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Topic 9 Innovation and Markets Ref; Corporate Strategies Google Images search 9.1 Corporate Strategies Essential ideas: Companies and businesses can utilize a range of different strategies to develop products, services and systems. Nature of Design The success of a company relies heavily on the strategies it adopts. The evaluation of products, services and systems can inform the selection of the most appropriate strategies to follow that will enable a company to achieve its objectives. Concepts and Principles Pioneering strategies Imitative strategies Market development Product development Market penetration Product diversification Hybrid approaches The relative success of pioneering and innovative strategies Corporate and social responsibility Guidance Comparison of success between pioneering and imitative strategies Examples of companies that have used above strategies Examples of a company that are a result of a hybrid approach How corporate social responsibility may be a particular goal of a company whereby the aim is to manage the economic, social and environmental impacts of their operation to maximize the benefits and minimize the disadvantages Examples of evidence of effective corporate social responsibility for a major multinational company Pioneering strategy ‘….. involves creating a new or innovative direction and product. Many individuals, designers or companies believe there is a real competitive advantage and profit in being the first to market with a new and sought after product. It is this idea that typifies the pioneering approach. Market pioneers need to identify their market sector and segment quickly or even create one to justify their often expensive, R&D costs. Ref. p 21 Design & Technology Metcalfe & Metcalfe 2011 Examples include the early operating systems of personal computers, Apple brought out the first user friendly GUI operating system and quickly started to eat into the Microsoft share of the PC market. Microsoft countered with ‘Windows’ which can be seen as an imitative strategy. Court cases followed for years as one company took the other to court to try to win the legislative battle. Copyright infringement was heavily involved. Imitative strategies These strategies are more focused on allowing the pioneers to establish a market or to clearly see what the market is and what is a successful product for that market. This allows imitators/colonisers to save on high set up costs of R&D. Once the market matures imitators can then more easily enter and improvement and product development occurs. Ref. p21-23 Design & Technology Metcalfe & Metcalfe 2011 Leverage is available to non-pioneering firms for gaining long-term competitive advantage by virtue of their late entry into a market: as it was with IBM over Apple, and is with Dell over IBM. The follower can benefit from the (1) clarification of the demand-uncertainty and market-uncertainty, (2) knowledge of the effects of changing customer needs and new technologies, (3) opportunity to free-ride the pioneer's investments in consumer-education, (4) distribution channel and infrastructure development, (5) pioneer's mistakes in product positioning and pricing, and in its promotional efforts. Read more: http://www.businessdictionary.com/definition/follower-advantage.html#ixzz39QHLVOYC Market development is the process of developing sales, new products or services and often new market sectors or segments. It often improves businesses through; introducing new products to existing customers, introducing new products to new customers, establishing a greater market by attracting new customers, educating consumers, creating new application for an existing product. Ref. p21-23 Design & Technology Metcalfe & Metcalfe 2011 Many parts of a Swiss Army knife were originally an existing, stand alone, piece of technology (Scissors, Saw, Knife, Tweezers, Pliers) Now there are Swiss Army products such as Swiss Cards, USB’s which still retain many of the original elements of the technology. Product development is the evolution of a product through the inclusion of new features, accessories, materials or components. It usually is aimed at existing market sectors and segments but can also include new markets or first time purchasers. Adding variations to a product to develop its range and building on an established brand. http://www.victorinox.com/ch/product/Swiss-ArmyKnives/Category/SwissCards/SwissCards/SwissCard/0.7100.T Market penetration Market Penetration means increasing sales to existing customers or finding new customers for existing products. Can be calculated as Product sales / Total market potential. Many different product promotion strategies can also be used to increase market penetration such as discounts, celebrity endorsements, bonus offers etc. Ref. p22 Design & Technology Metcalfe & Metcalfe 2011 Product diversification involves the modification of an existing product so that its market potential can be increased. Aims to attract new customers to increase sales. Can use previous reputation or improvements in product ranges or platforms. Aim is to increase sales. Examples of these strategies includes. Mars moving from Chocolate products to Ice Creams. Ref. p23 Design & Technology Metcalfe & Metcalfe 2011 Nike moving from Sports shoes to Sports clothing, fashion and equipment, sporting equipment and even watches. http://www.nike.com/us/en_us/c/nikeplus-fuelband Hybrid approaches Involves using both Pioneering and Imitative strategies in the development of a product or products to build sales and profitability. Adopting innovative techniques, adaptations and features but imitating market imitators by reducing the research and development costs through using a market familiar product Ref. p22 Design & Technology Metcalfe & Metcalfe 2011 The relative success of pioneering and innovative strategies Historically, pioneering companies have rarely reached market dominance. Eg Xerox corporation was unable to reap the benefits of the PC market. Sony’s Betamax Video player. For successes, Apple was a pioneer in the I-Pod/I-Pad notebook computer product line. Corporate and social responsibility CSR, also called corporate conscience, corporate citizenship or sustainable responsible business/ Responsible Business)[1] is a form of corporate self-regulation integrated into a business model. CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. In some models, a firm's implementation of CSR goes beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law."