History, heritage, & experiences
Meaning: Imagery Dimensions
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Family
Shared experiences
Maternal
Multipurpose
Caring
Classic
Timeless Childhood
memories
For example…Nivea’s brand imagery:
Marlboro cigarettes have masculine
associations.
But these have taken much time and
effort to develop…
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1940s
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1950s
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Late 1950s
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1962
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Late 1960s
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10-
681990s and today…
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Response: Judgment dimensions
• Personal opinions and evaluations of the brand based on the following factors:
– Brand quality
– Brand credibility
– Brand consideration
– Brand superiority
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• The emotional responses and reactions to the brand, which may involve the
following factors:
– Warmth
– Fun
– Excitement
– Security
– Social approval
– Self-respect
Response: Feelings dimensions
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RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
The ultimate relationship and level of identification that the customer has with the brand.
• Behavioral loyalty• Attitudinal attachment• Sense of community• Active engagement
Brand resonance
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RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
Intense, active
loyalty
Positive, accessible reactions
Points of parity and difference
Deep, broad brand awareness
Branding Objectives
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Brand Pyramid Workshop
• Identify a strong brand of your choice
• Analyse how it developed brand equity by applying the brand pyramid
model
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
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Brand Positioning
• The specific image of a company’s offering in the minds of consumers,
relative to competing offerings
• Marketers attempt to “position” their products in a particular way in the
minds of target markets
• It’s about finding the appropriate “mental location”
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Establishing Brand Positioning
Define the competitive frame of
reference
Target market and segmentation
Nature of competition
Define the basis of positioning
Points-of-difference
Points-of-parity
Types of PoPs
Category POPs
Competitive POPs
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• Perceptual mapping is a visual tool to portray perceptual differences among
products expressed by consumers
• Highlights distinguishing position from the competition
• Driven by dimensions valued by customers
• Example: the car market (selected factors and brands)
Perceptual Mapping
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Example of Perceptual Mapping
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The Positioning of ADSM
• If ADSM were:
– A car
– A sound
– An animal
• What would it be?
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The Brand Spirit
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Challenges in Establishing PoPs
and PoDs
Many of the attributes or
benefits that make up the
POPs and PODs are
negatively correlated
But consumers often want
to maximise both
attributes and benefits
The best approach is to
develop a product that
performs well on both
dimensions
Examples of negatively correlatedattributes and benefits
Low price High quality
Taste Low calories
Nutritious Good tasting
Efficacious Mild
Powerful Safe
Strong Refined
Ubiquitous Exclusive
Varied SimpleBut there are also other options…
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The Problem of Negatively
Correlated PoPs & PoDs
• Three approaches are available to overcome the problem, listed in increasing order of effectiveness (but perhaps also difficulty)
Separate the Attributes
• E.g., use two different marketing campaigns
Leverage Equity of another Entity
• E.g., link to any entity that possesses the right kind of equity
Redefine the Relationship
• E.g., convince customers that there is no negative correlation
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Swatch Case Study
1. What choices did customers have before the arrival of the Swatch, and how were these choices positioned?
2. What was the recipe for Swatch’s success? What did they do exactly from a positioning point of view?
3. What other brands have done something similar to Swatch? Can you think of any other brands that have used the same formula for success?
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• Brands may be linked to other entities that have their own knowledge
structures in consumers’ minds
• Because of these linkages, consumers may assume that the same
associations of the secondary entity apply to the brand
• Thus, the brand can borrow some brand knowledge and equity
Leveraging Secondary Brand
Knowledge
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Secondary Sources of Brand
Knowledge
Brand
Other brands
Places
Things
People
Alliances
Ingredients Company
Extensions
Country
Channels
Causes Events
Endorsements
Employees
Endorsers
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4. Communicating branding
1. Setting objectives and tasks
2. Choosing creative
3. Mountain Dew case study
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Attention Interest Desire Action
Setting Communications
Objectives and Tasks
Cognitive stage Affective stage Behavioural stage
Inform
PersuadeRemind
Communications objectives
Consumer adoption
Communications tasks
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Mountain Dew Case Questions
• What decision criteria you think are important in evaluating a brand’s
advertising?
• Evaluate the following ads:
1. Cheetah
2. Mock Opera
3. Dew or Die
4. Labor of Love
5. Showstopper
• Which ad do you think is best?
