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Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM.

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Presentation on theme: "Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM."— Presentation transcript:

1 Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

2 CIM Post Graduate Diploma Marketing Leadership & Planning Michael G.Warner MBA DipM FCIM FIDM 2

3 Course Objectives To deliver a coherent and deliverable market oriented internal culture to encourage flexibility which is SMART enough for your employer to understand and give you the go ahead. To follow the CIM guidelines so as not to throw away marks To maximise the LSM on-line resources = SUCCESS 3 Michael G.Warner MBA DipM FCIM FIDM

4 Assessment tasks CIM registration deadline 29 th March 2013 Introduction to the assessment. What do you have to do to pass? Michael G.Warner MBA DipM FCIM FIDM 4

5 Session 2 Developing marketing strategies and value proposition 5 Michael G.Warner MBA DipM FCIM FIDM

6 Strategic Choice – Product Market strategies 6 Michael G.Warner MBA DipM FCIM FIDM

7 Brand: A Definition ACCORDING TO MARKETING THEORY: …a name, term, symbol or design, or a combination of them, which is intended to signify the goods of one seller or groups of sellers and to differentiate them from those of competitors Kotler (1994), Marketing Management RATHER DEFINE A BRAND IN RELATION TO THE CUSTOMER: …is the means by which the company establishes a relationship with the customer (because a brand has an identity and a personality and a product not)… …A sum of all available information about the company, product or service, gained from experience (functional and emotional), differentiating it from another. The appeal is both rational and emotional level; tangible and intangible… …The space in consumers hearts and minds that belongs to you… …The reason to choose you over the other guys… INSIGHT 7 Michael G.Warner MBA DipM FCIM FIDM

8 What is a Brand? Product vs Brand A product is something that is made in a factory; A brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless. Stephen King (WPP Group, London) 8 Michael G.Warner MBA DipM FCIM FIDM

9 Strategic Choice 9 Michael G.Warner MBA DipM FCIM FIDM

10 The Total Product Concept 10 Michael G.Warner MBA DipM FCIM FIDM Physical v Psychological/ emotional intelligence

11 ©Michael Warner & Snowpine Ltd 11 The brand blueprint Inner Outer directed values Core Proposition raison detre to the consumer Essence Core Values fundamental values that define the brand Functional Emotional elements elements Supports How the brand makes me feel What the brand says about me Brand Personality How the brand speaks to me Peripherals: values to be reduced Absentees: desirable elements currently lacking from the brand and need to be developed into it Generics: Entry stakes to the category Interbrand Newell and Sorrell An approach to defining the brand and how to strengthen it

12 Boston Consulting Group (BCG) Growth-Share Matrix 12 Michael G.Warner MBA DipM FCIM FIDM

13 G E Business Screen 13 Michael G.Warner MBA DipM FCIM FIDM

14 What makes a Strong Brand? It must work as a product or service – no fancy advertising or clever logo will compensate Must appeal on both the rational and emotional level – products may all work well; price premium is justified by additional intangible, emotional benefits. Must be integrated and coherent – tangible and intangible benefits must be consistent with each other to present a coherent and believable brand personality (TAG-Heuer) What it offers must be wanted by the customer and mean something to him/her – what is relevant may change over time: e.g. environmentally friendly is a relevant benefit now for products from motor cars to holidays; 30 years ago – no premium paid for these products. 14 Michael G.Warner MBA DipM FCIM FIDM

15 Michael Waner for 15 What is customer-based brand equity Customer-based brand equity is the differential effect of brand knowledge on consumer response to the marketing of a brand. market oriented internal culture to encourage flexibility Aaker model

16 Brand Equity 16 Michael G.Warner MBA DipM FCIM FIDM Aaker model

17 ©Michael Warner & Snowpine Ltd 17 Service quality gaps model CUSTOMER PROVIDER Word-of-mouth communications Personal needsPast experience Expected service Perceived service Service delivery Service quality specifications Management perceptions of customer expectations External communications to customers Gap 5 Gap 4 Gap 1 Gap 3 Gap 2 Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a; Asubonteng et al., 1996; Wisniewski and Donnelly, 1996).

