Download Unit 5 mrkting - WordPress.com

By Roshan pant
MBM 2nd semester
Nepal Commerce Campus
Unit 5:
o Formulating and Implementing Strategic Marketing
Programme:
Product and Branding Challenges in 21st Century
Everyone faces problems and challenges in their jobs. And a marketing managers job has gotten tougher
with more and more introduction of different media vehicles and different costs of advertising present
in the market. In general, a marketing manager of the 21st century faces the following challenges.




Budget allocation is a challenge for marketing managers from day one – Where do
you use your budget? Do you use it for TVC’s, hoardings, radio, online or where else?
There are so many media vehicles today, and so many variant frequencies of advertising,
that media planning has become a big challenge for marketers. If you select the right
message but a wrong media, then the message will probably be lost.
Differentiation – The second challenge is differentiation. A customer sometimes
watches 6-7 ads in a single minute. If the ads are longer, he will still watch 2-3 ads in
every minute of advertisements. So how do you differentiate yourself? What is the
message that needs to go along with the advertisement? And remember that the message
needs to be effective enough to penetrate the noise and reach the customers mind. Thus,
Differentiation is another big challenge for marketing managers.
Brand Recall – You got the perfect message. You even advertised it through the right
channels. But now what do you do about the brand recall? After a month or so, the
customer is going to forget your ad. So how much budget do you allocate for the brand
recall? A smart tactic to learn here is from Vodafone, which always has a 15-20 second
ad which can be run at anytime to increase the brand recall. Similarly Intel has a small
jingle, which makes customers remember them in seconds.
Positioning – Another target of a marketing manager, is to achieve the right positioning
for the brand. Off course, positioning has now become a holistic activity. A company like
Apple or Samsung has to ensure that each of its various department is upto mark
(including sales, service and others) to achieve the correct positioning in the customers
mind. However, marketing is at the helm of positioning and the message sent by the
company to its customers through advertisements, majorly forms an impression on the
customer. The brand needs to be number 1 in the customers mind, or at least 2nd or 3rd.
If it drops below that, it directly affects the sales of the product. Thus, positioning is no
easy challenge to conquer.
The above challenges for marketing managers are such that each of them involves 100
decisions to be made and 100 options to be rejected. And even then, at the back of the
mind, always remains a doubt, what if we had selected the other option? What if we had
shown the other marketing message? This is the exact reason why so many advertising
agencies and media planning agencies have cropped up. Because marketing managers
need as many minds working on the right strategy, as possible and affordable by the
company.
o Identifying the Reasons for Product Failure in the Market;
Here’s our top 10 list of reasons new products and services fail:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Marketers assess the marketing climate inadequately.
The wrong group was targeted.
A weak positioning strategy was used.
A less-than-optimal "configuration" of attributes and benefits was selected.
A questionable pricing strategy was implemented.
The ad campaign generated an insufficient level of awareness.
Cannibalization depressed corporate profits.
Over-optimism about the marketing plan led to a unrealistic forecast.
Poor implementation of the marketing plan in the real world.
The new product was pronounced dead and buried too soon
Overview
Product and brand failures occur on an ongoing basis to varying degrees within most productbased organizations. This is the negative aspect of the development and marketing process. In
most cases, this “failure rate” syndrome ends up being a numbers game. There must be some
ratio of successful products to each one that ends up being a failure. When this does not happen,
the organization is likely to fail, or at least experience financial difficulties that prohibit it from
meeting profitability objectives. The primary goal is to learn from product and brand failures so
that future product development, design, strategy and implementation will be more successful.
Studying product failures allows those in the planning and implementation process to learn from
the mistakes of other product and brand failures. Each product failure can be investigated from
the perspective of what, if anything, might have been done differently to produce and market a
successful product rather than one that failed. The ability to identify key signs in the product
development process can be critical. If the product should make it this far, assessing risk before
the product is marketed can save an organization’s budget, and avoid the intangible costs of
exposing their failure to the market.
Defining product and brand failures
A product is a failure when its presence in the market leads to:




The withdrawal of the product from the market for any reason;
The inability of a product to realize the required market share to sustain its presence in
the market;
The inability of a product to achieve the anticipated life cycle as defined by the
organization due to any reason; or,
The ultimate failure of a product to achieve profitability.