[2][3] CSR aims to embrace responsibility for corporate actions and to encourage a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others. The term "corporate social responsibility" became popular in the 1960s and has remained a term used indiscriminately by many to cover legal and moral responsibility more narrowly construed.[4] Proponents argue that corporations increase long term profits by operating with a CSR perspective, while critics argue that CSR distracts from business' economic role. A 2000 study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes.[5] Critics[6][7] questioned the "lofty" and sometimes "unrealistic expectations" in CSR.[8] or that CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. CSR is titled to aid an organization's mission as well as a guide to what the company stands for to its consumers. Business ethics is the part of applied ethicsthat examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for CSR. Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles, but with no formal act of legislation. Ref: http://en.wikipedia.org/wiki/Corporate_social_responsibility http://www.highbrowmagazine.com/4185-general-motors-and-breakdown-corporatesocial-responsibility Triple bottom line[edit] People planet profit, also known as the triple bottom line, are words that should be used and practiced in every move an organization makes. People relates to fair and beneficial business practices toward labour, the community and region where corporation conducts its business. Planet refers to sustainable environmental practices. A triple bottom line company does not produce harmful or destructive products such as weapons, toxic chemicals or batteries containing dangerous heavy metals for example. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. It therefore differs from traditional accounting definitions of profit.[38][39] Despite the fact that adopting this triple measure has helped some companies be more conscious of their social[40] and moral responsibilities,[41] the triple bottom line has its critics. The first criticism is that the reporting of environmental and social/moral responsibilities is selective and ignores some real moral demands, thus substituting the adopted list for a company or its members paying attention to its myriad moral obligations. The second criticism is that there is no guaranteed-upon way to carry out the environmental and social/moral audits comparable to the way that companies carry out their financial audits-much of which is governed by government requirements. An inherent difficulty with any social reporting is that it is not quantifiable in the way that a financial report is. There is no quantitative method that captures what is significantly at issue and no agreed-upon way to represent qualitative measures.[42] Ref: http://en.wikipedia.org/wiki/Corporate_social_responsibility Brand differentiation In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values.[47] Several major brands, such as The Co-operative Group, The Body Shop and American Apparel[48] are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice. Crises and their consequences Often it takes a crisis to precipitate attention to CSR. One of the most active stands against environmental mismanagement is the CERES Principles that resulted after the Exxon Valdez incident in Alaska in 1989 (Grace and Cohen 2006). Other examples include the lead poisoning paint used by toy giant Mattel, which required a recall of millions of toys globally and caused the company to initiate new risk management and quality control processes. In another example, Magellan Metals in the West Australian town of Esperance was responsible for lead contamination killing thousands of birds in the area. The company had to cease business immediately and work with independent regulatory bodies to execute a cleanup. Odwalla also experienced a crisis with sales dropping 90%, and the company's stock price dropping 34% due to several cases of E. coli spread through Odwalla apple juice. The company ordered a recall of all apple or carrot juice products and introduced a new process called "flash pasteurization" as well as maintaining lines of communication constantly open with customers. See also The "Shattered Image" article had originally been scheduled to be published as a 10,000 word feature in Vanity Fair earlier in 1994 but was dropped after legal threats by The Body Shop. The original article was eventually published in 2004 by The Nation Books in Killed: Great Journalism Too Hot to Print,[27] edited by David Wallis. Business Ethics, which had featured Roddick on its cover just the year before, subsequently agreed to print a much shorter version of the exposé. In April 2013 it was revealed that Bodyshop was charging Irish consumers up to 50% more than their British counterparts. [28] Ref: http://en.wikipedia.org/wiki/The_Body_Shop 9.2 Market Sectors and Segments 1. www.d4Nations.com 2. http://blog.revenueshares.com/investment-opportunities-in-2014- revenueshares/ 3. http://allthingsmarketingoz.blogspot.com/2012/10/which-industry-is-really-driving-economy.html 4. http://www.wifag-polytype.com/plastic-laminates-tubes/markets/ Essential ideas: Designers must research and consider the target market sectors and segments in