18 Customer Relationship Marketing (CRM)Customer Relationship Management CRM) CRM strategies are important for all organisational aspects and industries and segments. However, they are a must in heterogeneous markets. In homogeneous markets the rules can, perhaps, be relaxed to an extent. Customer Acquisition CR Mgt. Customer Retention Customer Enhancement Marketing Mix Augmentation of product/service offer Branding strategies MIS MkIS DSS Other Sustainable competitive advantages and increase in shareholder value Knowledge Management CR Mark. © Dr George Panagiotou Michael G.Warner MBA DipM FCIM FIDM

19 Ethical stance - Four types of Firm on Ethical Issues Ethically dependent Firms whose ethical standing is a key aspect of their product offering Examples: Oxfam, The Body Shop, Innocent Ethically positive Firms whose ethical standing is important to their credibility but not itself a key attribute Examples: Honda, Sainsburys,,Virgin, Ethically Neutral Firms whose ethical standing is less significant though unethical behaviour would be damaging Examples: British Gas, British Airways Ethically Negative Firms perceived as being a business with negative ethical connotations Examples: Shell, BAT, Banks 19 Michael G.Warner MBA DipM FCIM FIDM

20 International Marketing Strategies 20 Michael G.Warner MBA DipM FCIM FIDM

21 International investment opportunities based on the directional policy matrix Source: Harrel, G.D. and R.D. Kiefer (1993), Multinational market portfolio in global strategy development, International Marketing Review 10 (1); Phillips, C., I. Duole, and R. Lowe, International Marketing Strategy, Routledge 1994, pp. 137–8. 21 Michael G.Warner MBA DipM FCIM FIDM

22 Value Proposition Value proposition refers to total benefits of using companys products and services. In other words, value proposition summarises why a customer should buy companys products or services. Generally there are three approaches/ strategies of developing a value proposition. Product leadership – value proposition created through best quality innovative products. Value focus on quality. Operational excellence – lowest cost achieved through operational excellence. Value focus on cost. Customer intimacy – total solution providers with greater focus on relationship building. Value focus on relationship/ service 22 Michael G.Warner MBA DipM FCIM FIDM

23 Characteristics & design of the Value Proposition Characteristics Clear Concise Credible Consistent over time Core elements Service Price Quality Image 23 Michael G.Warner MBA DipM FCIM FIDM

24 24 Key Business Concepts: Ikea Example Ikea is a low-cost retail service provider Sells home furnishing items at retail directly to the public Provides low-cost, easy-to-assemble items in a pleasant shopping environment Business model Revenue model Value proposition

25 25 Balanced Scorecard Kaplan and Norton 1992 is a management system (not only a measurement system) that enables organisations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.

26 26 The Balanced Scorecard (1992) Kaplan and Norton

27 Michael G.Warner MBA DipM FCIM FIDM 27

28 Michael G.Warner MBA DipM FCIM FIDM 28

29 Agenda Strategic choice Environmental analysis Industrial and consumer markets Segmenting, targeting and positioning Warfare Strategies Total product concept and Branding International marketing strategies Balanced score card 29 Michael G.Warner MBA DipM FCIM FIDM

30 Methods of growth Advantages of acquisitions / mergersAlliance Advantages Marketing advantages e.g. Market powerShared investment risk Production advantage economies of scaleComplementary resources Overcome entry barriersPossible government condition Resource and competenciesJoint financial strength Disadvantages of acquisitions / mergersAlliance Disadvantages CostlyDifficult to select and agree with partner Integration issues E.g. Cultural clashesManaging relationship Conflicts of objectivesLoss of competitive advantage through imitation Potential for diseconomies of scaleLimits integration/coordination of activities across countries Michael G.Warner MBA DipM FCIM FIDM