In the big book of product failures, there are a few examples that stand out as so colossal you
have to wonder what the company was thinking. Still, others seem to have just been a case of bad
timing, bad marketing and bad luck. Below we'll look at six reasons why products fail, and the
products that prove it.
1. Timing
In some cases, a luxury product that's been in planning stages for years is set to launch
just as a major recession is starting. This was the case with the Ford Edsel. The Edsel has
become synonymous with failure, and it is well known as a marketing catastrophe, but
the 1958 recession certainly played a large part in its undoing.
Sometimes a product is just "ahead of its time," and the market for it just doesn't exist,
like the precursor to popular PDA devices, the Apple Newton MessagePad. This kindaclunky PDA had a few shortcomings - most famously, its inability to live up to the claim
of understanding handwriting - but more than that was its release at a time when paying
$700US for a PDA seemed absurd.
Today, if there was a PDA that came out and revolutionized the industry, $700 would
seem like a bargain.
2. Not Living Up To The Hype
There's nothing worse than when the public feels like they're being tricked. This happens
when something has hyped-up marketing, but the product is pretty ho-hum. It's another
reason why the Edsel failed, as Ford had positioned it as a cutting-edge new automobile,
but the public saw it as more of the same for a higher cost. This poor positioning cost
Ford $350 million, a huge sum in 1959.
McDonald's also fell prey to this with the release of the Arch Deluxe menu in the '90s.
No one was fooled when Mickey-D's claimed to have moved into the fine dining racket
just by slapping a tomato on top of a burger. McDonald's reportedly spent $100 million
on advertising the failed line. For another example, don't forget the Windows Vista saga.
3. Prohibitively Strong Branding
A strong brand can be a blessing and a curse. Consumers trusted Colgate for toothpaste,
but it didn't make sense when that name was put on the Colgate Kitchen Entrees.
Connecting the taste of food and toothpaste was off-putting for the consumer. With the
McDonald's Arch Deluxe fiasco, McDonald's name was too strong as a value burger joint
for anyone to take the "dining for adults" line seriously.
4. Fixing What Ain't Broken
Companies that are already successful sometimes try to improve themselves but end up
scaring off their already loyal consumers. This is best illustrated in what is known as one
of the worst product failures in history: "New Coke." In 1985, Coca-Cola was doing
fairly well, but was worried about losing more market share to Pepsi. There was a $4
million market research project stating that Coke drinkers would prefer the new taste, but
when it came down to it, they still wanted the original.
Crystal Pepsi is another good example. Making a clear cola did not entice non-cola
drinkers - it just confused Pepsi's branding.
5. Cross Contamination - Mixing Two Successful Products Into One Big Failure
It seems counterintuitive that combining two successful products or companies can
somehow bring about disaster, but it happens. Just think of the combo of peanut butter
and jam in one bottle or Kellogg's disastrous milk-with-cereal packaging campaign
Cereal Mates.
Another example is the recently failed merger: AOL Time Warner. Though the AOL
Time Warner debacle had a lot to do with management, timing and meshing of company
culture, it goes to show that taking two successful things and combining them can lead to
unmitigated disaster.
6. Not Making The Right Business Partners
Sony's Betamax and Toshiba's HD DVD are perfect examples of this. Betamax was
widely regarded as being superior to VHS, but its higher cost meant it wasn't picked up
by the big distributors, which led to its downfall.
HD DVD was like the VHS of the DVD battle, because it cost less than Blu-Ray and held
less information, except that HD DVD lost. Certain studios (Fox, Sony, Walt Disney),
Sony's Playstation 3 and retailers like Wal-Mart and Best Buy all sided with Blu-Ray,
leaving Toshiba's HD DVD at a disadvantage because it had less available titles and sales
outlets. Like Betamax, this caused a chain reaction where fewer films were released for
the less-available format, and Toshiba eventually stopped producing HD DVD players in
mid-2008.
