Download Marketing Management in Practice

Michael G. Warner
Chartered Marketer
EMBA DipM
FCIM FIDM
Michael G.Warner MBA DipM FCIM FIDM
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CIM Post Graduate Diploma
Marketing Leadership & Planning
Michael G.Warner MBA
DipM FCIM FIDM
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Course Objectives
To deliver a coherent and deliverable
market oriented internal culture to encourage
flexibility
which is SMART enough for your employer to understand
and give you the go ahead.
To follow the CIM guidelines so as not to throw away marks
To maximise the LSM on-line resources
=
SUCCESS
Michael G.Warner MBA DipM FCIM FIDM
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Assessment tasks
 CIM registration deadline
29th March 2013
 Introduction to the assessment.
 What do you have to do to pass?
Michael G.Warner MBA DipM FCIM FIDM
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Session 2
Developing marketing
strategies and value
proposition
Michael G.Warner MBA DipM FCIM FIDM
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Strategic Choice – Product Market strategies
Michael G.Warner MBA DipM FCIM FIDM
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Brand: A Definition
ACCORDING TO MARKETING THEORY:
“…a name, term, symbol or design, or a combination of them, which is intended to
signify the goods of one seller or groups of sellers and to differentiate them from
those of competitors”
Kotler (1994), Marketing Management
RATHER DEFINE A BRAND IN RELATION TO THE CUSTOMER:
…is the means by which the company establishes a relationship with the customer
(because a brand has an identity and a personality and a product not)…
…A sum of all available information about the company, product or service, gained
from experience (functional and emotional), differentiating it from another. The
appeal is both rational and emotional level; tangible and intangible…
…The space in consumers’ hearts and minds that belongs to you…
…The reason to choose you over the other guys…
Michael G.Warner MBA DipM FCIM FIDM
INSIGHT
7
What is a Brand? Product vs Brand
A product is something that is made
in a factory; A brand is something that is
bought by a customer.
 A product can be copied by a
competitor; a brand is unique.
 A product can be quickly outdated; a
successful brand is timeless.

Michael G.Warner MBA DipM FCIM FIDM
Stephen King (WPP Group, London)8
Strategic Choice
Strategic
Choice
How to
compete
Direction
of growth
Michael G.Warner MBA DipM FCIM FIDM
Methods
of growth
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The Total Product Concept
Physical v Psychological/ emotional intelligence
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The brand blueprint
An approach to defining the brand and how to strengthen it
Generics:
Entry stakes to the
category
Inner
directed
values
Outer
directed
values
Core Proposition
raison d’etre to the consumer
How the
brand
makes
me
feel
Absentees:
desirable elements currently
lacking from the brand and need
to be developed into it
Essence
Core Values
fundamental values
that define the
brand
Functional
elements
Emotional
elements
Supports
Brand Personality
What
the
brand
says
about
me
Peripherals:
values to be reduced
How the brand speaks to me
Interbrand Newell and Sorrell
©Michael Warner &
Snowpine Ltd
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Boston Consulting Group (BCG) Growth-Share Matrix
Michael G.Warner MBA DipM FCIM FIDM
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G E Business Screen
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What makes a Strong Brand?
 It must work as a product or service – no fancy advertising or clever logo
will compensate
 Must appeal on both the rational and emotional level – products may all
work well; price premium is justified by additional intangible, emotional
benefits.
 Must be integrated and coherent – tangible and intangible benefits must
be consistent with each other to present a coherent and believable “brand
personality” (TAG-Heuer)
 What it offers must be wanted by the customer and mean something to
him/her – what is relevant may change over time: e.g. “environmentally
friendly” is a relevant benefit now for products from motor cars to
holidays; 30 years ago – no premium paid for these products.
Michael G.Warner MBA DipM FCIM FIDM
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What is customer-based brand equity
Customer-based
brand equity is the
differential effect
of brand
knowledge on
consumer
response to the
marketing of a
brand.
• market oriented internal culture
to encourage flexibility
Michael Waner for Snowpineltd.com
Aaker model
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Brand Equity
Michael G.Warner MBA DipM FCIM FIDM
Aaker model
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Service quality gaps model
Word-of-mouth
communications
CUSTOMER
Personal needs
Past experience
Expected service
Gap 5
Perceived service
Service
delivery
PROVIDER
Gap 1
Gap 4
Gap 3
Gap 2
Service quality
specifications
Management perceptions
of customer expectations
External
communications to
customers
Lewis and Mitchell, 1990; Dotchin and
Oakland, 1994a; Asubonteng et al ., 1996;
Wisniewski and Donnelly, 1996).
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©Michael Warner & Snowpine Ltd
Customer Relationship Marketing (CRM)Customer
Relationship Management CRM)
Customer
Acquisition
CR
Mark.
Marketing Mix
Branding
strategies
CR
Mgt.
Customer
Enhancement
MIS
MkIS
DSS
Other
Augmentation of
product/service
offer
Knowledge
Management
Customer
Retention
Sustainable
competitive
advantages
and increase in
shareholder
value
CRM strategies are important for all organisational aspects and industries and segments.
However, they are a must in heterogeneous markets. In homogeneous markets the rules
can, perhaps, be relaxed to an extent.
Michael G.Warner MBA DipM FCIM FIDM
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© Dr George Panagiotou 2009
Ethical stance - Four types of Firm on
Ethical Issues
Ethically dependent
Firms whose ethical standing is
a key aspect of their product
offering
Examples: Oxfam, The Body
Shop, Innocent
Ethically positive
Firms whose ethical standing is
important to their credibility
but not itself a key attribute
Examples: Honda, Sainsbury’s,
,Virgin,
Ethically Neutral
Firms whose ethical standing
is less significant though
unethical behaviour would
be damaging
Examples: British Gas,
British Airways
Ethically Negative
Firms perceived as being a
business with negative
ethical connotations
Examples: Shell, BAT, Banks
Michael G.Warner MBA DipM FCIM FIDM
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International Marketing Strategies
Michael G.Warner MBA DipM FCIM FIDM
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International investment opportunities
based on the directional policy matrix
Source: Harrel, G.D. and R.D. Kiefer (1993), ‘Multinational market portfolio in global strategy development’, International
Marketing Review 10 (1); Phillips, C., I. Duole, and R. Lowe, International Marketing Strategy, Routledge 1994, pp. 137–8.
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Value Proposition
• Value proposition refers to total benefits of using company’s
products and services. In other words, value proposition
summarises why a customer should buy company’s products
or services.
Generally there are three approaches/ strategies of developing
a value proposition.
• Product leadership – value proposition created through best
quality innovative products. Value focus on quality.
• Operational excellence – lowest cost achieved through
operational excellence. Value focus on cost.
• Customer intimacy – total solution providers with greater
focus on relationship building. Value focus on relationship/
service
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Characteristics & design of the Value
Proposition
Characteristics
Core elements
 Clear
 Service
 Concise
 Price
 Credible
 Consistent over time
 Quality
 Image
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Key Business Concepts: Ikea Example
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Business
model
Ikea is a low-cost retail service
provider
Revenue
model
Sells home furnishing items at retail
directly to the public
Value
proposition
Provides low-cost, easy-to-assemble
items in a pleasant shopping
environment
Balanced Scorecard
Kaplan and Norton 1992

