Session 6 & 7
Market Driven Program
Development (Part 1)
group3
2
Strategic Brand
Management
3
STRATEGIC BRAND
MANAGEMENT
 Challenges in Building
Strong Brands
 Strategic Brand Analysis
 Brand Identity Strategies
 Managing
Products/Brands
 Managing the Brand
Portfolio
4
CHALLENGES IN
BUILDING STRONG
BRANDS
A product is anything
that is potentially valued
by a target market for
the benefits or
satisfaction it provides,
including objects,
services, organizations,
places, people, and
ideas
5
A brand is a name, term, sign,
symbol, or design, or combination
of them, intended to identify the
goods or services of one seller or
group of sellers, and to
differentiate them from those of
competitors.
Marketing Association of Pakistan
Goods Versus Services
6
Strategic Role of Brands
A strategic brand perspective requires
managers to be clear about what role
brands play for the company in
creating customer value and shareholder value.
FOR BUYERS, BRANDS CAN:
• reduce customer search costs by
identifying products quickly and
accurately,
• reduce the buyer’s perceived risk by
providing an assurance of quality and
consistency (which may then be
transferred to new products),
• reduce the social and psychological
risks associated with owning and using
the “wrong” product by providing
psychological rewards for purchasing
brands that symbolize status and
prestige.
FOR SELLERS, BRANDS CAN
FACILITATE:
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• repeat purchases that enhance the
company’s financial performance because
the brand enables the customer to identify
and re-identify the product compared to
alternatives,
• the introduction of new products, because
the customer is familiar with the brand
from previous buying experience,
• promotional effectiveness by providing a
point of focus,
• premium pricing by creating a basic level of
differentiation compared to competitors,
• market segmentation by communicating a
coherent message to the target audience,
telling them for whom the brand is intended
and for whom it is not,
• brand loyalty, of particular importance in
product categories where loyal buying is an
important feature of buying behavior.
Brand Management
Challenges*
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Internal and external forces create
hurdles for product brand managers in
their brand building initiatives:
Intense Price and Other Competitive
Pressures
Fragmentation of Markets and Media
Complex Brand Strategies and
Relationships
Bias Against Innovation
Pressure to Invest Elsewhere
Short-Term Pressures
9
Responsibility for
Managing Products
Product/Brand Management


Planning, managing, and
coordinating the strategy for a
specific product or brand
Product Group/Marketing
Management


Product director, group
manager, or marketing manager
Product Portfolio
Management



Chief executive at SBU
Team of top executives
Marketing’s Role in
Product Strategy
10
1. Market sensing
2. Identifying the
characteristics and
performance features of
products
3. Guiding target market and
program-positioning
strategies
Strategic brand management
decisions are relevant to all
businesses, including suppliers,
producers, wholesalers,
distributors, and retailers.
Strategic Brand
Management
11
Brand Identity
Identity Implementation
Brand Strategy
Over Time
Strategic
Brand
Analysis
Managing the
Brand Portfolio
Leveraging the
Brand
Brand
Equity
Strategic Brand
Analysis
Analyses
□ Market and
Customer
□ Competition
□ Brand(s)
Product
Product
Line
12
Portfolio
of
Product
Lines
13
Tracking Product
Performance
Set Performance
Objectives
Select Method(s) for
Product Evaluation
Identify Problem
Products
Decide How to
Eliminate the
Problems
14
Product life cycle
analysis
Product
grid analysis
Financial
analysis
Analyzing
Brand
Performance
Research
studies
Standardized
information
services
Brand
Positioning
maps
Product Life Cycle
Analysis
15
Relevant issues in PLC
analysis include:



Determining the length and
rate of change of the PLC
Identifying the current PLC
stage and selecting the
product strategy that
corresponds to that stage
Anticipating threats and
finding opportunities for
altering and extending the
PLC
16
 Product Grid Analysis

