Marketing
And
IT initiatives
Marketing
• Session One: Marketing For the 21st
Century
• Session Two: Core Marketing Concepts
• Session Three: Core Marketing Concepts
• Session Four: The CMO, CIO, and
Strategic IT Initiatives
Session One
Marketing For the
Century
st
21
Starbucks!
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Phenomenal growth
Battling it out in the USA
World class competitor
Practicing both the “art” and “science” of
marketing!
What is marketing?
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Advertising
Selling
Branding
Market segmentation
Product development
Market forecasting
Sales forecasting
Sales promotion
What is marketing?
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Pricing
Product/Market positioning
Repositioning
Market analysis
– Geographic
– Demographic
– Psychographic
– Behavioral
What is Marketing?
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Competitive analysis
Market research
Product rollout strategies
Distributing: retailing, wholesaling, supply
chain management
• Marketing strategies
• Marketing plans
What is Marketing?
• Marketing is extremely broad and touches
nearly every aspect of the firm
• Marketing is horribly misunderstood and
poorly defined, even by many business
professionals
• Marketing, as it is practiced today, has
evolved, particularly since WWII
Marketing: A Brief History
• 16th century & scientists
• Copernicus: The sun, not the earth!
• Business parallel: The customer, not the
product
• “If you build a better mousetrap . . .”
• Really?
Marketing: A Brief History
• Production Era: 1870’s-1930’s (Industrial
Revolution)
• Sales Era: 1930-1950’s (Quality Products)
• Marketing Department Era: 1950’s
(“Marketing” emerges)
• Market Driven Era: 1960-2000 (Customer
focus)
• “Experience” Driven Era (Appealing to
“senses”) Ex. Disney, Starbucks
Marketing Defined
“An organizational function and a set of
processes for creating, communicating,
and delivering value to customers and for
managing customer relationships in ways
that benefit the organization and its
stakeholders.” American Marketing
Association, 2004
Marketing Management
“The art and science of choosing target
markets and getting, keeping, and growing
customers through creating, delivering,
and communicating superior customer
value.” A Framework for Marketing
Management, Kotler & Keller, 4th Ed.,
Pearson Prentice Hall, 2009
Marketing Basics
• Focus: The CUSTOMER: His needs
(wants) must be satisfied
• Duration: Begins by analyzing the
customer and his needs (wants) and ends
. . . well, marketing never really ends as
long as there are repeat purchases to be
made.
• Away from transactional to relational
• Away from short term to long term
Marketing Basics
• “The Marketing Concept”
• The “catch phrase” for modern marketing
through the last 50+ years
• Simply put, “Find out “what” the customer
wants and do what it takes to satisfy him.”
• The key is to “focus on the customer.”
• “The customer is king?”
Marketing Basics
• From a marketer’s perspective, the critical
business issue in today’s global economy:
• Not “can we produce enough . . .”
• But “will we produce the “right . . .”
car . . . house . . .ceiling fan . . .shotgun
software . . .textbook. . .dining experience,
educational program, etc.
Marketing Basics
• For nearly everything that is purchased in
today’s developed economies, we’re in a
buyer’s market.
• The customer does not have to purchase
his groceries, wallpaper, chainsaw, oil
change, coffee, car, airplane, or software
from you and your company.
• Your firm doesn’t even have to pay YOU to
provide their IT support services!!!
Marketing Basics
• Great marketing is “market” oriented, not
“product” oriented
• Especially in developed nations, the customer is
king
• The customer can find what he wants in today’s
mature, technology driven, global economy
“Q”: He can find high quality
“P”: He can find the low price
“S”: He can find great service
What is a market?
• Marketers see sellers as the industry and
buyers as constituting the market
• Marketers talk about
– Need markets (diet-seeking market)
– Product markets (shoes)
– Demographic markets (youth)
– Geographic markets (French)
– Voter, labor, and donor markets
What is a market?
• Marketers serve:
– Consumer markets
– Business markets
– Global markets
– Nonprofit markets
– Government markets
– Some combination of the above
What is a market?
• Marketers talk about “metamarkets,” referring to
clusters of products that would appeal to two
people getting married, expecting their first child,
buying a vehicle, and “metamediaries” to assist
buyers in moving through these groups.
