Q.

1
What do you mean by the term “Brand”?

Brand Definition

A brand is a product from a known source (organization). The name of the organization can also
serve as a brand. The brand value reflects how a product's name, or company name, is perceived
by the marketplace, whether that is a target audience for a product or the marketplace in general
(clearly these can have different meanings and therefore different values). It is important to
understand the meaning and the value of the brand (for each target audience) in order to develop
an effective marketing mix, for each target audience. The value of the brand for a web-based
company may have heightened importance due to the intangible nature of the web.

OR

brand

Definition
An identifying symbol, words, or mark that distinguishes a product or company from
its competitors. Usually brands are registered (trademarked) with a regulatory
authority and so cannot be used freely by other parties. For many products and
companies, branding is an essential part of marketing.

OR

brand

A brand is a product, service, or concept that is publicly distinguished from other products,
services, or concepts so that it can be easily communicated and usually marketed. A brand name
is the name of the distinctive product, service, or concept. Branding is the process of creating and
disseminating the brand name. Branding can be applied to the entire corporate identity as well as
to individual product and service names.

Q.2
What are the branding challenges and opportunities.

Branding challenges and opportunities

By brandvision2009
Brands build their strength by providing customers consistently superior product and service
experiences. A strong brand is a promise or bond with customers. In return for their loyalty,
customers expect the firm to satisfy their needs better than any other competitors.

Brands will always be important given their fundamental purpose – to identify and differentiate
products and services. Good brand makes people’s lives a little easier and better. People are loyal
to brands that satisfy their expectations and deliver on its brand promise. The predictably good
performance of a strong brand is something that consumer will always value.

The challenges to brands

1) The shift from strategy to tactics: - With the increasing pressure to generate ever-improving
profitability, it is often considered a luxury for managers to develop long-term strategic plans.
This is further exacerbated by short-term goal setting, which is frequently designed primarily for
the convenience of the financial community.

2) The shift from advertising to promotions: - As a consequence of the increasing pressure on

brand manager to achieve short-term goals, there is a temptation to cut back on advertising
support, since it is viewed as a long-term brand-building investment, in favour of promotions
which generate much quicker short-term results.

3) On-Line shopping: - The Internet is facilitating on-line shopping. On-line shopping is

different from traditional mail order because:

• Brands are available all the time and from all over the world;

• Information and interactions are in real time;

• Consumers can choose between brands which meet their criteria, as a result of selecting
information which is in a much more convenient format for them, rather than the standard
catalogue format.

This poses threats to brands, some components of added value, agent or the retail outlet which
originally added value by matching consumers with suppliers, may be eliminated.

4) Opportunities from technology: - Brand marketers are now able to take advantage of
technology to again a competitive advantage through time. Technology is already reducing the
lead time needed to respond rapidly to changing customers need and minimizing any delays in
the supply chain.

5) More sophisticated buyers: - In business-to-business marketing, there is already an emphasis

on bringing together individuals from different departments to evaluate suppliers’ new brands.
As inter departmental barriers break down even more, sellers are going to face increasingly
sophisticated buyers who are served by better information system enabling them to pay off brand
suppliers against each other.
6) The growth of corporate branding:- With media inhabiting individual brand advertising,
many firms are putting more emphasis on corporate branding, unifying their portfolio of brands
through clearer linkages with the corporation, which clarifies the those all the line brands adhere
to. Through corporate identity program functional aspects of individual brands in the firm’s
portfolio can be augmented, enabling the consumer to select brands through assessment of the
values of competing firms. Firms developed powerful corporate identity programmes by
recognizing the need first to identify their internal corporate values, from which flow employee
attitudes and specific types of staff behavior secondly, to devise integrated communication
programmes for different external audiences.

Q.3
Explain the term
brand knowledge

Brand Knowledge

“is a function of awareness, which relates to consumers’ ability to recognize or recall the brand, and image,
which consists of consumers’ perceptions and of associations for the brand.”

Positive brand equity results in:

1. Greater perceived differentiation

2. Stronger brand loyalty
3. Larger profit margins
4. Higher trade support
5. Increased marketing communication effectiveness
6. Opportunities to extend and license brand name

And these help consumers have a better awareness and recall. So in turn one can say brand knowledge is
what you know about the brand , how quickly you can recall it, with how much little information you can do
it.

OR

Brand Knowledge
Brand knowledge refers to brand awareness (whether and when consumers know the brand)
and brand image (what associations consumers have with the brand). The different
dimensions of brand knowledge can be classified in a pyramid (adapted from Keller 2001), in
which each lower-level element provides the foundations of the higher-level element. In other
words, brand attachment stems from rational and emotional brand evaluations, which derive
from functional and emotional brand associations, which require brand awareness. Brand
knowledge measures are sometimes called “customer mind-set” measures because they
capture how the brand is perceived in the customer’s mind.
Figure 1
The Brand Knowledge Pyramid
ATTACHMENT
Loyalty, sense of
community, engagement
BRAND AWARENESS DEPTH AND BREADTH
Depth (unaided recall, aided recall, or recognition) and breadth (when?)
RATIONAL
EVALUATION
Brand value,
credibility
EMOTIONAL
EVALUATION
Feelings, social
approval, self respect
FUNCTIONAL IMAGE
AND BENEFITS
Physique (design), quality,
reliability, service, price
EMOTIONAL IMAGE
AND BENEFITS
Who, when, how, where used
personality, history
4. INTENSE &
ACTIVE BRAND
LOYALTY
4. INTENSE &
ACTIVE BRAND
LOYALTY
3. POSITIVE &
ACCESSIBLE
BRAND
EVALUATIONS
3. POSITIVE &
ACCESSIBLE
BRAND
EVALUATIONS
2. STRONG,
FAVORABLE &
UNIQUE BRAND
ASSOCIATIONS
2. STRONG,
FAVORABLE &
UNIQUE BRAND
ASSOCIATIONS
1. DEEP & BROAD
BRAND

Q.4
Explain Brand Essence.

What is Brand Essence?

Brand Essence is a way of articulating the emotional connection and lasting
impression -- usually summed up with one simple statement or phrase -- that
defines the qualities, personality and uniqueness of a brand. Said another way,
Brand Essence characterizes what a brand stands for in the minds of customers and
stakeholders. It embodies the brand's core competencies, advantages, culture and
values.

Think of Brand Essence as the heart and soul of a product or service. A brand's essence
establishes a positive, powerful connection with everyone with whom it touches. It represents the
relationship and intrinsic value the brand provides to the customer. For those who serve the
brand, it is a beacon that motivates and inspires continued commitment.

Brand Essence should be viewed as long-term positioning. It is reflected in the quality and
evolution of a product, how it is communicated and marketed, the type of care and concern
customers receive, and the way stakeholders support the brand.

OR

Brand Essence - A Brand Building Concept

Brand essence is a compact summary of what the brand stands for.Brand identity structure
includes core identity, extended identity and a brand essence. Typically the brand identity will
require 6 to 12 dimensions in order to adequately describe the brand’s aspirations.

Because such a large set is unwieldy, it is helpful to provide focus by identifying the
core identity i.e. the most important elements of the brand identity. All dimensions
of the core identity should strategy and values of the organisation and at least one
association should differentiate the brand and resonate with the customers. The
core identity is most likely to remain constant as the brand travels to new markets
and products. The core identity creates a focus both for the customer and the
organisation. The extended identity includes all of the brand identity elements that
are not in the core. Brand personality is an element of extended identity.

Core identity has 2 to 4 dimensions that compactly summarize the brand vision.
Brand essence provides further focus by giving a single thought that captures the
soul of the brand. The brand essence can be viewed as the glue that holds the core
identity elements together.

Characteristics of brand essence:

• Should resonate with customers

• Drive the value proposition
• Should be own able
 • Provide differentiation persisting through time.
• Should be compelling enough to energize and inspire employees and
partners of the organization.

BRAND ESSENCE VS. TAG LINE

Brand essence represents the identity while tag line represents the brand position.
The function of essence is to communicate and energize those inside the
organization while tag line’s function is to communicate with the external audience.
Brand essence is timeless or for a long period of time while the tag line has a
limited life. Brand essence is relevant across markets and products whereas the tag
line is more likely to have a confined arena.

Why is
Product Management necessary?

Its necessary for following reasons

ey perform the following tasks:

• research products, markets, and competitors

• devise and execute product plans

• based on market trends, they introduce new products or add features to existing products

• manage the positioning of existing brands

• develop product strategies and promotional planning

• based on sales figures, feedback, and other survey reports, they forecast their products’
successes

• keep track of competing products and monitor marketing and production efforts

• carry out pricing and profitability analyses

• assume responsibility for the successes and failures of their products

• don’t interfere with the responsibilities of marketing and operations departments

• anticipate serious product flaws and work toward achieving real solutions

• strive to provide superior value for customers

•
 Q.6
What is Brand value chain?

Brand value chain

The brand value chain is a structured approach to assessing the sources and outcomes of brand
equity and the manner in which marketing activities create brand value. The brand value chain is
based on several basic premises.

The brand value creation process begins when the firm invests in a marketing program targeting
actual or potential customers. Any marketing program that can be attributed to brand value
development, either intentional or not, falls into this category — product research development,
and design; trade or intermediary support; and marketing communications.

The marketing activity associated with the program affects the customer “mind-set� with
respect to the brand. The issue is, in what ways have customers been changed as a result of the
marketing program? This mind-set, across a broad group of customers, then results in certain
outcomes for the brand in terms of how it performs in the marketplace. This is the collective
impact of individual customer actions regarding how much and when they purchase, the price
that they pay, and so on.

Finally, the investment community considers market performance and other factors such as
replacement cost and purchase price in acquisitions to arrive at an assessment of shareholder
value in general and the value of a brand in particular.

The model also assumes that a number of linking factors intervene between these stages and
determine the extent to which value created at one stage transfers to the next stage. Three sets of
multipliers moderate the transfers between the marketing program and the subsequent three value
stages — the program multiplier, the customer multiplier, and the market multiplier.

The program multiplier determines the ability of the marketing program to affect the customer
mind-set and is a function of the quality of the program investment. The customer multiplier
determines the extent to which value created in the minds of customers affects market
performance. This result depends on contextual factors external factors external to the customer.