31 Methods of growth Advantages of licensingAdvantages of joint ventures Capital not tied to operationsSynergies through Shared resources and competencies Contractually agreed incomeFlexibility Limit financial/economic riskShared risk Greenfield – state of art and government finance Disadvantages of licensingDisadvantages of joint ventures Difficult to select and agree with partner Integration issues Loss of competitive advantage through imitation Imbalanced level of expertise and investment Limits participationGreenfield – time consuming and unpredictable cost Licensees become competitorsDiminished control over Michael G.Warner MBA DipM FCIM FIDM

32 Invest or hold If the business position is strong of the company and the industry environment is favorable then the company should try to retain in the market as there are still opportunity for the organisation to make profits. However the company should take different measures to increase its performance at this level. Following could be considered: Exploit new markets Exploit new products Exploit new applications Exploitation of growth of sub markets. Government stimulated growth. 32 Michael G.Warner MBA DipM FCIM FIDM

33 Be a profitable survivor This could be achieved by different measures. Majorly the company could encourage competitors to exit from the market. Following alternatives could be identified; Be Visible About Commitment to Survive Raise the Costs of Competing Introduce New Products & Cover New Segments Reduce Competitors Exit Barriers Create a Dominant Brand in Fragmented Declining Market Purchase a Competitors Market Share or Production Capacity. 33 Michael G.Warner MBA DipM FCIM FIDM

34 Milk or harvest The main objective here is to generate cash flow by reducing investment and operating expenses, even if that causes sales and market share to decrease. Conditions Favoring a Milking Strategy Decline rate is pronounced, but not excessively steep. Stable price structure is profitable for efficient firms. Business position is weak, but customer loyalty will still produce sales and profit. Business is not central to strategic direction. A milking strategy can be successfully managed. 34 Michael G.Warner MBA DipM FCIM FIDM

35 Exit or liquidate This strategy is appropriate both the business position and the industry environment is not favorable to the entity. The logic here is to exit or to liquidate the business and avoid loss making as soon as possible, since there is no profitability with the current market condition. Following areas are identified as features of these markets; Rapid and Accelerating Decline Rate Extreme Price Pressures Business Position is Weak; Losing Money No Longer Part of Strategic Direction Exit Barriers Can be Overcome 35 Michael G.Warner MBA DipM FCIM FIDM

36 Example of a Competitor Profile A student example 36 Michael G.Warner MBA DipM FCIM FIDM

37 A student example 37 Michael G.Warner MBA DipM FCIM FIDM

38 Strategic Wear-out Strategic and tactical wear-out is the problem that any organisation will face if it continues with its current strategies and tactics without considering the changes happening in the macro and micro environment. Followings can be identified as main reasons for strategic wear-out Market changes – customer preferences and requirements, distribution requirements etc Competitor innovations Internal factors – poor cost control, lack of consistent investment, ill advised change of successful strategies 38 Michael G.Warner MBA DipM FCIM FIDM

39 Industrial and Consumer markets VariableIndustrial MarketsConsumer Markets Volume of salesLowHigh Value of salesHighLow Supplier bargaining powerShifting - depending upon number of suppliers and organisational size and importance Usually high Buyer bargaining powerShifting - depending upon number of buyers and organisational size and importance Usually low Service requirementsHighLow Buying decision makingDMUIndividual Availability of informationUsually lowUsually High 39 Michael G.Warner MBA DipM FCIM FIDM

40 Low High Business Orientations Product Orientation Marketing Orientation High Industrial Markets Not-for- Profit Markets Consumer Markets Capital equipment Business-to- business R&D labs Charities Schools Hospitals Gov. Agencies FMCG Service- offer Retailing Second Hand Markets Auctions © Dr George Panagiotou Michael G.Warner MBA DipM FCIM FIDM

