VO Management I - Marketing (MA) Lecture Notes PDF

VO Management I - Marketing (MA) Week 6 - Brands and Branding Univ.-Prof. Dr. Christoph Fuchs Chair of Marketing, [email protected] http://marketing.univie....

VO Management I - Marketing (MA) Week 6 - Brands and Branding Univ.-Prof. Dr. Christoph Fuchs Chair of Marketing, [email protected] http://marketing.univie.ac.at Office hours: upon request Course Framework PRODUCT SEGMENTATION Marketing PRICE Research TARGETING PROMOTION Consumer Behavior POSITIONING PLACE Where do I want to go? How do I get there? PREREQUISITES MARKETING STRATEGY MARKETING PLAN Chair of Marketing Prof. Christoph Fuchs, Ph.D. 2 Agenda What is a brand Brand equity Benefits of brands for buyers and sellers Brand strategies Chair of Marketing Prof. Christoph Fuchs, Ph.D. 3 Chair of Marketing Prof. Christoph Fuchs, Ph.D. 4 A market-place example Which car is better: Toyota Corolla or Geo Prizm? Chair of Marketing Prof. Christoph Fuchs, Ph.D. 5 A market-place example Which car is better: Toyota Corolla or Geo Prizm? Toyota Corolla commanded a premium of $300 to $1850 Toyota Corolla’s unit sales are five times greater despite a smaller dealer network Toyota earned more operating profits than GM The Geo Prizm was discontinued in 2001 Chair of Marketing Prof. Christoph Fuchs, Ph.D. 6 Toyota Corolla vs. Geo Prizm The truth: The two cars are essentially identical. Both were produced in Fremont, California, by the same workers, in a plant co-owned by Toyota and GM. Chair of Marketing Prof. Christoph Fuchs, Ph.D. 7  What do you expect happens to prices when generic drugs come in after 20-year monopoly due to patent? Chair of Marketing Prof. Christoph Fuchs, Ph.D. 8  Prices of Capoten (Brand) and First Generic Entrant (Captopril) Wholesale Price per Prescription 100 90 80 70 60 50 ($) 40 30 Unit Sales of Capoten (Brand) and First Generic 20 Entrant (Captopril) 10 800 0 700 Unit Sales (Number of Months since Patent Expiration 600 GENERIC PRICE BRAND PRICE prescriptions) 500 400 300 Detaling Expenditures on Capoten 200 600 100 Detailing expenditures 500 0 400 10 13 16 19 22 25 28 31 34 37 40 43 46 49 1 4 7 Months since Patent Expiration 300 GENERIC UNITS BRAND UNITS 200 100 0 Months since Patent Expiration Chair of Marketing Prof. Christoph Fuchs, Ph.D. 9 Three Metaphors Brand… IDENTIFIES The brand as trademark Chair of Marketing Prof. Christoph Fuchs, Ph.D. 10 Three Metaphors Brand… SUMMARIZES The brand as shorthand Chair of Marketing Prof. Christoph Fuchs, Ph.D. 11 Three Metaphors Brand… ABSTRACTS The brand as symbol Chair of Marketing Prof. Christoph Fuchs, Ph.D. 12 Defining „Brand“ Name or symbol intended to identify the goods and services of one seller and differentiate them from the competition. Chair of Marketing Prof. Christoph Fuchs, Ph.D. 13 Brands & Products BRANDED PRODUCT Brand symbolic value Halo Product characteristics Chair of Marketing Prof. Christoph Fuchs, Ph.D. 14 Brands & Products Chair of Marketing Prof. Christoph Fuchs, Ph.D. 15 Brands & Products Chair of Marketing Prof. Christoph Fuchs, Ph.D. 16 Guess the price Chair of Marketing Prof. Christoph Fuchs, Ph.D. 17 This is brand equity! Chair of Marketing Prof. Christoph Fuchs, Ph.D. 18 Brand equity The set of associations and behaviors that permits the brand to earn greater volume or greater margins than it could without the brand name. Chair of Marketing Prof. Christoph Fuchs, Ph.D. 19 Brand equity Chair of Marketing Prof. Christoph Fuchs, Ph.D. 20 Customer-based brand equity Brand Equity = Brand Awareness + Brand Associations Chair of Marketing Prof. Christoph Fuchs, Ph.D. 24 Awareness measures Brand Recognition “Here is a list of logos/brands/ads. Do you remember having seen them before?” “Complete the following words: L_G_, R_ E B _ _” Brand Recall “Name all the business schools you can think of” “Do you remember seeing a commercial for toys last night? (If yes,) what brand was the commercial for?” Chair of Marketing Prof. Christoph Fuchs, Ph.D. 25 Association measures: Qualitative For exploratory purposes & to uncover deeper associations Interviews Focus groups Free associations Projective techniques (e.g., animal?) Collages Chair of Marketing Prof. Christoph Fuchs, Ph.D. 26 Association measures: Quantitative Many approaches to measuring image and associations Beliefs & Attitudes Brand personality Association maps Chair of Marketing Prof. Christoph Fuchs, Ph.D. 27 Net Promoter Score Referral value Indicator