Three such factors are competitive superiority (how effective is the quantity and quality of the
marketing investment of other competing brands), channel and other intermediary support (how
much brand reinforced and selling effort is being put forth by various marketing partners), and
customer size and profile (how many and what types of customers, profitable or not, are attracted
to the brand).

The market multiplier determines the extent to which the value shown by the market
performances of a brand is manifested in shareholder value. It depends, in part, on the actions of
financial analysts and investors.
OR

The brand value chain

The majority of companies that still follow the main principles of the
industrial economy will face great difficulties in the value economy of the
future. When the company defines itself by its products, far too many
resources will be tied up in the product system.

Alarm bells should ring when investment in products, services, divisions

and departments are inflated when compared to a company’s actual
market access. Fortunes are spent on developing new products without
taking a critical view on their relevance in the market.
At the same time companies will find it increasingly difficult to push their
new products through the value chain to the people who are expected to
buy them. It is becoming still more difficult to penetrate the
communication flow – and the more products that are fighting for the
same resources, the less these resources will suffice.

Brand Value Chain is a model that illustrates the fact that the company must
change its focus to win the optimal value position.

In contrast to the traditionally thinking company that optimises itself

according to its products, the mantra in Brand Value Chain is the concept
that in the future, the company must optimise itself according to its value
position.
Internally, the employees must be made to understand the value position
and its importance for the company’s existence. The value position must be
made relevant and present so that the employees understand how they,
through their daily work, can contribute to the company achieving the
desired value position.
Externally, the company must send a clear signal through its collective
behaviour about which value it offers to the market. This can be effectuated
through the product programme, its customer relations and through all its
marketing and communication.

To win a strong market position the company must pull in the same direction
in everything that it does. The company’s strategy and actions must be
optimised according to how the company can achieve the desired value
position.

The Brand Value Chain way of thinking works with 8 focus points:

To successfully enter the value economy, the core of corporate strategy

must be the optimization of the brand value chain. Only then can it win
the best value position in the market. The entire company must be built
and shaped according to the brand. The brand value chain mindset:
1. Defining the value position you want in the market, depicted as a circle
to the very right of the figure, is key.
2. At the far left link in the brand value chain it is important to appear as
one company. Only a single, centralized company is in a position to be
unique. It has a soul and is a living organism.
3. The company must be built into a brand because the brand mindset is
good at gathering and communicating a set of values and attitudes
externally and internally.
4. You must develop a brand culture that can hold the brand together
globally.
5. It is important to define the product programme on which you focus
when building a brand position in the market.
6. You must define the most important target groups for the brand, both
those who buy the brand directly and any indirect decisionmakers, who
are often the most important carriers of value. Direct connection to these
decision makers must be made via a brand relation management system.
7. You need to build a consistent and value-accumulating brand
communication that focuses on the brand and not on a lot of different
 product launches.
8. The brand communication must deliver the brand position in the
market, which should equal the value position you wish to capture.

The Brand Value Chain way of thinking leads to a strategy in which the
company must focus on becoming brand oriented instead of product
oriented. Use the model as a checklist when preparing a status of the
company’s branding strategy.

In addition to this the company can use the model to take a critical look at
the way resources are being spent.
It would be utterly incorrect to think that branding is all about spending more
money on marketing. It is about reallocating the company’s resources so
that more is spent in the customer system and less in the product and
distribution system. It is about organisational changes, creating an efficient
marketing system etc.
To illustrate this you could look in your warehouse and note how many
brochures for the last products you introduced are still there. If you expand
your survey to include subsidiaries and distribution system, you are
guaranteed to become depressed.

Or you could check out the company’s investments in new machinery and
product development costs. What would it mean to the strength of the
company’s brand and market position if these were cut down by 10-20%?
Could this money be better spent somewhere else?

Q.7
What do you mean by Product modification and Line extensions

Product Modification
Product Modification is an attempt by companies to extend the length of the Product Life Cycle by making
small, or big changed to a product to keep customers interested in the product, or cause them to buy
accessory items to keep the product popular.

In the first years of the new Millenium, we see a lot of examples of Product Modification

What are the driving forces causing companies to seek new and weird ways to change the product
so they can keep selling more?

1. The intensity of competition - the Competitive Environment, - in a globalized community of

businesses all interlinked, it becomes easier and easier to copy other people's products, especially
consumer electronics
- so once you have launched a new product - there is a very short time before someone else will make a
knock-off copy, or even make a slight improvement to capture your customers

2. The continued advances in technology, the Technological Environment. Technology makes it easier
and easier to copy other products. Also, advanced in technology make it more possible to have to
features to add on to a product that is several months old

3. The Economic Environment - the need for companies to make more money selling a product (maybe
because the cycle was too short) -

4. The Social / Cultural Environment - after the product has been used by the early adopters, it might
the possible that other customer groups have slightly different uses, and this can be accomodated if the
product packaging or features are altered slightly to make it more appealing to other demographics

OR

Product Modification
strategy employed when a brand has reached maturity and profits begin to decline;
approaches to revitalisation may include one or all of market expansion, product
modification or brand repositioning.

Product modification means changing one or more of the product's features and
may involve reformulation and repackaging to enhance its customer appeal.
Modifications can give a competitive advantage , e.g., a company may be able to
charge a higher price and enhance customer loyalty. Product modification is often
used as a way of extending the product life cycle of a product. Brassington and
Pettitt (2003) classify modifications into three distinct types: quality, design , and
performance. Quality modifications relate to the product's dependability and
durability; performance modifications relate to the effectiveness, convenience, and
safety of products (e.g., washing machines that use less heat and water); and
design modifications alter the aesthetic and sensory appeal of the product (such as
its taste, texture, sound, and appearance). Such modifications can act to
differentiate products in the marketplace, e.g., BMW cars have an immediately
recognizable style. A number of issues have to be considered before deciding
whether or not to keep the product, change it, or eliminate it ( see product
deletion ); for example, what is the customer appeal? The product may have lost its
distinctiveness because of the introduction of new products or improvements of its
main rivals.

Line extensions\;;;

A product line extension is the use of an established product’s brand name for a new item in the
same product category.
Line Extensions occur when a company introduces additional items in the same product category
under the same brand name such as new flavors, forms, colors, added ingredients, package sizes.
This is as opposed to brand extension which is a new product in a totally different product
category.Line extension occurs when the company lengthens its product line beyond its current
range. The company can extend its product line down-market stretch, up-market stretch, or both
ways.

line extension

Multiproduct branding strategy whereby a firm markets one or more new products
under an already established and well known brand name. The objective is to serve
different customer needs or market segments while taking advantage of the
widespread name recognition of the original brand. For example, maker of a popular
perfume may introduce shampoos, bath soaps, body powders, etc., under the
perfume's name. Line extension is encouraged by some marketing experts and
frowned upon by others. Also called brand extension.

Adding of another variety of a product to an already established brand line of products. For
example, when a coffee manufacturer adds decaffeinated coffee to the same brand line of coffee
products already on the market (such as regular coffee and instant coffee), a line extension has
been made. Line extensions do not compete with each other, since each answers different needs
and thus appeals to a different market

Q.8
Mention about the ways to measure brand equity

Brand equity should be measured in two ways: internal and external measurement. Internal
measurement ensures that employees are living the brand and delivering the desired experience
from an organizational alignment perspective. External measurement is measuring to what
degree customers and prospects are experiencing your brand in ways that will cause them to
become more committed evangelists.

We recommend annual benchmarking for brand equity, including the following types of
measurements:
- unaided and aided awareness of the company, its products and services--including unaided first
mentions;
- unaided and aided awareness of company brand concepts including values, personality,
associations and messages;
- customer brand loyalty;
- customers' willingness to pay a price-premium over a generic product or service and size of
price premium;
- whether or not customers are likely to recommend company brand or product/service to others;
- number of competitive product or service choices customers will review when replacing their
current product or buying a similar new product or service;
- likelihood of customer purchasing company's product or service again

Aided questions should use a -5 to +5 numerical scale, where +5 equals an unbreakable customer
relationship. The deeper the relationship, the greater the return on your brand investment.

The most effective format for external and internal research is a combination of in-depth phone
interviews, supported by a larger sample of Web-based surveys to provide statistical legitimacy
(depending on size of total population). Another great way to conduct ongoing brand equity
checks is to create customer councils that are representative of your customer base. You can
regularly solicit information and test ideas to get a good idea of how your customer base will
respond.

OR

measuring brand equity

Measuring the financial value of the brand usually converts the CFO to a staunch brand
supporter and gets the organization to view brands as assets that must be maintained, built and
leveraged. In his book, Managing Brand Equity, David Aaker writes about several approaches
to valuing a brand as an asset. Interbrand has a methodology to help public and private
companies measure their brands’ values. Financial World, a recently defunct publication,
annually ranked top brands by their financial values (estimating the Coca-Cola brand to be
worth $48 billion in 1997).

Measuring brand equity helps you to maintain, build and leverage brand equity (that is, it helps
you to understand how to increase both the “A” and the “R” in the brand’s “ROA”). I will spend
the remainder of this post expounding on (b) measuring brand equity.

To better understand how to build brand equity we must first agree to a definition of brand
equity. My favorite definition is as follows: brand equity is the value (positive and negative) a
brand adds to an organization’s products and services. Brand equity may ultimately manifest
itself in several ways. Three of the most important ways are as the price premium (to consumers
or the trade) that the brand commands, the long-term loyalty the brand evokes and the market
share gains it results in.

The Blake Project’s brand equity model is most interested in one thing, moving consumers from
brand awareness and brand preference to brand insistence. To do this, we have identified the
major factors that lead to consumer brand insistence. We call them brand equity drivers:

Brand Awareness
First, consumers must be aware that there are different brands in the product categories in which
your brand operates. Next, they must be aware of your brand. Ideally, your brand should be the
first one that comes to their minds within specific product categories and associated with key
consumer benefits. Consumers should be able to identify which products and services your brand
offers. They should also be able to identify which benefits are associated with the brand.
Finally, they should have some idea of where your brand is sold.

Accessibility
Your brand must be available where consumers shop. It’s much easier for consumers to insist
upon your brand if it is widely available. Slight brand preference goes a long way toward
insistence when the brand is widely available. The importance of convenience cannot be
underestimated in today’s world.*

Value
Does your brand deliver a good value for the price? Do consumers believe it is worth the price?
Regardless of whether it is expensive or inexpensive, high end or low end, it must deliver at least
a good value.

