| Designing a Customer Value–Driven Strategy and Mix
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PART 3
8-10
Consider ad agency Young & Rubicam’s BrandAsset
Valuator. How might the central brand fans speaking up in support of a brand affect the four consumer
perception dimensions? (AACSB: Written and Oral
Communication; Reflective Thinking)
8-11
What are the potential drawbacks of leveraging or
encouraging dialogue from brand rivals? (AACSB:
Written and Oral Communication; Reflective Thinking)
Marketing Ethics Cutthroat Prices
Multinational corporations such as Gillette were widely criticized
in 2017 for perpetuating the price differential between men’s and
women’s razors. A survey by The Times in 2016 revealed that
clothes, beauty products, toys, and other products were routinely
more expensive for women than men. According to the newspaper,
the prices were 37 percent higher across several product categories. This price discrimination is not new; neither is it restricted to
women’s clothes, pink razors, and dolls. A report by the New York
City Department of Consumer Affairs (“From Cradle to Cane: The
Cost of Being a Female Consumer,” 2015) found that across 800
identical products, on average the female version was 7 percent
more expensive. Perhaps part of the explanation is price sensitivity. In other situations, a business will attempt to increase the price
out of balance to the increase in cost to them if they can manage
it. Sellers do rely on making a greater profit by sneaking “add-ons”
or personalizing products. In these cases, the buyer effectively selfselects the higher price. It may be a simple extra topping on a dessert, a super-sized version of the standard product, or even a vanilla
syrup shot in a coffee. All attract a nice mark-up for the seller.
8-12
Is price discrimination reasonable and a viable approaching in the marketing of products and services?
Explain why the approach might be contrary to customer
value–driven strategies. (AACSB: Communication;
Ethical Reasoning)
8-13
There are other forms of price discrimination that
are routinely used by businesses. Identify the different types and comment on their impact on customer
value–driven approaches. (AACSB: Communication;
Reflective Thinking)
Marketing by the Numbers Diet Coke with Fiber
Coca-Cola launched Coca-Cola Plus in a limited market in
Japan last year and now plans to launch it nationwide in that
country. Coca-Cola Plus is a zero-calorie soda (essentially Diet
Coke) with 5 grams of an indigestible dietary fiber called dextrin.
Although some might just call it Diet Coke with a laxative, CocaCola Plus is touted in Japan as a health food that suppresses the
absorption of fat and keeps blood triglycerides at moderate levels. In fact, the product has earned the Japanese government’s
“gold label,” designating it as a government-approved Food of
Specific Health Use (FOSHU). Although the new Coca-Cola
Plus reaps a higher wholesale price for the company ($1.20 per
470-milliliter bottle versus $1.15 per bottle for the original Diet
Coke), it also comes with higher variable costs ($0.65 per bottle
versus $0.55 per bottle for the original product). Although some
Diet Coke drinkers will switch to Coca-Cola Plus, the company
believes the new product will attract new customers because of
its health benefits. Coca-Cola is no stranger to introducing new
products in Japan. The company released Coca-Cola Coffee
Plus last year and recently introduced its first alcoholic beverage
called Lemon Do.
8-14
What brand development strategy is Coca-Cola undertaking? (AACSB: Communication; Reflective Thinking)
8-15
Assume the company expects to sell 5 million bottles of
Coca-Cola Plus in the first year after introduction but that
60 percent of those sales will come from buyers who
would normally purchase Diet Coke (that is, cannibalized sales). Assuming the sales of Diet Coke are normally
300 million bottles per year and that the company will
incur an increase in fixed costs of $500,000 during the
first year to launch Coca-Cola Plus, will the new product be profitable for the company? Refer to the Financial
Analysis of Marketing Tactics: Extend the Product Line
section in Appendix 2: Marketing by the Numbers for
an explanation regarding how to conduct this analysis.
(AACSB: Communication; Analytical Reasoning)
Company Case MINI: Focus on the Essential—Maximize the Experience
Long-term brands face a balancing act. On the one hand, they
must remain true to the characteristics that endear them to
their throngs of loyal customers. On the other hand, the longer a brand remains, the more it must develop new attributes
that appeal to new generations of customers. Maintaining this
balance between consistency and relevancy is difficult. Brands
that can do this for decades are truly special. Take BMW’s
MINI—the modern representation of the iconic British people’s
car. MINIs continue to roll off the assembly line after more than
60 years. Not only has MINI remained true to the original brand
while keeping up with changing customer dynamics, it has
done so despite having been owned by six different companies.
CHAPTER 8
A Classic Is Born
| Products, Services, and Brands: Building Customer Value
In 1956, the Suez Crisis brought on a major worldwide fuel shortage. As a result, the demand for small, fuel-efficient vehicles spiked.
The British Motor Corporation (BMC) gave Sir Alec Issigonis the job
of designing a vehicle with a unique challenge—minimize dimensions and amenities while maximizing efficiency and utility. That
challenge became the heart and soul of the MINI brand.