• Ex: Edmunds (www.edmunds.com) will help you
buy your car by finding the features, prices,
lowest price dealer, financing, car accessories,
and more that meets your requirements
Everything needs to be marketed!
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Goods
Services
Events
People
Places
Properties
Organizations
Everything needs to be marketed!
• Information
• Ideas
• Experiences
The
Core
The
Core
of the
Core
The Core
Of
The Core
Of
The Core
Core Marketing Concepts
1)
2)
3)
4)
5)
6)
Needs, Wants, and Demands
The Marketing Plan
Environmental (situation) Analysis
SWOT Analysis
Marketing Strategies
Market Segmentation, Targeting, and
Positioning
7) Product Development
8) Brands and Branding
Marketing Defined
“The aim of marketing is to make selling
superfluous. The aim of marketing is to
know and understand the customer so
well that the product or service fits him and
sells itself. Ideally, marketing should result
in a customer who is ready to buy. All that
should be needed then is to make the
product or service available.”
Peter Drucker, 1973
Session #2
Core
Marketing
Concepts
Core Marketing Concepts
1)
2)
3)
4)
5)
6)
Needs, Wants, and Demands
The Marketing Plan
Environmental (situation) Analysis
SWOT Analysis
Marketing Strategies
Market Segmentation, Targeting, and
Positioning
7) Product Development
8) Brands and Branding
Core Marketing Concept #1
Needs, Wants,
and
Demands
Needs, Wants, and Demands
• Needs are basic human requirements: food, air,
water, clothing, and shelter to survive.
Recreation, education, and entertainment might
also be classified as needs.
• Wants develop when these needs are directed
toward specific products/services: You “need”
food but you want a burrito, etc.
• Wants seem to be shaped by one’s culture.
Needs, Wants, and Demands
• Demands are wants for specific products
along with the ability to pay
• A firm must not only measure the “wants”
for their products/services but also the
willingness and ability to make the
purchase.
Needs, Wants, and Demands
• Marketers are often falsely charged with
“creating needs,” but need preexist
marketers.
• Marketers, along with other societal
factors, influence wants.
• Marketers might promote the idea that
living in a certain neighborhood would
satisfy your “need” for social status, but
they don’t create the need for such status.
Five types of Needs
• Stated needs: An inexpensive car
• Real needs: Low operating costs but not
low initial price
• Unstated needs: Good service from dealer
• Delight needs: Free onboard navigation
system
• Secret needs: Recognized by friends as
“hip.”
Needs, Wants, and Demands
• An important point: Simply providing customers
with what they say they want doesn’t quite get it
anymore.
• Great marketers get a leg up on competitors by
helping customers learn what they want.
• The challenge and necessity of this important
aspect of great marketing is directly related to
the increasing complexity of 21st century
lifestyles and opportunities.
Core Marketing Concept #2
The
Marketing Plan
The Marketing Plan
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Executive Summary
Environmental Analysis
SWOT Analysis
Marketing Goals & Objectives
Marketing Strategy
Marketing Implementation
Evaluation & Control
Core Marketing Concept #3
Environmental
Analysis
Environmental Analysis
• Also known as environmental monitoring
– Gathering and analyzing information
– Forecasting impact of environmental trends
Environmental Analysis
• The Internal Environment
• The External Environment
• The Customer Environment
External Macroenvironment
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Demographics
Economic conditions
Competition
Social and cultural forces
Political and legal forces
Technology
Demographics
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Characteristics of population groups
Size
Distribution (rural, urban)
Population growth
Income
Education
Gender
Race
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Economic Conditions
• Stage of the business cycle (recovery,
prosperity, recession, depression)
• Inflation
• Unemployment
• Interest rates
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Competition
• Brand competitors: directly similar
products (Coke vs Pepsi)
• Total Budget competitors: totally dissimilar
products (New car vs room addition)
• Substitute products: Same class of
products (entertainment: baseball vs
symphony or wood flooring vs carpeting)
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Competition
• The goal: to gain a “differential advantage”
• Also known as “competitive differential
advantage”
• Should provide at least a “temporary
monopoly in your own little market.”