Management’s performance
criteria

Strengths and weaknesses relative
to portfolio
 Brand Positioning Analysis

Perceptual maps for brand
comparison

Buyer preferences
 Other Product Analysis
Methods



Information Services
Research studies
Financial analysis
Brand Equity
17
Effective strategic brand management requires that we
understand brand equity and evaluate its impact when
making brand management decisions:
“Brand equity is a set of brand assets
and liability linked to a brand, its name,
and symbol, that add to or subtract
from the value provided by a product or
service to a firm and/or to that firm’s
customers.*
Measuring Brand Equity. Several measures are
needed to capture all relevant aspects of brand
equity.**
• loyalty (price premium, satisfaction/loyalty),
• perceived quality/leadership measures (perceived
quality, leadership/popularity),
• associations/differentiation (perceived value, brand
personality, organizational associations),
• awareness (brand awareness), and
• market behavior (market share, price and
distribution indices).
These components provide the basis for developing
operational measures of brand equity.
BRAND IDENTITY
STRATEGIES
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Brand identity is a unique set of
brand associations that the brand
strategist aspires to create or
maintain. These associations
represent what the brand stands
for and imply a promise to
customers from the organization
members.*
Four Brand Identity Perspectives
Product
Organization
Person
Symbol
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Specific
Product
Private
Branding
Line
of
Products
Basis
of
Identification
Combination
Basis
Company
Name
20
MANAGING
PRODUCTS/BRANDS
Building the
Product/Brand Over
Time
Product Line Strategies
Product/Brand Portfolio
Strategies
Strategies for
Improving Product
Performance
Cost
reduction
Add
new
product(s)
21
Product
Alter
improvement marketing
strategy
Product line
Strategy
Eliminate
specific
product(s)
Product mix strategy
Delete
product
line(s)
Change
product line
priorities
Add new
product
line(s)
22
Strategies for Brand
Strength

Brand-Building Strategies
– Developing the brand identification
strategy
– Coordinate identity across the
organization

Brand Revitalization
– Find new uses for mature brands
– Add products related to heritage

Strategic Brand Vulnerabilities
– Brand equity can be negative
– Retailer private brands compete with
manufacturer brands
– Major shifts in consumer tastes
– Competitive actions
– Unexpected events
Product Mix
Modifications
23
Motivation for changing the
product mix:
 Increase the growth rate of the
business
 Offer a more complete range of
products to wholesalers and
retailers
 Gain marketing strength and
economies in distribution,
advertising, and personal
selling
 Leverage an existing brand
position
 Avoid dependence on one
product line or category
Brand Leveraging
Strategy
24
LINE
EXTENSION
Minor variants of a
single product are
marketed under the
same brand name
BRAND
EXTENSION
Extensions of the
brand name to
other product
categories
--Similar
--Dissimilar
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Leveraging
Alternatives
LINE
EXTENSIONS
Horizontal
Extension
BRAND
EXTENSIONS
Vertical Another
Extension Product
Class
Up from
Core
Brand
CoRange
Brand Branding
Down from
Core
Brand
Licensing, Overleveraging
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BRAND LEVERAGING
EVALUATION CRITERIA
Brand Relevance/Differentiation
Capabilities/Perceived Value
Match
Market/Segment Opportunity
Cannibalization Risks
Potential for Core Brand Damage
Clarity of Product Offerings
Estimated Financial Performance
Brand Equity Impact
27
SEVEN DEADLY SINS OF
BRAND MANAGEMENT*
Failure to fully understand the
meaning of the brand.
Failure to live up to the brand
promise.
Failure to adequately support the
brand.
Failure to be patient with the brand.
Failure to adequately control the
brand.
Failure to properly balance
consistency and change with the
brand.
Failure to understand the complexity
of brand equity measurement
and management.
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MANAGING THE BRAND
PORTFOLIO

Objectives:
–
Leverage commonalities to
generate synergy
–
Reduce damage to brand identity
–
Obtain clarity of product offering
–
Enable change and adaptation
–
Guide resource allocations among
brands
29
GLOBAL BRANDS
INTERNET BRANDS
30
HOW MANY
BRANDS?
1.
Is it different enough
to merit a new name?
2.
Will the brand identity
add value?
3.
Are there risks in using
an existing brand
name?
4.
Is the new brand a
viable business
venture?
31
Value-Chain Strategy
32
Value Chain
Strategy
 Strategic
role of distribution
 Channel of distribution
strategy
 Managing the channel
 International channels
 Supply chain management
issues
33
Strategic Role of
Distribution
Distribution functions
- buying and selling activities
- product assembly
- transportation
- financing
- processing and storage
- advertising and sales promotion
- pricing
- reduction of risk
- personal selling
- communications
- servicing and repairs
Channels for Services
Direct distribution by
manufacturers
34
Illustrative Example:
Internet Impact on
Distribution
The Impact of Technology
on Value Chains
In India
E-Government
Computer Kiosks
Agricultural e-commerce
Tele-medicine
35
The Marketing
System
Manufacturers and producers
Marketing intermediaries
Agriculture and
raw materials
suppliers
Retailers
Agents-brokers
Wholesalers-distributors
End users
Consumer
Industrial-institutional
Facilitating
organizations
Financial
Transportation
Advertising
Other
36
Marketing
Channels
Manufacturers/producers
Agents/brokers
Wholesalers/
distributors
Retailers
Retailers
Consumers and organizational end users
37
Illustrative Example:
Samsung






