... ..

...
.•. .
 .
.
 .
. • How do marketing activities in general—and
product, pricing, and distribution strategies in
particular—build brand equity?
• How can marketers integrate these activities
to enhance brand awareness, improve the
brand image, elicit positive brand responses,
and increase brand resonance?

5.3
 .
.
 .
The four major drivers of this new economy are:
.
1. Digitalization and connectivity
(internet, intranet, mobile devices)

2. Disintermediation and reintermediation

(middlemen)

3. Customization and customerization

( tailored products and ingredients provided to customers to make their own
products)

4. Industry convergence
(blurring of industry boundaries)
Customers: - Have more power
.
- Have a large variety of available goods and
services
- Can obtain more information
. - Can easily interact with marketers in placing
and receiving orders
- Can interact with other consumers and
compare notes

Companies: - Can collect fuller and richer information

about markets, customers, competition
- Better communication technologies and
transaction efficiency
- Can use the internet and e-mail to send
promotional messages to customers
- Can customize their offerings to individual
customers
 Implications for the
. Practice of Brand
Management
. • They have a number of implications for the
practice of brand management. Marketers are
increasingly abandoning the mass-market
strategies that built brand powerhouses in the
1950s, 1960s, and 1970s to implement new
approaches.
• Even marketers in staid, traditional industries
are rethinking their practices and not doing
business as usual.

5.7
 .
. There is a move away from mass-market strategies

• The 21st century has forced marketers to change how

they develop their marketing programs.

• Integration and Personalization are crucial factors

in building and maintaining strong brands
 .
.
 .
.
brand building efforts

marketing activities marketing activities

Product

brand building efforts

 .
.

• Experiential marketing
• One-to-One marketing
• Permission marketing
 .
• Expression of individuality
.• Consumer desire for personalization
Experiential Marketing; One-to-One Marketing; Permission Marketing

Experiential marketing connects a product to unique and interesting experiences

“The idea is not to sell something, but to demonstrate how a brand

can enrich a customer’s life”
 . GENERATE
INFORMATION EXPERIENCES
Consumers ----------------------------Marketers---------------------------------Consumers

.
The Fundamental Strategies of One-to-One Marketing:
- Focus on individual consumers through consumer databases
- Respond to consumer dialogue via interactivity
- Customize products and services

Marketing to consumers only after gaining their express permission

“anticipated, personal and relevant” - Godin

 .
.
 .
“At the heart of a great brand is invariably a great
. product”

• How do consumers form their opinions of the quality and value

of a product?

• How can marketers use the relationship marketing perspective

in formulating product strategy and offerings?
 .
Dimensions of Quality:
.
• Performance
• Features
• Conformance Quality
• Reliability
• Durability
• Serviceability
• Style and Design

Brand Intangibles
speed, accuracy, delivery and installation, courtesy, helpfulness of
customer service and training
 .
1. Functional benefits: Product and performance attributes

2..Process benefits: ease of access to product information; broad

product selection; convenient transactions

3. Relationship benefits: personalized service; strong emotional

relevance; loyalty rewards
(McKinsey)

“By improving the fuller customer experience, companies

can keep consumers happier and hold on to them longer”
 .
quality perceptions + cost perceptions = assessment of value
.
opportunity costs of time, energy and psychological involvement in the decision

The firm is a collection of activities that are performed to

design, produce, market, deliver and support products

Firms can achieve competitive advantages by

improving performance and reducing costs in
any or all of the value creating activities
 .
current customers are the key to long term brand success

- Mass Customization
.
Customization addresses the need for individuality
NIKEiD

- Aftermarketing
Activities that occur after customer purchase (User Manuals, Complimentary Products)

To achieve the desired brand image, product strategies should focus on

both purchase and consumption

- Loyalty Programs
Loyalty programs offer different mixtures of services, newsletters, premiums and incentives for a
firm’s “best” customer

Co-branding arrangements: Discovery – Ster-kinekor, Kulula, Pick ‘n Pay

 .
.
 .
. Revenue generating element from of the mix

 Its belongs in the performance CBBE model( Chapter 2 )

 Consumers willing to pay price premiums , when there is a

perceived added value = Stronger brands

 Aspects of pricing Strategy :