is a management system (not only a measurement system) that enables
organisations to clarify their vision and strategy and translate them into
action.
 It provides feedback around both the internal
business processes and external outcomes in order
to continuously improve strategic performance and
results.
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The Balanced Scorecard
Kaplan and Norton
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(1992)
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Michael G.Warner MBA DipM FCIM FIDM
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Agenda

Strategic choice

Environmental analysis

Industrial and consumer markets

Segmenting, targeting and positioning

Warfare Strategies

Total product concept and Branding

International marketing strategies

Balanced score card
Michael G.Warner MBA DipM FCIM FIDM
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Methods of growth
Advantages of acquisitions / mergers
Alliance Advantages
Marketing advantages e.g. Market power
Shared investment risk
Production advantage economies of scale
Complementary resources
Overcome entry barriers
Possible government condition
Resource and competencies
Joint financial strength
Disadvantages of acquisitions / mergers
Alliance Disadvantages
Costly
Difficult to select and agree with partner
Integration issues E.g. Cultural clashes
Managing relationship
Conflicts of objectives
Loss of competitive advantage through imitation
Potential for diseconomies of scale
Limits integration/coordination of activities
across countries
Michael G.Warner MBA DipM FCIM
Methods of growth
Advantages of licensing
Advantages of joint ventures
Capital not tied to operations
Synergies through Shared
resources and competencies
Contractually agreed income
Flexibility
Limit financial/economic risk
Shared risk
Greenfield – state of art and
government finance
Disadvantages of licensing
Disadvantages of joint ventures
Difficult to select and agree with
partner
Integration issues
Loss of competitive advantage
through imitation
Imbalanced level of expertise and
investment
Limits participation
Greenfield – time consuming and
unpredictable cost
Licensees become competitors
Diminished control over
Michael G.Warner MBA DipM FCIM
Invest or hold

If the business position is strong of the company and the industry environment is
favorable then the company should try to retain in the market as there are still
opportunity for the organisation to make profits.

However the company should take different measures to increase its performance at
this level. Following could be considered:

Exploit new markets

Exploit new products

Exploit new applications

Exploitation of growth of sub markets.