41 Main organisational Market Approaches ProducerWhole Seller RetailerConsumer ProducerWhole Seller RetailerConsumer Push-Selling Techniques Product Orientation (emphasis on own products) Marketing Orientation (emphasis on customer needs and wants) Pull-Selling Techniques Flow of sales Research and development and marketing communications © Dr George Panagiotou Michael G.Warner MBA DipM FCIM FIDM

42 1.Identify the organisations position, strengths, weaknesses and capabilities relative to competition, given aims and objectives. 2.Identify desired segments in the industry and segmentation variables within. 3.Develop profiles for each segment The Stages of the Segmentation, Targeting, Positioning (STP) Process 4.Evaluate the attractiveness of each potential segment(s). 5.Select segment(s) to enter 6.Identify the positioning concept within each target segment. 7.Select and develop the appropriate positioning concepts. 8.Develop a relevant marketing mix for each segment Situational analysis Market Segmentation Market Targeting Product Positioning The 7 Ps-based Marketing Mix 42 Michael G.Warner MBA DipM FCIM FIDM

43 Customer Related Geographic Continent; Country; Region; City; Rural; Urban; population Density Demographic Age; Gender; Family Size; Family Lifecycle (old/New); Income; Occupation; Education; Race; Nationality; Social Class. Lifestyle (psychographic) Tastes; Preferences; Motivation; Inclinations; Status. Situation Related Benefits Offered/Benefits Sought Need Satisfiers; Product Features; Low Price; Reliability; Safety; Convenience. Bases for Segmentation 43 Michael G.Warner MBA DipM FCIM FIDM

44 Macro Environmental Analysis Political environment Economic environment Socio-cultural environment Technological environment International environment Environmental and ecological environment In addition to the above factors followings may also be considered. Business Life-Cycle Elasticity/Inelasticity of Demand and Supply Socio-Politico Frameworks Market Structures 44 Michael G.Warner MBA DipM FCIM FIDM

45 Meso Environmental Analysis IndustryMarket Place Competitor Profiles (PIMS/Other databases) Segmentation, Targeting, Positioning (STP) BenchmarkingCustomer profiles Industry Life-Cycle (ILC)Branding/communications Models General Electric (GE) MatrixProduct Life-Cycle (PLC) Shell Directional Policy MatrixConsulting Group (BCG) Growth Share Matrix Ansoff Matrix Forces/Dynamics of competition & KFS Strategic Groups Positioning/Perceptual/Cognitive Maps All positive and negative observations/ findings should be included in the opportunities and threats sections of the overall SWOT Analysis/ Telescopic Observations Framework. © Dr George Panagiotou Michael G.Warner MBA DipM FCIM FIDM

46 Micro Environmental Analysis Organisations vision, mission and values Corporate strategy and Resource and competency audit Portfolio analysis Value chain and resource utilisation Innovation audit Cost efficiency Product lifecycle Degree of customer and market orientation Comparative and best practice analysis Core competencies Organisational culture Financial performance Critical factors for success 46 Michael G.Warner MBA DipM FCIM FIDM

47 Bases for Segmentation Consumption or Use pattern Rate of Use; Use with Other Products; Brand Familiarity. Buying Situation Kind of Shop or Distribution Channel; Kind of Shopping; Depth of Assortment; Type of Product. Questions to Ask: Who is the customer?, What is their bargaining power?, What do they buy?, Where do they buy from?, Why do they buy?, When do they buy?, From which competitor can they buy from and why? 47 Michael G.Warner MBA DipM FCIM FIDM

48 Process of creating favourable relative position: 1.Identification of target market 2.Determination of target market's needs, wants, preferences and desired benefits 3.Examination and assessment of competitors characteristics and positioning 4.Comparison of product offerings with competitors 5.Identification of unique position 6.Development and implementation of a marketing program 7.Continuous Review and reassessment 48 Michael G.Warner MBA DipM FCIM FIDM