1. Price perceptions
2. Setting prices
 .
•. Consumers rank brand according to prices

• Price Bands = range of acceptable prices

• price – product meaning

- value and quality they received

• perception of value received < cost to the company

 Sell the right product and the
right price- to better meet
. consumer needs

Costs of producing the product Relative prices of

. competition

Profit margin of the

company
Pricing
Needs and wants of
consumers Strategy

Value strategies
Greater emphasis on the
end consumer
Everyday low pricing EDLP
strategies
 .
.1. Asses what value the customer places on your brand
2. Look for variation in assessing customers value
3. Asses customers price sensitivity
4. Identify an optimal pricing structure
5. Consider competitors reactions
6. Monitor prices at a transaction level
7. Asses customer emotional response
8. Analyse if the returns are worth the cost
 .
. Value pricing
Product
Innovations , improvements , and convenience
design and
delivery

Outsourcing , material substitution , technology,

Product costs product reformulation , factory improvement .
Cost reductions can’t sacrifice quality

Understand what consumers are willing to pay, if

Product
there are premiums and then adjust it for cost and
prices
competition
 .
Everyday low pricing EDLP)
.
Discount and Everyday base prices
promotions over time

Consistent low prices on major items

Builds brand loyalty and will bring consumers back to buy
awareness

Incentives to
consumers to buy

- Forward buying versus diverting

 .
.
 .
 Marketing channels =“ a set of interdependent organizations
. involved
for use “
in the process of making a product / service available

 This involves designing a channel and managing

intermediaries.

 Channel design :
1. Indirect - sell through third party intermediaries
2. Direct – sell through personal contacts

 Try develop : “integrated shopping experiences “

 .
. INDIRECT DIRECT

 Broad assortment is essential  Product info is high

 Availability is critical  Customisation
 After sales service is important  Quality assurance is important
 Lot size is important
 Logistics are important

-Hybrid approach = combing the both , must be careful not to

have too many not too little

- The goal is to maximize channel coverage and effectiveness

while minimizing cost and conflict
 Example: Nike (sell its shoes, apparel, and equipment product)
.
• Retail: Nike products are sold in retail locations such as shoe
. stores,
stores.
sporting goods stores, department stores, and clothing

• Branded Nike Town Stores: Nike Town Stores, located in prime

shopping avenues in metropolitan centers .
• Niketown.com: Nike’s e-commerce site allows consumers to
place internet orders for a range of products.
• Catalog retailers: Nike’s product appear in numerous shoe,
sporting goods, and clothing catalogs.
• Outlet Stores: outlet stores feature discounted Nike
merchandise.
• Specialty stores: Nike equipment from product lines such as
Nike Golf, Nike Hockey.
 .
- It concentrates on retailers even though there are many other
intermediaries
.
- Retailers have the most contact to customers – affect brand equity

- The image of the product and the image of the retailer is important
to consider as customers tend to form associations.

- Consider : 1. Push and pull strategies

2. Channel support
- Retail segmentation
- Cooperative advertising
 1. Push and pull strategies
.
. have power over manufactures and directly affect brand equity.
Retailers
- Demand lucrative and frequent trade promotions
- Compensation to stock a new brand
- Cash payments for shelf space (slotting allowances)
- Introductory deals (“ one free with three”)
- Postponed billing
- Advertising or promotion to supports a new brand

Manufactures can overcome this power by creating unique products the

consumer demands

Devoting marketing efforts to the end consumer = PULL STRATEGY( broad

distribution)

Devoting marketing efforts to the channel members , offering them incentives

to buy the brand = PUSH STRATEGY( selective distribution)
2. Channel support
.
Services provided by channel members may help enhance the value to consumers and
the brand. Establish “ Marketing partnership with retailers is critical to ensure
channel support ( FIGURE 5-7)
.
Two channel support strategies are :

1. Retail segmentation – segmenting the retailers according to similar characteristics , as

different retailers might need different product mixes , special delivery systems
,customised promotions or even there own branded version of the product( Branded
variants)

2. Cooperative advertising- manufacturer pays for a portion of the advertising to promote

the product and the availability at the retailer. Ideal situation would be to achieve synergy
between the manufacturers own ad campaigns and the corresponding co-op ad campaign
with the retailer . Must be balance between pushing the brand and advertising the retailer
 .
.Manufacturers who sell directly to the public

1. Company owned stores – by means to showcase the brand

and all its products. Helps build stronger relationships with it’s
customers. This may cause competition with the retailers.

2. Other means - create there own shops within a department store ;

sell through phone , mail or electronic means ( Catalogue)

3. Web strategies – online retail channel