Government stimulated growth.
Michael G.Warner MBA DipM FCIM FIDM
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Be a profitable survivor

This could be achieved by different measures. Majorly the company could encourage
competitors to exit from the market. Following alternatives could be identified;

Be Visible About Commitment to Survive

Raise the Costs of Competing

Introduce New Products & Cover New Segments

Reduce Competitor’s Exit Barriers

Create a Dominant Brand in Fragmented Declining Market

Purchase a Competitor’s Market Share or Production Capacity.
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Milk or harvest
 The main objective here is to generate cash flow by reducing investment and
operating expenses, even if that causes sales and market share to decrease.
Conditions Favoring a Milking Strategy

Decline rate is pronounced, but not excessively steep.

Stable price structure is profitable for efficient firms.

Business position is weak, but customer loyalty will still produce sales and profit.

Business is not central to strategic direction.

A milking strategy can be successfully managed.
Michael G.Warner MBA DipM FCIM FIDM
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Exit or liquidate

This strategy is appropriate both the business position and the industry environment is not
favorable to the entity. The logic here is to exit or to liquidate the business and avoid loss
making as soon as possible, since there is no profitability with the current market condition.

Following areas are identified as features of these markets;
 Rapid and Accelerating Decline Rate
 Extreme Price Pressures
 Business Position is Weak; Losing Money
 No Longer Part of Strategic Direction
 Exit Barriers Can be Overcome
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Example of a Competitor Profile
INTEGRATED COMPETITOR PROFILES AND GAP ANALYSIS
Key Factors for
Success (KFS)
Innovation
India
Titan
Europe
UK
USA
India
Swiss
Europe
UK
USA
Top
end
Design
Needs to adapt
to preferences
Quality
Needs
Communications
Cost Base
Produce
in
India
and
export abroad
India
Japan
Europe
UK
USA
Timex
?
Skill
Comp.
Awareness
Brand
Recognition
Needs
improvement
Increasing
After sales serv.
?
?
?
?
?
?
?
Access to supply
and SMS
Varied range
?
Management
skill
?
Distribution
Increasing
Facilities
Increasing
?
Operational
Efficiency
Market
Knowledge
Marketing
Comms.
?
?
Needs
improvement
?
Increasing
Michael G.Warner MBA DipM FCIM FIDM
A student example
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student
example
Michael G.Warner MBAADipM
FCIM
FIDM
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Strategic Wear-out

Strategic and tactical wear-out is the problem that any organisation will face
if it continues with its current strategies and tactics without considering the
changes happening in the macro and micro environment.
Followings can be identified as main reasons for strategic wear-out
 Market changes – customer preferences and requirements, distribution
requirements etc
 Competitor innovations
 Internal factors – poor cost control, lack of consistent investment, ill advised
change of successful strategies
Michael G.Warner MBA DipM FCIM FIDM
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Industrial and Consumer markets
Variable
Industrial Markets
Consumer Markets
Volume of sales
Low
High
Value of sales
High
Low
Supplier bargaining power
Shifting - depending upon
number of suppliers and
organisational size and
importance
Usually high
Buyer bargaining power
Shifting - depending upon
number of buyers and
organisational size and
importance
Usually low
Service requirements
High
Low
Buying decision making
DMU
Individual
Availability of information
Usually low
Usually High
Michael G.Warner MBA DipM FCIM FIDM
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Business Orientations
Product
Orientation
High
Second
Hand
Markets
Industrial
Markets
•Capital equipment
•Business-tobusiness
•R&D labs
•Charities
•Auctions
Not-forProfit
Markets
•Schools
•Hospitals
•Gov.
Agencies
Consumer
Markets
•FMCG
•Serviceoffer
•Retailing
Low
High
Michael G.Warner MBA DipM FCIM FIDM
Marketing
Orientation
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© Dr George Panagiotou 2009
Main organisational Market Approaches
Product Orientation (emphasis on own products)
Flow of sales
Push-Selling Techniques
Producer
Whole
Seller
Retailer
Consumer
Marketing Orientation (emphasis on customer needs and wants)
Flow of sales
Pull-Selling Techniques
Producer
Whole
Seller
Retailer
Research and development and marketing
communications
Michael G.Warner MBA DipM FCIM FIDM
Consumer
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© Dr George Panagiotou 2009
The Stages of the Segmentation, Targeting, Positioning
(STP) Process
1.
Identify the
organisation’s
position, strengths,
weaknesses and
capabilities relative
to competition, given
aims and objectives.
Situational
analysis
2.
Identify desired
segments in the
industry and
segmentation
variables within.
3.
Develop profiles for
each segment
6.
Identify the positioning
concept within each
target segment.
7.
Select and develop the
appropriate positioning
concepts.
Market
Segmentation
4.
5.
Evaluate the
attractiveness of each
potential segment(s).
Market
Targeting
Select segment(s) to enter
Product
Positioning
8.
Develop a relevant
marketing mix for
each segment
The 7 Ps-based
Marketing Mix
Michael G.Warner MBA DipM FCIM FIDM
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Bases for Segmentation
Customer Related
•Geographic
•Continent; Country; Region; City; Rural; Urban; population Density
•Demographic
•Age; Gender; Family Size; Family Lifecycle (old/New); Income; Occupation; Education;
Race; Nationality; Social Class.
•Lifestyle (psychographic)
•Tastes; Preferences; Motivation; Inclinations; Status.
Situation Related
•Benefits Offered/Benefits Sought
•Need Satisfiers; Product Features; Low Price; Reliability; Safety; Convenience.
Michael G.Warner MBA DipM FCIM FIDM
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Macro Environmental Analysis