49 Corporate positioningMarket positioning Product positioningTotal Repositioning Brand/Image Positioning Strategies 49 Michael G.Warner MBA DipM FCIM FIDM

50 Portfolio Analysis Portfolio A collection of products/ SBUs owned by one entity in which each product/ SBU can be separately identified for decision-making and performance measurement. Portfolio Analysis Analyzing elements of a firm's product mix to determine the optimum allocation of its resources. Portfolio Planning The process of managing the products/ SBUs, including choosing and monitoring appropriate markets & industries and allocating funds accordingly. 50 Michael G.Warner MBA DipM FCIM FIDM

51 Shortcomings of BCG Matrix Growth rate is only one aspect of industry attractiveness and high growth markets are not always the most profitable. Definition of the market is sometimes difficult. It considers the product or business in relation to the largest player only. It ignores the impact of small competitors whose market share is rising fast. The use of four categories is too simplistic It ignores interdependence and synergy. Market share is only one aspect of overall competitive position. 51 Michael G.Warner MBA DipM FCIM FIDM

52 Determinants of Strengths and Attractiveness Industry Attractiveness Market size Market growth Demand variability Price elasticity Industry rivalry Global opportunities Industry profitability Macro-environmental factors Business Strengths Market share Growth in market share Brand equity Distribution Production capacity Management skills Perceived differentiation Profit margins relative to competitors 52 Michael G.Warner MBA DipM FCIM FIDM

53 Disadvantages of Portfolio Planning Portfolio models do not reflect the uncertainties of decision making Most of the models do not take risk in to account Most of the models ignore the importance of niche markets Most of the models ignore the opportunities for creative segmentation Markets are assumed as given rather than created and nurtured Complex assessments and calculations 53 Michael G.Warner MBA DipM FCIM FIDM

54 Shell Directional Policy Matrix 54 Michael G.Warner MBA DipM FCIM FIDM

55 Elements of a Brand APPROACH: Separate the physical attributes from emotional benefits. What lies at the core of the brands identity? Arnold, D (1992), The Handbook of Brand Management ) 55 Michael G.Warner MBA DipM FCIM FIDM

56 Benefits of brand equity Brand awareness Influences attitude and perceptions Anchor for associations Signal of substance Perceived quality Price premium Differentiation /Positioning Reasons to buy Brand extension potential Channel member interest Strong brand associations Differentiation /Positioning High price premium Memory retrieval potential Reasons to buy Brand extension potential High brand loyalty Reduced marketing costs Trade leverage Attracting new customers Time to respond to competitive threats 56 Michael G.Warner MBA DipM FCIM FIDM

57 Measuring Brand Equity Interbrand – tracks leading brands on a number of variables: Sales Market growth Internationalisation Well protected in law, etc. Good practice to measure your own and the competition brands – part of broader evaluation of strategic health of company. 57 Michael G.Warner MBA DipM FCIM FIDM

58 Brand Dimensions (according to Interbrand) BRAND WEIGHT (dominance) BRAND LENGTH (stretch) BRAND BREADTH (franchise) BRAND DEPTH (commitment) 58 Michael G.Warner MBA DipM FCIM FIDM

59 Brand Weight Dominance in category or market Dominant market share (market leaders) Standard setter McDonalds, Coca-Cola, Kodak, Gillette 59 Michael G.Warner MBA DipM FCIM FIDM

60 Brand Length Stretch and strechability into new categories and markets Wide area of competence Disney, Johnson & Johnson, Harrods, Virgin, Sony 60 Michael G.Warner MBA DipM FCIM FIDM

61 Brand Breadth Breadth of franchise in terms of age spread, consumer types and international appeal. A broad brand can cross social, cultural and national boundaries. Coca-Cola, MaDonalds, Kodak, Somy, Visa, Microsoft 61 Michael G.Warner MBA DipM FCIM FIDM

