MKT 555 DECISIONS IN MARKETING MANAGEMENT

MEETING FIVE LECTURE OUTLINE

PART I: MARKETING THEMES

MARKETING METRICS
:
SWOT analysis of your brand(s).
Cash cows, dogs, etc. or Boston Consulting Group's analysis of your brand(s).
GE or ROI and cash flow analysis of your brand(s).
Assignment: Review Kotler, chapter 3, pp. 63-73.

The application of real options to brand marketing.
Assignment: Review lecture outlines for meetings one through three, and term paper 1 and appendix 1.

BUILDING AND MANAGING BRAND EQUITY
(1) The brand excels at delivering the benefits customers truly desire. The brand is a collection of attributes, tangible and intangible factors, community culture. after market service, and many other SRC items not necessarily recognized by customers. Example: Starbucks.
(2) The brand stays relevant. The brand blends with "user imagery" (the type of person who uses the brand); "usage imagery" (the type of situations in which the brand is used); the type of personality the brand portrays (that is, sincere, exciting, competent, rugged); the feeling that the brand tries to elicit in customers (purposeful, warm); and the type of relationship it seeks to build with customers (committed, casual, seasonal). The most successful brands tweak their intangibles to fit the times. Example: Gillette.
(3) The pricing strategy is based on consumers's perception of value. Do not adopt value pricing (that is, cutting the price) at the expense of essential brand-building activities. Example: Cascade and everyday low pricing from P&G.
(4) The brand is properly positioned. Brands must occupy particular niches in the minds of customers. Example: Mercedes.
(5) The brand is consistent. The brand cannot get muddled in the minds of customers. Example: "Weekends were made for Michelob versus "Some days were made for Michelob."
(6) The brand portfolio and hierarchy make sense. Example: Banana Republic anchors the high end. the Gap covers the basic style-and-quality terrain. Old Navy taps into the broader mass market.
(7) the brand makes use of and coordinates a full repertoire of marketing activities to build equity. Trademarks, logos, symbols, slogans, packaging, signage: all must be done correctly to reinforce consumer awareness of the brand or its image. Example: Coke.
(8) The brand's managers understand what the brand means to consumers. Example: Bic pens and Bic perfumes versus Gillette razors and Braun electric razors.
(9) The brand is given proper support, and that support is sustained over the long run. Examples: Shell and Coors.
(10) The company monitors sources of brand equity. Do a brand audit: brand inventory internally and focus group analysis externally. Example: Disney.

Note: No formal system can help a brand when it is slipping in the mind of customers. Example: Levi's. Dockers.

Source: Kevin Lane Keller, "The Brand Report Card," Harvard Business Review, 78:1 (January-February 2000): 147-157.

Assignments:
Review Kotler, chapter 13, pp. 404-418.
Apply the ten branding concepts from the Keller article to the product or service of your term paper.

PART II: RESEARCH METHODOLOGY

SETTING VALUE NOT PRICE
Value is the tradeoff between the benefits customers receive from a product or service and the price they pay for it. The management of this tradeoff is a critical component of the marketing mix. Customers buy according to the following: the difference between the benefits a company gives customers and the price it charges. Thus the higher the perceived benefit or the lower the price of a product or both, the higher the customer value and the greater likelihood that customers will choose that product.

Marketing Metrics
Draw a value map. The horizontal axis quantifies benefits as perceived by the customer. The vertical axis shows perceived price.
If market shares are stable, the value equivalence line (VEL) will be a straight diagonal line from the point of origin.
If market shares are changing, a move to the right shows shares gained (or value advantage), and a move to the left shows shares lost (or value disadvantage).
If value positions are changing among competitors, then either reposition along the VEL, or move off the VEL and create a new VEL. To move off the VEL pay attention to the following:

(1) The mindset of competitors.
(2) The willingness of suppliers and distributors to shift with you from the old pattern (old VEL) to the new pattern (new VEL).
(3) The price elasticities of demand.
(4) The cyclical and seasonal nature of product demand.
(5) The time effect of diffusion and the life cycle of products.

Source: Ralf Leszinski and Michael V. Marn, "Setting Value Not Price," The McKinsey Quarterly, 1 (1997): 99-115.