the design of their products Nature of Design Designers must consider the market when targeting their product, service or system. The smaller the sector the more the target audience will have in common. Companies may decide to compete in the whole market or only in segments that are attractive and/or familiar. A designer’s understanding of the identified market is essential. Concepts and Principles Categories of market sectors Influence of market sectors Classifications of consumer market segments: income, profession, age, family, values, behavior Development of a product family Guidance Broad categories of market sectors include geographical sectors focusing on values, culture and characteristics of purchasers in a particular region and purchasing power, client based sectors focusing on consumers, industrial, public sector and commercial How companies take into account market sectors in the design and manufacture of products Examples of products designed for only one sector and products designed to be sold to more than one sector How the needs of the markets segments listed impact on the design of products and scale of production Examples of product families Refs http://furnishingsresearchstore.com/ft.html http://www.worldfurnitureonline.com/showPage.php?template=homepage&id=101 http://www.slideshare.net/Ken_Research/india-furniture-market http://www.slideshare.net/SophiaJns/india-furniture-market-forecast-and-opportunities2019 http://www.slideshare.net/manigarg211/ikea-invades-india http://www.slideshare.net/csilmilano9/world-furniture-international-markets-review-bycsil-nr-60-december-2013-by-csil http://www.slideshare.net/ukaszSzymula/2013-luxury-goods-worldwide-market Categories of Market Sectors Market sectors are particular subsets of markets that share specific characteristics. Sectors are often large and can include diverse fields such as pharmaceutical, household and automotive groupings.” p23 Design Technology Metcalfe, Metcalfe 2011 Geographical sectors focusing on values, culture and characteristics of purchasers in a particular region and purchasing power, client based sectors focusing on consumers, industrial, public sector and commercial Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs and priorities, and then designing and implementing strategies to target them. Market segmentation strategies may be used to identify the target customers, and provide supporting data for positioning to achieve a marketing plan objective. Businesses may develop product differentiation strategies, or an undifferentiated approach, involving specific products or product lines depending on the specific demand and attributes of the target segment. http://en.wikipedia.org/wiki/Market_segment Shoes Market Sector Market sector can be segmented into groups of consumers with similar characteristics Each segment can be further broken down into Age Job Interests Lifestyle Location Income narrower sectors. Eg Age subdivided into Baby, toddler, pre-school, junior, teenager, adult etc. Values Philosophy Classifications of consumer market segments: income, profession, age, family, values, behavior Income is a key criteria for determining certain market segments. Income largely determines the type of products or consumables that certain people will be interested in or potentially purchase. Especially luxury or high priced products, which are marketed toward certain income segments of the total population. Profession also is a key determinant of segmenting markets. Many professions have particular equipment, tools, clothing or required The medical profession requires certain types of materials, consumables or even technology so this clearly dictates the market for these types of products. Age related markets can be seen through the design, production and selling of age pertinent items such as clothing, shoes or other products for babies, children, teenagers, senior citizens etc. Family markets include many products such as family type vehicles, household goods and even holidays. Values related markets can include a wide variety of interests including but not limited to philosophy, religion, education. Behaviour segment marketing can include areas such as sports, hobbies, physical interests. http://www.businesssttudiesonline.co.uk/AsA2BusinessStudies/TheoryNotes/2874/PDF%20Non%20Print/02%20Market% 20Planning.pdf Some products are purposely created for only one segment. High end luxury watches are aimed at the high income market. Particular vehicles 4WD/SUV’s are marketed/aimed at certain types of drivers. This means that the marketing of these items can be very focused on where, how and when these products are advertised. More general or less income focused products are often marketed at several sectors or even segments. Family and value oriented, or even some age related products such as general clothing or shoes are often marketed and aimed at broader segments. Many large corporations having a product family often attract customers/sales through the use of advertising an image. Eg Coca Cola products advertise young people involved in many appealing and attractive activities as a way of increasing its appeal. So what started as a one drink soda company now has many different products including Coca Cola, Coke light, Coke Zero being sold in many different sized/material containers including, glass, plastic, steel and aluminum and also dispensed into cups, glasses and containers from machines. As is widely known Coca Cola is a multinational company now and as such commands a huge scale of production of all its family of products. With production being done at such huge numbers, economies of scale allows many opportunities for diversification or design development. Robust Design or Product Family Robust design is a flexible approach that can be adapted to changing technical and market driven requirements. The product functionality remains quite constant despite