62 Brand Depth Degree of commitment the brand has achieved among its customer base and the proximity, intimacy and loyalty they feel to the brand. Intimate relationship with customers, usually on the basis of shared central or higher values. Apple Computer, Disney, Body Shop, Harley-Davidson, Camel 62 Michael G.Warner MBA DipM FCIM FIDM

63 Brand Identity Must be relevant to customer needs and wants Must be clear and easy to understand Is at the heart of the relationship between customer and company Heart of any brand strategy Has a personality of its own Has human qualities which appeal to customers See brand as a person and ask: If this brand were a person, what sort of car would it drive? What is its favourite drink? What would it say to you? If answer is not obvious, the brand personality and also brand identity is not clear 63 Michael G.Warner MBA DipM FCIM FIDM

64 Brand Extension A way of strengthening a brands positioning Recent example of classic line extension: McGraw-Hill --publisher of textbooks and educational materials into childrens educational software. They started with the brands long-standing reputation for educational excellence. Virgin Todays definition of brand extension: Globalisation Demographic shifts – new classes of consumers Technology – new channels of marketing (Internet, Satellite TV) Industry consolidations – fewer brand choices; likely to become loyal to one Increasing emphasis on relationships – customers want brands to be accountable for their products and promises. 64 Michael G.Warner MBA DipM FCIM FIDM

65 Brand Chartering Recent development (concept) Tough internal audit to charter the underlying strength of their brands on a regular basis Brand Chartering – probes the organisation (strategic strengths) behind the brand Brand Equity – strength of the brand in the marketplace How to do brand chartering: Is there a common interpretation of the brands essential meaning throughout the organisation? What core competencies does the brand represent? Would the people be proud to be called manifestations of the brand? Macrae, C (1996), The Brand Chartering Handbook 65 Michael G.Warner MBA DipM FCIM FIDM

66 Global Brands Global brands can reap benefits of economies of scale in production, marketing and distribution. They must stay responsive of customer wants – may vary from one country or region to another. The issue is how to balance global economies of scale with local responsiveness. Country specific? Other factors (youth, luxury?) – not country specific Different type of channels? Competition local or international? Communication will have to be different even for global brands (Coke has more than 20 different advertisement versions) 66 Michael G.Warner MBA DipM FCIM FIDM

67 Positioning the Brand (Definition) DEFINITION OF BRAND POSITIONING: A companys attempts to influence the customers (target markets) perception of its brand by presenting (communicating) it in a certain way through: Advertising Point of sale material Direct mail PR Etc NB! The brand is actually positioned by the consumer – all the company can do is send positioning prompts to influence. 67 Michael G.Warner MBA DipM FCIM FIDM

68 Positioning: How to Build a Brand that Sells Focus Choose one distinctive thing that will give you the edge Halo effect Invest in one positive image that will impact on the whole portfolio Start with current position Turn current customer perceptions into benefits (if gap between perception and reality is too big, they wont make the leap) Be different Positioning is about clear, positive difference Be distinctive Message need to be unique, hard-hitting, sensory, creative 68 Michael G.Warner MBA DipM FCIM FIDM

69 Developing a Brand Positioning 3 ESSENTIAL COMPONENTS FOR DEVELOPING A CLEAR BRAND DEFINITION: Clear vision – why are you in business?; where are you going? (3M: to solve unsolved problems innovatively) Concise meaning – what your brand represents to the marketplace Understand parameters of relevance – what your brand is and what it is not (limits to which you can extend your brand beyond its core meaning without compromising your credibility) Examples – Disney (clear vision – to make people happy); Microsoft (vision – a computer on every desk in every home) 69 Michael G.Warner MBA DipM FCIM FIDM