PART III: EXECUTIVE DECISIONS

SELF-EXAMINATION CHECKLIST
(1) Are we as a company easy to do business with? Easy to contact? Fast to provide information? Easy to order from? Make reasonable promises?
(2) Do we as a company keep our promises? On product performance? Delivery? Installation? Training? Service?
(3) Do we as a company meet the standards we set? Specifics? General tone? Do we even know the standards?
(4) Are we responsive? Do we listen? Do we follow up? Do we ask "why not," not "why"? Do we treat customers as individuals?
(5) Do we work together? Share blame? Share information? Make joint decisions? Provide satisfaction?

Source: Benson P. Shapiro, "What the Hell is 'Market Oriented'?" Harvard Business Review, (November-December 1988) : 125.
 

PART IV. READINGS FROM TEXTBOOK

Build up and maintain brand equity. Define the corporate mission and add value pricing. Define the competitive scopes in which the company will operate and add the mind-set of competitors. Set up and measure the success of SBUs and apply marketing metrics. Plan new brands. Do SWOT, portfolio, and real options analysis.
 

PART V. CASE EXAMPLES OF BUILDING AN EFFECTIVE BRAND

THE PROCESS OF BRAND-BUILDING

Decisions and action elements

1. Anchor values: Brands need to be based on values, attributes, and life styles that are permanent and fundamental. Anchor values are the genetic code of brands. Example: Ericsson's cellular phones are based on simplicity, dependability, social interaction, etc. Therefore, decide on the values first. Assignment: Review self-reference criteria.

2. Value proposition: Translate the anchor values into statements on the benefits that drive from the buying decision. The value proposition is s based on aspirational propositions. Example: "The Pepsi generation." Therefore, link the brand to an up-and-coming generation with new habits and lifestyles, and target the benefits to those that are highly regarded by customers. Assignment: Review age groups and VALs.

3. Positioning. Decide on the target segment for future brand-building, and then decide on the differentiation strategy or answer the question "Why this brand?" Positioning is a key element of marketing strategy. Examples: Nescafe's targets customers who welcome new ways of drinking coffee and are willing to entertain the idea of a good cup of instant coffee. Sony communicates the idea that its products are simpler on the outside, and more sophisticated on the inside; hence, they are more fun to use. Assignment: Review actionable segmentation, actionable targeting, and actionable positioning.

4. Media communication: Two problems with media advertising: Clutter--too many commercial messages. Decay--most messages are lost in a matter of minutes. Ads must be similar to soap operas; consumers must fall in love with the ads and wait in anticipation for the next ad in the series. Example: The romance in the Nescafe ads.

5. Promotions: Don't need high-budget mass advertising. Examples: Body Shop sponsors social activism and environmental causes. Harley-Davidson sponsors the Hog clubs.

6. Point of sale. In supermarkets, the moment of truth comes with availability on the shelf, packaging, and the words and images on the product. Example: Hilti, a manufacturer of construction power tools and fastener systems, expects its direct sales force to communicate the firm's superior product quality and end-user service. McDonald's promotes speedy service, friendly atmosphere, and cleanliness.

Source: Kamran Kashani, "The essence of building an effective brand," in "Mastering Management: Part Twelve," Financial Times, December 18, 2000, pp. 2-4.

Recent articles on US brand marketing:
Julie Creswell, "Bottled Up," Fortune, September 18, 2000, pp. 195-206. Story is on Heinz, and the reasons for green ketchup and Tuna in a Pouch.

Kruti Trivedi, "Chips Off the P&G Block," The New York Times, August 5, 2000, pp. B1-B4. Story is on cast off brands--that is, brands that P&G sheds and sells off to others.

Recent articles on international brand marketing.
"Car Power," Business Week, October 23, 2000, pp. 73-82. Story is on Latin American auto industry. Remember GM's Nova. Why was it a loser in Puerto Rico and Latin America?

Paul Betts and John Thornhill, "Starbucks steams into Italy," Financial Times, October 22, 2000, p. 7. Story is on Starbucks entering the Milan market.

Niraj Dawar and Amitava Chattopadhyay, "The new language of emerging markets," in "Mastering Management," Financial Times, November 13, 2000, pp. 6-7. Story is on selling global brand names in China and India. The authors give several good examples on segmentation, the 4 Ps of marketing, and the use of mass communications.