Political environment
Economic environment
Socio-cultural environment
Technological environment
International environment
Environmental and ecological environment
In addition to the above factors followings may also be considered.
 Business Life-Cycle
 Elasticity/Inelasticity of Demand and Supply
 Socio-Politico Frameworks
 Market Structures
Michael G.Warner MBA DipM FCIM FIDM
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Meso Environmental Analysis
Industry
Market Place
Competitor Profiles (PIMS/Other
databases)
Segmentation, Targeting, Positioning (STP)
Benchmarking
Customer profiles
Industry Life-Cycle (ILC)
Branding/communications Models
General Electric (GE) Matrix
Product Life-Cycle (PLC)
Shell Directional Policy Matrix
Consulting Group (BCG) Growth Share
Matrix
Ansoff Matrix
Forces/Dynamics of competition & KFS
Strategic Groups
Positioning/Perceptual/Cognitive Maps
All positive and negative observations/ findings should be included in the
opportunities and threats sections of the overall SWOT Analysis/ Telescopic
Observations Framework.
Michael G.Warner MBA DipM FCIM FIDM
© Dr George Panagiotou 2009
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Micro Environmental Analysis














Organisation’s vision, mission and values
Corporate strategy and
Resource and competency audit
Portfolio analysis
Value chain and resource utilisation
Innovation audit
Cost efficiency
Product life‐cycle
Degree of customer and market orientation
Comparative and best practice analysis
Core competencies
Organisational culture
Financial performance
Critical factors forMichael
success
G.Warner MBA DipM FCIM FIDM
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Bases for Segmentation
Consumption or Use pattern
Rate of Use; Use with Other Products; Brand Familiarity.
Buying Situation
Kind of Shop or Distribution Channel; Kind of Shopping; Depth of Assortment; Type
of Product.
Questions to Ask:
Who is the customer?, What is their bargaining power?, What do they buy?,
Where do they buy from?, Why do they buy?, When do they buy?, From which
competitor can they buy from and why?
Michael G.Warner MBA DipM FCIM FIDM
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Process of creating favourable relative
position:
1. Identification of target market
2. Determination of target market's needs, wants,
preferences and desired benefits
3. Examination and assessment of competitors’
characteristics and positioning
4. Comparison of product offerings with competitors
5. Identification of unique position
6. Development and implementation of a marketing
program
7. Continuous Review and reassessment
Michael G.Warner MBA DipM FCIM FIDM
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Brand/Image Positioning Strategies
Corporate positioning
Market positioning
Product positioning
Total Repositioning
Michael G.Warner MBA DipM FCIM FIDM
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Portfolio Analysis
 Portfolio
 A collection of products/ SBUs owned by one entity in which each
product/ SBU can be separately identified for decision-making and
performance measurement.
 Portfolio Analysis
 Analyzing elements of a firm's product mix to determine the optimum
allocation of its resources.
 Portfolio Planning
 The process of managing the products/ SBUs, including choosing and
monitoring appropriate markets & industries and allocating funds
accordingly.
Michael G.Warner MBA DipM FCIM FIDM
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Shortcomings of BCG Matrix

Growth rate is only one aspect of industry attractiveness and high growth markets
are not always the most profitable.

Definition of the market is sometimes difficult.

It considers the product or business in relation to the largest player only. It ignores
the impact of small competitors whose market share is rising fast.

The use of four categories is too simplistic

It ignores interdependence and synergy.