many factors changing. Product Family uses a concept of standardised specifications of components or assemblies this allows companies to create competitive advantage. Often based around a common product platform.. p23 Design Technology Metcalfe, Metcalfe 2011 Product platform indicates commonalities in design including but not limited to product lines, shapes, materials, production or manufacturing processes or other features such as marketing, branding. Honda is an example of a Robust design developing into a product family. The ability of Honda to provide high power to weight ratios in their engines which was initially used in its racing motorbikes helped create the environment (Technology and expertise) to transfer this product advantage into a whole range of motorbike models. Ref http://www.youtube.com/watch?v=rYabfifhEPE Try to decide which examples match the different markets below and justify your answers. Examples - 1. Marketing campaign to a different target market group - 2. Developing a new colour range of the same product - 3. A low fat version of the same food product - 4. Using nylon for clothing rather than parachutes or its original use. - 5. Income; Age; Lifestyle; Values - 6. Products containing common parts and assemblies - 7. Flexible designs which can be changed due to technical improvement Different Markets Example (1-7) Robust Design Market Development Diversification Product Family Market Sector/Segmentation Product Development Market Penetration Complete the following Quiz on Marketing Segments and review your responses http://www.tutor2u.net/business/quizzes/as/marketing_segmentation/quizmaker.htm Jeep http://www.bing.com/images/search?q=jeep+product+family&qpvt=Jeep+product+family &FORM=IGRE 9.3 Marketing Mix Essential idea: The marketing mix is often crucial when determining a product or brands offering. Nature of Design Empathy for and understanding of the target audience is developed through analysis of the market chosen. This informs several factors: the standards that end users demand; how and where to distribute and sell the product; how much they are willing to pay for a certain product and its quality; and how to communicate the launch of the product. Correct analysis of these factors could determine the success or failure of the product despite its quality Concepts and Principles Marketing Mix the 4P’s Product, Price, Promotion and Place Product; standardization of products Price; strategies for setting price; cost-plus, demand pricing, competitor-based pricing, product line pricing, psychological pricing. Promotion: Advertising, publicity, personal selling Place: Implications of internet selling for a company in relation to its supply chain and distribution network Guidance Consider governments standards for a particular market segment, component standardization and industry wide standards. Examples of trigger products and incremental products Analysis of product prices that matches each of the price setting strategies Examples of promotion campaigns for different products. http://businesscasestudies.co.uk/business-theory/marketing/marketing-mix-price-placepromotion-product.html#axzz3CcJKJlNC “The marketing mix is the set of controllable, tactical marketing tools that a company uses to produce a desired response from its target market. It consists of everything that a company can do to influence demand for its product. It is also a tool to help marketing planning and execution. The four Ps of marketing: product, price, place and promotion The marketing mix can be divided into four groups of variables commonly known as the four Ps: 1. Product: The goods and/or services offered by a company to its customers. 2. Price: The amount of money paid by customers to purchase the product. 3. Place (or distribution): The activities that make the product available to consumers. 4. Promotion: The activities that communicate the product’s features and benefits and persuade customers to purchase the product. Marketing tools Each of the four Ps has its own tools to contribute to the marketing mix: Product: variety, quality, design, features, brand name, packaging, services Price: list price, discounts, allowance, payment period, credit terms Place: channels, coverage, assortments, locations, inventory, transportation, logistics Promotion: advertising, personal selling, sales promotion, public relations” Ref: http://www.marsdd.com/mars-library/the-marketing-mix-in-marketing-strategy-productprice-place-and promotion/ More specific detail on each of the 4P’s is offered here 1. 2. http://www.nhlabreakaway.net/_content/courses/NHLAMKT101_Module_4.pdf http://en.wikipedia.org/wiki/Marketing_mix http://www.dezeen.com/ Activity 1. Look at the first website above and state all of the 4 P’s for an Apple product. Be specific and give as much detail as possible. Name of Brand/Product………………………………… P P P P Choose a Lighting product (Desklamp) and again outline all aspects of the marketing mix to clearly show how this is involved in the commercial success of the product. Name of Brand/Product………………………………… P P P P Test your Marketing Mix knowledge using the following quiz…….. http://www.tutor2u.net/business/quizzes/as/marketing_mix_introduction/quizmaker.htm 9.4 Market Research Essential idea: Market research is an organized effort to gather information about markets or customers. Nature of Design Market research often identifies how to improve the product, service or system and increase its chance of success within a particular sector or segment. The price a user is prepared to pay is usually determined through market research. This in turn sets an upper limit of cost to the design and production of a potential product, service or system. Market research has a crucial role in determining the constraints a designer has to work within. Concepts and Principles Purpose of Market Research Consumers reaction to technology and green design