Measuring only ten feet long, four-and-a-half feet wide, and
four-and-a-half feet high, the original MINI rode on tiny teninch wheels. But with its wheels pushed out to the extreme
corners and its 40-horsepower engine mounted sideways, the
tiny car could seat four people comfortably with room in the
back for cargo. It was fuel efficient and boasted a sturdy frame
and suspension. The innovative design of the original MINI
gave it nimble reflexes and go kart-like handing. Available in a
variety of basic colors, the car offered optional niceties such
as adjustable seats, opening rear side windows, rubber mats,
and a heater.
Customers were thrilled with the MINI and its small-on-sizebig-on-function design. Those initial characteristics of the brand
were soon enhanced even further through a partnership between
BMC and John Cooper, the legendary Formula One driver and
race car designer. Recognizing the MINI’s potential as a race car
based on its small size, low weight, and stiff chassis, Cooper designed performance modifications for the drivetrain, suspension,
and brakes. Cooper’s hunches were right. MINI won the Monte
Carlo Rally three times between 1958 and 1962 against veteran
racing brands such as Ferrari, Maserati, and Lotus. With Cooper
performance modifications added to the options list, the MINI
was poised to deliver more value than ever.
Based on its design and options, key characteristics of the
brand began to emerge. Round headlights and a “smiley face”
bumper contributed to a friendly and fun brand personality. As
the options offered by BMC and by aftermarket companies
evolved, MINI soon became one of the most customizable car
brands, giving it a strong appeal to those who wanted a car that
would express their individuality. It’s not surprising that MINI
quickly became the perfect blend of practical and cool that was
irresistible to everyone, regardless of class and culture. MINI’s
popularity really took off as iconic celebrities became fans. At
one point, all four Beatles were counted among the growing
body of MINI owners.
Under BMC during its first decade, the MINI was sold in
coupe, wagon, and van versions as a sub-brand of various
marks (Morris MINI-Minor and the Austin Seven MINI, among
others). In 1969, MINI became a standalone brand. But as BMC
experienced financial difficulties in the late 1960s, MINI bounced
from one company to another for the better part of 25 years
before finding a home with BMW in 1994 where it has remained
ever since.
Although the MINI’s pedigree is confusing, the car changed
very little during its first 41 years, staying true to the original design. But safety and emissions regulations as well as changing
consumer needs brought MINI production to a halt in October of
2000. It was then that MINI number 5,387,862—a red Cooper
Sport—was driven off the line and immediately parked in the
Heritage Motor Centre in Gaydon, England, right alongside the
first MINI ever made—a tribute to the most popular British car of
265
all time. Just one year before, a jury of 126 automotive experts
from 32 countries had voted the MINI the runner up to Ford’s
Model T as the Car of the Century.
Redesigning an Iconic Brand
Although the writing was on the wall signaling the end of the
original MINI design, BMW was hard at work designing its replacement. The brand had far too much equity and heritage to
let it die. However, BMW faced a challenge in recreating one
of the most iconic automobiles ever made. Modern customers
called for more of everything—more power, larger size, safer
design, and more features and options. But the heritage of the
brand demanded an automobile for the new millennium that was
unmistakably a MINI.
In 2001, the first of the new two-door MINI hatchbacks
rolled off the assembly line in England and hit showroom floors.
Although the length and width of the new MINI was substantially
greater than the original (22 inches longer and 11 inches wider),
the new MINI was very small relative to average vehicles of the
time. Various engine options delivered between 75 and 245
horsepower. BMW’s modern version delivered on fuel efficiency,
practicality, and driving performance. With nimble reflexes and
rally car handling, it was easy to drive and park. Yet taller-thanaverage occupants found plenty of headroom and legroom, not
to mention superb visibility in any direction. Round headlights
and a happy-face grill gave the new design a look that was unmistakably MINI.
Sticking with the original MINI’s appeal to individuality, BMW
provided a lengthy list of options with various wheel packages,
paint schemes, and latex appliques that could be fitted to give
the roof, mirrors, hood, and hatch seemingly endless appearance options. Within a few years, the two-door hatch spawned
convertible and wagon variants.
The goal of the new MINI’s branding was to sell “lifestyles
defined by freedom, good cheer, and camaraderie.” To that
end, MINI unleashed the “Let’s Motor” campaign, employing a
rich mix of unconventional media, carefully integrated to create
personality for the car and excited buzz among consumers.
The company put MINIs in all kinds of imaginative places. It
mounted them atop Ford SUVs and drove them around 22
major cities, highlighting the car’s sensible size. It set up “MINI
Ride” displays outside department stores, featuring an actual
MINI that looked like a children’s ride. Displays in airport terminals featured oversize newspaper vending machines showing
the undersized MINI and proclaiming, “Makes everything else
seem too big.” Equally creative were integrated print, online,
and direct mail ads.