• Should provide a “hard to copy marketing
mix.”
• Opposite of a “differential disadvantage.
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Social & Cultural Environment
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Concern about natural environment
Changing gender roles
A premium on time
Physical fitness and health
Political & Legal Forces
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Monetary and fiscal policies
Social legislation & regulations
Governmental relationships w/industries
Legislation related specifically to
marketing
Technology
• Living in a technology revolution
• Tech breakthroughs affect us in three ways
By starting entirely new industries
Radically altering/destroying existing
industries
By stimulating markets/industries not
related to the new technology. Rippling
effect
Technology (continued)
• Affects how marketing is carried out
• Global market/sourcing
• 24/7
External Microenvironment
• The firm’s market
• The firm’s suppliers
• Various marketing intermediaries
External Microenvironment
• External to the firm
• Generally uncontrollable
• But they “can” be influenced
Pressure on suppliers and middlemen
Advertising influences your market
The firm’s market
• Market defined:
• People or organizations with
Needs (synonymous with wants) to
satisfy
Money to spend
Willingness to spend it (buying
behavior)
Suppliers
• Often carelessly overlooked by marketers
• Increasing need for cooperative
relationships with suppliers
• Increasingly competitive due to technology
and instant global communication
Marketing Intermediaries
• Independent organizations aid in the flow
of g/s between businesses and suppliers
as well as their markets
• Middleman: wholesalers, retailers,
distributors
• Various facilitating organizations:
transportation companies, warehousing,
financing (banks and other lenders)
Marketing Intermediaries
• Huge question: To what degree should our
firm use marketing intermediaries?
• I could buy directly, sell directly, do my own
shipping, warehousing, financing, etc.
• Or I could hire specialists to do a “better,
more efficient” job.
• Answer: Examine the value chain
• Challenge: Value can be intangible and
difficult to measure
Universal Functions of Marketing
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Buying
Selling
Transporting
Storing
Standardizing or grading
Financing
Risk-taking
Information gathering
Universal Functions of Marketing
• Super-critical issue
• Each of these functions must be
performed for every product/service that is
successfully marketed
• Responsibility can be shifted and shared
Environmental Analysis
• Customer Environment
– Who are our current/potential customers?
– What do customers do with our products?
– Where do customers purchase our products?
– When do customers purchase our products?
– Why/how do customers select our products?
– Why do potential customers not purchase our
products?
Core Marketing Concept #4
SWOT
Analysis
Major Benefits of SWOT Analysis
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Simplicity
Lower Costs
Flexibility
Integration and Synthesis
Collaboration
SWOT Analysis
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Strengths and Weaknesses are internal
Opportunities and Threats are external
Try to convert weaknesses into strengths
Try to convert threats into opportunities
Strengths matched with opportunities
provide capabilities
• Capabilities provide competitive
advantages if they provide better value to
customers than competitive offerings
SWOT Analysis
• SWOT Analysis allows the marketer to
“get his arms around the business.”
• SWOT Analysis can be done quantitatively
or qualitatively or both
• A major goal of SWOT Analysis: The
development of competitive advantage
Common Sources of Competitive
Advantage
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Relational Advantages
Legal Advantages
Organizational Advantages
Human Resource Advantages
Product Advantages
Pricing Advantages
Promotion Advantages
Distribution Advantages
Strategies for Competitive
Advantage
• Operational Excellence
• Product Leadership
• Customer Intimacy
Core Marketing Concept #5
Marketing
Strategies
Marketing Strategy
1) Selecting a Target Market(s)
2) Developing a Marketing Mix(es)
1)
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4)
Product
Price
Promotion
Placement (distribution
Core Marketing Concept #6
Market Segmentation,
Targeting
And
Positioning
Dunkin’ Donuts!!
• A sleeping giant!
• Serving the same market as KK and
Starbucks?
• How are they alike?
Ans: Coffee and pastries
DD, Starbucks, & KK
• How are they different?
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SB: Upscale hangout providing “an
experience.” Work, home, and
Starbucks, the “third” place
KK: “Dietary splurge” or “special
indulgence” rather than a regular habit
DD: “Get ‘em in, sell ‘em coffee & snack,
and get ‘em out.”