and subsequent impact on design development and market segmentation Market research strategies Guidance The purpose of Market research includes idea generation and development; evaluating market potential and economic trends; collecting data relating to demographics, family roles, consumers; identifying suitable promotion strategies; considering technological trends and scientific advances. Market research strategies include literature search, expert appraisal, user trial, user research, perceptual mapping and environmental scanning. Advantages and disadvantages of each market research strategy considering the nature, reliability and cost of the research and importance to the design development process. Purpose of Market Research The purpose of market research is to help a business gain more detailed understanding of consumer needs, reduce the risk of business failure, gather data on customers and potential customers and aid in business decision making. Market research should be done often to realise and continue meeting needs of a changing market. Complete the exercise below using the following words deadlines tative distribution Quantitative economic recording failure research plan Market sources Marketing research is defined as the needs objectives systematic plan tastes gathering, portfolios Quali trends and analysing of data about problems relating to the marketing of goods and services. Marketing research can serve a number of purposes, including giving a business a better understanding of customer future , reducing the risk of product and helping to predict . It can be used to find out information about the product itself and the market in which it operates, as well as about the promotion and of that product. Marketing research needs to be carried out regularly, if not continuously, because the environment in which business organisations operate is subject to change. The reasons for this dynamic environment may include changes in consumer changes in the product , changes in technology, of rival firms and changes in conditions Market research is the process of identifying primary and secondary information about the demand for a product, whereas research is a much broader process involving product testing, and consumer reactions to changes in prices and promotion. Before marketing research can be carried out, the problem must be defined and the established. The next step is to develop a data which determines what will be used and how the data will be collected. If primary research is required it may be necessary to take a sample of the population as a whole - this will involve drawing up a sampling . It will also be necessary to establish a budget and to ensure that the research is completed on time and within agreed costs. research involves gathering statistical or numerical information, such as the size of the market. It is usually obtained by conducting large scale surveys. research, on the other hand, is concerned with people’s opinions, views and motivations and is usually obtained via focus groups or in-depth interviewing. Check your answers at the following URL; http://www.tutor2u.net/quiz/marketing/jcl_marketing_research_purpose.htm Consumers reaction to technology and green design and market segmentation Ref: http://www.greenbookblog.org/2013/05/06/four-new-approaches-to-consumersegmentation-in-a-digital-and-social-age/ http://www.ssireview.org/articles/entry/cultivating_the_green_consumer/ http://www.wpp.com/wpp/marketing/hottopics/china/ten-implications-formarketing-strategy-in-these-times/ http://www.greenmarketing.com/files/NRoGM_ch1REVIEW-COPY-FOR-FREEDOWNLOAD.pdf Market research strategies Literature Search - the methodical investigation of all published sources for information bearing on a usually scientific or technological subject <it is in chemistry that the literature search has attained full stature — New Technical Books> Expert Appraisal - The reliance on the knowledge and skills of an expert in the operation of the product. http://www.larapedia.com/glossary_of_technology_terms/expert_appraisal_meaning_in_technology. html User Trial – Is the observation of people using a product and the collection of comments from people who have used the product. User Research - Is obtaining user responses usually through questionnaires or interviews Perceptual Mapping - is a diagrammatic technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line, brand, or company is displayed relative to their competition. http://www.perceptualmaps.com/example-maps/ Create your own Perceptual Map using this template …………………………. http://www.perceptualmaps.com/free-templates/ Environmental Scanning - Environmental scanning can be defined as ‘the study and interpretation of the political, economic, social and technological events and trends which influence a business, an industry or even a total market’.[2] The factors which need to be considered for environmental scanning are events, trends, issues and expectations of the different interest groups. http://en.wikipedia.org/wiki/Environmental_scanning#cite_note-2 Or careful monitoring of an organization's internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans. In comparison, surveillance is confined to a specific objective or a narrow sector. Read more: http://www.businessdictionary.com/definition/environmentalscanning.html#ixzz3D3cf8rf2 Advantages and disadvantages of these methods include Literature Search – Advantage is that many different sources of information are available but a disadvantage is that there may be an abundance of information or data which can be very time consuming. IT helps in accessing data and collecting data immensely but again perhaps too much so synthesis is necessary Expert Appraisal – Expert knowledge is gained quickly and can help a designer decide design direction, as opposed to user trial info which takes longer to acquire. Expert appraisal may however