7.Lack of Demand
You can build a product, but consumers may simply reject it. A "Harvard Business Review"
article that looked at the reasons why products failed saw the Segway as an example of a product
that hasn't caught on, even though it is still available for sale. Months before the product came to
the market, its inventor raised expectations by saying that he was building an "alternative to the
automobile." When the Segway made its debut, consumers discovered that the product was
essentially a motorized scooter, retailing for $5,000. Today, the product price has been dropped,
but it is sold chiefly to police departments and city tour guides. The general public has shown no
interest in the Segway. Find a need to fill, and establish it by surveys before investing a fortune
in research and development that might go off a cliff.
8.Marketing Research
"Bad estimates of market potential (or other marketing research mistakes)" was one of the points
a Booz, Allen and Hamilton study on the subject of new products found. In 2004, Coca-Cola
released C2, a product aimed at 20- to 40-year-old men who like the taste of Coke, but whom
marketers believed would prefer half the calories and carbs of the original Coke. The product
failed and research conducted after the launch showed that men wanted the full taste of Coke, but
with no calories and no carbs. Had research been properly conducted the product would have
never come to the market. Instead, its replacement, Coke Zero, would have been introduced, a
product that men want with Coke's taste retained, but free of both calories and carbs. Research
first, then release.
9.Target Market
You can serve up the right product, but your customer base won't receive it. An example of this
is fast-food giant McDonald's, which has tried to bring many products to the market through the
years and has seen quite a few fail. Among the products pronounced "dead on arrival" was
McLobster, a $5.99 lobster sandwich that was the wrong product for its customers. Hot dogs,
pizza and pasta were other products that were tried and failed, as did the McLean Deluxe, a
lower calorie burger that also proved low on taste. Most failed McDonald's products just weren't
right for this burger-loving crowd. Know your target market is the moral, and do limited roll-outs
to a segment of it before going full-scale.
10.Flawed Product
The Microsoft Corporation has managed to make billions of dollars annually despite bringing to
the market products that were considered flawed by many reviewers and users, including its
VISTA operating system. Microsoft poured $500 million into marketing the product, which was
designed to replace Windows XP. Instead, consumers found the product to be flawed and
downgraded to XP or switched to Apple, a competing computer maker and operating system.
Microsoft could have avoided a problem had it brought a product to the market that was not
flawed. Thorough pre-market testing by a representative cross-section of actual potential
customers can help businesses avoid this potential pitfall.
The benefits of studying failures
Gaining a better understanding of product failures is important to help prevent future
failures. Studying the history of product failures may generate some insight into the
reason for those failures and create a list of factors that may increase the opportunity for
success, but there are no guarantees.
o New Product Development & Analyzing New Product Adoption
Trend;
NPD is Process of developing a new product or service for the market. This type of development is
considered the preliminary step in product or service development and involves a number of steps that
must be completed before the product can be introduced to the market. New product development
may be done to develop an item to compete with a particular product/service or may be done to
improve an already established product. New product development is essential to any business that
must keep up with market trends and changes.Developing a new product shouldn’t feel like you’re
fighting in the dark. There’s an easier way. What you need is a structured road-map that gives
your business a clear path to follow.
Actually developing the tangible product or service is only a small part of the new product
development process, which includes the complete journey from generating the initial idea to
bringing the product to market.
By setting out the steps involved, and sticking to them, your product development will become a
more focused and flexible approach that can be adapted for all different types of products and
services.
#1. Idea GenerationThe development of a product will start with the concept. The rest of the
process will ensure that ideas are tested for their viability, so in the beginning all ideas are good
ideas (To a certain extent!)
Ideas can, and will come, from many different directions. The best place to start is with a SWOT
analysis, (Strengths, Weaknesses, Opportunities and Threats), which incorporates current market
trends. This can be used to analyse your company’s position and find a direction that is in line
with your business strategy.
In addition to this business-centred activity, are methods that focus on the customer’s needs and
wants. This could be:




Under-taking market research
Listening to suggestions from your target audience – including feedback on your current
products’ strengths and weaknesses.
Encouraging suggestions from employees and partners
Looking at your competitor’s successes and failures
#2. Idea Screening
This step is crucial to ensure that unsuitable ideas, for whatever reason, are rejected as soon as
possible. Ideas need to be considered objectively, ideally by a group or committee.
Specific screening criteria need to be set for this stage, looking at ROI, affordability and market
potential. These questions need to be considered carefully, to avoid product failure after
considerable investment down the line.
