Creating Brand Equity PDF

CREATING BRAND EQUITY Brand is a promise between the firm and the consumer. It’s all about creating differences between products. Marketers need to teach consumers “who” the product is—by giving it a name and other brand elements to identify it—as well as what the product does and why consumers shou...

CREATING BRAND EQUITY Brand is a promise between the firm and the consumer. It’s all about creating differences between products. Marketers need to teach consumers “who” the product is—by giving it a name and other brand elements to identify it—as well as what the product does and why consumers should care. Branding creates mental structures that help consumers organize their knowledge about products and services in a way that clarifies their decision making and, in the process, provides value to the firm. Brand equity added value endowed to products with consumers. Brand equity may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability it commands. A brand has positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified than when it is not identified. A brand has negative customer-based brand equity if consumers react less favorably to marketing activity for the brand under the same circumstances. Brand promise - The marketer’s vision of what the brand must be and do for consumers. 6 criteria for choosing brand elements 1. Memorable 4. Transferable 2. Meaningful 5. Adaptable 3. Likable 6. Protectable Brand contact - any information-bearing experience (positive or negative) a customer or prospect has with the brand, its product category, or its market. Managing Brand Equity Brand reinforcement - Requires the brand always be moving forward Brand revitalization - Almost any kind starts with the product A firm’s branding strategy—often called its brand architecture—reflects the number and nature of both common and distinctive brand elements. Deciding how to brand new products is especially critical. Assuming a firm decides to brand its products or services, it must choose which brand names to use. Three general strategies are popular: 1. Individual or separate family brand names. Consumer packaged-goods companies have a long tradition of branding different products by different names. 2. Corporate umbrella or company brand name. Many firms, such as Heinz and GE, use their corporate brand as an umbrella brand across their entire range of products. 3. Sub-brand name. Sub-brands combine two or more of the corporate brand, family brand, or individual product brand names. SETTING PRODUCT STRATEGY Product Characteristics and Classifications. Product - anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. Product Levels: The Customer-Value Hierarchy The fundamental level is the core benefit: the service or benefit the customer is really buying. A hotel guest is buying rest and sleep. At the second level, the marketer must turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser, and closet. At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product. Hotel guests minimally expect a clean bed, fresh towels, working lamps, and a relative degree of quiet. At the fourth level, the marketer prepares an augmented product that exceeds customer expectations. In developed countries, brand positioning and competition take place at this level. At the fifth level stands the potential product, which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. Here companies search for new ways to satisfy customers and distinguish their offering. Product Classifications Products fall into three groups according to durability and tangibility: 1. Nondurable goods are tangible goods normally consumed in one or a few uses, such as beer and shampoo. Because these goods are purchased frequently, the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. 2. Durable goods are tangible goods that normally survive many uses: refrigerators, machine tools, and clothing. They normally require more personal selling and service, command a higher margin, and require more seller guarantees. 3. Services are intangible, inseparable, variable, and perishable products that normally require more quality control, supplier credibility, and adaptability. Examples include haircuts, legal advice, and appliance repairs. When we classify the vast array of consumer goods on the basis of shopping habits, we distinguish among convenience, shopping, specialty, and unsought goods. The consumer usually purchases convenience goods frequently, immediately, and with minimal effort. Examples include soft drinks, soaps, and newspapers. Staples are convenience goods consumers purchase on a regular basis. A buyer might routinely purchase Heinz ketchup, Crest toothpaste, and Ritz crackers. Impulse goods are purchased without any planning or search effort, like candy bars and magazines. Emergency goods are purchased when a need is urgent—umbrellas during a rainstorm, boots and shovels during the first winter snow. Shopping goods are those the consumer characteristically compares on such bases as suitability, quality, price, and style. Examples include furniture, clothing, and major appliances. Homogeneous shopping goods are similar in quality but different enough in price to justify shopping comparisons. Heterogeneous shopping goods differ in product features and services that may be more important than price. Specialty goods have unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort. Examples