Question: “Is it wise (or even
necessary) for the firm to bet
that a large part of the coffee
and pastry market is more
interested in convenience and
speed of service than dunking?
DD, Starbucks & KK
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Additional questions to ponder
“How are these “competitors different?”
“Is this a zero-sum game or can all three
companies grow simultaneously?”
Welcome to
Market Segmentation,
Targeting,
and
Positioning
Structured segmentation (steps)
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Identify current and potential wants
within market
Identify characteristics that distinguish
among segments
Determine potential of segments and
how well they are being satisfied
Select the “right” segment (s) as your
target market (s). Ideally, market (s)
whose needs are not being met well.
Selecting a Target-Market
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Compatible with organization’s goals and
image
Matches market opportunity with
company’s resources
Attractive ROI projections
Weak or few competitors
Characteristics of segments
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Characteristics must be measureable and
data describing segments must be obtainable
Market segments should be accessible
through existing marketing institutions;
middlemen, media, sales force with minimal
cost, waste, and effort.
Each segment should be substantial (large
enough) to be profitable. Note: Micromarketing
is more common but risky and challenging.
(Trucks, houses, computers via masscustomization) Benefits vs costs!
The First “Cut”
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Consumer markets/Business markets:
either or both
Very significant
Why?
Both the buyers and buying process are
very different
Segmenting Consumer Markets
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Consumers are still quite varied
Need: Further subdividing’
Four traditional segmentation dimensions
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Geographic
Demographic
Psychographic
Behavioral
Geographic Segmentation
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Similarities within local/regional locations
(Southwest, Midwest, South, Northeast, etc.)
Differences between also exist
“Survey of Buying Power” provides information
on pop., income, and spending behavior by
state, county, major metro markets, TV and
newspaper markets
Walmart’s initial strategy: < 35,000 to limit
competition
Demographic Segmentation
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Characteristics: Age, gender, occupation,
income, and education
“Geodemographic Clustering” An
application with some imagination
1) US census data: demographic
2) Claritas: private research firm
3) 36,000 zip codes turned into 15 groups and
66 homogeneous clusters or segments
Demographic Segmentation
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Clusters are defined by lifestyles, consumption
behavior, etc.
Cluster “names”
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“kids and cul-de-sacs”
“gray power”
“shotguns and pickups”
“town and gown”
“blue-blood estates”
Used for locating retail outlets, designing
direct mail campaigns, selecting products and
brands
Psychographic Segmentation
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Personality: Critical differences exist but
very difficult to measure. Ex. What
percentage of people are “aggressive?”
How do you “access” or reach the
“aggressive market.” Thru what media?
Lifestyle: AIO variables: Can be difficult
to measure and access through usual
channels of distribution and promotional
program
Psychographic Segmentation
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Values: “LOV” or “List Of Values” that
relate to purchase behavior:
• Self respect
• Security
• Excitement
• Fun and enjoyment in life
• Having warm relationships
Psychographic Segmentation
• Values: “LOV” or “List Of Values” that
relate to purchase behavior (cont’d)
• Self-fulfillment
• Sense of belonging
• Sense of accomplishment
• Being well respected
Behavioral Segmentation
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“Benefits desired”: The ideal method for
segmenting a market! Why? People
everywhere buy “product benefits”, not
“product features.”
Not the medication but the “extra sleep” it
provides
Not the car but the “comfortable ride” or
the “coolness” it conveys
Behavioral Segmentation
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Usage rates (another behavioral
measurement)
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Light, medium and heavy users
The “heavy half”: 50% of all users account
for 80-90 % of total purchases
“angels” are very profitable: purchase w/o
sales or discounts
“devils” are losers for us: shop the bargains
Segmenting Business Markets
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Fewer buyers (significantly) but still very
much need to be segmented
Why?
Customers can still be successfully
grouped for greater efficiency and
satisfaction
Segmenting Business Markets
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Customer Location
Customer Type
Transaction Conditions
Customer Location
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Close to natural resources to minimize
transportation costs
Close to clients to minimize
transportation costs
Customer Type
• Industry: Typically more efficient to
segment the market and limit the
number of industries you serve. Not
being “all things to all potential
customers.”
