Marketing Strategy

MARKETING STRATEGY Session 10 WITH DR. BRENT SMITH

Content

u Review: Ch 6. The Marketing Program – Yield Management

u Ch 7. Branding and Positioning

u Article: If You Can’t Beat Them…

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Review Ch6. The Marketing Program

u Question: Beyond travel/tourism, what businesses should utilize this kind of yield management tool?

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Ch 7. Branding and Positioning

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Branding and Positioning

u Question: Assume that a truly effective brand succinctly captures the product offering in a way that answers a key question in the customer’s mind. What questions do the brands below answer?

u Coca-Cola

u Disney

u Google

u American Express

u Aldi

u IKEA

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Branding Strategy

u Selecting the right combination of name, symbol, term, or design that identifies a product

u Parts of a brand

u Brand name - Words, letters, and numbers that can be spoken

u Brand mark - Symbols, figures, or a design

u Critical to product identification and the key factor in differentiating a product from its competition

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Potential Brand Attributes

u There are many products that can be branded; there are many ways to brand products.

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Source: From Kotler, Philip and Keller, Kevin, “A Framework for Marketing Management,” 4th, ©N/A. Electronically reproduced by permission of Pearson Education Inc., Upper Saddle River, New Jersey.

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Strategic Issues in Branding

u Advantages of branding

u Product identification

u Comparison shopping

u Shopping efficiency

u Risk reduction

u Product acceptance

u Enhanced self-image

u Enhanced product loyalty

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Basic Branding Decisions

u Manufacturer vs. Private-label brands

u Private-label brands are owned by the merchants that sell them

u Examples - Gap, Craftsman, and Sam’s Choice soft drinks

u Individual vs. Family branding

u Individual branding - When a firm gives each of its product offerings a different brand name

u Family branding - When a firm uses the same name or part of the brand name on every product

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Manufacturer Brands vs. Private-Label Brands

u Advantages of selling manufacture (name) brands

u Reduced costs

u Built-in loyalty

u Enhanced image

u Lower inventory

u Less risk

u Advantages of selling private-label (store) brands

u Increased profit

u Less competition

u Total control

u Merchant loyalty

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Strategic Brand Alliances

u Cobranding u Using two or more brands on one

product

u Leverages image and reputation of multiple brands to create distinctive differentiation

u Examples - Processed foods and credit cards

u Brand licensing u Contractual agreement where a firm

permits another to use its brand on non-competing products

u Exchange involves licensing fee

u Helps attain instant recognition for firm’s brand among consumers

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Brand Value

u Brand equity u Firm-centric view of a brand’s value

u Marketing and financial value associated with a brand’s position in the marketplace

u Linked to brand name awareness, brand loyalty, and brand quality

u Brand loyalty - Positive attitude towards a brand that results in customers consistently choosing the brand u Brand recognition

u Brand preference

u Brand insistence

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Brand insistence

Brand preference

Brand recognition

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Packaging and Labeling

u Go hand-in-hand with branding u Help develop a product, its benefits, its differentiation, and its image

u Packaging u Includes color, shape, size, and convenience

u Plays a role in product modification and repositioning

u Can be used as part of a co-branding strategy

u Labelling u Vital in helping customers make proper product selections

u Can have important environmental and legal consequences

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Differentiation and Positioning

u Differentiation: creating differences in firm’s product offering that set it apart from competing offerings

u Positioning: creating a mental image of product offering and its differentiating features in the minds of the target market

u Relative position: creating a product’s position vis-à-vis competition

u Addressed through two tools:

u Perceptual mapping

u Strategy canvas

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Hypothetical Perceptual Map of the Automotive Market

u Questions: u How many brands do consumers

perceive as expensive/distinctive vs. affordable/practical?

u How many brands do consumers perceive as conservative vs. sporty?

u Which two brands are perceived as the most conservative, expensive autos?

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Hypothetical Strategy Canvas for Book Retailers 16

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Bases for Differentiation

u Brand often is the most important tool of differentiation

u Other important bases for differentiation include, for example: u Product descriptors

u Product features - Factual descriptors of the product and its characteristics

u Advantages - Performance characteristics of how the product behaves

u Benefits - Positive outcomes or need satisfaction

u Customer support services

u May be the best way to overcome commoditization

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Positioning Strategies

u Strengthen current position u Constantly monitor customer perceptions, needs, and wants

u Raise the bar of customer expectations

u Repositioning u Often requires a fundamental change in one or more marketing program

elements

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Discussion Questions

u Apple appears on the list of the world's twenty-five most valuable brands and the strongest and weakest U.S. corporate reputations. Why do you think Apple appears on both lists?

u Bank of America is within the top 100 most valuable global brands, but it has a low reputation. How is it that Bank of America can have a very high brand valuation, but a very low corporate reputation score?