include cars, audio-video components, and men’s suits. Unsought goods are those the consumer does not know about or normally think of buying, such as smoke detectors. Other classic examples are life insurance, cemetery plots, and gravestones. We classify industrial goods in terms of their relative cost and the way they enter the production process: materials and parts, capital items, and supplies and business services. Materials and parts are goods that enter the manufacturer’s product completely. They fall into two classes: raw materials and manufactured materials and parts. Raw materials in turn fall into two major groups: farm products (wheat, cotton, livestock, fruits, and vegetables) and natural products (fish, lumber, crude petroleum, iron ore). Manufactured materials and parts fall into two categories: component materials (iron, yarn, cement, wires) and component parts (small motors, tires, castings). Component materials are usually fabricated further—big iron is made into steel, and yarn is woven into cloth. The standardized nature of component materials usually makes price and supplier reliability key purchase factors. Component parts enter the finished product with no further change in form, as when small motors are put into vacuum cleaners and tires are put on automobiles. Capital items are long-lasting goods that facilitate developing or managing the finished product. They fall into two groups: installations and equipment. Installations consist of buildings (factories, offices) and heavy equipment (generators, drill presses, mainframe computers, elevators). Equipment includes portable factory equipment and tools (hand tools, lift trucks) and office equipment (desktop computers, desks). These types of equipment don’t become part of a finished product. Supplies and business services are short-term goods and services that facilitate developing or managing the finished product. Supplies are of two kinds: maintenance and repair items (paint, nails, brooms) and operating supplies (lubricants, coal, writing paper, pencils). Together, they go under the name of MRO goods. Business services include maintenance and repair services (window cleaning, copier repair) and business advisory services (legal, management consulting, advertising). Product Differentiation 1. Form – Many products can be differentiated in form—the size, shape, or physical structure of a product. 2. Features – Most products can be offered with varying features that supplement their basic function. 3. Performance Quality – Most products occupy one of four performance levels: low, average, high, or superior. Performance quality is the level at which the product’s primary characteristics operate. 4. Conformance Quality – Buyers expect a high conformance quality, the degree to which all produced units are identical and meet promised specifications. 5. Durability – a measure of the product’s expected operating life under natural or stressful conditions, is a valued attribute for vehicles, kitchen appliances, and other durable goods. 6. Reliability – Buyers normally will pay a premium for more reliable products. Reliability is a measure of the probability that a product will not malfunction or fail within a specified time period. 7. Repairability – measures the ease of fixing a product when it malfunctions or fails. Ideal repairability would exist if users could fix the product themselves with little cost in money or time. 8. Style – describes the product’s look and feel to the buyer and creates distinctiveness that is hard to copy. 9. Customization – customized products and marketing allow firms to be highly relevant and differentiating by finding out exactly what a person wants—and doesn’t want—and delivering on that. Services Differentiation The main service differentiators are ordering ease, delivery, installation, customer training, customer consulting, maintenance and repair, and returns. 1. Ordering Ease – describes how easy it is for the customer to place an order with the company. 2. Delivery – refers to how well the product or service is brought to the customer, including speed, accuracy, and care throughout the process. 3. Installation – refers to the work done to make a product operational in its planned location. 4. Customer Training – helps the customer’s employees use the vendor’s equipment properly and efficiently. 5. Customer Consulting – includes data, information systems, and advice services the seller offers to buyers. 6. Maintenance and Repair – programs help customers keep purchased products in good working order. These services are critical in business-to-business settings. 7. Returns – A nuisance to customers, manufacturers, retailers, and distributors alike, product returns are also an unavoidable reality of doing business, especially in online purchases. Free shipping, growing more popular, makes it easier for customers to try out an item, but it also increases the likelihood of returns. Controllable returns result from problems or errors made by the seller or customer and can mostly be eliminated with improved handling or storage, better packaging, and improved transportation and forward logistics by the seller or its supply chain partners. Uncontrollable returns result from the need for customers to actually see, try, or experience products in person to determine suitability and can’t be eliminated by the company in the short run.