#3. Concept Development & Testing
You have an idea and it’s passed the screening stage. However, internal opinion isn’t the most
important. You need to ask the people that matter – your customers.
Using a small group of your true customer base – those that convert – the idea need to be tested
to see their reaction. The idea should now be a concept, with enough in-depth information that
the consumer can visualise it.
Do they understand the concept?
Do they want or need it?
This stage gives you a chance to develop the concept further, considering their feedback, but also
to start thinking about what your marketing message will be.
#4. Business Analysis
Once the concept has been tested and finalised, a business case needs to be put together to assess
whether the new product/service will be profitable. This should include a detailed marketing
strategy, highlighting the target market, product positioning and the marketing mix that will be
used.This analysis needs to include: whether there is a demand for the product, a full appraisal of
the costs, competition and identification of a break-even point.
#5. Product Development
If the new product is approved, it will be passed to the technical and marketing development
stage. This is when a prototype or a limited production model will be created. This means you
can investigate exact design & specifications and any manufacturing methods, but also gives
something tangible for consumer testing, for feedback on specifics like look, feel and packaging
for example.
#6. Test Marketing
Test marketing (or market testing) is different to concept or consumer testing, in that it
introduces the prototype product following the proposed marketing plan as whole rather than
individual elements.
This process is required to validate the whole concept and is used for further refinement of all
elements, from product to marketing message.
#7. Commercialisation
When the concept has been developed and tested, final decisions need to be made to move the
product to its launch into the market. Pricing and marketing plans need to be finalised and the
sales teams and distribution briefed, so that the product and company is ready for the final stage.
#8. Launch
A detailed launch plan is needed for this stage to run smoothly and to have maximum impact. It
should include decisions surrounding when and where to launch to target your primary consumer
group. Finally in order to learn from any mistakes made, a review of the market performance is
needed to access the success of the project.
New product development can be made much simpler and focused, with a higher likelihood of
success, by following these steps to guide you.
New product adoption
A new product adoption can be defined as: “A good, service or idea that is “perceived” by some
potential customers as new. It may have been available for some time, but many potential
customers have not yet adopted the product nor decided to become a regular user of the product.
Thus if they buy this product, it is new product adoption.”
Research suggests that customers go through five stages in the process of new product adoption
or service: these are summarized below:
(1) Awareness – the customer becomes aware of the new product, but lacks information about it.
This first stage is about creating awareness that your product is in the market. It is important that
your company develops a successful avenue for your consumers to become aware of your
product. If consumers do not know your product exists, than it might as well not exist! Create
marketing material. These can be one-sheets, video teasers, images, and landing pages. Make
these marketing materials easily accessible. Utilizing creativity and wit is a great way to engage
consumers in this awareness stage. I recommend creating a strong social presence for said
product. In the era of social media, many tools are available in the market that provide
companies with the techniques and methods to increase product awareness through social
channels – enabling them to reach a large number of customers at a low cost!
Case Example – Movie Teasers and Tesla Model D
As an example, movie teasers are designed to inform the audience and customers that a movie
will be released soon, but it doesn’t provide them in-depth information about the movie. Another
great example includes Tesla’s Model D. Prior to its launch and release, Elon Musk published
the below image on his Twitter in order to build momentum and awareness of their upcoming
launch. What’s amazing about this picture is the way it has been strategically designed to make
consumers aware of the product without exposing too much about the product. The viewer is left
wanting to learn more.
(2) Interest – the customer seeks information about the new product. In this stage consumers are
ready to learn more about your companies product and / or service. Your organization must
guide the consumer through the interest stage by providing easily accessible information on your
product. Among the methods used in the todays business landscape include a website describing
the product, blog posts, tutorial or instructional videos, white papers, and other sources of info
that the potential consumer can discover and review.
Case Example – Apple
Apple utilizes its product launch to provide information and insight into its latest product. With
well-designed and organized speech, scripted presentation, and balanced use of technical and
non-technical vocabulary, Apple delivers information eloquently and successfully to broad range
of customers. With the information now available in multiple mediums and comprehensible by
both technical and non-technical individuals, Apple gains the interest of their potential customers
and builds strong momentum of interested buyers.
