Marketing Management debates

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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 any

extension to the brand supports those brand elements or attributes that customers associate

with 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 product

with the existing strong brand that the company has developed. For example, Nike started out

as a running shoe manufacturer. They built their brand equity by developing the brand

elements 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 was

patented and copy write protectable, and

Adaptable – they expanded their shoe product line to include hiking, walking and cross

trainers.

The last criteria of the brand elements, transferable, is what made Nike more profitable and

successful. Leveraging the strong market position and brand equity, Nike extended their brand

out into active clothing wear. This extension decision was a great growth-strategy, as the

product(s) complemented and enhanced their brand image. By offering active wear, then could

create additional associations to affiliations to professional athletes (non-runners) as well as

fashion conscious consumers.

Brand Equity Model:

Brand Equity is measured based on how well the brand is recognised and favoured over its

competitors. It is the added value endowed on products and services. The value-addition may be

reflected 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 consumer’s mind, we can say it has a positive brand equity.

Brands with positive brand equity will consistently generate, maximize, and grow cash flows. They

achieve 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 marketing

organizations which came up with their own metrics, analytics, and models to measure and manage

brand equity. Advertising agency Young and Rubicam (Y&R) developed a brand equity model called

Brand Asset Valuator (BAV). Please referwww.thebrandbubble.com/explore. Young and Rubicam,

based on its research with almost 500,000 consumers in 44 countries, has come up with five key

components or pillars of brand equity. They are:

http://www.thebrandbubble.com/explore






- Differentiation or Uniqueness measures the degree to which the brand is seen as different from

others.

- Energy measures the brand’s sense of momentum.

- Relevance or Appropriateness measures the breadth of a brand’s 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 shown

inwww.thebrandbubble.com/explore ). Select brands like Coca-Cola, Google, etc, and you will quickly

realize that they are shown on the top right corner of the grid. These are the leaders with high earning

and high potential. Similarly, brands like Safeway will appear in the fourth quadrant, which is an

indication of an aging brand and has some serious challenges. Virgin Atlantic appears in the

New/Indifferent category of the PowerGrid.

Other important Brand Equity models are: Milward Brown’s Brand Dynamics, Brand MetricsDNA, Brand

Resonance Model, and Aaker model.







Chapter 9

To develop an effective positioning, a company must study competitors as well as actual and potential

customers. Marketers need to identify competitor’s 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 associations

and are strongly held and favorably evaluated by consumers; the key to competitive advantage

is relevant

brand differentiation; emotional branding is becoming a way to create product and brand

differentiation: brand stories are growing in importance as are brand journalism, and

cultural branding.

3 C’s 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 right

mix 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 complicated—computer and game programs.

A firm may use dual strategies to communicate these negatively correlated attributes and



benefits. Although more expensive to use dual marketing strategies, for a product or service

consisting 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 other

associations 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 manager’s perspective brands that

can be expected to last forever have continuously built, measured, and managed the proper brand

equity that allows for a brand to survive forever. Continuously building, measuring, and managing brand

equity 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. It

may be reflected in the way consumers think, feel, and with respect to the brand, as well as in the

prices, market share, and profitability the brand commands for the firm.” (2009, p. 240) When creating

brand equity marketing managers must first create the right brand elements that will attract and

identify 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 can

identify with such as, the distinctive “swoosh” logo, the empowering “Just Do It” slogan, and the “Nike”

name based on the winged goddess of victory.” (Kotler & Keller, 2009, p. 246) Consumers recognize

brand elements and are more likely to continuously purchase the brand due to their familiarity with the

product 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 audits

on a regular basis, such as annually, allows marketers to keep their fingers on the pulse of their brands

so 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 the

brand is presented and treated by the company that has created it. A company that wants to stay on the

cutting 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 entire

company die out. As unfortunate as it is, this is what has happened throughout time to some good

brands and good companies that as simply not around anymore



Market Leader Strategies:� The market leader generally leads the other firms in price changes,

new-product introductions, distribution coverage, and promotional intensity.� The market

leader must maintain a constant vigilance as other firms keep challenging its strength or trying

to 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 an

aggressive bid for further market share.� The strategic objective of most challengers is to

increase their market shares.� An aggressor can choose to attack the market leader, to attack

firms of its own size that are not doing the job or are under-financed, or attack small local and

regional firms that are not doing the job or are under-financed.� The attack strategies include

frontal attack, flank attack, encirclement attack, bypass attack, and guerilla attack.