Relevant Differentiation
This is the most important thing a brand can deliver. Relevant differentiation today is a leading-
edge indicator of profitability and market share tomorrow. Does your brand own consumer-
relevant, consumer-compelling benefits that are unique and believable?

Emotional Connection
First, the consumer must know your brand. Then he or she must like your brand. Finally, the
consumer must trust your brand and feel an emotional connection to it. There are many
innovative ways to achieve this emotional connection--from advertising and the quality of front
line consumer contact to consumer membership organizations and company-sponsored consumer
events.

As you measure brand equity, keep the following points in mind:

•Include measures of awareness, preference, accessibility, value, relevance, differentiation,
vitality, emotional connection, loyalty and insistence.
•Include both behavioral and attitudinal measures (especially for loyalty).
•Tailor the study to your product categories and industry (especially benefit structure)
•Include competitive comparisons

Some of the more telling measures include the following:

•Top-of-mind unaided awareness (first recall)
•Position in the consideration set
•Emotional connection to the brand
•Perceived brand vitality
•Perceived points of difference (open ended question)
•Unique delivery against key benefits

As you develop your brand equity measurement system, keep these questions in mind:
•Do you have a profound understanding of your brand’s consumers?
•Do you know what drives your brand’s equity?
•Have you established and validated equity measures for your brand?
•Have you set objectives against these measures?
•Do key decision-makers regularly see results against these measures?
•Are people held accountable for achieving brand objectives?

*Brands whose market place positionings have “exclusivity” as a key component may be an
exception to this.

Q.9
What are the brand elements?

The most important elements of a brand should be:

Brand Position

• Who is addressed by company’s branded products or services. What the company does
and for whom
• The company’s unique value and how customers benefit from products and/or services
• Key competitive differentiators, what makes the brand be chosen, be different from its
competitors

Brand Promise

• The ONE most important thing that the brand promises to deliver to its customers —
Every time!
• What customers and partners should expect from every interaction, how should they feel
as brand’s customers

Brand Personality

• What the brand is to be known for

• Personality traits that customers, partners, and employees use to describe the company.
What comes to the (potential) customer’s mind when addressed about the brand

Brand Story

• The company’s history and how the history adds value and credibility to the brand
• A summary of products/services/solutions

Brand Associations

• Physical artifacts: name, logo, colors, taglines, fonts, imagery

• Ideally, it must reflect the all the above statements about the brand and the company

Q.10
What do you mean by competitive analysis?
Competitor Analysis

In formulating business strategy, managers must consider the strategies of the firm's competitors.
While in highly fragmented commodity industries the moves of any single competitor may be
less important, in concentrated industries competitor analysis becomes a vital part of strategic
planning.

Competitor analysis has two primary activities, 1) obtaining information about important
competitors, and 2) using that information to predict competitor behavior. The goal of competitor
analysis is to understand:

• with which competitors to compete,

• competitors' strategies and planned actions,
• how competitors might react to a firm's actions,
• how to influence competitor behavior to the firm's own advantage.

Casual knowledge about competitors usually is insufficient in competitor analysis. Rather,

competitors should be analyzed systematically, using organized competitor intelligence-
gathering to compile a wide array of information so that well informed strategy decisions can be
made.

Competitor Analysis Framework

Michael Porter presented a framework for analyzing competitors. This framework is based on the
following four key aspects of a competitor:

• Competitor's objectives
• Competitor's assumptions
• Competitor's strategy
• Competitor's capabilities

Objectives and assumptions are what drive the competitor, and strategy and capabilities are what
the competitor is doing or is capable of doing. These components can be depicted as shown in
the following diagram:

A competitor analysis should include the more important existing competitors as well as
potential competitors such as those firms that might enter the industry, for example, by extending
their present strategy or by vertically integrating.

Competitor's Current Strategy

The two main sources of information about a competitor's strategy is what the competitor says
and what it does. What a competitor is saying about its strategy is revealed in:

• annual shareholder reports

• 10K reports
 • interviews with analysts
• statements by managers
• press releases

However, this stated strategy often differs from what the competitor actually is doing. What the
competitor is doing is evident in where its cash flow is directed, such as in the following tangible
actions:

• hiring activity
• R & D projects
• capital investments
• promotional campaigns
• strategic partnerships
• mergers and acquisitions

Competitor's Objectives

Knowledge of a competitor's objectives facilitates a better prediction of the competitor's reaction

to different competitive moves. For example, a competitor that is focused on reaching short-term
financial goals might not be willing to spend much money responding to a competitive attack.
Rather, such a competitor might favor focusing on the products that hold positions that better can
be defended. On the other hand, a company that has no short term profitability objectives might
be willing to participate in destructive price competition in which neither firm earns a profit.

Competitor objectives may be financial or other types. Some examples include growth rate,
market share, and technology leadership. Goals may be associated with each hierarchical level of
strategy - corporate, business unit, and functional level.

The competitor's organizational structure provides clues as to which functions of the company
are deemed to be the more important. For example, those functions that report directly to the
chief executive officer are likely to be given priority over those that report to a senior vice
president.

Other aspects of the competitor that serve as indicators of its objectives include risk tolerance,
management incentives, backgrounds of the executives, composition of the board of directors,
legal or contractual restrictions, and any additional corporate-level goals that may influence the
competing business unit.

Whether the competitor is meeting its objectives provides an indication of how likely it is to
change its strategy.

Competitor's Assumptions

The assumptions that a competitor's managers hold about their firm and their industry help to
define the moves that they will consider. For example, if in the past the industry introduced a
new type of product that failed, the industry executives may assume that there is no market for
the product. Such assumptions are not always accurate and if incorrect may present
opportunities. For example, new entrants may have the opportunity to introduce a product similar
to a previously unsuccessful one without retaliation because incumbant firms may not take their
threat seriously. Honda was able to enter the U.S. motorcycle market with a small motorbike
because U.S. manufacturers had assumed that there was no market for small bikes based on their
past experience.

A competitor's assumptions may be based on a number of factors, including any of the

following:

• beliefs about its competitive position

• past experience with a product
• regional factors
• industry trends
• rules of thumb

A thorough competitor analysis also would include assumptions that a competitor makes about
its own competitors, and whether that assessment is accurate.

Competitor's Resources and Capabilities

Knowledge of the competitor's assumptions, objectives, and current strategy is useful in

understanding how the competitor might want to respond to a competitive attack. However, its
resources and capabilities determine its ability to respond effectively.

A competitor's capabilities can be analyzed according to its strengths and weaknesses in various
functional areas, as is done in a SWOT analysis. The competitor's strengths define its
capabilities. The analysis can be taken further to evaluate the competitor's ability to increase its
capabilities in certain areas. A financial analysis can be performed to reveal its sustainable
growth rate.

Finally, since the competitive environment is dynamic, the competitor's ability to react swiftly to
change should be evaluated. Some firms have heavy momentum and may continue for many
years in the same direction before adapting. Others are able to mobilize and adapt very quickly.
Factors that slow a company down include low cash reserves, large investments in fixed assets,
and an organizational structure that hinders quick action.

Competitor Response Profile

Information from an analysis of the competitor's objectives, assumptions, strategy, and

capabilities can be compiled into a response profile of possible moves that might be made by the
competitor. This profile includes both potential offensive and defensive moves. The specific
moves and their expected strength can be estimated using information gleaned from the analysis.

The result of the competitor analysis should be an improved ability to predict the competitor's
behavior and even to influence that behavior to the firm's advantage.

OR
What is Competitive Analysis?

Competitive Analysis is a process of gathering and

analyzing information about your competitors, their
practices, products, strengths and weaknesses and
business trends in order to assess your position in the market and improve your
products and marketing strategies.

What is the purpose of Competitive Analysis?

In today's market, you must know what your competitors are doing and what to do
to stay ahead of the competition. Many businesses believe they are providing a
good product to their customers, but do not have reliable information showing how
customers perceive their product or how it compares to the competition.

A Competitive Analysis performed by an unbiased third party is an invaluable tool

because it can help you identify ways to attract new customers, as well as keep the
ones you have satisfied with your products.

nResult's Competitive Analysis can help you determine the following:

• Strengths and weaknesses: How your product stacks up against the

competition and in what areas they have an edge over your product and in
what areas your product is superior.
• Identify your competition: Verify who your primary and secondary
competitors are.
• Improvements: How and in what areas your product, processes, and practices
must be improved to meet market demands or to stay ahead of the
competition.
• Marketing: What improvements you need to make in your marketing
approach - you may want to highlight why your product is ahead of the
competition, or the unique features that consumers desire.

How can Competitive Analysis help establish my product

as a market leader?
Competitive Analysis gives you a realistic view of your competition. It also gives you
the opportunity to identify improvement in areas like manufacturing processes,
customer services, and marketing claims. It can help you compare products prior to
making your marketing and promotional decisions, thus saving you both time and
money.
nResult's Competitive Analysis will help you accomplish the following:

• Have a realistic view of your competition.

• Foresee market changes and demands.
• Identify ways to attract customers from your competitors.
• Discover opportunities for improvement in your business practices.
• Identify necessary changes in your processes to meet market demands.
• Identify necessary changes in your processes to reduce costs.

What will Competitive Analysis reveal about my products?

• What products compete with yours

• What advantages your products have over the competition
• What disadvantages your products have when compared to the competition
• The readiness of a new product in the market
• A realistic view of customers' perception of your product against the
competition

What is nResult's approach to Competitive Analysis?

nResult evaluates features and functions of your products and those of the
competition. Each evaluation covers a wide range of criteria, which are then
classified in categories and subcategories. The results of the evaluations are
kept in a proprietary secure web-based tool kit accessible only to you on-line.

Staffing: nResult will assign a Project Leader and Competitive Analysis

Engineers to test and evaluate your product. The nResult Project Leader's
primary responsibility is to ensure that our testing meets your requirements
and is executed according to the agreements. We will also provide you with
up-to-date progress, status, and findings. In addition to managing the testing
process, the Project Leader will provide technical expertise and will work with
you to make any required changes to the test plan as issues arise.

Scope: Before the Competitive Analysis is started, nResult Engineers will

collaborate with you to define the scope of the analysis - which of your
products and which of your competitors and their products will be included in
the test.

Test Case Scenarios: nResult will work with you to develop evaluation profiles
to ensure all features and functions are included.