be biased and an expert may be difficult to locate. User Trial – Advantage is that the User is a non specialist so which makes the trials easier and cost effective to conduct. Disadvantage is that they may carry out tasks in different ways……… and be inexperienced. User Research - Advantage is that it is easy and cheap to conduct, disadvantage is that it is largely qualitative data collected. Perceptual Mapping - Advantage is that it allows an observer to very quickly see how a brand or product compares to other competitors in the market through a graphical representation. Disadvantage is that as it is a graphical representation the accuracy can be misleading or even biased depending on the size and scale of the mapping used. Can give limited information depending on the data used, What source, when it was sourced, reliability of the data etc. Environmental Scanning - Advantage is that it gives a very broad interpretation of strengths, weaknesses, opportunities and threats. Disadvantages include lack of detailed information or specifics of what constitutes these opportunities or threats it may need much more research or specific data to identify usable information. Complete this quiz on Marketing research to check how much you understand……….. http://www.tutor2u.net/business/quizzes/as/marketing_research/quizmaker.htm 9.5 Branding Essential idea: Branding creates an identity for a product or company, which makes it distinct from another and can provide added value. Nature of Design In order to diffuse products into the market place, the identity of a company is typically embodied in a brand. The brand is communicated to the consumer through a value proposition. Designers help to communicate this by: building stronger user experience around the brand identity; determining content design; establishing the tone of message through advertisements; promotion Concepts and Principles Brand loyalty How brands appeal to different market segments The difference between a trademark and registered design The implications for a company of positive and negative publicity on brand image Contribution of packaging to brand identity Effects of product branding Evaluating the global impact of branding Guidance Examples of positive and negative effects of product branding on different market segments. Examples of products affected by branding on a global scale. What is Branding? http://www.youtube.com/watch?v=JKIAOZZritk Brand Loyalty is where a person buys products from the same manufacturer repeatedly rather than from other suppliers.[1] In a survey of nearly 200 senior marketing managers, 68 percent responded that they found the "loyalty" metric very useful. Brand loyalty, in marketing, consists of a consumer's commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of a product or service, or other positive behaviors such as word of mouth advocacy Ref: http://en.wikipedia.org/wiki/Brand_loyalty http://en.wikipedia.org/wiki/My_Coke_Rewards or another example Marriott Rewards is the guest loyalty program that offers travelers their choice of points toward free vacations and merchandise or frequent flyer miles, as well as other membership benefits, when staying at Marriott brand hotels worldwide. Frequent travelers also can earn “elite level” benefits with Marriott Rewards, including room upgrades, bonuses, and gifts. There are three “elite” levels—Silver, Gold and Platinum – each based on the number of nights stayed at Marriott hotels each year.[30] When consumers become committed to your brand and make repeat purchases over time. Brand loyalty is a result of consumer behavior and is affected by a person's preferences. Loyal customers will consistently purchase products from their preferred brands, regardless of convenience or price. Companies will often use different marketing strategies to cultivate loyal customers, be it is through loyalty programs (i.e. rewards programs) or trials and incentives (ex. samples and free gifts). Ref: http://www.investopedia.com/terms/b/brand-loyalty.asp Classwork activity Name and describe 4 company loyalty programs and what the benefits are to the consumer and company How Brands appeal to different market segments Market segmentation pertains to the division of a market of consumers into persons with similar needs and wants. For instance, Kellogg's cereals,Frosties, and Coco Pops are marketed to children. Kellogs Crunchy Nut Cornflakes are marketed to adults. Both goods denote two products which are marketed to two distinct groups of persons, both with similar needs, traits, and wants. http://en.wikipedia.org/wiki/Marketing#Market_segmentation , People do things with brands to say things about themselves. This means brand and target market segment personalities need to be aligned (to some extent). If they’re not they’ll be like ships passing in the night as the brand will hold little self expressive value for the target market. It’s also crucial the brand’s personality acts as an emotional common denominator that appeals to all the target segments. However, facets of the brand personality need to be emphasised in certain contexts and at certain moments in time. This helps ‘fine tune’ the brand’s appeal to certain segments. So how does this work in reality? For example, if you decide to buy a new car, VW would hope that you would consider it first, among the dozens of great car makes that dealerships have to offer. Volkswagen's "da-da-da" campaign achieved exactly that among young buyers. The brand was perceived as being cool, inclusive and reliable, which was relevant for the audience that Volkswagen wanted to appeal to. Consequently, the results jumped off the chart. As such, branding is more than just a promise of what the product or service will provide. It is a dialog between two trading groups who need to communicate effectively in a highly noisy environment Ref: http://wavelengthmarketing.wordpress.com/2013/05/17/how-can-one-brand-appeal-todifferent-segments/ Classwork activity Watch this video: http://understandingteenagers.com.au/blog/2010/07/how-branding-is-shapingteenagers/ List / explain 4 examples of 2 x positive and 2 x negative effects of product branding on different market segments Trademark and Registered Design A Trademark is a distinctive design, graphics, logo, symbols, words, or any combination thereof that uniquely identifies a firm and/or its goods or services, guarantees the item's genuineness, and gives it owner the legal rights to prevent the trademark's unauthorized use. A trademark must be (1) distinctive instead of descriptive, (2) affixed to the item sold, and (3) registered with the appropriate authority to obtain legal ownership and protection rights. A Registered Design refers to the features of a shape, configuration, pattern or ornament applied to an article by any industrial process. If you register a design, you will be protecting the external appearance of the article. Registered Designs are used primarily to protect designs for industrial use. By registering a design, you obtain a right to ownership and the right to prevent others from using the design without your permission. You can exploit your design in many ways. You may use it to better protect your market share by barring copying by others, license it to third parties for commercial returns or sell the design for a sum of money. Read more: http://www.businessdictionary.com/definition/trademark.html#ixzz3DMlpETDA and http://www.ipos.gov.sg/AboutIP/TypesofIPWhatisIntellectualProperty/Whatisaregistereddesign.asp x The implications for a company of positive and negative publicity on brand image Earning and maintaining a good reputation is challenging for new and established businesses. When bad publicity emerges, businesses could be portrayed as irresponsible, dishonest or appear to be only looking out for their best interests. Although it is possible to make a good name for your business on a local or national scale, doing so can be an uphill battle, especially in the face of bad publicity. Loss of Trust Bad publicity can come in the wake of an exposed lie or inaccuracy. Sometimes advertising is used to pump up businesses' capabilities and consumers' expectations. Expectations can be carelessly overblown, revealed as false in the form of bad publicity and lead to disappointment and a loss of trust. When an organization fails to follow through with promises, customers, employees and partners are more likely to question the truthfulness of all the organization's current and future messages. Regaining trust can be difficult and timeconsuming. Mistrust expressed by word of mouth and through social media can take years to repair and often can only be remedied by the number of vocal supporters eventually outnumbering the critics. Effects on Sales In general, bad publicity negatively affects sales. Companies that are virtually unknown can at times experience a boom in business after bad publicity, but they are the exception. In general, bad publicity damages the long-term success of larger established businesses. Product accessibility can also decrease with bad publicity, and potential consumers might have fewer opportunities to purchase products. When buyers and store owners have negative opinions, their choices ultimately affect their customers' options Damaged Brand Equity Brand equity can suffer long-term damage as a result of bad publicity. This is especially evident for companies that must recall their products because of safety or health hazards. In such cases, even if only a portion of a product's supply is recalled, buyers are likely to avoid the brand altogether for a period. Rumors, even those with no merit, can affect sales just as strongly Damaged Brand Association Brand association refers to the deep-seeded attitudes and feelings a customer has toward a product or company. When brand association is negative, negative attitudes are more likely to come into a consumer's mind before positive ones. Bad publicity can contribute to negative brand association, which can in turn reduce sales over time. Changing attitudes and brand associations can take a great deal of time and can also be costly, as a company might be forced to invest in additional advertising and campaigns to correct negative attitudes. Damaged brand association also leaves room for competition to move in on a customer base, which can also reduce sales. Ref: http://yourbusiness.azcentral.com/disadvantages-bad-publicity-3495.html Contribution of packaging to brand identity The McAfrika was a burger sold by McDonald's in Norway and traded as a Limited Edition Olympic Games Burger. It attracted significant public attention as a result of its name and the timing of its launch. The McAfrika sandwich contained beef, cheese, and tomatoes wrapped in pita bread. McDonald's claimed it was based upon an authentic African recipe. The McAfrika was released in 2002, just as a major famine was occurring in southern Africa. The name of the burger was immediately criticized for being grossly insensitive, especially since it was released in Norway, one of the richest nations in the world. Norwegian Church Aid and the Norwegian Red Cross, which were both conducting humanitarian operations in southern Africa at the time, said that McDonald's decision was insensitive, crass and ill-considered. CARE Norway demanded that McDonald's withdraw the burger. In particular, Norwegian Church Aid protested the McAfrika burgers by giving out "catastrophe crackers" to customers entering Norwegian McDonald's outlets. Support for McDonald's came from the organization African Youth in Norway who appreciated Africa name being used in a positive manner instead of as a continent of war and poverty. Generating positive publicity for your business is an area of marketing that is often forgotten or not even considered. Yet using the media to