Market Follower Strategies:� Followers tend not to want to steal others� customers, but

instead they present similar offers to buyers, usually by copying the leader.� Follower market

shares show a high stability.� Each follower tries to bring distinctive advantages to its target

market.� The follower is a major target of attack by challengers.� Therefore the follower must

keep its manufacturing costs low and its product quality and service high.� Following does not

mean the firm is passive or a carbon copy of the leader.� The specific strategies are: the

cloner, which lives parasitically off the leader; the imitator, which copies some things from the

leader but maintains differentiation in terms of packaging advertising, pricing, etc; and the

adapter, 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 by

targeting small markets of little or no interest to the larger firms.� Firms with low shares of the

total market can be highly profitable through small niching.� The nicher ends up knowing the

target customer group so well that it can meet their needs better than other firms casually selling

to this niche could.� The nicher receives high margins in contrast to the high volume of the

mass marketer.� The key idea is specialization.� Nichers need to create niches, expand

niches, and protect niches.

Take a positi on: The best way to challenge a leader is to attack its strengths versus the best way to

attack 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



changes, new-product introductions, distribution coverage, and promotional intensity. Market leaders

may also have products that generally hold a distinctive position in consumers’ minds. These strengths

and competitive advantages can be formable when used by a savvy and seasoned firm. Trying to

attack 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 market

leader 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 a

geographic 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 with

fewer 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 firms

follow the principles described in the chapter?

Suggested Response:

Student answers wil l differ according to the industries picked and the role the firms play in that

industry. Al l answers should 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, preemptive

defense, 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.



Price should reflect the value that consumers are willing to pay”.

Consumer- orientation is the focal point of this age of marketing. Consumers think about the products

they are purchasing, its attributes, prices, utilities according to their own way. Yes, they are influencedby a number of factors like, promotional activities, reference groups, and family members. But

ultimately it is the consumer who makes the purchasing decision and sets the expectation level and

according to it who sets the price range within which he/she can purchase the product. This is the fact

behind reflecting the value when setting the price.

Differentiating the products through different marketing mix strategies from competitors is the demand

of time now-a-days. Even firms within a same industry are differentiating their products by adding more

and more value-added services. So they can charge different prices for the same category of product. In

these cases it is easier to the producer to set a price on the basis of the value.

Consumers don’t purchase the product rather they purchase benefits, prestige inherent in the products.

So, it can be an opportunity to the firm to charge a higher price on the basis of perceived benefits and

prestige of the consumer by consuming the product. Benefits and prestige can be enhanced through

different promotional activities, branding and long-term relationship with consumer community. Here,

cost-based pricing can be just a loss of opportunity to earn a good profit. For example,BMW, Mercedes

Benz ,Rolex Watch are purchased with a premium price because of these attributed prestige.

It is the perceived quality which motivates the customer to give a premium price, not the quality assured

by the firms. Consumers set a price range in the mind to give in exchange for the value they get from the

quality product

Chapter 7

Mass marketing is still viable way to build a profitable brand

Mass marketing will never die - as long as there are international brands with massappeal, this type of advertising and promotion will continue to exist.

Those who argue that "mass marketing is dead" are probably getting better

marketing results by targeting niche market segments with a defined demographic. Thistype of marketing is common on the Internet, where search engine keywords are usedto attract potential buyers who are looking for a particular product or service.

Mass marketing requires lots of money, a cohesive marketing plan and access to massmedia, such as magazines, popular websites, national orinternational radio, and cabletelevision networks. Those who argue that mass marketing is dead will probably nothave access to the type of multi-million dollar budgets that mass marketing requires.



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 who

believe that mass marketing is dead, finding a niche market and targeting that market

segment in ads is preferred over spending a lot of money on a mass marketing

campaign.



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, and

psychographic 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 society

who are existing or potential consumers of the company. The question marketing critics often raise is the eth ical

aspect of this strategy. My position on this debate favour the argument that targeting minorities is a sound business

and 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 information

to 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, being

completely 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 needs

of 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 minorities

In 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 reporting

continuous growth and development. Their needs expand also, and so does their power

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