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Decision Filters• A set of decision filters should be employed to evaluate brand
communications
Is framing of
brand benefits
compelling?
Is expression of
brand symbolism
apt?
Will the ad
resonate with
target culture?
Engaging, simple,
original, creative?
Integrates product
into story?
Effective extension of
campaign equities?
Brand filters
Communications filters
Campaign filter
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5. Measuring and sustaining
brand equity
1. Measuring and interpreting brand performance
2. Understanding and communicating sources of brand equity
3. Managing brand equity over time
4. Brand reinforcement and revitalisation
5. New Coke case study
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Why Measure Brand Equity?
• Give marketing activities board room legitimacy
– Shift away from perception of marketing as a cost centre
– Elevate marketing expenditure to a strategic level
• Coordinate organisational effort
– Mobilise cross-functional support and cooperation
– Provide an organisation-wide understanding of brand anatomy (i.e., what activities build or destroy brand value)
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• Rewards a long-term view in marketing initiatives
– Move away from quarterly, semi-annual, or annual appraisal of marketing effectiveness
• Accuracy in financial accounting
– Brand values can be volatile
– Mandatory for acquired brands to be reflected in accounts but not internally created brands
Why Measure Brand Equity?
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Marketing programmeinvestment
Customer mindset
Market performance
Shareholder value
The Brand Value Chain
• Product
• Communications
• Trade
• Employee
• Other
• Awareness
• Associations
• Attitudes
• Attachment
• Activity
• Price premium
• Price elasticity
• Market share
• Expansion
success
• Cost structure
• Profitability
• Stock price
• P/E ratio
• Market
capitalisation
VALUE
STAGES
MULTIPLIERProgram quality
Market conditions
Investor sentiment
• Clarity
• Relevance
• Distinctiveness
• Consistency
• Competitive
reactions
• Channel support
• Customer size
and profile
• Market dynamics
• Growth potential
• Risk profile
• Brand
contribution
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Implications
• The Brand Value Chain model has at least three significant implications
for marketers:
1. Value creation begins with the marketing programme investment
2. Value creation requires more than the initial marketing investment
3. The brand value chain provides a detailed road map for tracking
value creation to focus marketing research and intelligence efforts
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Y&R’s BrandAsset Valuator
• Measures brands on four fundamental measures of equity value and
using a set of perceptual dimensions
• The four pillars:
1. Differentiation
2. Relevance
3. Esteem
4. Knowledge
BRAND STRENGTH
BRAND STATURE
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D R E K
D R E K
D R E K
D R E KBra
nd S
trength
D
+R (
futu
re)
Brand Stature E+K (current)
High
Low
Eroding Potential
Leadership
New/Unfocused
Unrealised/emergingPotential
The Brand Asset Valuator
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The BAV and Profitability
Sourc
e:
Sta
ndard
& P
oors
High
Low
6.5%
6.3%
5.9%
9.3%
Profit Margin
Brand Stature E+ K (current)
Bra
nd S
trength
D
+R (
futu
re)
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The BAV and earnings growth
High
Low
86.5%
48.9%
-27.2%
122.0%
Change in Earnings
Brand Stature E+ K (current)
Bra
nd S
trength
D
+R (
futu
re)
Sourc
e:
Sta
ndard
& P
oors
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Y&R Australia (2006)
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Y&R Australia (2006)
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eBay has had a massive increase in Brand Equity between 2003 and 2006.
Y&R Australia (2006)
2000 2003
2006
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A decline in differentiation caused the Sportsgirl brand to drop
between 2000-03. But a massive re-invention saw it bounce back to an
even stronger position in 2006.