(3) Evaluation – the customer considers whether trying the new product makes sense. Prior to
purchasing, consumers examine, compare and evaluate the product. Such behavior increases in
intensity and need once the item in question is more expensive, sophisticated and complex, or
critical. Consumers are searching for information. We are now finding that consumers go online
and utilize social media channels to ask other individuals about your product or service. In
addition, they find online reviews and recommendations. In order to simplify a customer’s search
and evaluation of your product, I suggest creating information that outlines the difference
between your product and other similar products, or differences within the different products and
services you sell. Outline what separates your product from others, and emphasize on strength.
Another great system to utilize is the webinar. This platform allow you to communicate with
potential customer in depth information about your product and provides time for Q&A.
Case Example – PCMag
PCMag is a world-renowned website for comparing gadgets and computers. They are notable for
their reliable reporting, comprehensive evaluation editorials, and categorization of different
gadgets based on their qualities. For example, in order to maintain fairness, PCMag categorizes
laptops differently (such as work laptop, ultra-notebooks, …etc) in order to provide a more
reasonable evaluation that fits the needs of the customer. PCMag is a great tool for consumers to
evaluate products. Product manufactures can contact PCMag and request to get their products
included in the magazine.
(4) Trial – the customer tries the new product on a limited or small scale to assess the value of
the product. This is the stage where the consumer “kicks the tires”. Nothing helps a consumer
make a decision about your product more than actually trying your product out! There are many
ways this is accomplished. For example, your company can provide your consumer with a free
trial or a proof of concept campaign. In this stage it is very important to set the customer
expectations correctly and deliver on said expectations.
Case Example – Costco
Costco is known for their free samples. I have heard that some customers piecemeal an entire
lunch just from bouncing around the free sample tables during a visit to a Costco location. This
“free sample” approach is very smart. In some cases Costco has seen this strategy increase sales
of a product over 1000 percent. There are additional psychological effects from this, which
include consumer loyalty and consumer reciprocity. Consumers feel that if they receive
something for free they owe something in return.
(5) Product Adoption – the customer decides to make full and/or regular use of the new
product. When the consumer enters the product adoption phase, he/she is ready to purchase your
companies product. This is the critical stage that businesses need to get their consumers to. When
the customer is here, you need to make the payment process simple, intuitive, and pain free. In
addition, you need to ensure that the consumer can easily obtain the product. If you make it to
and through this last phase successfully, than you can take money to the bank – A job well done!
Thus if a customer goes through all the above stages he is assumed to have adopted the product.
There are various stages post adoption as well which decide whether or not the customer will be
retained with the product. One of such things is post sale service which is extremely important to
retain the customer.
o Analyzing Product-life-cycle and Product-life-cycle Strategies
PRODUCT LIFE CYCLE
The life story of most successful products is a history of their passing through certain
recognizable stages. These are shown in Exhibit I and occur in the following order:
Introduction Stage
When the product is introduced, sales will be low until customers become aware of the product
and its benefits. Some firms may announce their product before it is introduced, but such
announcements also alert competitors and remove the element of surprise. Advertising costs
typically are high during this stage in order to rapidly increase customer awareness of the
product and to target the early adopters. During the introductory stage the firm is likely to incur
additional costs associated with the initial distribution of the product. These higher costs coupled
with a low sales volume usually make the introduction stage a period of negative profits.
During the introduction stage, the primary goal is to establish a market and build primary
demand for the product class. The following are some of the marketing mix implications of the
introduction stage:




Product - one or few products, relatively undifferentiated
Price - Generally high, assuming a skim pricing strategy for a high profit margin as the
early adopters buy the product and the firm seeks to recoup development costs quickly. In
some cases a penetration pricing strategy is used and introductory prices are set low to
gain market share rapidly.
Distribution - Distribution is selective and scattered as the firm commences
implementation of the distribution plan.
Promotion - Promotion is aimed at building brand awareness. Samples or trial incentives
may be directed toward early adopters. The introductory promotion also is intended to
convince potential resellers to carry the product.