of brand attachment Customer referrals increasingly key success factor Chair of Marketing Prof. Christoph Fuchs, Ph.D. 28 Benefits of brands for consumers and for companies Chair of Marketing Prof. Christoph Fuchs, Ph.D. 33  Strong brands simplify decision making The brand as the miser (availability heuristic) Chair of Marketing Prof. Christoph Fuchs, Ph.D. 34  Strong brand can charge higher prices & inelastic demand Not just prepared to pay more, Expect to pay more Chair of Marketing Prof. Christoph Fuchs, Ph.D. 35  Strong brands reduce risk and searching costs Chair of Marketing Prof. Christoph Fuchs, Ph.D. 36  Strong brands say something about who we are „I am good father“, „I am a good mother“ Chair of Marketing Prof. Christoph Fuchs, Ph.D. 37  Strong brands help us to express ourself and can repair or increase our self-esteem Chair of Marketing Prof. Christoph Fuchs, Ph.D. 38  Strong brands change the way we are seen and help us to get social status and image, „Look, I am successful“ Chair of Marketing Prof. Christoph Fuchs, Ph.D. 39 Customer benefits: B2B vs. B2C 100% 90% 80% 70% Importance 60% 50% 40% 30% 20% 10% 0% B2B B2C Risk reduction Information efficiency Image benefits Source: McKinsey Germany Chair of Marketing Prof. Christoph Fuchs, Ph.D. 40 The value of Brand… Consumer benefits Organizational benefits Risk management Reduced search costs Self-enhancement Self-expression Chair of Marketing Prof. Christoph Fuchs, Ph.D. 41 Organizational benefits: Customer retention Brand loyalty: The engine of customer lifetime value Market share: Outdated paradigm Commodity mindset (e.g., promotions) WoM Chair of Marketing Prof. Christoph Fuchs, Ph.D. 42 Organizational benefits: Brand extension potential Cost per unit of trial Brand as a beachhead in market Reduced establishment costs -36% Increased potential for success New revenue New brand Brand extension Chair of Marketing Prof. Christoph Fuchs, Ph.D. 43 Organizational benefits: Financial valuation Market value based on intangible assets Provided: A) You have strong brand B) You persuade financial community to value brand For M&A’s Chair of Marketing Prof. Christoph Fuchs, Ph.D. 46 Organizational benefits: HRM Internal role of brand Lower costs of acquisition Decreased salary Improved performance Increased retention Chair of Marketing Prof. Christoph Fuchs, Ph.D. 47 The virtuous cycle of branding Consumer benefits Organizational benefits Higher margins Risk management Inelastic demand Reduced search costs Customer retention Brand extension potential Self-enhancement Sales effectiveness Self-expression Equity in channels Financial valuation HR Efficiency of MARCOMs Market orientation Strategic focus Chair of Marketing Prof. Christoph Fuchs, Ph.D. 51 Strategic Brand Management Chair of Marketing Prof. Christoph Fuchs, Ph.D. 52 Brands & Organizations Brands encode what a firm does and what it stands for “Branding as Strategy” vs. … Branding typically understood as aspect of product image Cosmetic: style over substance Chair of Marketing Prof. Christoph Fuchs, Ph.D. 53 How your core idea (brand pomise) determines your marketing strategies THE low-fare airline Chair of Marketing Prof. Christoph Fuchs, Ph.D. 54 This core idea drives your decisions “We are THE low-fare airline. Once you understand the fact, you can make any decision about this company’s future as well as I can.” (Herb Kelleher former CEO). Chair of Marketing Prof. Christoph Fuchs, Ph.D. 55 Chair of Marketing Prof. Christoph Fuchs, Ph.D. 56 Chair of Marketing Prof. Christoph Fuchs, Ph.D. Branding as Strategy: Template for all customer touchpoints 57  BRANDING AS STRATEGY: LONG-TERM ORIENTED Chair of Marketing Prof. Christoph Fuchs, Ph.D. 58 Importance of consistency for brands Chair of Marketing Prof. Christoph Fuchs, Ph.D. 59 Importance of not betraying brand promise Chair of Marketing Prof. Christoph Fuchs, Ph.D. 60 Chair of Marketing Prof. Christoph Fuchs, Ph.D. 61 Chair of Marketing Prof. Christoph Fuchs, Ph.D. 62 Key Takeaways Brands are valuable assets in the end, brands are all about associations in customers' heads strong brands require consistency (in communication and product performance) brands need to be maintained, managed, measured Brand-driven management as a valuable business strategy Chair of Marketing Prof. Christoph Fuchs, Ph.D. 63 Swatch & Omega Chair of Marketing Prof. Christoph Fuchs, Ph.D. 64  Thank You. Chair of Marketing Prof. Christoph Fuchs, Ph.D. 65