• Size: Allows for different methods of
promotion and distribution
Customer Type
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Organizational structure: Purchasing
departments, “selling teams” for “buying
centers,” lengthy government buying
w/extensive approval processes
Purchase criteria: Major purchasers
can have major requirements of vendors;
i.e., technical capabilities, defect rates,
delivery schedules, etc.
Transaction Conditions
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Buying situation: New, modified, straight
– Ex: IKON, operating supplies via inside
sales
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Usage rate: Heavy, light, nonusers
(prospects)
Purchase procedure: simple, negotiated,
sealed bid
Segmentation Strategies
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Market aggregation
Multiple market segmenter
Single market segmenter: market concentration
Niche marketing: extreme concentration
Individualized marketing
– One-to-one marketing
– Mass customization
– Permission marketing
Positioning
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Position, positioning, perceptual maps, &
repositioning
Positioning is “the act of designing the
company’s offering and image to occupy a
distinctive place in the minds of the target
market.
Good brand positioning helps guide marketing
strategy by clarifying the brand’s essence,
what goals it helps the consumer achieve, and
how it does so in a unique way.
Positioning
• Positioning is done on a “perceptual map”
and is usually the result of formal
marketing research that acquires
information from the firm’s target market
on their perceptions of:
– The firm’s product (s)
– Competitors product (s)
– The ideal product (s)
Positioning
• A product’s “position” refers to its image on
a two or three dimensional perceptual map
• A product is strategically positioned and
repositioned typically by advertising to give
it a competitive edge, ideally a type of
“monopoly” where it is different.
Expensive/Distinctive
Lincoln
Porsche
Mercedes
Cadillac
BMW
VW
Chrysler
Nissan
Buick
Toyota
Conservative
Sporty
Honda
Ford
Chevy
Pontiac
Saturn
Dodge
Affordable/Practical
Core Marketing Concept #7
Product
Development
Creativity!
• Great Ideas!
• Cornerstone of business success!
• Improved production processes!
• Better customer service!
• Greater cost savings!
• Superior products!
But…how do you get them? From where?
Great Ideas!
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Just over ½ come from customers,
competitors, and suppliers
Remainder from company employees of
all types; R&D staff, salespeople, others
Imaginatik: provides “innovation and idea
management,” an electronic employee
suggestion box that becomes interactive
Imaginatik
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Systematic way of developing new ideas
Harnessing the creative potential of
employees
The Importance of
Product Innovation
1) Business goals:
– Satisfy customers
– Make a profit
The Importance of
Product Innovation
2) Critical to being successful—Why???
-technological changes—obsolescence
-”cloning” by competitors
3) “The core business is innovation. If we
innovate well, we will win.” (P & G head)
4) Innovate or die!
The Importance of
Product Innovation
5) High failure rates of new products
-Poor differentiation
-Poor positioning
-Lack of marketing support (Big bucks
and ROI)
Product!!
Product!!
Product!!
What is a product????
What is a product?
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Good
Service
Place
Person
Idea
“Formal” Definition
Product: “A set of tangible and intangible
attributes, which may include:
• Packaging
• Color
• Price
• Quality
• Brand
• Services
• Reputation
• Warranty
Classifications of Products
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Two broad classifications
Consumer products: intended for
personal consumption by households
Business products: intended for resale,
for use in producing other products, or
for providing services in an organization
Key distinguishing issues: “Who will use
them” and “How will they be used”
Consumer Goods
• Convenience goods
• Shopping goods
• Specialty goods
• Unsought goods
Distinguishing issue: Not intrinsic
differences in products themselves but
“how” consumers go about purchasing
each product
Business goods
• Raw Materials
• Fabricating Materials and Parts
• Installations
• Accessory Equipment
• Operating Supplies
Key: Classifications are based on broad
uses
Three distinct categories of new
products
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Really innovative
Significantly different
Imitative: “me-too”
New-product “strategy”
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Sales-driven: protect market share
Investment-driven: ROI
Expansion-driven: Establish position in a
new market
Stages in Development Process
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Generating new product ideas
Screening ideas
Business analysis
Prototype development
Market tests
Commercialization
Stages in adoption process
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Awareness
Interest
Evaluation
Trial
Adoption
Confirmation
Adoption Categories
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards
Additional: “Non-adopters”
Organizing for Product Innovation
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Beginning in 1950’s: Brand manager or
product manager
Category Manager
“Endangered species”
Team efforts: new-product departments,
product planning committees, crossfunctional teams
The Product Life Cycle
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The concept of a product’s life applies to a
generic category of product (internal
combustion engines, kerosene lamps,
microwave ovens, photography film) and not to
specific brands (Ford, Dell, Sony, General
Mills)
The PLC consists of the aggregate demand
over an extended period of time for all brands
comprising a generic product category.