Competitive Analysis Report: At the conclusion of testing your product, you

will receive a detailed on-line Competitive Analysis Report from the nResult
Project Leader and the nResult Engineers. This report will outline the results
of comparing your product against the market.
………………………………………………………………………………………………………………
………………………………………………

Q.1
Explain in detail about
Category Attractiveness.

Q.2
What are the levels of
Market Competition and methods for measuring competition

There are five principal levels of competition in marketing:

• Consumer need level – A specifically identified need of the consumer.

• Industry – The key industries supplying the demand of those needs, taking into
consideration relative growth and market power.
• Product line – Specific products competing with yours in that field.
• Organizational – Companies competing with you in that field, their economic health,
market share, and relative growth pattern.
• Brand – The specific brands competing head-on with your product, taking into
consideration their market position, corporate prioritization, and your product’s market
position.

By identifying your competition in line with these five different levels, you should be able to
identify all the competitive factors that present any meaningful resistance, and get a clear image
of your market position. After that, by looking at your competitors’ market share, company
stability, relative growth and product/service characteristics, you should be able to put together a
marketing strategy that will put you on the right track. Bear in mind the fact that any of these five
elements can fluctuate, so a strong marketing strategy should also have a good marketing
information system in place, to detect variations so that you can make timely adjustments.

Market Competition

Product market competition

Introduction: There are two kinds of product market competition that are relevant in
corporate governance. 1) Competition in the firm's product markets, and 2) competition in
the product markets of the firm’s owners if they are firms as well. For instance the product
markets of an institutional investor. Product market competition is of major importance in
corporate governance because it affects the incentives of managers and thereby the
economic efficiency of the companies they manage. A classic reference on product market
competition is Hart
Nature of Competition in Business

• MONOPOLY
• OLIGOPOLY
• MONOPOLISTIC COMPETITION

Pure Competition
- low barriers to entry, many choices, no business has dominance
sdc
- many companies competing and nobody has a significant
advantage
examples

• small bars and restaurants

• variety stores, convenience stores
• nail salons, barbers
• small grocery stores
• doughnut shops

• professional services (dentist, doctor, architects)

s
Oligopoly
- very similar products, few sellers, small firms follow lead of big firms,
fairly inelastic demand

sdc
- many barriers to establishing a business so only the oldest and biggest businesses are operating
examples
- all the businesses are big and of equal size

o banking industry
o automotive manufacturers
o gasoline retail companies
o insurance companies

o telecommunications companies
s
Monopoly
- one single large seller with no close competition and no alternate substitutes
examples
sdc
- the definition of a Monopoly, some say, is that it is bigger than all other competition combined

• software companies like Microsoft

• local telephone in Canada (Bell)
• Hydro services
• LCBO

• Canada Post
s

Monopolistic Competition
- sellers feel they do have some competition

sdc
- there is one big company dominating the market with a few medium or smaller sized companies
examples

• Google

(there used to be "pure competition" until Google grew very big and became dominant)

• Walmart

Q.3
Explain the
steps involved in brand building,

Branding
The central concern of brand building literature experienced a dramatic shift in the last
decade. Branding and the role of brands, as traditionally understood, were subject to
constant review and redefinition. A traditional definition of a brand was: “the name,
associated with one or more items in the product line, that is used to identify the source
of character of the item(s)” (Kotler 2000, p. 396). The American Marketing Association
(AMA) definition of a brand is “a name, term, sign, symbol, or design, or a combination
of them, intended to identify the goods and services of one seller or group of sellers and
to differentiate them from those of competitors” (p. 404). Within this view, as Keller
(2003a) says, “technically speaking, the n, whenever a marketer creates a new name,
logo, or symbol for a new product, he or she has created a brand” (p. 3). He recognizes,
however, that brands today are much more than that. As can be seen, according to these
definitions brands had a simple and clear function as identifiers.
Before the shift in focus towards brand s and the brand building process, brands were
just another step in the whole process of marketing to sell products. “For a long time,
the brand has been treated in an off-hand fashion as a part of the product” (Urde 1999,
p. 119). Kotler (2000) mentions branding as “a major issue in product strategy” (p.
404). As the brand was only part of the product, the communication strategy worked
towards exposing the brand and creating brand image. Aaker and Joachimsthaler (2000)
mention that within the traditional branding model the goal was to build brand image ; a
tactical element that drives short-term results. Kapferer (1997) mentioned that “the
brand is a sign -therefore external- whose function is to disclose the hidden qualities of
the product which are inaccessible to contact” (p. 28). The brand served to identify a
A Brand Building Literature Review
2
product and to distinguish it from the competition. “The challenge today is to create a
strong and distinctive image” (Kohli and Thakor 1997, p. 208).
Concerning the brand management process as related to the function of a brand as an
identifier, Aaker and Joachmisthaler (2000) discuss the traditional branding model
where a brand management team was responsible for creating and coordinating the
brand’s management program. In this situation, the brand manager was not high in the
company’s hierarchy; his focus was the short-term financial results of single brands and
single products in single markets. The basic objective was the coordination with the
manufacturing and sales departments in order to solve any problem concerning sales
and market share. With this strategy the responsibility of the brand was solely the
concern of the marketing department (Davis 2002). In general, most companies thought
that focusing on the latest and greatest advertising campaign meant focusing on the
brand (Davis and Dunn 2002). The model itself was tactical and reactive rather than
strategic and visionary (Aaker and Joachimsthaler 2000). The brand was always referred
to as a series of tactics and never like strategy (Davis and Dunn 2002).
2.2.2 Now: Brand Building Models
Kapferer (1997) mentions that before the 1980’s there was a different approach towards
brands. “Companies wished to buy a producer of chocolate or pasta: after 1980, they
wanted to buy KitKat or Buitoni. This distinction is very important; in the first case
firms wish to buy production capacity and in the second they want to buy a place in the
mind of the consumer” (p. 23). In other words, the shift in focus towards brands began
when it was understood that they were something more than mere identifiers. Brands,
according to Kapferer (1997) serve eight functions shown in Table 2.1: the first two are
mechanical and concern the essence of the brand: “to function as a recognized symbol
in order to facilitate choice and to gain time” (p. 29); the next three are for reducing the
perceived risk; and the final three concern the pleasure side of a brand. He adds that
brands perform an economic function in the mind of the consumer, “the value of the
brand comes from its ability to gain an exclusive, positive and prominent meaning in the
minds of a large number of consumers” (p. 25). Therefore branding and brand building
should focus on developing brand value.
A Brand Building Literature Review
3
Table 2.1
The Functions of the Brand for the Consumer
Function Consumer benefit
Identification To be clearly seen, to make sense of the offer, to quickly identify the sought-after
products.
Practicality To allow savings of time and energy through identical repurchasing and loyalty.
Guarantee To be sure of finding the same quality no matter where or when you buy the
product or service.
Optimization To be sure of buying the best product in its category, the best performer for a
particular purpose.
Characterization To have confirmation of your self-image or the image that you present to others.
Continuity Satisfaction brought about through familiarity and intimacy with the brand that
you have been consuming for years.
Hedonistic Satisfaction linked to the attractiveness of the brand, to its logo, to its
communication.
Ethical Satisfaction linked to the responsible behavior of the brand in its relationship
towards society.
Adapted from Kapferer (1997)

Kapferer’s view of brand value is monetary, and includes intangible assets. “Brands fail
to achieve their value-creating potential where managers pursue strategies that are not
orientated to maximizing the shareholder value” (Doyle 2001a, p. 267). Four factors
combine in the mind of the consumer to determine the perceived value of the brand:
brand awareness; the level of perceived quality compared to competitors; the level of
confidence, of significance, of empathy, of liking; and the richness and attractiveness of
the images conjured up by the brand. In Figure 2.1 the relationships between the
different concepts of brand analysis, according to Kapferer (1997), are summarized.
Figure 2.1
From Brand Assets to Brand Equity
Kapferer 1997, p. 37
Brand Awareness
+ Image
+ Perceived quality
+ Evocations
+ Familiarity, liking
= Brand Assets Brand added value
perceived by customers
- Costs of branding
- Costs of invested capital
Brand financial value
(BRAND EQUITY)
A Brand Building Literature Review
4
2.1.2.1 Brand Orientation
Urde (1999) presents Brand Orientation as another brand building model that focuses on
brands as strategic resources. “Brand Orientation is an approach in which the processes
of the organization revolve around the creation, development, and protection of brand
identity in an ongoing interaction with target customers with the aim of achieving
lasting competitive advantages in the form of brands” (p. 117-118). Brand orientation
focuses on developing brands in a more active and deliberate manner, starting with the
brand identity as a strategic platform. It can be said that as a consequence of this
orientation the brand becomes an “unconditional response to customer needs and wants”
(p. 120). This should be, however, considered carefully given that “what is demanded
by customers at any given moment is not necessarily the same as that which will
strengthen the brand as a strategic resource” (p. 121). Following this reasoning, “the
wants an needs of customers are not ignored, but they are not allowed to unilaterally
steer the development of the brand and determine its identity” (p. 122).
According to the brand orientation model, “the starting point for a process of brand
building is to first create a clear understanding of the internal brand identity. The brand
then becomes a strategic platform that provides the framework for the satisfaction of
customers’ wants and needs” (Urde 1999, p. 129). The point of departure for a brandoriented
company is its brand mission.
Urde’s Brand Hexagon (1999), shown in Figure 2.2, integrates brand equity and brand
identity with a company’s direction, strategy and identity. The right side of the model
reflects the reference function -product category and product, which are analyzed
rationally-, while the left side of the model reflects the emotional function -corporate
and brand name, which are analyzed emotionally. “A brand is experienced in its
entirety” (p. 126), which means that both emotions and rational thought are involved.
The lower part of the model -mission and vision- reflects the company’s intentions
towards the brand, while the upper part reflects the way that target consumers interpret
the brand. At the center of the model lies the core process of brand meaning creation,
which includes the positioning and core values.
A Brand Building Literature Review
5
Figure 2.2
Brand Hexagon
Urde 1999