Y&R Australia (2006)
2000
2003
2006
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The BAV and Brand Development:
Apple (Adults, 2005)
Brand Stature
Brand
Strength
Switzerland
Germany
USAAustralia
New Zealand
Spain
Belgium
MexicoItaly
Argentina
France
Uruguay
Holland
Colombia
UK
Puerto RicoBrazil
Peru
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Brand Stature
Brand
Strength
SwitzerlandGermany
USA
AustraliaNew ZealandSpain
Belgium
Mexico
ItalyArgentina
France
Uruguay
Holland
Colombia
UK
Puerto Rico
Brazil
Peru
The BAV and Brand Development:
Coca Cola (Adults, 2005)
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Workshop: Pillar patterns
D R E KD R E KD R E K
D R E KD R E K D R E K
D R E K
D R E K
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• The Interbrand approach involves three steps:
1. Financial forecasting
2. Role of branding
3. Brand strength
Find out more here: http://www.interbrand.com/en/best-globalbrands/best-
global-brands-methodology/Overview.aspx
• This approach is useful, partly because it’s a step closer to putting a
financial value on the brand
Interbrand Brand Equity Model
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Brand Strength
Authenticity
Relevance
Differentiation
Consistency
Presence
Understanding
Responsiveness
Protection
Commitment
Clarity
INTERNAL EXTERNAL
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The Best Global Brands (2013)
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Managing Brands Over Time
• The internal and external environments of a brand constantly change
• Thus, managers must know how to manage brands over time
1. They may wish to extend the brand
2. They may need to adjust the brand meaning
3. They may need to adjust the marketing mix
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1. Brand Extensions
• Key questions:
– How does a band extension leverage the equity in the parent
brand?
– How effectively does the extension contribute to the equity in the
parent brand?
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Brand Extensions: Pros and Cons
Advantages of Brand Extensions Reduce risk perceived by customersPermits consumer variety seekingIncrease relevance of brand to new marketsIncrease probability of getting distribution and trialIncrease efficiency of promotional expendituresReduce costs of introducing and developing new brandIncrease pricing breadth
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Disadvantages of Brand ExtensionsConfuse customers (weaker line logic)May lead to retailer resistanceBoth success and failure can hurt parent brand’s imageCannibalise parent brand’s salesMay dilute a brand’s meaningIncreased costsOpportunity cost of developing a new brand
Brand Extensions: Pros and Cons
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Gillette and Cannibalisation
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Brand Extensions
• Vertical Extensions– Extending the brand ‘up’ or
‘down’ the value spectrum
• Horizontal extensions– Extending the brand within its
current value position
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2. Reinforcing Brands
• Begin by asking the questions:
1. What products does the brand represent, what benefits does it supply and what needs does it satisfy?
2. How does the brand make those products superior? What strong, favourable and unique brand associations exist in the minds of consumers?
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Defending Tylenol’s main source of brand Equity - Trust
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3. Revitalising Brands
• There are many examples of once prominent and admired brands that have
fallen on hard times or even completely disappeared
• Some of them have made impressive comebacks
• What can brands do to recapture lost sources of equity?
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Revitalising Brands
• The need to revitalise is predominantly the result of neglect
• Assess the prospects for revival:
1. Is there residual goodwill among customers and distributors?
2. Is it the brand or the company which is responsible for the decline?
3. Is there a group of loyal customers with potential for growth?
• Revitalisation should typically only be pursued where some values, favourability and awareness remain
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Revitalising the Brand
• The customer-based brand equity model suggests that there are two ways
to refresh old sources of brand equity:
A. Expand the depth or breadth of awareness
B. Improve the strength and uniqueness of brand associations making
up the brand image
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A. Expanding Awareness
• With a fading brand, often depth of awareness is not the problem
• Breadth of awareness is more often the problem, which can be dealt by:
1. Identifying additional or new usage opportunities
2. Identifying new and completely different ways to use the brand
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De Beers diamonds and new usage opportunities
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Wrigley’s and new ways of using the brand
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B. Improving Brand Image
• Repositioning the brand
– Find points of parity with category leaders
– Establish new points of difference or bring the focus back on the old PoDs
• Change brand elements
– Brand elements (e.g., name and logo)
1952 1978 1991 1997 2006
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New Coke Case Study
1. Assess Coke’s brand equity. Where does it come from?
2. What was clever about Pepsi’s attack on the Coke brand?
3. What do you think are the main reasons for Coke’s failed response? What would you have done?
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6. Digital marketing
1. Fundamentals of online marketing and product management
2. Brand advertising online
3. Trends and challenges in product and brand communications
4. Pets.com case study
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Non-traditional marketing
approaches
• Advertising has traditionally been the centre of marketing campaigns• But current trends suggest that the traditional advertising model is in
decline…
– Loss of control over traditional advertising media
– Democratisation of content and file sharing
– Personalisation of schedules
– Fragmentation of audiences
– Rising cost of advertising
• As a consequence, advertisers might need to consider more and more non-traditional marketing strategies and tools
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Growth of “Channels”
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Breaking through the clutter…
“Marketers shouldn’t be thinking just about whether it’s either traditional channels or interactive channels, they should be thinking about the fact that given all this new technology the consumer’s tolerance for interruption has been diminished”
- Strauss Zelnick, President and CEO of BMG Entertainment
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Marketing Communication is
Certainly Changing
• Brands are increasingly relying on new tools to communicate with
customers
• For example, 1 in 5 advertising Euros in Europe is now spent online.