The Product Life Cycle
Traditionally, there are four stages
• Introduction: pioneering stage
• Growth: market-acceptance
stage
• Maturity
• Decline
Product Life-Cycle Stages
Length of Product Life Cycles
Total PLC times can vary
Times in each stage can vary, too
• Extended introduction stage: very
unusual
• Fads: hoola hoops, nasal dilators,
Livestrong bands (by Lance Armstrong)
• Indefinite maturity stage: traditional
automobiles and the internal combustion
engine
Length of Product Life-Cycle
Life Cycles related to Markets
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A product could be in the maturity or
decline stage in one market (U.S.) and
the introductory stage in another market
(a primitive or emerging market)
Ex: wringer washing machines
So, it would be correct to label the
product life cycle as a product/market life
cycle
Entry Strategies
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Is there a “best” time to enter a market?
Is there any legitimacy to the “first-mover
advantage,” or “pioneering advantage”
concept?
Answer: No consistent advantage. It is
temporary and not lasting.
The “first-mover” vs the “early-leader” who
emerges in the growth stage: early leaders
seem to have the advantage in the long-run
Managing On The Rise
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Putting your product on “auto-pilot” would
not work well
Careful management (pricing, promotion,
distribution, additional product uses, and
further product development/alteration,
etc) through the PLC is the key to
success
Eventually, products “may” need to be
abandoned, a critical marketing decision
Core Marketing Concept #8
Brands
and
Branding
Cadillac!
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King of the luxury car market—1950’s
Definitely dethroned by the imports!
(80’s-90’s)
• Cool again! (After 2000)
The lesson: A brand can lose it’s luster and if
carefully managed, regain it once again.
Brands, Packaging, and Other
Product Features
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Brands
Brand names
Branding strategies
Brand equity
Packaging and labeling
Packaging strategies
Other product features: design, color
& quality
Brands
Brand: Comprehensive term, a name and/or mark;
identifies and differentiates a seller’s product
or group of products
• Brand name: words, letters and/or numbers
that can be vocalized
• Brand mark: the part of the brand that
appears in the form of a symbol, design, or
distinctive color or lettering, “recognized by
sight but cannot be expressed when
pronouncing the brand name
Brands
3) Trademark: A brand that has been
adopted by a seller and given legal
protection; includes both brand name
and brand mark
Examples
1) Brand names: Altec, Sony, Maytag
2) Brand marks: Nike’s “swoosh,”
Prudential’s “rock,” Allstate’s “better
hands”
3) Trademarks: Green Giant, Arm &
Hammer
Brands: Ways of classifying
1) Producer’s brands: like Florsheim and
Prozac (Eli Lilly antidepressant)
2) Middlemen’s brands: Craftsman (Sears)
and St. John’s Bay (J.C. Penny)
Reasons for branding
For the buyer:
• Ease of identification by consumers
• Aids shoppers in locating and decisionmaking
• Guarantee of quality
For the seller:
• Reduces price comparisons
• Increases customer loyalty
• Differentiates commodities
Reasons for not branding
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•
Promoting the brand (takes time &
money)
Maintaining a consistent quality of output
(requires a high level of commitment)
Selecting a Good Brand Name
The Challenge!
Running out of possibilities
Average 10,000 new products per year
Only 50,000 words in a standard dictionary
Many words already being used
Many words unsuitable
Solution: combine words, numbers, letters
Ex: Formula 409, WD-40, Lotus 123
Desirable characteristics
•
Suggests benefits and uses of product:
Mr. Goodwrench, La-Z-Boy, Dustbuster
• Easy to pronounce, spell, remember:
Tide, Ban, Aim
• Distinctive: National, Ideal, United are not
• Be adaptable to additions to product line.