In summary, “in a brand-oriented organization, the objective is -within the framework

of the brand- to create value and meaning. The brand is a strategic platform for interplay
with the target group and thus is not limited to being an unconditional response to what
at any moment is demanded by customers” (Urde 1999, p. 130).
Additionally, in a later article, Urde (2003) mentions that the brand building process is
two-part: internal and external. He defines the internal process as that used primarily to
describe the relationship between the organization and the brand, with the internal
objective being for the organization to live its brands. Conversely, the external process
is that concerned with relations between the brand and the customer, with the external
objective of creating value and forming relationships with the customer.
2.1.2.2 Brand Leadership
Aaker and Joachimsthaler (2000) leave behind the traditional branding model and
introduce the brand leadership model, “which emphasizes strategy as well as tactics” (p.
7). In this model, the brand management process acquires different characteristics: a
strategic and visionary perspective; the brand manager is higher in the organization, has
a longer time job horizon, and is a strategist as well as communications team leader;
building brand equities and developing brand equity measures is the objective; and,
brand structures are complex, as the focus is on multiple brands, multiple products, and
Target
Audience
Product
Vision &
Mission
Brand name
Product
Category
Company
name
Positioning:
Core Values
Personality Quality
Communication
2) Associations
1) Awareness
3) Loyalty
A Brand Building Literature Review
6
multiple markets. In short, brand identity and creating brand value become the drivers
of strategy.
The brand leadership model is Aaker and Joachimsthaler’s (2000) proposal for building
strong brands. They argue that there are four challenges, summarized in Figure 2.3, that
must be addressed:
1) The organizational challenge: to create structures and processes that lead to
strong brands, with strong brand leader(s) for each product, market or country.
Also, to establish common vocabulary and tools, an information system that
allows for sharing information, experiences and initiatives, and a brandnurturing
culture and structure. Supporting this challenge, McWilliam and
Dumas (1997) argue that everyone on the brand team needs to understand the
brand building process, and they propose metaphors as intelligent tools to
transmit the values of a firm. Doyle (2001b) adds that brand management must
be seen as part of the total management process and not only as a specialist
marketing activity.
2) The brand architecture challenge: to identify brands, sub-brands, their
relationships and roles. It is also necessary to clarify what is offered to the
consumer and to create synergies between brands; to promote the leveraging of
brand assets; to understand the role of brands, sub-brands, and endorsed brands
in order to know when to extend them; and to determine the relative role of each
brand of the portfolio. Aaker (2004a) renames brand architecture calling it
instead brand portfolio strategy. He says that “the brand portfolio strategy
specifies the structure of the brand portfolio and the scope, roles, and
interrelationships of the portfolio brands” (p. 13). Therefore, this challenge
could be renamed the brand portfolio strategy challenge.
3) The brand identity and position challenge: to assign a brand identity to each
managed brand and to position each brand effectively to create clarity. Speak
(1998) supports and adds to this stating that the brand identity challenge should
have a long-term focus in order to integrate the brand building process into the
fabric of the organization.
A Brand Building Literature Review
7
4) The brand building program challenge: to create communication programs and
other brand building activities to develop brand identity, that help not only with
the implementation but also in the brand defining process. In short, brand
building must do what is necessary to change customer perceptions, reinforce
attitudes, and create loyalty. One tactic to do so would be to consider alternative
media in addition to advertising. Doyle (2001b) also adds that the brand strategy
must maximize shareholder value.
Figure 2.3
Brand Leadership Tasks
Aaker and Joachimsthaler 2000

2.1.2.3 Brand Asset Management

Davis (2002) also talks about a new way of managing brands. He argues that brands,
along with people, are a company’s most valuable asset. “There is growing support for
viewing and managing the brand as an asset and thus having the brand drive every
strategic and investment decision” (Davis and Dunn 2002, p. 15). This becomes relevant
given that the top three strategic goals for brand strategy nowadays are increasing
customer loyalty, differentiating from the competition, and establishing market
leadership (Davis and Dunn 2002). It is important for a company to change its state of
mind in order to adopt this perspective because “brand management has to report all the
way to the top of the organization and has to involve every functional area” (Davis
Brand Architecture
- Brands/sub-brands/endorsed
brands
- Roles of brands/sub-brands
Brand
Leadership
Brand Identity/Position
- Aspirational image
- Positioning the brand
Organizational Structure and
Processes
- Responsibility for brand strategy
- Management processes
Brand-Building Programs
- Accessing multiple media
- Achieving brilliance
- Integrating the communication
- Measuring the results
A Brand Building Literature Review
8
2002, p. 9). Davis (2000) defines Brand Asset Management as “a balanced investment
approach for building the meaning of the brand, communicating it internally and
externally, and leveraging it to increase brand profitability, brand asset value, and brand
returns over time” (p. 12). Some of the shifts from traditional brand management to this
new model are highlighted in Table 2.2.
Table 2.2
The Shift from Traditional Brand Asset Management
Davis 2002

The Brand Asset Management process, as shown in Figure 2.4, involves four phases
and eleven steps. The first phase is to develop a brand vision, which consists of a single
step: developing the elements of a brand vision. The basic objective of this step is to
clearly state what the branding efforts must do to meet corporate goals. The second
phase is to determine the company’s “BrandPicture” by understanding consumer
perceptions about the brand and of competitor brands. This phase consists of three
steps: determining the brand’s image, creating the brand’s contract - list of customer’s
perceptions of all the current promises the brand makes-, and crafting a brand-based
customer model -which allows for understanding how consumers act and think, and
how and why they make their purchase decisions. The third phase is to develop a brand
asset management strategy, in order to determine the correct strategies for achieving
goals according to the brand vision. This phase consists of five steps: positioning the
brand, extending the brand, communicating the brand’s positioning, leveraging the
brand, and pricing the brand. Finally, the fourth phase is to support a brand asset
Traditional Brand Management
Brand management
Brand managers
Retention
One-time transactions
Customer satisfaction
Product-driven revenues
Three-month focus
Market share gains
Marketing manages the brand
Awareness and recall metrics
Brand is driven internally
Brand Asset Management Strategy
Brand asset management strategy
Brand champions and ambassadors
Deep loyalty
Lifetime relationships
Customer commitment
Brand-driv en revenues
Three-year focus
Stock price gains
All functional areas manage the
brand
Sophisticated brand metrics
Brand is driven externally
A Brand Building Literature Review

OR

Phase 1- Developing a brand vision

Step 1
Elements of a
brand vision
Phase 2- Determining BrandPicture\

Step 2
Determining
brand image

Step 3
Creating brand
Contract

Step 4
Brand-based
customer model

Phase 3- Developing a brand asset management strategy

Step 5
Positioning
the brand

Step 6
Extending
the brand

Step 7
Communicating
brand’s positioning

Step 8
Leveraging
the brand

Step 9
Pricing
the brand

Phase 4- Supporting a brand management culture

Step 10
Measuring return on
brand investment

Step 11
Establishing a
brand-based culture

Q.4
What do you mean by
Brand Positioning and Brand Associations?

The term
“positioning” was described by Trout and Ries
as the basic position in the consumer’s mind
occupied by a brand. They saw positioning as
an antidote to the “overcommunicated” society,
in which consumers were drowning in a sea of
advertising messages.

The term “positioning” is, and should be, intimately

connected to the concept of “target market.”
That is, a brand’s positioning defines the
target audience. For example, an airline could
position itself against other airlines, which
defines the target audience as airline travelers.
Or, it could position itself against all modes
of transportation between two destinations,
which then defines the target audience as all
travelers between those two markets.

The positioning possibilities that exist for any given brand

or service are almost infinite in number. Some commonly
used positioning strategies are:
Positioning against a broader market; for example, positioning
a bicycle brand as a substitute for the automobile,
rather than as a substitute for other brands of bicycles.
Positioning against a price segment of the market; for example,
positioning a car brand against luxury imported
cars.
Positioning against a usage segment of the market; for
instance, positioning a brand of cooking oil as the very
best brand of oil for frying chicken.
Positioning against a geographic segment of a market;
for example, positioning Ford trucks as made for driving
conditions in Texas.
Positioning against a psychgraphic segment of the market;
as an example, positioning the Volvo as the car for
drivers who are primarily concerned about safety.
Positioning against a channel of distribution, a season
of the year, a particular type of weather, a human
fear, etc.

OR

Positioning defined

Most authors define positioning as the perception that a target market has
of a brand relative to its competitors. This definition raises two points.
First, positioning is perceptual. In other words, positioning is not factual;
instead it pertains to influencing customer perceptions of your product.

Second, companies cannot position brands in isolation; they must be positioned

relative to one or more competitors. By nature, human beings learn by making
comparisons. When we learn new information, one way we remember and use
that information is by mentally comparing it to existing information. Therefore,
it’s only natural for people to develop perceptions of one brand that are relative
to other brands. When we say what our brand is, whether we like it or not, we
also imply what our competitor is not. When we say what our brand is not, we
imply what our competitor is.

Brand Association

Brand Association and Value Creation

Brand associations are useful to marketers. Marketers use brand associations to
differentiate, position, and extend brands, to create positive attitudes and feelings towards
brands, and to suggest attributes or benefits ofpurchasing or using a specific brand
(Aaker, 1991). However, brand associations are ofmore use to the customer than the
marketer. The way a brand association creates value to the customer will depend on the
customer’s perception of value. For each individual, reality is a totally personal
phenomenon, based on that person’s needs, wants, and personal experiences. Customers
7
everywhere respond to images, myths, and metaphors that help them define their personal
identities. Thus, different customers will perceive reality differently. Indeed, Schiffrnan
& Kanuk et al (1996, p.161) contends that although two individuals may be subject to the
same stimuli under apparently the same conditions, the way they recognize them, select
them, organize them, and interpret them is a highly individual process based on each
person’s own needs, values, and expectations.
The underlying value of a brand name often is its set ofassociations its meaning to
—

people. Associations, according to Aaker (1991) represent the bases for purchase
decisions and for brand loyalty. There are a host ofpossible associations and a variety of
ways they can provide value (p.110). He identifies the following as the possible ways in
which associations create value to the customer: helping to process / retrieve information
about a brand; generating a reason to buy, and creating positive attitudes / feelings.
2.3 Brand Associations and Value of Products Model
Brand associations help consumers judge the value ofa product. For example, country of
origin influences consumers in making judgements as to whether a product is of value or
not. Consumers tend to have broad but somewhat vague stereotypes about specific
countries and specific brands that they judge “best”. For example, French perfume,
Italian leather, Japanese electronics and so on (Cateora, 1996; p.349). Using the example
of country oforigin as a basis forjudging value of products, a model for brand
associations and consumer perceptions ofvalue ofproducts can be depicted
schematically as in the following diagram (Figure 1)
Associations Value
• Process / Retrieve
Information
• Reason-to-buy
• Create Positive attitudes
Figure 1: Conceptual Framework of the effects ofbrand association on perceived value.
• Product attributes
• Relative price
• Use / Application
• User / Customer
• Celebrity / Person
• Life Style/Personality
• Competitions
• Country ofOrigin
8
The model shows that a product is of value to the customer and hence it can be bought to
satisfy a need depending on its attributes, its use, or whether it can be associated with a
particular customer group. Similarly, a consumer will consider a product as being
valuable if he/she can associate it with a certain celebrity, lifestyle or country of’ origin.
Proponents ofbrand positioning suggest that brands should develop distinct images and
that these images will attract specific consumer segment (Hoek, et al, 2000).
Consequently, the consumer segment will see the brand as being valuable to them. How’
do marketers determine the brand associations that convey the value of a brand to the
consumer? Association research (research on brand associations) is important to
marketers since they would want to gain an insightful picture of how a brand is perceived
by consumers as well as its competitors. The techniques that have been utilized by firms
to measure brand associations form part ofthe next section.