Growth Stage
The growth stage is a period of rapid revenue growth. Sales increase as more customers become
aware of the product and its benefits and additional market segments are targeted. Once the
product has been proven a success and customers begin asking for it, sales will increase further
as more retailers become interested in carrying it. The marketing team may expand the
distribution at this point. When competitors enter the market, often during the later part of the
growth stage, there may be price competition and/or increased promotional costs in order to
convince consumers that the firm's product is better than that of the competition.
During the growth stage, the goal is to gain consumer preference and increase sales. The
marketing mix may be modified as follows:




Product - New product features and packaging options; improvement of product quality.
Price - Maintained at a high level if demand is high, or reduced to capture additional
customers.
Distribution - Distribution becomes more intensive. Trade discounts are minimal if
resellers show a strong interest in the product.
Promotion - Increased advertising to build brand preference.
Maturity Stage
The maturity stage is the most profitable. While sales continue to increase into this stage, they do
so at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced.
Competition may result in decreased market share and/or prices. The competing products may be
very similar at this point, increasing the difficulty of differentiating the product. The firm places
effort into encouraging competitors' customers to switch, increasing usage per customer, and
converting non-users into customers. Sales promotions may be offered to encourage retailers to
give the product more shelf space over competing products.
During the maturity stage, the primary goal is to maintain market share and extend the product
life cycle. Marketing mix decisions may include:




Product - Modifications are made and features are added in order to differentiate the
product from competing products that may have been introduced.
Price - Possible price reductions in response to competition while avoiding a price war.
Distribution - New distribution channels and incentives to resellers in order to avoid
losing shelf space.
Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to get
competitors' customers to switch.
Decline Stage
Eventually sales begin to decline as the market becomes saturated, the product becomes
technologically obsolete, or customer tastes change. If the product has developed brand loyalty,
the profitability may be maintained longer. Unit costs may increase with the declining production
volumes and eventually no more profit can be made.
During the decline phase, the firm generally has three options:



Maintain the product in hopes that competitors will exit. Reduce costs and find new uses
for the product.
Harvest it, reducing marketing support and coasting along until no more profit can be
made.
Discontinue the product when no more profit can be made or there is a successor product.
The marketing mix may be modified as follows:




Product - The number of products in the product line may be reduced. Rejuvenate
surviving products to make them look new again.
Price - Prices may be lowered to liquidate inventory of discontinued products. Prices may
be maintained for continued products serving a niche market.
Distribution - Distribution becomes more selective. Channels that no longer are profitable
are phased out.
Promotion - Expenditures are lower and aimed at reinforcing the brand image for
continued products.
Strategies for the Different Stages of the Product Life Cycle
Introduction
The need for immediate profit is not a pressure. The product is promoted to create awareness and
develop a market for the product. The impact on the marketing mix and strategy is as follows:




Product branding and quality level is established and intellectual property protection,
such as patents and trademarks are obtained.
Pricing may be low penetration to build market share rapidly or high skim pricing to
recover development costs.
Distribution is selective until consumers show acceptance of the product.
Promotion is aimed at innovators and early adopters. Marketing communications seeks to
build product awareness and educate potential consumers about the product.
Growth
Competitors are attracted into the market with very similar offerings. In the growth stage, the
firm seeks to build brand preference and increase market share.




Product quality is maintained and additional features and support services may be added.
Pricing is maintained as the firm enjoys increasing demand with little competition.
Distribution channels are added as demand increases and customers accept the product.
Promotion is aimed at a broader audience.
Maturity
Those products that survive the earlier stages tend to spend longest in this phase. At maturity, the
strong growth in sales diminishes. Competition may appear with similar products. The primary
objective at this point is to defend market share while maximizing profit.




Product features may be enhanced to differentiate the product from that of competitors.
Pricing may be lower because of the new competition.
Distribution becomes more intensive, and incentives may be offered to encourage
preference over competing products.
Promotion emphasizes product differentiation.
Decline
At this point, there is a downturn in the market. For example, more innovative products are
introduced or consumer tastes have changed. There is intense price cutting, and many more
products are withdrawn from the market. Profits can be improved by reducing marketing
spending and cost cutting.
As sales decline, the firm has several options:



Maintain the product, possibly rejuvenating it by adding new features and finding new
uses.
Harvest the product–reduce costs and continue to offer it, possibly to a loyal niche
segment.