Good: McDonalds
Not so good: Burger King, Alaska Air
• Be capable of registration/legal protection
Note: Cost? $25,000 and up!
Protecting a brand name
An asset: protect it from damage and/or loss
Two ways you can get hurt:
• Product counterfeiting: the use of
someone else’s brand illegally: Ex:
Rolex, Gucci
– $250 B annual losses by U.S. companies
– FBI: “The crime of the 21st century
– Huge in software—very easy
Protecting a brand name
•
Generic usage: Your brand name
becomes the commonly descriptive term
for a generic class of goods. Ex: aspirin,
escalator, linoleum, thermos, cellophane
The result: You may lose your legally
protected right to the use of the name.
Protecting a brand name
• Generic Usage: This can be prevented by
using the “R” symbol right after the name
(or TM or SM if not registered)
• The better approach: Use the brand name
together with the generic name like,
“aspirin pain reliever” or “linoleum floor
covering”
• Call attention and challenge misuses of
your brand name
Branding Strategies
• Producer’s strategies
• Middlemen’s strategies
Producer’s Strategies
1) Marketing entire output under producer’s
own brands
– Usually seen only in large, well-financed,
well-managed firms
– Uncommon
– Very difficult for a new firm
– Diminishing as a strategy
– Ex: Gillette
Producer’s Strategies
2) Branding of fabricating materials and
parts. Likely to be effective
– if the good is also sold as a consumer
good (replacement good)
Ex: spark plugs, batteries, light
bulbs
– if an integral part of the finished
product where it might get
attention/recognition
Producer’s Strategies
3) Marketing under middlemen’s brands
-”hedging your bets” by broadening your
market
-the risk: you are depending on the
marketing skill of the middlemen
Middlemen’s Strategies
1) Carry only producer’s brands: The most
common strategy. Why? Lack of
resources to promote your own
2) Carry both producer and middlemen
(store) brand
•
•
Control
Differentiation
The “Battle of the Brands”
•
•
•
•
•
What is it?
Producer brands vs Middlemen Brands
Who is winning?
Middlemen are showing significant gains
There is lots of fighting yet to be done
Strategies Common To Both
Branding Within A Product Mix
• Family branding: All your products carry
your “family” name; sometimes alone
and sometimes combined with a product
name.
Well-known family names: Heinz,
Campbells, Kellogg, Libby, Armor All
Strategies Common To Both
Branding for Market Saturation:
1) Multiple-brand strategy
Ex: P&G Tide, Dreft, etc
Ex: GM: Chevy, Olds, Pontiac, Cadillac
2) Cobranding: dual branding
Ex: Betty Crocker’s Sunkist Lemon Bars
mix
Ex: Pizza Hut and Taco Bell
A big decision: Costs vs. Benefits
Brand Equity
•
•
•
•
A critical issue
“The value a brand adds to a product”
“The present value of the future earnings
that can be attributed to the brand itself.”
Ex: Coke: estimated at $60B
Negative brand equity is possible
Ex. Firestone
Brand Equity
1) Can provide critical differential advantage
2) Can provide a protective “barrier to entry”
3) Can facilitate international expansion
4) Can help a product survive changes in
the operating environment; i.e. economic
cycles, changing consumer tastes, etc.
5) Can be overused at no gain: Harley
Davidson cigarettes!!! Dunkin Donuts
cereal!!
Trademark Licensing
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•
•
Also known as brand licensing
Licensor charges a fee of 5-10% of
wholesale price
Very big in toys but the biggest is in
apparel.
Ex: Calvin Klein, Ralph Lauren
Other Related Topics
•
Packaging and Labeling
– Purposes and Importance of Packaging
•
•
•
Protect: primary historic purpose
Promote (persuade): an increasing differentiator
Packaging Strategies
– Family packaging (the entire product line)
– Multiple packaging (several units/container)
– Changing the package (to fix problems or
improve promotion)
Session Four
The CMO, CIO,
and
Strategic IT Initiatives