Goal of moving from cheap imitative
electronics products to a cool brand
Feature-packed products
Products removed from shelves of WalMart and Target and positioned with
higher-end chains like Best Buy and
Circuit City
Samsung competes through hardware
innovation, product customization and
speed
Samsung sells only higher-end goods and
resists pressures towards marketing lowprice products
Strategy is implemented in part through
supply chain and distribution choices
Distribution by
Manufacturers
38
 Manufacturers
have three
distribution alternatives:
– Direct distribution is necessary
– Use of intermediaries is
necessary
– Both direct and intermediary
contact are feasible
39
Factors Favoring Distribution by
Manufacturer
Opportunity
for
Profit margins
competitive
adequate to support advantage
distribution
Rapidly changing
organization
market environment
Complete line
of products
Distribution
by the
manufacturer
Purchases
are
large and
infrequent
Early stages of
product life cycle
Complex product
application
Extensive
Small number of
purchasing
geographically
Supporting process
concentrated
services are
buyers
required
40
Illustrative Example:
Retail Initiatives by
Manufacturers

Apple Computer
– To educate consumers about computers and
music players

Sony Electronics, palmOne
– Reinforce brands with affluent consumers and
better understand market trends

Driving forces are market access and
market learning
41
Channel of
Distribution Strategy
Types of distribution
channel
Distribution intensity
Selecting the
channel strategy
Strategies at
different
channel levels
42
Steps in Channel Strategy
Selection
(1) Type of channel arrangement
Conventional
Vertically coordinated
Ownership
Contractual
Administ
ered
(2) Desired intensity of
distribution
Intensive
Selective
Exclusiv
e
(3) Selection of a channel configuration
43
Distribution Intensity
Illustrations
Trading Area
A
B
+
+
+
+
+
Exclusive
distribution
Selective
distribution
Illustrations
Cadillac automobiles
Ethan Allen furniture
Revlon cosmetics
Caterpillar equipment
Estée Lauder cosmetics
Timex watches
C
++
+++
+
++++
+
++++
++
++++
++
+++
Intensive
distribution
44
Selecting the Channel Strategy
Design stages
Decision criteria
Identification
of channel
alternatives
Evaluation and
selection of
channel(s) to
be used
Selection
of channel
participants
Intensity of distribution
Access to end users
Prevailing distribution
practices
Necessary activities and
functions
Revenue-cost analysis
Time horizon for
development
Control considerations
Legal constraints
Channel availability
Select the channel
Market coverage
Capabilities
Intermediary’s needs
Functions provided
Availability
45
Illustrative Channel Strategy
Evaluation
Evaluation
Criteria
Manufacturer’s
Representatives
Market access
Rapid
Sales forecast (2 years)
$10 million
$20 million
Forecast accuracy
High
Medium to low
Estimated costs
$1 million*
$2.4 million**
Selling Expense (cost/sales)
10%
12%
Flexibility
Good
Fair
Control
Limited
Good
*
Company
Salesforce
1 to 3 year
development
Includes 8% commission plus management time for recruiting and training
representatives.
** Includes $100,000 for 10 salespeople, plus management time.
46
Managing the Channel
Channel leadership
Management structure and systems
Physical distribution management
Channel relationships
Conflict resolution
Channel performance
Legal and ethical considerations
International Channel of
Distribution Alternatives
Home country
47
Foreign country
The foreign marketer
or
producer sells to or
through
Domestic
producer or
marketer sells
to or through
Open
distribution
via domestic
wholesale
middlemen
Exporter
Importer
Foreign
agent or
merchant
wholesalers
Foreign
retailer
Foreign
consumer
Export management company
or company
sales force
Source: Philip R. Cateora, International Marketing, 7th ed., Homewood, Ill.: Richard D. Irwin, Inc., 1990, 572.
48
Strategic Value Chain
Management





Supply chain management
– Efficient Consumer Response
program
– Lean supply chains
– Agile supply chains
Impact of supply chain strategy on
marketing
E-business models
Retailer and distributor power
Strategic flexibility and change
Efficient Consumer
Response

Traditional channel problems
–
–
–
–
–
–

49
Forward buying and diverting
Excessive inventories
Damages and unsaleable goods
Complex deals and deductions
Too many promotions and coupons
Too many new products
Efficient Consumer Response
– Category management
– “Value” pricing replaces promotions
– Continuous replenishment and crossdocking
– Electronic data interchange
– New performance measures
– New organizational processes and
structures
– Internet-based network for supplierbuyer trading
50
Lean Supply Chain
Elements
1. Definition of Value
2. Identification of Value Streams and
Removal of Muda (Waste)
3. Organizing Around Flow, Instead
of “Batch and Queue”
4. Responding to Pull Through
the Supply Chain
5. The Pursuit of Perfection