tell people about your business can be a very effective way of spreading the word, enhancing your credibility and generating sales. What’s more, other than the time you spend arranging your publicity… it’s free! Being published in the press or featuring in an industry magazine can add weight to all your other marketing and shouldn’t be seen as something only the big companies go after. New Zealand is a nation of small business owners like you, and people are interested in your story. Generating free publicity for your business is easier than you think especially if you know how to look for opportunities and make the most of them when they arise. Class work Look for one brand that has benefitted from positive publicity. Discuss implications on the brand image. Brand identity and package design are an increasingly important component of corporate branding strategies as they contribute significantly to marketing or branding successes. While marketing and advertising efforts seek to create “need” or demand for a product, only the package can tangibly deliver that product and brand to the consumer. The package must meet the consumer where he or she is, and it must deliver just the right brand message to promote a purchasing decision. All of the corporate marketing, advertising and promotional efforts in the world go for naught if the consumer standing before the retail shelf, passes over the product. When this happens, the huge cost of research and development, marketing and positioning the product in the marketplace has been a waste. Since a brand’s packaging is its most enduring and accessible brand communication vehicle, it’s important that it conveys the brand experience. Through an innovative structure and package design system. The brand’s packaging must be a synergistic part of the overall brand expression continuum. Sometimes the objective is to develop a logo and a package design system for line extensions by leveraging existing brand equities while creating distinctive imagery for a new category segment. A great example of this is Procter & Gamble’s Pringles Snack Stacks products. Snack Stacks offer consumers the same Pringles in an eight- pack configuration of small plastic tubs that are yoked together in a paperboard sleeve. Ideal for lunchboxes and for those who wish to control portions, this structural package extends the Pringles line, and its recognizable brand attributes. The iconic Mr. Pringles character has been contemporized for new generations of potato chip fans and is now a global player in the crowded snack market in 140 countries. Effects of product branding Brand name products are those products that are identifiable not just by their function but also by their manufacturer. In some cases, brand names are so recognizable, they come to stand for the products themselves, as with Kleenex, Tylenol and Post-It. Brand names are so pervasive, it is no wonder that they have been argued to have potentially deleterious effects on children. Read more : http://www.ehow.com/info_8075672_effects-brand-names-kids.html Brand names are words, images, slogans or symbols used to distinguish a product from its competitors in the market. The legally protected brands (those that can't be copied without the explicit permission of the owner) are called trademarks and are one of the most important elements of modern marketing. This is because, according to the "The Socio-Cultural Meaning of Brands" research published by the Oxford University Press, "the power of a brand to influence perceptions can transform the experience of using the product." Read more : http://www.ehow.com/info_8488017_influence-brand-names-consumerdecisions.html Evaluating the global impact of branding Global branding and advertising can help you market your product or service in many different countries around the world. Although global branding and advertising have historically required large budgets, emerging communication techniques such as social media can make global campaigns affordable for companies of all sizes. Though branding came about during the industrial revolution to create distinction and individuality, branding in today’s global society takes on a different role for consumers, often having a negative impact on workers many consumers aren’t aware of. Most people feel better when they choose brand names because they equate recognition and established reputation with a quality product. In her book Naomi Klein uncovers the underbelly of branding and explains that companies manufacturing outside the U.S. often do so in Export Contracting Zones. These zones often utilize “Work Camps” which regularly subject workers to inhumane conditions. The Institute for Global Labor and Human Rights released a report alleging that workers producing clothing for Classic Brands like Walmart, Target, Macy's, and Hanes at a factory in Jordan have been routinely beaten, underpaid and forced to work excessive hours. The report added that workers have been forced to live in bed buginfested dormitories that lack heat and hot water. The companies named in the report have yet to take any action. Charles Kernaghan, author of the report says these companies have become global networks that design, make, buy, and sell things wherever around the world it’s most profitable for shareholders and believes nothing will change until we get a law that keeps goods produced under these conditions out of U.S. consumers' shopping carts. As long as consumers stay in the dark about these practices, retailers will continue to pressure manufactures & suppliers to keep producing as cheaply as they can. Would you be willing to pay more to ensure humane work conditions for all? Examples of products affected by branding on a global scale Nescafe http://wn.com/global_branding Global brands http://www.youtube.com/watch?v=IddQGjBKxYs Class work: Choose one product and discuss how it was affected by branding.