70 Positioning Organisational Alignment ORGANISATIONAL ALIGNMENT PROGRAMME Use tagline or theme – can make or break brand building Identify a few words that communicate the full weight and force of brand message All activities get their energy from this positioning device. Tagline must: Provide clear and recognisable differentiation Respond to customers most pressing needs in a believable manner Provide guidance for management decision-making, hiring, training and resource allocation 70 Michael G.Warner MBA DipM FCIM FIDM

71 Positioning the Brand Key Factors Successful brands are not created overnight – result of careful positioning, supported by long term strategies and consistent investment Frequent change in brand positioning – customer becomes confused Considerable time and effort must be spent in understanding how the customer perceives the brand, before thought can be given to changing that perception Changes in customer perception – only achieved in small steps over long periods of time 71 Michael G.Warner MBA DipM FCIM FIDM

72 Communicating the Brand (cont) Recently, experts have stressed the inadequacy of relying on mass media to communicate a brand: Cost of mass media is increasing Poorly targeted for todays increasingly fragmented markets Use the new media -- direct marketing, database marketing and building relationships (vouchers, free samples, advice booklets – build relationship with customer). Rather rely on these to communicate brands successfully 72 Michael G.Warner MBA DipM FCIM FIDM

73 Brand Extension (cont) 4 WAYS TO EXTEND: Licensing Pierre Cardin – to a variety of marginal products – brand weakened Co-branding Disney and McDonalds – there has to be a fit Sponsorships E.g. Olympic Games – linking up with big events Brand agents Individuals that are not only celebrities, but stir emotions that support the brand in a meaningful way (e.g. Tiger Woods & Nike) 73 Michael G.Warner MBA DipM FCIM FIDM

74 Brand Identity DEFINITION OF BRAND IDENTITY Brand identity is how the company wants the brand to be perceived. Aaker (1996), Building Strong Brands 74 Michael G.Warner MBA DipM FCIM FIDM

75 Brand Loyalty Customers become loyal if brand identity is communicated effectively and positioned positively in their minds However, this does not mean they will never buy any other brand Customers tend to use repertoires of brands rather than single brands The specific brand they buy on any one occasion will depend on other factors such as availability, special price offers, recent advertising campaigns, point of sale factors. Highly educated and affluent groups are found to be less loyal! (not willing to pay a price premium for branded products) 75 Michael G.Warner MBA DipM FCIM FIDM

76 Positioning & Communication Positioning is the development and communication of a differential advantage that makes the organisations product or service superior and distinctive in the perception of target customers. Positioning should be meaningful to the target market segment, believable and unique (biggest, most reliable, etc). Positioning involves giving the target market segment the reason for buying your product. 76 Michael G.Warner MBA DipM FCIM FIDM

77 Communicating the Brand (cont) INTERACTIVE BRAND COMMUNICATION New phenomenon brought on by: Reduced effectiveness of mass media advertising Emergence of the new media Emphasis on relationship and database marketing Other Free telephone numbers Care lines Eliciting feedback (not just complaints) from customers Loyalty cards and clubs (e.g. Voyager) 77 Michael G.Warner MBA DipM FCIM FIDM

78 Brand Management in the New Economy Brand used to guide all activities surrounding it Coordinate these activities Manage relationships with external partners and agencies (research companies, advertising agencies, and channels) Whole organisation must understand brand Integrated approach to brand management – key issues: Cross functional working Company culture Internal communication CEOs important role to personify the brand (e.g. Richard Branson, Bill Gates, Raymond Ackerman) The corporate brand is of increasing importance (e.g. Virgin) – the corporate brand sells the product! New corporate identities created if parent company has inappropriate or unclear associations (Flora Food Co, Unilever) 78 Michael G.Warner MBA DipM FCIM FIDM