Market share is only one aspect of overall competitive position.
Michael G.Warner MBA DipM FCIM FIDM
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Determinants of Strengths and
Attractiveness

Industry Attractiveness
•
Business Strengths
 Market size
•
Market share
 Market growth
•
Growth in market share
 Demand variability
•
Brand equity
 Price elasticity
•
Distribution
 Industry rivalry
•
Production capacity
 Global opportunities
•
Management skills
 Industry profitability
•
Perceived differentiation
 Macro-environmental factors
•
Profit margins relative to
competitors
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Disadvantages of Portfolio Planning

Portfolio models do not reflect the uncertainties of decision making

Most of the models do not take risk in to account

Most of the models ignore the importance of niche markets

Most of the models ignore the opportunities for creative segmentation

Markets are assumed as given rather than created and nurtured

Complex assessments and calculations
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Shell Directional Policy Matrix
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Elements of a Brand
APPROACH:
Separate the physical attributes from emotional benefits. What
lies at the core of the brand’s identity?
Arnold,
Michael G.Warner MBA DipM FCIM
FIDM D (1992), The Handbook of Brand Management)
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Benefits of brand equity
Brand awareness
•Influences attitude and
perceptions
•Anchor for associations
•Signal of substance
Perceived quality
•Price premium
•Differentiation /Positioning
•Reasons to buy
•Brand extension potential
•Channel member interest
Strong brand associations
•Differentiation /Positioning
•High price premium
•Memory retrieval potential
•Reasons to buy
•Brand extension potential
High brand loyalty
•Reduced marketing costs
•Trade leverage
•Attracting new customers
•Time to respond to competitive threats
Michael G.Warner MBA DipM FCIM FIDM
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Measuring Brand Equity

Interbrand – tracks leading brands on a number of variables:





Sales
Market growth
Internationalisation
Well protected in law, etc.
Good practice to measure your own and the competition brands – part of broader
evaluation of strategic health of company.
Michael G.Warner MBA DipM FCIM FIDM
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Brand Dimensions (according to
Interbrand)

BRAND WEIGHT (dominance)

BRAND LENGTH (stretch)

BRAND BREADTH (franchise)

BRAND DEPTH (commitment)
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Brand Weight

Dominance in category or market

Dominant market share (market leaders)

Standard setter

McDonald’s, Coca-Cola, Kodak, Gillette
Michael G.Warner MBA DipM FCIM FIDM
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Brand Length

Stretch and strechability into new categories and markets

Wide “area of competence”

Disney, Johnson & Johnson, Harrods, Virgin, Sony
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Brand Breadth

Breadth of franchise in terms of age spread, consumer types and international
appeal.

A “broad brand” can cross social, cultural and national boundaries.

Coca-Cola, MaDonald’s, Kodak, Somy, Visa, Microsoft
Michael G.Warner MBA DipM FCIM FIDM
61
Brand Depth

Degree of commitment the brand has achieved among its customer base and the
proximity, intimacy and loyalty they feel to the brand.

Intimate relationship with customers, usually on the basis of shared “central” or
“higher” values.

Apple Computer, Disney, Body Shop, Harley-Davidson, Camel
Michael G.Warner MBA DipM FCIM FIDM
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Brand Identity







Must be relevant to customer needs and wants
Must be clear and easy to understand
Is at the heart of the relationship between customer and company
Heart of any brand strategy
Has a personality of its own
Has human qualities which appeal to customers
See brand as a person and ask:
 If this brand were a person, what sort of car would it drive?
 What is its favourite drink?
 What would it say to you?

If answer is not obvious, the brand personality and also brand identity is not clear
Michael G.Warner MBA DipM FCIM FIDM
63
Brand Extension



A way of strengthening a brand’s positioning
Recent example of classic line extension: McGraw-Hill --publisher of textbooks and
educational materials into children’s educational software. They started with the
brand’s long-standing reputation for educational excellence. Virgin
Today’s definition of brand extension:
Globalisation
Demographic shifts – new classes of consumers
Technology – new channels of marketing (Internet, Satellite TV)
Industry consolidations – fewer brand choices; likely to become loyal
to one
 Increasing emphasis on relationships – customers want brands to be
accountable for their products and promises.




Michael G.Warner MBA DipM FCIM FIDM
64
Brand Chartering

Recent development (concept)

Tough internal audit to charter the underlying strength of their brands on a regular
basis

Brand Chartering – probes the organisation (strategic strengths) behind the brand

Brand Equity – strength of the brand in the marketplace

How to do brand chartering:
 Is there a common interpretation of the brand’s essential meaning
throughout the organisation?
 What core competencies does the brand represent?
 Would the people be proud to be called manifestations of the brand?
Macrae, C (1996), The Brand Chartering Handbook
Michael G.Warner MBA DipM FCIM FIDM
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Global Brands

Global brands can reap benefits of economies of scale in production, marketing
and distribution. They must stay responsive of customer wants – may vary from
one country or region to another. The issue is how to balance global economies of
scale with local responsiveness.
 Country specific?
 Other factors (youth, luxury?) – not country specific
 Different type of channels?
 Competition local or international?
 Communication will have to be different even for global brands (Coke
has more than 20 different advertisement versions)
Michael G.Warner MBA DipM FCIM FIDM
66
Positioning the Brand (Definition)
DEFINITION OF BRAND POSITIONING:
A company’s attempts to influence the customer’s (target market’s) perception of
its brand by presenting (communicating) it in a certain way through:





Advertising
Point of sale material
Direct mail
PR
Etc
NB! The brand is actually positioned by the consumer – all the company can do is
send “positioning prompts” to influence.
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67
Positioning: How to Build a Brand that Sells

Focus
 Choose one distinctive thing that will give you the edge

Halo effect
 Invest in one positive image that will impact on the whole portfolio

Start with current position
 Turn current customer perceptions into benefits (if gap between
perception and reality is too big, they won’t make the leap)

Be different
 Positioning is about clear, positive difference

Be distinctive
 Message need to be unique, hard-hitting, sensory, creative
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68
Developing a Brand Positioning
3 ESSENTIAL COMPONENTS FOR DEVELOPING A CLEAR BRAND DEFINITION:
 Clear vision – why are you in business?; where are you going? (3M:
“to solve unsolved problems innovatively”)
 Concise meaning – what your brand represents to the marketplace
 Understand parameters of relevance – what your brand is and
what it is not (limits to which you can extend your brand beyond its
core meaning without compromising your credibility)
 Examples – Disney (clear vision – “to make people happy”); Microsoft
(vision – “a computer on every desk in every home”)
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Positioning
Organisational Alignment
ORGANISATIONAL ALIGNMENT PROGRAMME




Use “tagline” or theme – can make or break brand building
Identify a few words that communicate the full weight and force of brand message
All activities get their energy from this positioning device.
Tagline must:
 Provide clear and recognisable differentiation
 Respond to customer’s most pressing needs in a believable
manner
 Provide guidance for management decision-making, hiring,
training and resource allocation
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70
Positioning the Brand
Key Factors

Successful brands are not created overnight – result of careful positioning,
supported by long term strategies and consistent investment

Frequent change in brand positioning – customer becomes confused

Considerable time and effort must be spent in understanding how the customer
perceives the brand, before thought can be given to changing that perception

Changes in customer perception – only achieved in small steps over long periods
of time
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71
Communicating the Brand (cont)
Recently, experts have stressed the inadequacy of relying on mass media to
communicate a brand:
 Cost of mass media is increasing
 Poorly targeted for today’s increasingly fragmented markets
Use the “new media” -- direct marketing, database marketing and
building relationships (vouchers, free samples, advice booklets – build
relationship with customer). Rather rely on these to communicate
brands successfully
Michael G.Warner MBA DipM FCIM FIDM
72
Brand Extension (cont)
4 WAYS TO EXTEND:
 Licensing
 Pierre Cardin – to a variety of marginal products – brand weakened

Co-branding
 Disney and McDonald’s – there has to be a fit

Sponsorships
 E.g. Olympic Games – linking up with big events

Brand agents
 Individuals that are not only celebrities, but stir emotions that support
the brand in a meaningful way (e.g. Tiger Woods & Nike)
Michael G.Warner MBA DipM FCIM FIDM
73
Brand Identity
DEFINITION OF BRAND IDENTITY
Brand identity is how the company wants the brand to be perceived.
Aaker (1996), Building Strong Brands
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Brand Loyalty

Customers become loyal if brand identity is communicated effectively and
positioned positively in their minds

However, this does not mean they will never buy any other brand

Customers tend to use “repertoires” of brands rather than single brands

The specific brand they buy on any one occasion will depend on other factors such
as availability, special price offers, recent advertising campaigns, point of sale
factors.

Highly educated and affluent groups are found to be less loyal! (not willing to pay a
price premium for branded products)
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Positioning & Communication
Positioning is the development and communication of a differential advantage that
makes the organisation’s product or service superior and distinctive in the
perception of target customers.
Positioning should be meaningful to the target market segment, believable and
unique (biggest, most reliable, etc). Positioning involves giving the target market
segment the reason for buying your product.
Michael G.Warner MBA DipM FCIM FIDM
76
Communicating the Brand (cont)
INTERACTIVE BRAND COMMUNICATION

New phenomenon brought on by:
 Reduced effectiveness of mass media advertising
 Emergence of the new media
 Emphasis on relationship and database marketing

Other




Free telephone numbers
Care lines
Eliciting feedback (not just complaints) from customers
Loyalty cards and clubs (e.g. Voyager)
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Brand Management in the New Economy





Brand used to guide all activities surrounding it
Coordinate these activities
Manage relationships with external partners and agencies (research companies,
advertising agencies, and channels)
Whole organisation must understand brand
Integrated approach to brand management – key issues:






Cross functional working
Company culture
Internal communication
CEOs important role to personify the brand (e.g. Richard Branson, Bill
Gates, Raymond Ackerman)
The corporate brand is of increasing importance (e.g. Virgin) – the corporate brand
sells the product!
New corporate identities created if parent company has inappropriate or unclear
associations (Flora Food Co, Unilever)
Michael G.Warner MBA DipM FCIM FIDM
78
New Keys to Brand Building






