Marketing Chapter 5: Brand Equity Strategies

Chapter 5: Designing Marketing Programs to Build Brand Equity

• Learning Objectives:
  • Identify new perspectives and developments in marketing.
  • Describe how marketers enhance product experience.
  • Explain the rationale for value pricing.
  • List direct and indirect channel options.
  • Summarize reasons for private label growth.

New Perspectives on Marketing

• Marketing strategies and tactics have changed dramatically due to shifts in external marketing environments.

New Approaches Embraced by Marketers

• Rapid technological developments
• Greater customer empowerment
• Fragmentation of traditional media
• Growth of interactive and mobile marketing
• Channel transformation and disintermediation
• Increased competition and industry convergence
• Globalization and growth of developing markets
• Heightened environmental, community, and social concerns
• Severe economic recession

The New Capabilities of the New Economy

• Consumers:

  • Wield more customer power.
  • Purchase a wider variety of goods/services.
  • Access a vast amount of information.
  • Interact easily with marketers.
  • Compare information with other consumers.

• Companies:

  • Operate powerful information and sales channels with expanded geographic reach.
  • Gather richer information about markets, customers, and competitors.
  • Facilitate two-way communication and efficient transactions.
  • Customize offerings and services for individual consumers.
  • Improve purchasing, recruiting, training, and internal/external communication.

Integrating Marketing

• Personalizing Marketing:

  • Rapid expansion of the internet & fragmentation of mass media necessitates personalized marketing.
  • The modern economy values the individual consumer.
  • Marketers adapt, using concepts like experiential and relationship marketing.

• Reconciling Different Marketing Approaches:

  • Mass customization, one-to-one, and permission marketing are effective strategies to engage consumers with a brand.
  • These approaches emphasize various aspects of brand equity, according to the customer-based brand equity model.

Relationship Marketing

• Experiential Marketing:

  • Promotes products by connecting them with unique consumer experiences.
  • Transcend a product or service to create stronger bonds with customers.
  • Maximizes brand resonance.

• Relationship Marketing (cont.)

  • Focuses on creating stronger bonds with consumers beyond the product itself.
  • It aims to be more than just a transaction; it means building a more robust connection with consumers.
  • Mass Customization: Make products to fit specific customer needs (enabled by digital technology).
  • Permission Marketing: Marketing only after gaining consent.

• Brand Experience Scale (Figure 5-2):

  • Sensory: Evokes strong visuals and other senses.
  • Affective: Triggers emotions and feelings.
  • Behavioral: Leads to physical actions and behaviors.
  • Intellectual: Stimulates thinking and problem solving.

Product Strategy

• Perceived Quality: Customers' overall perception of product quality superior to alternatives in the context of its purpose.
• Managing Customers Post-Purchase: Crucial in e-commerce, this includes tools like user manuals, customer service programs, and loyalty programs.

Pricing Strategy

• Consumer Price Perceptions: Choosing a pricing strategy to build equity requires setting current prices and policies for promotions. Importance is placed on consumer perceptions and preferences, not only on costs.
• Figure 5-3: Price Tiers in the Ice Cream Market: Shows how brands position themselves in the ice cream market concerning quality, and price tiers.

Channel Strategy

• Channel Design: Involves direct and indirect channels.

• Indirect Channels: Retailers, push and pull strategies and other marketing techniques are used here to affect brand equity.

• Direct Channels: Manufacturers sell directly to consumers, including company-owned stores, store-within-a-store, or other methods like phone or internet sales.

• Figure 5-5: JCPenney Customer Channel Value Analysis: Provides examples of average yearly customer spending in various channels.

Setting Prices to Build Brand Equity

• Value Pricing: Companies uncover a product's perfect balance of quality, costs, and prices that satisfy consumer needs & meet the company's profit goals through value pricing.
• Communicating Value: Delivering good value is not enough to gain success. Consumers need to understand and appreciate the brand's value. At times, this value must be communicated to them.
• Price Segmentation: Setting and adjusting prices for distinct market segments.
• Everyday Low Pricing: Avoiding fluctuations by offering constant "everyday" base prices, avoiding inconsistent discounts and price increases/decreases.
• Reasons for Price Stability: Includes forward buying and diverting.