Measurement of Brand Associations

One of the key functions ofbrand management is to keep one jump ahead ofcompetitors
by imprinting the brand firmly on the consumer psyche and keep it there (Emerald,
—

2000). A firm therefore requires understanding consumer perceptions of its brand(s) visa-
avis those of competitors. This calls for the measurement of brand associations. The
techniques used to achieve this objective can be grouped into two categories lessstructured
—

and structured techniques ( Aaker, 1991; Low & Lamb, 2000).

3.1 Projective Techniques
The central feature ofall projective techniques is the presentation ot’an ambiguous,
unstructured object, activity, or person that a respondent is asked to interpret and explain
(Aaker, et al, 1998). These writers argue that projective techniques are used when it is
believed that respondents will not or cannot respond meaningfully to direct questions
about (1) the reasons for certain behaviours or attitudes or (2) what the act ofbuying,
owning, or using a brand means to them (p.1 98). Respondents may be unwilling or
unable to reveal feelings, thoughts, and attitudes when asked direct questions for a
number ofreasons. First, they may be unwilling because they feel the information is
9
embarrassing or private (Aaker, 1991; p 136). Alternatively, respondents may simply b
unable to provide information as to why they buy certain items because they do not kno
tile real reasons.
Man of projective techniques employed in the measurement ofbrand associations are
meant to address problems aforementioned since they allow the respondent to project h
self or him-self into a context, which bypasses the inhibitions, or limitations of more
direct questioning (Aaker, p. 136). The techniques involve focusing on a discussion upo
the use experience, the decision process, the brand user, or off- the- wall perspectives
such as considering the brand to be a person or an animal. Another characteristic of
projection research is the use of ambiguous stimuli, wherein there is freedom to project
experiences, attitudes, and perceptions.
There are many projective (indirect) approaches to understanding brand associations.
The commonly used methods are word association, picture completion, Thematic
Apperception Tests, sentence completion, and story completion (Aaker, 1991; Kotler an
Armstrong, 1996; Aaker, et a!, 1998).
3.2 Structured Approaches
According to Aaker (1991), structured approaches involve scaling brands upon a set of
dimensions. He argues that scaling approaches are more objective and reliable than
qualitative approaches since they are less vulnerable to subjective interpretation.
Scaling consumer perceptions involves the determination ofperceptual dimensions,
identification ofthe target segment. and the interpretation ofthe brand profiles. The
perceptual dimensions may include the product attributes and benefits, user ofthe brand,
or relevant competitors (Day, et al, 1979).
Scaling methods that marketers have utilized include semantic differential (Fry and
Claxton, 1971), Likert scale, conjoint analysis, and natural grouping

Q.6
Explain Customer based brand equity with the help of brand equity model

Customer Based Brand Equity

Customer-Based Brand Equity is formally defined as the differential effect that brand
knowledge has on consumer response to the marketing of that brand. A brand is said to have
positive customer-based brand equity when consumers react more favourably to a product and
the way it is marketed when the brand is identified than when it is not (e.g., when the product is
attributed to a fictitious name or is unnamed). (Kevin Lane Keller 2004).Thus, a brand with
positive CBBE equity might result in the consumers’ acceptance of a new brand extension, less
sensitiveness to price increases and withdrawal of advertising support, or willingness to seek the
brand in a new distribution channel. On the other hand, a brand is said to have negative
customer-based brand equity if consumers react less favourably to marketing activity for the
brand compared with an unnamed or fictitiously named version of the product. The main
ingredients of consumer based brand equity are differential effect, brand knowledge, consumer
response in marketing.

The followings are the some of the important building blocks identified as the crucial elements
of customer based brand equity.

Brand Loyalty

This is major component of brand equity. Brand loyalty, a long a central construct in marketing,
is a measure of the attachment that a customer has to brand. If the customer continue to purchase
one particular brand even in the face of competitors with superior features, price and
convenience where we can find the brand loyalty. It reflects how likely a customer will be to
switch to another brand, especially when that brand makes a change, either in price or in product
features. It is one indicator of brand equity which is demonstrably linked to future profits. Brand
loyalty is qualitatively different from the other major dimensions of brand equity in that it is tied
more closely to the use of experience. Brand loyalty cannot exist without prior purchase and use
experience. It is a basis of brand equity that is created by many factors, chief among them being
the use experience. (Aaker 1991) defines loyalty as “the attachment that a customer has to a
brand” and consider it to be a primary dimension of brand equity. In contrast, Keller (1993)
views loyalty as a consequence of brand equity, i.e. when favourable attributes results in
repeated purchase. (Yoo and Donthfu 2001) defines brand loyalty from the attitudinal
perspective that “the tendency to be loyal to a focal brand, which is demonstrated by the
intention to buy the brand as a primary choice”

Brand Knowledge

From the perspective of the CBBE model, brand knowledge is the key to creating brand
equity, because it creates the differential effect that drives brand equity. What marketers need,
then, is an insightful way to represent how brand knowledge exists in consumer memory. In
particular brand knowledge can be characterized in terms of two components: brand awareness
and brand image. Brand awareness is related to the strength of the brand node or trace in
memory, as reflected by consumers’ ability to identify the brand under different conditions
(Rossiter, J.R, and Piercy.L (1987). Brand image can be defined as perceptions about a brand as
reflected by the brand association held in consumer memory. A positive brand image is created
by marketing programmes that link strong, favourable, and unique associations to the brand in
memory. The brand knowledge effects through brand awareness and brand association, the
benefits of brand are underlined as outcomes. Therefore brand knowledge entails significant
activities leading to brand loyalty and equity. In brief brand knowledge encompasses the
consumer’s ability relating to the awareness of the product, product features, where the product
is available, company that makes the product, how the product is used and for what purpose and
the specific and distinctive features of the product.

Brand Awareness

Brand awareness refers to the strength of the brand presence in the consumer’s mind. It is
the ability of a potential buyer to recognize or recall that a brand is a member of a certain product
category. This refers to the strength of a brand’s presence in consumers’ mind. Brand awareness
is an important component of brand equity (Aaker, 1991; Keller, 1993). It is believed that brand
awareness is improved to the extent to which brand names are chosen that are simple and easy to
pronounce or spell; familiar and meaningful; and different, distinctive and unusual. Brand
awareness consists of brand recall and brand recognition. A brand can increase the demand for a
product in several ways. Brand awareness makes it easier for consumers to identify products
with the well-known brand names (Mary W.Sullivan 1998). Therefore, brands provide
information by increasing awareness and serving as a proxy for quality. Brands can also appeal
to a consumer’s sense of individuality or make consumers feel as if they belong to a particular
social group. Brand awareness can be characterized according the depth and breath. The depth
of brand awareness concerns the likelihood that a brand element will come to mind and the ease
with which it does so. The breath of brand awareness concerns the range of purchase and usage
situations in which the brand element comes to mind. The breath of brand awareness depends to
a large extent on the organization of brand and product knowledge in memory.

Perceived Quality

Perceived quality can be defined as the customer’s perception of the overall quality or
superiority of a product or service with respect to its intended purpose, relative to alternatives
(Valarie A.Zeithaml 1988). Perceived quality is, first a perception by customers. Perceived
quality is defined relative to an intended purpose and a set of alternatives. Perceived quality is an
intangible, overall feeling about a brand. However, it usually will be based on underlying
dimensions which included characteristics of the products to which the brand is attached such as
reliability and performance. To understand perceived quality, the identification and measurement
of the underlying dimension will be useful. Perceived quality is a major determinant of brand
strength. Quality helps to increase market share, which results in lower unit costs through scale
economies. So it provides a competitive edge over the rivals in securing potential market area by
inspiring the customers.

Brand Association

To create brand equity, it is important that the brand have some strong, favourable and unique
brand association. Creating strong, favourable and unique associations is a real challenge to
marketers, but essential in terms of building customer-based brand equity.The favourable brand
associations are created by convincing consumers that the brand possesses relevant attributes and
benefits that satisfy their needs and wants such that they from positive overall brand judgments.
Basically brand associations can be classified into three major categories viz, attributes, benefits
and attitudes. Attributes are those descriptive features that characterize a product or service.
Attributes are further sub divided into product related and non-product related. Benefits are the
personal value consumers attach to the product or service attributes can be further distinguished
into three categories i.e. functional benefits, experimental benefits and symbolic benefits. Brand
attitudes are consumers overall evaluations of a brand, which is most important one because it is
directly associated with the consumers buying behaviour.

Purchase Decision

The core of marketing is exchange. It is the actualization of a transaction between the

seller and the seeker of value. In this process the customer must make a choice or decisions with
regard to selection of a value provider. A decision involves a choice between two or more
alternative actions or behaviours (Henson, Flemming 1976). The customers essentially make two
types of decision in the context of marketing. The first type of decisions is directed at the choice
of product or service. These decisions are called assortment decisions. The second type decisions
concern the choice of specific brands and how to obtain them. These are called market related
decisions (Walters,GC 1974).

After searching and evaluating the alternatives, the consumer must decide whether to buy
or not. Thus, the first outcome is the decision to purchase or not to purchase. If the decision is to
buy, various decisions are to be taken regarding where and when to make the actual transaction,
how to take delivery or possession, the method of payment, and other issues. The buying
decision also highly influenced with cultural, social, personal and psychological factors. For
consumers, brand equity is the value addition in the product of the brand. Brand equity result in
increase in sales through consumer’s acceptance.