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Stages of the Product Life Cycle (PLC)

u The PLC can help marketers learn when to expect market behaviors and when to enact certain marketing activities.

u Note: One may see 4-5 stages in various diagrams. If 4, then development stage is not included.

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PLC: Development Stage

u No sales revenue during this stage

u Components of product concept

u Understanding customer’s desired uses and benefits

u Description of product

u Potential for creating a complete product line

u Analysis of feasibility of product concept

u Test marketing is conducted to gauge customer needs before developing marketing strategy

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PLC: Introduction Stage

u Begins when development is complete and ends when customers widely accept the product

u Marketing strategy goals

u Attract customers by raising awareness and interest

u Induce customers to try and buy

u Engage in customer education activities

u Strengthen or expand channel and supply chain relationships

u Build on availability and visibility through trade promotion

u Set pricing objectives

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PLC: Growth Stage (A)

u Profits rapidly increase and decline toward the end of this stage

u Length depends on nature of product and competitive reactions

u Organizational priorities u Establish a strong, defensible marketing position

u Achieve financial objectives that repay investment

u Strategy shifts from customer acquisition to retention and building brand loyalty

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PLC: Growth Stage (B)

u Marketing strategy goals

u Leverage product’s perceived differential advantages

u Establish clear brand identity

u Create unique positioning

u Maintain control over product quality

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PLC: Growth Stage (C)

u Maximize product availability

u Maintain or enhance product’s ability to deliver profits to partners

u Find ideal balance between price and demand

u Keep an eye on the competition

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Challenges: Growth Stage (A)

u Pricing

u Firms must balance need for cash flow and need to be competitive

u Complicating factors

u Relationship between perceived quality and price

u Increasing price sensitivity of customers

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Challenges: Growth Stage (B)

u Rise in competition in the market

u Build a defensible market

u Image can be based on quality, price, image, or technological standards

u All markets go through a shakeout period and dominant firms emerge

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PLC: Maturity Stage (A)

u Longest stage in the cycle in which no more firms will enter the market

u Window of opportunity remains open for new product features and variations

u Essential when firms want to gain market share

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PLC: Maturity Stage (B)

u Flowing goals can be pursued: u Generate cash flow

u Hold market share

u Steal market share

u Increase share of customer

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Maturity Stage: Strategic Options to Achieve Goals

u Develop new product image

u Find and attract new users to the product

u Discover new applications and uses for the product

u Apply new technology to the product

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PLC: Decline Stage (A)

u Firms can attempt to postpone the decline

u Product demand can be renewed via:

u Repositioning

u Developing new features

u Applying new technology

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PLC: Decline Stage (B)

u Firms can accept inevitability of decline u Harvesting

u Gradual reduction in marketing expenses and usage of a less resource-intensive marketing mix

u Divesting

u Withdrawing all marketing support from the product

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Decline Stage: Factors to Consider (A)

u Market segment potential

u Look for viability and profitability associated with loyal customers

u Market position of the product

u Attract customers from competitors’ abandoned products

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Decline Stage: Factors to Consider (B)

u Firm’s price and cost structure u Have low cost and maintain selling price

u Rate of market deterioration u Faster the rate of deterioration, sooner the firm should divest its product

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Discussion Questions

u Look back at the list of top 25 most valuable brand. What bases do these brands use for differentiation? What strategies do they use to create a relative position in their respective markets? Why do these brands hold so much value?

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If You Can’t Beat Them, Let Them Join…

u Source material

u Nuttavuthisit, K. (2010). If you can’t beat them, let them join: The development of strategies to foster consumers’ co-creative practices. Business Horizons, 53(3), 315-324.

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Company and Consumer Co-Creation K. Nuttavuthisit

u What are the main points of the article by Nuttavuthisit?

u How can co-creation practices, or lack thereof, impact customer relationships and competitive differentiation?

u Does co-creation reflect or reinforce other marketing strategy concepts?

u In your opinion, what companies do or need to foster these practices?

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Company and Consumer Co-Creation K. Nuttavuthisit

u Company strategy can → foster consumer behaviors u Foster creation

u Complement → … for self

u Communality → … for others

u Foster participation

u Choice → … for self

u Cause → … for others

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Which companies do these C’s well? How do those companies make it possible?

Company and Consumer Co-Creation K. Nuttavuthisit

u Re: Early class lessons

u Relationships (RBV + MBV) and Rule #1

u Learning relationships

u Durable relationships

u Loyal relationships

u Valued relationships

u New take on brand management u Managers < Shepherds

u Shepherds of Co-Created Solutions

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Which companies do these C’s well? How do those companies make it possible?