The “Let’s Motor” campaign not only won awards, it was
a smashing success in achieving BMW’s goals. Together with
company-sponsored owner events, MINI developed a cult-like
following of devoted owners. Although the new MINI didn’t
please all purists, many were impressed. Like the original, the
new MINI drew drivers of all demographics despite the fact
that BMW targeted drivers between the ages of 20 and 30
who enjoyed the pleasure of driving. Sales were initially strong
and steadily increased to more than 300,000 units sold in
2012—a figure that rivaled the best sales years ever of the
classic MINI.
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PART 3
| Designing a Customer Value–Driven Strategy and Mix
The Soul of the Brand Lives On
With the MINI’s popularity stronger than ever, in the summer
of 2015 BMW announced that it would again reinvent the
brand, complete with new designs, a new logo, and a new
positioning for its cars. Many observers asked the obvious
question, “With things are going so well for MINI, why
was it reinventing itself?” The simple answer is, BMW was
proactively staying ahead of shifts in market conditions.
Keeping tabs, BMW noticed that its target customer—
affluent urban dwellers in their 20s and 30s who enjoy fun,
freedom, and individuality—had changed considerably.
When the brand first launched in 2001, consumers were
brimming with confidence from a booming world economy.
But rapid technological change, geo-political uncertainty, and
the financial crash of 2008 combined to fundamentally alter
consumer values. MINI’s core customer had become more
practical—focused on the essentials. For a brand built on a
lifestyle defined by fun, adventure, and sharing good times,
BMW managers none-the-less believed that MINI was better
positioned than perhaps any other brand to meet this new
focus on practicality.
The new MINI logo was toned down from the 3D version to a more simple 2D black and white rendition. MINI
also simplified its approach to advertising. Gone were the
tongue-in-cheek creatives that broke with convention.
Instead, new, simpler MINI ads focused on the features and
functions of the cars. MINI also updated its website with videos and visuals that helped customers better understand
the benefits of the car. These branding changes suggested
that MINI was authentic, practical, and ready to play a bigger role in society.
As part of the new branding philosophy, BMW planned
to rollout complete revisions of each of its five models—now
referring to them as the “Five Superheroes”—the Hardtop 2
Door, the Hardtop 4 Door, the Convertible, the wagon-esque
Clubman, and the all-wheel drive Countryman crossover. All
models would receive substantial technological updates. In a
departure from the past, branding efforts for each new model
would emphasize a unique identity, including color schemes
and aesthetics tailored to each car. With this approach, MINI
created a brand with five product lines that appealed to a
broader range of customers. For example, the Clubman was
aimed at attracting more families to the brand. Advertising focused on the car’s functionality and elegant design. And at
over 14 feet in length and six feet in width, it was MINI’s largest
and roomiest car ever.
With this redesign, did MINI abandon its original brand values? Not according to MINI’s head of brand management.
CHAPTER 8
| Products, Services, and Brands: Building Customer Value
“With our five ‘superheroes’ we want to make it very clear that
each of those cars has its own character. The Clubman is the
most extreme example in terms of moving in a direction away
from the past, but you should still expect a lot of fun from the
different models as each character emerges.” Those at the
company emphasize that MINI’s brand values are still in line
with the minimizing, practical instincts of Issigonis on the one
hand contrasted with the maximizing, performance-driven approach of Cooper on the other.
“MINI has always been about new ideas, inspiration, and
a lot of passion, and these things are not going to change,”
said another MINI representative. Since the unveiling of the
new generation of MINIs, the company continues to innovate
with state-of-the-art features like MINI Connected Concierge
services, wireless smartphone charging, and anti-dazzle
adaptive headlights with a matrix high beam—a rarity on small
city cars. In an even bolder move, buyers of new MINIs can
custom design interior appointments like dashboard inserts,
side scuttles, and door sills that are produced on 3D printers and installed in the car before the buyer takes ownership.
In addition, MINI’s high-performance models will soon see
higher performance than ever. And in the coming year, the
MINI Copper SE will make its debut, the first in a new line of
fully electric MINIs.
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Based on MINI’s recent sales numbers, it seems that the
new direction is right on the money. For each of the past
four years, MINI has sold substantially more vehicles than
any year prior to the 2015 rebranding, moving more than
360,000 vehicles into garages around the world last year. As
MINI moves boldly into the future with efforts to stay relevant
in a changing world, it must also stay true to the qualities
that have made it iconic for so long. The folks at MINI seem
to get that. “Mini crosses cultures, class, gender, and age,”
says MINI’s head of design. “Anyone who buys a MINI feels
immediately younger while driving it. It just puts a smile on
your face.”50
Questions for Discussion
8-16 Discuss how MINI has endured for 60 years as a brand,
despite being owned by various companies.
8-17 Does MINI have high brand equity? Explain.
8-18 Over the years, has MINI been positioned based on attributes, benefits, or values? Explain.
8-19 Is BMW taking MINI in the right direction with its current
branding strategy? Why or why not?