Post Purchase Behaviour

After purchasing the product, the consumer will experience some level of satisfaction or
dissatisfaction. The consumer will also engage in post purchase action and product uses of
interest to the marketer. The consumer’s satisfaction or dissatisfaction with the product will
influence subsequent behaviour, if the consumer is satisfied, then he/she will exhibit a higher
probability of purchasing the product on the next occasion. The satisfied consumer will also tend
to say good thighs about the product and the company to others. The post purchase behaviour is
depending upon the extent of consumers’ set of experience stored in memory, how well they
select products and stores and the type of feedback they received.

The post purchase evaluation involves comparison between the expectations and actual
performance of the product or brand. There are three possibilities at this stage. First, there is no
discrepancy between expectations and actual performance. It leaves the consumer with neutral
feelings. Second, performance exceeds expectations, in this situation consumer feels satisfied.
Third, performance falls below expectations, this leaves the consumer dissatisfied (Cadotte,
Ernet R, Robert B Woodruff and Roger L Jenkins 1987). Post purchase behaviour indicates to
what extent these purpose have been met and motives achieved. Post purchase activity gives an
indication as to whether the customers are going to again patronize a firm in future, and also
whether they will be in a mood to recommend a product to potential customers.

OR

Customer-Based Brand Equity\

Customer-based brand equity is the differential effect that brand knowledge

has on consumer
response to the marketing of that brand. A brand has positive customer-
based brand equity
when customers react more favorably to a product and the way it is
marketed when the brand is
identified than when it is not (e.g., when it is attributed to a fictitiously
named or unnamed
version of the product).
Brand knowledge can be defined in terms of an associative network memory
model as a
network of nodes and links wherein the brand node in memory has a variety
of associations
linked to it. Brand knowledge can be characterized in terms of two
components: brand
awareness and brand image. Brand awareness is related to the strength of
the brand node or
trace in memory, as reflected by consumers’ ability to recall or recognize the
brand under
different conditions. Brand awareness can be characterized by depth and
breadth. The depth
of brand awareness relates to the likelihood that the brand can be
recognized or recalled. The
breadth of brand awareness relates to the variety of purchase and
consumption situations in
which the brand comes to mind. Brand image is defines as consumer
perceptions of a brand as
reflected by the brand associations held in consumers’ memory.
Customer-based brand equity occurs when the consumer has a high level of
awareness and
familiarity with brand and holds some strong, favorable, and unique brand
associations in
memory.
In some cases, brand awareness alone is sufficient to result in more
favorable consumer
responseㅡfor example, in low-involvement decision settings where
consumers are willing to
base their choices merely on familiar brands. In other cases, the strength,
favorability, and
uniqueness of the brand associations play a critical role in determining the
differential response
making up the brand equity.
To create the differential response that leads to customer-based brand
equity, it is
important to associate unique, meaningful points of difference to the brand
to provide a
competitive advantage and a “reason why” consumers should buy it. For
some brand
associations, however, it may be sufficient that they are seen as roughly
equally favorable with
competing brand associations so that they function as points of parity in
consumers’ minds to
negate potential points of difference for competitors. In other words, these
associations are
designed to provide consumers “no reason why not” to choose the brand.
Assuming a positive
brand image is created by marketing programs that link strong, favorable,
and unique
associations to the brand in memory, a number of benefits can result.
The CBBE model maintains that building a strong brand involves a series of
logical steps:
(1) establishing the proper brand identity, (2) creating the appropriate brand
meaning, (3)
eliciting the right brand responses, and (4) forging appropriate brand
relationships with
customers. Specifically, according to this model, building a strong brand
involves establishing
breadth and depth of brand awareness; creating strong, favorable, and
unique brand
associations; eliciting positive accessible brand responses; and forging
intense, active brand
relationships. Achieving these four steps, in turn, involves establishing six
brand building
blocks: brand salience, brand performance, brand imagery, brand judgments,
brand feelings,
and brand resonance.
The strongest brands excel on all six of these dimensions and thus fully
execute all four
steps of building a brand. In the CBBE model, the most valuable brand
building block, brand
resonance, occurs when all the other core brand values are completely “in
sync” with respect to
consumers’ needs, wants, and desires. In other words, brand resonance
reflects a completely
harmonious relationship between customers and the brand. With true brand
resonance,
customers have a high degree of loyalty marked by a close relationship with
the brand such that
customers actively seek means to interact with the brand and share their
experiences with
others. Firms that are able to achieve resonance and affinity with their
customers should reap a
host of valuable benefits, such as greater price premiums and more efficient
and effective
marketing programs.
Thus, the basic premise of the CBBE model is that the true measure of the
strength of a
brand depends on how consumers think, feel, and act with respect to that
brand. Achieving
brand resonance requires eliciting the proper cognitive appraisals and
emotional reactions to
the brand from customers. That, in turn, necessitates establishing brand
identity and creating
the right meaning in terms of brand performance and brand imagery
associations. A brand with
the right identity and meaning can result in a customer believing that the
brand is relevant and
“my kind of product.” The strongest brands will be those brands for which
customers become
so attached and passionate that they, in effect, become evangelists or
missionaries and attempt
to share their beliefs and spread the word about the brand.

OR

Brand equity is a good barometer to understand past action and future course of action for
marketers, who are active in formulating strategies for a given brand. If in present, customer
has developed favorable attitude towards the brand then it is a clear indication that past
investment (time, money, etc) have found there mark.
The present also leads the way how marketers should plan future course, as to achieve desired
results. But one aspect is absolutely clear that brand knowledge is a key factor in establishing
brand equity.

To further stress point of brand knowledge, an experiment was conducted by Larry Percy with
respect to brand equity using Beer as product. Aim was to understand consumer response for the
same brands under two different set ups. The first set up was where consumer had no knowledge
about the brand and in the second next set up, brand name was not disclosed. Result showed that
consumer were highly critical of preferred beer when they were not aware of brand. A favorable
response was recorded after brand disclosure, leading to conclusion that brand knowledge
contributes a lot in understanding customer based brand equity.

Brand knowledge which is crucial in evolution of brand equity consists of brand awareness and
brand image. Here brand awareness means the ability created by brand with which consumer can
recall and recognize in any given environment. On the other hand brand image are visuals, logo,
style etc with which brand is associated. Customer based brand equity results in creation of
strong brand and this is achieved when brand awareness and image are at high level. But
how to create a strong brand based brand equity ?

A thing to understand here is that brand equity resides in the mind of the customer, so conviction
has to be brought in strategy as to permanently occupy consumer mind space. The process is like
climbing a ladder, one step at a time. And at each step an objective is achieved creating leading
to a strong brand. First step is to establish a relation between customer need and product offering,
meaning for given product the brand is the best customer can get. This is done by appropriate
brand awareness and image. Second step is connection, by churning out predictable, reliable and
quality performance during each purchase. This establishes imprint in customer’s mind which
further can be cemented by visual, logos, packaging, quality, customer service, warranty, etc.
Next create emotional connection with customer using brand offering and brand image as to
generate response from the customer. The emotional level response in form of positive reaction
or opinion brand creates long term, sustainable and healthy relationship.

A classic example here would be of “Google” and “Apple”. Both these brands have become
synonymous with search engine and entertainment in mind of customers.

When brand is able to achieve sense of oneness with its consumer then it can be said that strong
brand has been created. Companies tend to benefit a lot, in terms loyalty as consumer will stick
to the brand no matter what price premium they have to shell out. These consumers become sort
of brand ambassador and recommending usage of brand. There by creating consumer based
brand equity.

Q.7
How can you develop a sustainable product strategy?

InnovationPoint is a non-traditional management consulting firm focused on Strategic

Innovation. We help organizations achieve business breakthroughs that grow the topline -
through opportunity identification, new business creation, strategy development and new
product, service and category innovation. We help our clients build sustainable innovation
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Based on our Silicon Valley heritage, we understand real innovation. Our firm's leaders and
consultants come from industry, having driven innovation internally at companies including HP,
3M, Xerox, Philips, Kimberly-Clark and Frito-Lay among others.

Our two complementary, integrated practice areas are:

Growth Strategy Organizing for Sustainable Innovation

Identifying and developing new growth
opportunities for our clients - beyond
incremental innovation that grows the top
line. Services include:
• White Space Opportunity
Identification
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• New Product, Service & Category
Building differentiated innovation capabilities that
provide self-sufficiency in driving Strategic
Innovation over the long-term. Services include:
• Organizational Capability Building
• Innovation Immersions and Training
• Decision Accelerator
 Innovation
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• Socially Responsible Innovation

Unlike conventional consulting firms, our proprietary approach addresses the success factors for
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our core Innovation Principles, our seasoned team's experience guides our clients through
engaging processes that begin with inspiration and end with measurable business impact.

Q.8
What are the sources of Brand equity?

Sources of brand equity : Sources of brand equity 1)Market ResearchIntroducing brand in

the market needs quantities or qualitative research to get familiar with the trends and different
attributes. Proper market research allows the company to launch a right brand for the right
segment. 2)Quality New product must incorporate quality ingredient because first impression
is the last impression. If customers are satisfied with the quality of your product then customers
will suggest other people to go for this product by sharing good thoughts. 3)Brand NameBrand
name should be related to the product and easy to remember. 4)Brand PositioningPosition

Q.9
Explain Brand equity management.

BRAND and BRAND EQUITY MANAGEMENT

Excels at delivering the benefits consumer desire

Stays relevant

Pricing is based on consumer perceived value

The brand is well positioned

The brand is consistent

Scope of Branding

It involves creating mental structure & organize knowledge and services.

Key is that consumer must not think that all brands in the same category
are same.

Brand differences often are related to attributes or benefits of the

product.

It can be applied anywhere a consumer has a choice.

Building And Managing Brand Equity

Introduction

Elaboration

Fortification

Alternatives Means To Brand Equity

Licensing

Co-Branding

Managing Multiple Brands

Single Brand Identity

Umbrella

Multi-Brand Category

Family Name

Key Challenges In Brand Equity Measurement

Measure the importance of “brand” In the consumers product selection.

To dissect that measure of “brand” and determine its key contributing
content

Q.10
Explain the Pricing strategies for a product.