Use of marketing communications (mass-market advertising-agency model) as
primary driver of corporate brand management is fast becoming obsolete.
Replaced by an array of communications channels that can target increasingly
narrow customer segments.
All experiences affect brand image. Customer experience is key to brand building
(e.g. Harley Davidson – owner groups, rallies)
Align communication of brand to all 4 main audiences – customers, investors,
employees and regulators (media, public interest organisations). Align -- key to
building brand equity.
Communication messages need to line up with experiences of customers.
Ensure that entire business deliver the promise implicit in the brand (favourable
advertising versus negative service experience – the latter will be remembered)
Michael G.Warner MBA DipM FCIM FIDM
79
Positioning & Communication Process
3 steps:



Choose brand identity
Begin positioning
Communicate (marketing mix):




Product / service (together with packaging, logo, design)
Price (including discounts, etc)
Place (where and how it is distributed)
Promotion (advertising above and below the line, PR, sponsorship, etc)
Michael G.Warner MBA DipM FCIM FIDM
80
Traditional Marketing versus CRM
Traditional Marketing
CRM
Aim is to expand customer
base and to increase market
share by mass marketing
Aim is to establish a profitable,
long-term, one-to-one
relationship with customers
Product oriented view
Customer oriented view
Mass marketing / mass
production
Mass customization, one-to-one
marketing
Standardization of customer
needs
Close customer-supplier
relationship
Transactional approach/
relationship
Relational approach
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81
Porter’s Diamond
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Assessing country attractiveness
possible criteria
Attractiveness
Market size
Market growth
Absence of barriers
Profit potential
Competitive structure
Entry opportunities
Compatibility
Language
Currency
Legal systems
Technical standards
Culture
Consumption patterns
Michael G.Warner MBA DipM FCIM FIDM
83
12C framework for analysing international markets
Country
Concentration
Culture/consumer behaviour
Choices
Consumption
Contractual obligations
Commitment
Channels
Communications
Capacity to pay
Currency
Caveats
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84
Market Entry Methods
Time
Quick
Joint Venture
Partnership/Alliance
Manufacturing abroad
Contracting
Franchising
Licensing
Indirect export
Direct export.
Slow
Organically
Michael G.Warner MBA DipM FCIM FIDM
Market Entry
Methods
85
International Strategies - Hofstede’s Cultural
Similarities
Inter-Country Differences
Cross-Country Similarities
PESTILE differences
Power-distance
Collectivism vs. individualism
Femininity vs. masculinity
Uncertainty avoidance
Long- vs. short-term orientation
Barriers to entry
Market entry methods
Cultural Similarities:
For example,
Hispanic; Nordic; Germanic; Arabic;
Michael G.Warner
MBA DipMAnglo-Saxons;
FCIM FIDM
86
Other.
Hoftede’s Model of National Cultures

Power distance.

Uncertainty avoidance.

Individualism –collectivism.

Masculinity.
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87
Hofstede’s comparative analysis
Distinguished four dimensions:
 Power distance (high or low)
 High – accept inequality of wealth and power: e.g. France, Brazil
 Low – do not accept inequality – e.g. Sweden, UK
 Uncertainty avoidance
 High – tolerate ambiguity - e.g. US, Australia
 Low – uncomfortable with uncertainty, prefer clarity – e.g. Latin
America, southern Europe
Michael G.Warner MBA DipM FCIM FIDM
88
The Strategy Clock
Michael G.Warner MBA DipM FCIM FIDM
89
Examples of measures for the financial perspective

Return on capital employed (ROCE)

Operating margins

Economic value added (EVA)

Cash flow

Sales growth
Michael G.Warner MBA DipM FCIM FIDM
90
Examples of measures for the customer
perspective
Market share
Brand image and awareness
Customer satisfaction
Customer retention
Customer acquisition
Ranking by key accounts
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91
Examples of measures for the internal
perspective
Percentage of sales from new products
Manufacturing costs
Manufacturing cycle time
Inventory management
Quality indicators
Technological capabilities
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92
Examples of measures for the innovation &
learning perspective
 Product development
 Purchasing
 Manufacturing
 Technology
 Marketing and sales
Michael G.Warner MBA DipM FCIM FIDM
93
Strategic Choice – Competitive strategies
Differentiation
A type of competitive strategy with which the organisation seeks to distinguish its
products or services from competitors.
Cost Leadership
A types of competitive strategy with which the organisation aggressively seeks
efficient facilities, cuts costs , employs tight cost controls to be more efficient than
competitors.
Focus
Type of competitive strategy that emphasizes concentration on a specific regional
market or buyer group.
Michael G.Warner MBA DipM FCIM FIDM
94
Examples of Companies along the Dimensions
of the Generic Strategies in Different Industries
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Assessing the value proposition - Strategy Clock MUST DO
Michael G.Warner MBA DipM FCIM FIDM
Source: Bowman & Faulkner (1995)
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Strategic Choice – Competitive strategies
Michael G.Warner MBA DipM FCIM FIDM
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Strategic Choice – Institutional Strategies