Discontinue the product, liquidating remaining inventory or selling it to another firm that
is willing to continue the product.
By imaginatively repositioning their products, companies can change how customers mentally
categorize them. They can rescue products struggling in the maturity phase of their life cycles
and get them back to the growth phase. And in some cases, they might be able take their new
products forward straight into the growth phase.
Identifying the Sources of Brand Equity and Building Competitive
Brand
Brand Equity:
Brand equity is the commercial value that derives from consumer perception of the brand name
of a particular product or service, rather than from the product or service itself. Brand equity
describes the value of having a well-known brand name, based on the idea that the owner of a
well-known brand name can generate more money from products with that brand name than
from products with a less well known name, as consumers believe that a product with a wellknown name is better than products with less well-known names.
Sources of brand equity
There are two techniques of Capturing mindset:
• Quantitative Technique.
• Qualitative Technique.
Qualitative Technique.
1. Free Association
2. Projective Techniques
3. Brand Personality and Values
4. Experiential Methods
Quantitative Technique.
1. Awareness
2. Recognition
3. Recall
4. Image
Qualitative Research Techniques:
Qualitative research techniques are often employed to identify possible brand associations and
sources of brand equity. Qualitative research techniques are relatively unstructured measurement
approaches whereby a range of possible consumer responses are permitted. Because of the
freedom afforded both researchers in their probes and consumers in their responses, qualitative
research can often be a useful "first step" in exploring consumer brand and product perceptions.
Consider the following three qualitative research techniques that can be employed to identify
sources of brand equity.
1. Free Association
The simplest and often most powerful way to profile brand associations involves free association
tasks whereby subjects are asked what comes to mind when they think of the brand without any
more specific probe or cue than perhaps the associated product category (e.g., "What does the
Rolex name mean to you?" or "Tell me what comes to mind when you think of Rolex watches.").
Answers to these questions help marketers to clarify the range of possible associations and
assemble a brand profile.
2. Projective Techniques
Uncovering the sources of brand equity requires that consumers' brand knowledge structures be
profiled as accurately and completely as possible. Projective techniques are diagnostic tools to
uncover the true opinions and feelings of consumers when they are unwilling or otherwise unable
to express themselves on these matters. The idea behind projective techniques is that consumers
are presented with an incomplete stimulus and asked to complete it or given an ambiguous
stimulus that may not make sense in and of itself and are asked to make sense of it. In doing so,
the argument is that consumers will reveal some of their true beliefs and feelings. Thus,
projective techniques can be especially useful when deeply rooted personal motivations or
personally or socially sensitive subject matters may be operating. Projective techniques often
provide useful insights that help to assemble a more complete picture of consumers and their
relationships with brands.
3. Brand Personality and Relationships
Another useful set of measures to assemble the brand profile is brand personality. Brand
personality is the human characteristics or traits that can be attributed to a brand. Brand
personality can be measured in different ways. Perhaps the simplest and most direct way is to
solicit open-ended responses to a probe such as: "If the brand were to come alive as a person,
what would it be like, what would it do, where would it live, what would it wear, who would it
talk to if it went to a party (and what would it talk about)." Other means are possible to capture
consumers' point of view. For example, consumers could be given a variety of pictures or a stack
of magazines and asked to assemble a profile of the brand. These pictures could be of celebrities
or anything else. Along these lines, ad agencies often conduct "picture sorting" studies to clarify
who are typical users of a brand. In terms of measuring brand image, the Zaltman Metaphor
Elicitation Technique (ZMET) requires study participants to take photographs and/or collect
pictures (from magazines, books, newspapers or other sources) and use these visuals to indicate
what the brand means to them in various ways.
4. Ethnographic and Observational Approaches
Fresh data can be gathered by directly observing relevant actors and settings. Consumers can be
unobtrusively observed as they shop or as they consume products to capture every nuance of
their behavior. Marketers such as Procter & Gamble seek consumers’ permission to spend time
with them in their homes to see how they actually use and experience products.