Pricing Strategy

One of the four major elements of the marketing mix is price. Pricing is an important strategic
issue because it is related to product positioning. Furthermore, pricing affects other marketing
mix elements such as product features, channel decisions, and promotion.

While there is no single recipe to determine pricing, the following is a general sequence of steps
that might be followed for developing the pricing of a new product:

1. Develop marketing strategy - perform marketing analysis, segmentation, targeting, and

positioning.
2. Make marketing mix decisions - define the product, distribution, and promotional
tactics.
3. Estimate the demand curve - understand how quantity demanded varies with price.
4. Calculate cost - include fixed and variable costs associated with the product.
5. Understand environmental factors - evaluate likely competitor actions, understand
legal constraints, etc.
6. Set pricing objectives - for example, profit maximization, revenue maximization, or
price stabilization (status quo).
7. Determine pricing - using information collected in the above steps, select a pricing
method, develop the pricing structure, and define discounts.

These steps are interrelated and are not necessarily performed in the above order. Nonetheless,
the above list serves to present a starting framework.

Pricing Objectives

The firm's pricing objectives must be identified in order to determine the optimal pricing.
Common objectives include the following:

• Current profit maximization - seeks to maximize current profit, taking into account
revenue and costs. Current profit maximization may not be the best objective if it results
in lower long-term profits.
• Current revenue maximization - seeks to maximize current revenue with no regard to
profit margins. The underlying objective often is to maximize long-term profits by
increasing market share and lowering costs.
 • Maximize quantity - seeks to maximize the number of units sold or the number of
customers served in order to decrease long-term costs as predicted by the experience
curve.
• Maximize profit margin - attempts to maximize the unit profit margin, recognizing that
quantities will be low.
• Quality leadership - use price to signal high quality in an attempt to position the product
as the quality leader.
• Partial cost recovery - an organization that has other revenue sources may seek only
partial cost recovery.
• Survival - in situations such as market decline and overcapacity, the goal may be to
select a price that will cover costs and permit the firm to remain in the market. In this
case, survival may take a priority over profits, so this objective is considered temporary.
• Status quo - the firm may seek price stabilization in order to avoid price wars and
maintain a moderate but stable level of profit.

Pricing Methods

To set the specific price level that achieves their pricing objectives, managers may make use of
several pricing methods. These methods include:

• Cost-plus pricing - set the price at the production cost plus a certain profit margin.
• Target return pricing - set the price to achieve a target return-on-investment.
• Value-based pricing - base the price on the effective value to the customer relative to
alternative products.
• Psychological pricing - base the price on factors such as signals of product quality,
popular price points, and what the consumer perceives to be fair.

In addition to setting the price level, managers have the opportunity to design innovative pricing
models that better meet the needs of both the firm and its customers. For example, software
traditionally was purchased as a product in which customers made a one-time payment and then
owned a perpetual license to the software. Many software suppliers have changed their pricing to
a subscription model in which the customer subscribes for a set period of time, such as one year.
Afterwards, the subscription must be renewed or the software no longer will function. This
model offers stability to both the supplier and the customer since it reduces the large swings in
software investment cycles.

OR

There are many ways to price a product. Let's have a look at some of them and try to understand
the best policy/strategy in various situations

Premium Pricing.
Use a high price where there is a uniqueness about the product or service. This approach is used
where a a substantial competitive advantage exists. Such high prices are charge for luxuries such
as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.
Penetration Pricing.
The price charged for products and services is set artificially low in order to gain market share.
Once this is achieved, the price is increased. This approach was used by France Telecom and Sky
TV.

Economy Pricing.
This is a no frills low price. The cost of marketing and manufacture are kept at a minimum.
Supermarkets often have economy brands for soups, spaghetti, etc.

Price Skimming.
Charge a high price because you have a substantial competitive advantage. However, the
advantage is not sustainable. The high price tends to attract new competitors into the market, and
the price inevitably falls due to increased supply. Manufacturers of digital watches used a
skimming approach in the 1970s. Once other manufacturers were tempted into the market and
the watches were produced at a lower unit cost, other marketing strategies and pricing
approaches are implemented.

Premium pricing, penetration pricing, economy pricing, and price skimming are the four main
pricing policies/strategies. They form the bases for the exercise. However there are other
important approaches to pricing.

Psychological Pricing.
This approach is used when the marketer wants the consumer to respond on an emotional, rather
than rational basis. For example 'price point perspective' 99 cents not one dollar.

Product Line Pricing.

Where there is a range of product or services the pricing reflect the benefits of parts of the range.
For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.

Optional Product Pricing.

Companies will attempt to increase the amount customer spend once they start to buy. Optional
'extras' increase the overall price of the product or service. For example airlines will charge for
optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

Captive Product Pricing

Where products have complements, companies will charge a premium price where the consumer
is captured. For example a razor manufacturer will charge a low price and recoup its margin (and
more) from the sale of the only design of blades which fit the razor.

Product Bundle Pricing.

Here sellers combine several products in the same package. This also serves to move old stock.
Videos and CDs are often sold using the bundle approach.

Promotional Pricing.
Pricing to promote a product is a very common application. There are many examples of
promotional pricing including approaches such as BOGOF (Buy One Get One Free).

Geographical Pricing.
Geographical pricing is evident where there are variations in price in different parts of the world.
For example rarity value, or where shipping costs increase price.

Value Pricing.
This approach is used where external factors such as recession or increased competition force
companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.

OR
PRODUCT PRICING STRATEGIES
Developing a pricing strategy perplexes many CEOs, marketing and sales executives, and brand
managers. It's not surprising really: real businesses don't always follow the pricing strategy models that
business schools and books on pricing strategy present. But there are a few basic guidelines that can
help take some of the mystery out of the process of establishing a successful pricing strategy.

We consider that there are four basic components to a successful pricing strategy:

1. Costs. Focus on your current and future, not historical, costs to determine the cost basis for your
pricing strategy .

2. Price Sensitivity. The price sensitivities of buyers shift based on a number of factors and your
pricing strategy must shift with them.

3. Competition. Pay attention to them, but don't copy them . . . when it comes to pricing strategy
they may have no idea what they're doing.

4. Product Lifecycle. How you price, and what value you provide for that price, will change as you
move through the product lifecycle.

Pricing Before You Build

Establishing a pricing strategy is an activity that should be completed before you start product
development. The only way to accurately determine how much money you can afford to spend on
development, support, promotion and the other costs associated with a product is to analyze how much of
that product you will sell, and at what price. That's the heart of a successful pricing strategy.

Use the Right Costs

A successful pricing strategy is your means of making a profit today, not of recovering costs spent a year
ago. Don't use the cost of developing your current product as the basis for its price. Instead, use the
current costs of developing your new products as the basis of the price of your current product.

Raise Price to Exploit a Reticence to Switch

Once the customer is yours, the situation switches in your favor. One of the resistance factors your
salesforce encounters on a new sale is reticence to switch. An existing customer is still unwilling to learn
something new, only now they're afraid to switch FROM you, not TO you. They would much prefer to add
the functionality of your product enhancements instead of learning how to use something new. For you,
price sensitivity is much lower as comfort and ease factors increase. So you might raise your update
pricing accordingly.

Study the Competition

Study the competition, but don't react and don't copy them, since they're likely making mistakes anyway.
Let them guide you in terms of where you set your boundaries, and in terms of counter offensives you can
launch to deal with obvious bonehead pricing on their part. And remember this as well: any move you
make can be countered by them just as easily. Don't get caught in a no-win price war--which may hurt
your product, their product and devalue your marketplace.

Align with the Product Life Cycle

How high or low you set your price is also going to be driven by where your product is in its life cycle. In
general, the farther along you go toward the Decline phase the lower your price should be, since your
market will be (a) saturated with product and (b) have increased price sensitivity as their knowledge of the
products increases. One technique to consider is unbundling support, training and services from the
product itself, which will allow you to lower price without discounting.
Strategic pricing is the effective, proactive use of product pricing to drive sales and profits, and to help
establish the parameters for product development. Used wisely it is a clearly powerful tool for successful
marketing strategies.

OR

New Product Pricing Strategies

The most challenging stage of product is introductory stage. In introductory stage of new product
companies face the challenge of setting the prices for the first time. Companies have only one
chance to get new product price right. They can choose among the two strategies i.e. market
skimming pricing and market penetration pricing.

Market Skimming Pricing

Companies interested in profitable sale set initially high price for a product to skim maximum
revenue from the segments which is willing to pay high price and then slowly move to low price.

Market Penetration Pricing

Companies interested in large market share set low price for a product in order to attract large
number of customer.

Product Mix Pricing Strategy

The strategies of setting the price for a product when the product is part of product mix.

Product Line Pricing

Same product with different features the price is kept on the bases of the cost difference between
the products in product line and customer evaluation of features and competitorprices. For
example Sony offering different television with different features at different prices.

Optional Product Pricing

It’s the pricing of the main product with the accessories or optional product for example car with
power window CD changer and car without power window and CD changer.

Captive Product Pricing

Pricing of the product which must be used with the main product for example films must be use
with VCR, CD must be use with CD player etc.
Product Bundle Pricing

Making the bundle of different product and price the bundle at a reduce price. It is basically for
selling the slow moving items.
Effective brand equity management is the cornerstone of
business success. Strong brands influence customer
preferences, strengthen customer loyalty and generate greater
profits. At DCDM, we have developed a number of research
methodologies that assist you in the management of your
brands.

Our Brand Equity Management Practice specialises in the

following:

Brand Equity Diagnostic

Brand Equity Measurement

Brand Equity Diagnostic

We provide you with a comprehensive assessment of the

different dimensions of brand equity. We highlight areas where
you need to focus your efforts and propose actionable
improvements you need to strengthen your brand's positioning
on the market.

There are four dimensions to Brand Equity Diagnostic that you

need to assess to strengthen your brand's positioning :

Product research
On going product research is fundamental to monitor your
competitive positioning on the market. Achieving and
maintaining superior product quality is a key factor for the
success of a brand.

Pricing research
Price is a critical component of the marketing mix. You need to
have market information with a view to set your price at a level
that maximises profits while at the same time ensuring your
competitive position on the market.

Packaging research
We will assist you in determining the core attributes of
your pack design, assess and select alternative pack designs,
and evaluate customers' feedback towards an eventual pack
redesign.

Sales promotions and communication strategy

Our Brand Equity Management team will assist you in
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