There are number of different methodologies available for a company expand its
operations. management should identify the most appropriate, suitable as well as
feasible option when it comes to selection of the expansion strategy. Each expansion
strategy has its own merits as well as demerits and also constraints of which some are
company specific and some are external.
Growth Strategies
Organic growth
Inorganic growth
Michael G.Warner MBA DipM FCIM FIDM
98
Hostile and declining markets
Characteristics of hostile and declining markets
1. Fall in over all demand level
2. Changes in the technology causing reduction in demand for a particular good or a
service
3. Change in customer needs, wants and taste
4. Changes or shifts the in government policy
5. Reduction in average margin earned by the firms.
Michael G.Warner MBA DipM FCIM FIDM
99
Strategic alternatives for declining markets

Revitalising the market

Be the profitable survivor

Milk or harvest

Exit or liquidate
Michael G.Warner MBA DipM FCIM FIDM
100
Strategic alternatives for declining markets
Business position in the key segment
STRONG
FAVOURABLE
WEAK
Invest or Hold
Milk or Exit
Milk or Exit
Exit
Industry
Environment
UNFAVOURABLE
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Environmental analysis
Environment
Macro
Meso
Michael G.Warner MBA DipM FCIM FIDM
Micro
102
Selecting Markets

Total marketing approach



Designs a single marketing mix and directs it towards the entire market
Assume that the needs of the target market for a specific kind of product or service are very
similar
Market segmentation approach


Appropriate for heterogeneous markets
Markets are sub-divided based on similarities
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103
Targeting Strategies

Undifferentiated marketing one marketing mix strategy that is appropriate for all
members of the total market.

Differentiated marketing The targeting of two or more market segments, with
separate and distinct market offerings, which have been designed to closely meet
the needs of those particular segments

Concentrated marketing Concentrating the firm’s market offering solely on the
needs of one defined target market..

Customised marketing specific individuals
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104
Warfare Strategies

Marketing Warfare is a term used to describe some of the techniques and tactics
marketers use.

There are two types of warfare strategies;
 Defensive Strategies – These are followed by market leaders to defend their
market share. There are six defensive strategies.
 Offensive strategies – Offensive strategies and followed by market challengers
and there are five Offensive strategies.
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Offensive Strategies
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Defensive Strategies
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Brand Equity Defined
Brand Equity can be defined as consisting of 5 asset categories:





Brand awareness
Brand loyalty
Perceived quality
Brand associations in addition to perceived quality
Other proprietary brand assets (patents, trademarks, etc)
Aaker, D (1996), Building Strong Brands
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Hofstede (continued)
 Individual/collectivism
 Individualist societies stress individual responsibility and success e.g. US, UK
 Collectivist societies stress loyalty to group in return for support –
e.g. in South America, Asia
 Masculinity/femininity
 M. societies show assertive behaviour – e.g. Japan, Italy, Arab
countries
 F. societies show modest behaviour, interest in quality of life – e.g.
Sweden, Norway, Denmark
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109
Brands are under Threat
SOURCES OF THREATS ON BRANDS:
 Educated consumers
 Became marketing literate; brands had to offer real
added value; trend: loyal customers became loyal to
group of brands rather than to a single brand.
 Powerful retailers
 Strong retailers dictate terms to manufacturers (e.g.
Pick ‘n Pay); retailer builds own brand (Woolworths) –
customer loyal to retailer rather than product; only 1
label sold (power of the retail brand).
 Both of the above leading to pressure on prices
 No added value – consumer will not pay price premium;
trend – demand both low prices AND added value
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Brands are under Threat (cont)

The growth of own label
 If the retailer represents some strong brand values itself, the way is
clear for own label products (Woolworths; Pick ‘n Pay) – e.g. own
Colas

Brand extension instead of innovation
 Brands which in the past were built through real technical innovation
can no longer keep pace, and may choose instead to extend an
existing brand into new areas or variants. Can enhance brand, but
there is danger of brand dilution or of confusing the customer (e.g.
Pierre Cardin).

New competition from outside the sector
 Existing strong brands looking to extend their franchise into other
areas also pose a threat (e.g. Virgin). NB! New competitors like this
are hard to fight because they are playing a different game.
Michael G.Warner MBA DipM FCIM FIDM
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Value Proposition - Examples
Intel: Intel inside
IBM: Global solutions for a small planet
Lexus: Passionate pursuit of perfection
FedEx: When it absolutely, positively has to get
there overnight
Visa: It is everywhere you want to be
Motorola University: Right knowledge, right now
Nordstrom: Shopping humanized
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FIDM
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