Quantitative Research Techniques
Although qualitative measures are useful to identify and characterize the range of possible
associations to a brand, a more quantitative portrait of the brand often is also desirable to permit
more confident and defensible strategic and tactical recommendations. Whereas qualitative
research typically elicits some type of verbal responses from consumers, quantitative research
typically employs various types of scale questions so that numerical representations and
summaries can be made. Quantitative measures are often the primary ingredient in tracking
studies that monitor brand knowledge structures of consumers over time.
1. Awareness
Brand awareness is related to the strength of the brand in memory, as reflected by consumers'
ability to identify various brand elements (i.e., the brand name, logo, symbol, character,
packaging, and slogan) under different conditions. Brand awareness relates to the likelihood that
a brand will come to mind and the ease with which it does so given different type of cues.
2. Recognition
In the abstract, recognition processes require that consumers be able to discriminate a stimulus -a word, object, image, etc. -- as something they have previously seen. Brand recognition relates
to consumers' ability to identify the brand under a variety of circumstances and can involve
identification of any of the brand elements. The most basic type of recognition procedures gives
consumers a set of single items visually or orally and asks them if they thought that they had
previously seen or heard these items.
3. Recall
Brand recall relates to consumers' ability to identify the brand under a variety of circumstances.
With brand recall, consumers must retrieve the actual brand element from memory when given
some related probe or cue. Thus, brand recall is a more demanding memory task than brand
recognition because consumers are not just given a brand element and asked to identify or
discriminate it as one they had or had not already seen. Different measures of brand recall are
possible depending on the type of cues provided to consumers.
4. Image
Brand awareness is an important first step in building brand equity, but usually not sufficient.
For most customers in most situations, other considerations, such as the meaning or image of the
brand, also come into play. One vitally important aspect of the brand is its image, as reflected by
the associations that consumers hold toward the brand. Brand associations come in many
different forms and can be classified along many different dimensions.
BUILDING COMPETITIVE BRAND
The most important brand building challenges they say they are facing is vision, innovation, and
alignment.
No doubt, the stakes for marketplace success are growing ever higher for marketers. Consumers
have more choice than their mind’s can process. Against the backdrop of a dicey economy, overcrowded retail channels, and price pressure driving nearly every decision these days, marketers
are neck deep and choking on more short-term marketing tactics to sell more stuff.
Few are granted the luxury of stepping back and making big picture assessments with clarity and
confidence that the future they are busy creating will matter to anyone by time they get there.
Brand building is like riding a bullet train these days. It’s easy to feel like your being left behind.
Regardless, I believe it’s a good idea to be looking up and out right now.
what may be the most important areas of focus for many marketing decision-makers and brand
managers to pursue their best opportunities now and in the future.
Vision
The global economic reset continues to slowly shake itself out. As a result, more brand managers
(with enlightened management) recognize the value of crafting a bigger, more compelling vision
for their brand’s future. A future that will be rich in opportunity for those brands that truly know
who they are, what they represent, where they’re going from here, and why they will matter to
people. Vision is everything! Everything that ever was, is now, or ever will be, begins with a
compelling vision.
How clear is your vision looking out onto the horizon of opportunity right now?
Innovation
The marketplace is a vast slush pile – with more slush added daily. The brands that are rewarded
with existence are the ones that continue to innovate better ways to be of value and serve people.
This is where the real game is played. Innovations, both incremental and disruptive, are
happening at light speed in every product and service category. There’s simply no room left
anymore for me-too anything. More marketers must put their creative energies into innovating
highly valued “meanings” for their offerings, rather than adding more competitive features and
benefits – and in the process, create whole new markets.
Where do you see your best opportunity to change the game?
Alignment
By now, most consumers are online. Increasingly, paid media messaging is less about awareness
and more about engagement online. To genuinely connect with people there, the web has everevolving rules of engagement. Rule number one is you can’t control the message. Rule number
two is you have to be invited. It is a continuing challenge for brand managers to align their brand
vision and product innovations to stay relevant and highly valued by people. It is an
understatement to say the social web is a sea change of profound magnitude for marketers.
Brands must provide intrinsic value to people first, and the social web is the perfect venue for
doing this. Brand managers who successfully connect the dots and add to the collective good in
their customer’s lives dominate. Being authentic, honest, and trustworthy–is how the marketing
gets baked in these days. Paraphrasing Seth Godin, “ideas have to ship” for your value to matter
to people.