• Despite the continued weak economic conditions across Europe and
globally, Europe’s online advertising market grew 14.5% year-on-year
to a market value of €20.9bn in 2012. By comparison the overall
European advertising market - excluding online - grew at just 0.8% in
the same time period.
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What are brands doing
online?
Organisations have now a large range of opportunities available to do brand advertising online. These include:
1. Display advertising
2. Games advertising
3. Mobile marketing
4. Social media marketing
5. Video marketing
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1. Online Advertising
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The First Ever Online
Advertisement
• October 25th, 1994
• The website HotWired decided they needed to make money from their website
• AT&T was the first company to pay money to HotWired to display the world’s first banner advert, a 468 x 60 banner.
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Display Advertising
• Online display advertising is the meat and veg of online marketing.
• Online displays are useful primarily for three objectives:
• To deliver brand messages
• To immerse consumers with interactive experiences
• To generate a direct response from consumers
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2. Games Advertising
• One of the most dynamic and fast-growing disciplines within the
online landscape.
• Placing advertising within a gaming environment and using bespoke
games to promote a product or service.
• IAB research shows 80% of the UK population play games regularly.
• For advertisers, gaming offers a large, growing and highly engaged
audience.
• Take a look at this example:
http://www.youtube.com/watch?v=4ba1BqJ4S2M
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3. Mobile Marketing
• Fast becoming the central focus of many media plans.
• As awareness and understanding grows, advertisers are
increasingly waking up to the potential of mobile.
• The range of advertisers using mobile to benefit their brands is also
becoming broader as more mainstream brands from sectors such as
finance and consumer goods are investing on mobile.
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60000
45000
30000
15000
Cu
mu
lati
ve t
ota
l un
its
sold
(th
ou
san
ds)
Quarters after launch
0
1 2 3 4 5 6 7
Cumulative Units Sold
Source: Asymco
The iPad growth rate is
phenomenal
iPad
iPhone
iPod
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Mobile vs Desktop Internet
Users
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4. Social Media Marketing
• Social networks now account for a quarter of time spent online in the
UK.
• Social media encompasses a vast range of activities: social
networking, blogging, word of mouth, content dissemination, user
generated content, crowd sourcing, interactive advertising and more.
• Social media is broadly split into three areas:
1. Paid, such as advertising on a social network
2. Earned, such as a genuine blogger review of a new product or
service
3. Owned, a brand’s official page in a social network
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Time Spent Online
Source: IAB (2012)
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The Emotions of Highly Viral
Content
Source: HBR (2013)
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• Engaging customers in more sophisticated and creative ways may be the best way to capitalise on networking sites.
• Any means that allow information and brand elements to be shared by users represent a new powerful opportunity for marketers.
Focus on the Exchange
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Let Your Customers Participate
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5. Video Marketing
• Online video advertising is one of the fastest growing advertising formats in the world and is becoming a key way to build brands.
• The last adspend report shows an explosive growth of 91% year on year meaning that the sector is now worth nearly £60 million.
• A recent survey of over 160 media buyers found almost three quarters expected their online video advertising spend to increase by 25 per cent before Q4 2012 (WebTVEnterprise: The UK Online Video Advertising Market - 2012).
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The Most Globally Shared
Branded Videos of 2013
Position Brand Total shares (m)
1 Dove: Real Beauty Sketches 4.2
2 Geico: Hump Day 4.0
3 Evian: Baby & Me 3.3
4 Kmart: Ship my pants 3.0
5 Cornetto: Cupidity 2.9
6 Budweiser: Brotherhood 2.7
7 Pepsi Max: Test drive 2.7
8 MGM: Carrie 2.2
9 Ram Trucks: Farmer 1.9
10 TrueMove H: Giving 1.3
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Summary
1. Fundamental concepts in product and brand management
2. Marketing management, organisational culture and innovation
3. Building brands
4. Brand communications
5. Measuring brand equity and growing and sustaining brand equity
6. Digital product and brand management