79 New Keys to Brand Building Use of marketing communications (mass-market advertising-agency model) as primary driver of corporate brand management is fast becoming obsolete. Replaced by an array of communications channels that can target increasingly narrow customer segments. All experiences affect brand image. Customer experience is key to brand building (e.g. Harley Davidson – owner groups, rallies) Align communication of brand to all 4 main audiences – customers, investors, employees and regulators (media, public interest organisations). Align -- key to building brand equity. Communication messages need to line up with experiences of customers. Ensure that entire business deliver the promise implicit in the brand (favourable advertising versus negative service experience – the latter will be remembered) 79 Michael G.Warner MBA DipM FCIM FIDM

80 Positioning & Communication Process 3 steps: Choose brand identity Begin positioning Communicate (marketing mix): Product / service (together with packaging, logo, design) Price (including discounts, etc) Place (where and how it is distributed) Promotion (advertising above and below the line, PR, sponsorship, etc) 80 Michael G.Warner MBA DipM FCIM FIDM

81 81 Traditional Marketing versus CRM Traditional MarketingCRM Aim is to expand customer base and to increase market share by mass marketing Aim is to establish a profitable, long-term, one-to-one relationship with customers Product oriented viewCustomer oriented view Mass marketing / mass production Mass customization, one-to-one marketing Standardization of customer needs Close customer-supplier relationship Transactional approach/ relationship Relational approach Michael G.Warner MBA DipM FCIM FIDM

82 Porters Diamond 82 Michael G.Warner MBA DipM FCIM FIDM

83 Assessing country attractiveness possible criteria Attractiveness Market size Market growth Absence of barriers Profit potential Competitive structure Entry opportunities Compatibility Language Currency Legal systems Technical standards Culture Consumption patterns 83 Michael G.Warner MBA DipM FCIM FIDM

84 12C framework for analysing international markets Country Concentration Culture/consumer behaviour Choices Consumption Contractual obligations Commitment Channels Communications Capacity to pay Currency Caveats 84 Michael G.Warner MBA DipM FCIM FIDM

85 Direct export. Indirect export Licensing Franchising Contracting Manufacturing abroad Partnership/Alliance Joint Venture Organically Market Entry Methods Slow Time Quick Control Issues Market Entry Methods Less More 85 Michael G.Warner MBA DipM FCIM FIDM

86 Inter-Country Differences PESTILE differences Barriers to entry Market entry methods Cross-Country Similarities Power-distance Collectivism vs. individualism Femininity vs. masculinity Uncertainty avoidance Long- vs. short-term orientation International Strategies - Hofstedes Cultural Similarities Cultural Similarities: For example, Anglo-Saxons; Hispanic; Nordic; Germanic; Arabic; Other. 86 Michael G.Warner MBA DipM FCIM FIDM

87 Hoftedes Model of National Cultures Power distance. Uncertainty avoidance. Individualism –collectivism. Masculinity. 87 Michael G.Warner MBA DipM FCIM FIDM

88 Hofstedes comparative analysis Distinguished four dimensions: Power distance (high or low) High – accept inequality of wealth and power: e.g. France, Brazil Low – do not accept inequality – e.g. Sweden, UK Uncertainty avoidance High – tolerate ambiguity - e.g. US, Australia Low – uncomfortable with uncertainty, prefer clarity – e.g. Latin America, southern Europe 88 Michael G.Warner MBA DipM FCIM FIDM

89 The Strategy Clock 89 Michael G.Warner MBA DipM FCIM FIDM

90 Examples of measures for the financial perspective Return on capital employed (ROCE) Operating margins Economic value added (EVA) Cash flow Sales growth 90 Michael G.Warner MBA DipM FCIM FIDM

91 Examples of measures for the customer perspective Market share Brand image and awareness Customer satisfaction Customer retention Customer acquisition Ranking by key accounts 91 Michael G.Warner MBA DipM FCIM FIDM

92 Examples of measures for the internal perspective Percentage of sales from new products Manufacturing costs Manufacturing cycle time Inventory management Quality indicators Technological capabilities 92 Michael G.Warner MBA DipM FCIM FIDM

93 Examples of measures for the innovation & learning perspective Product development Purchasing Manufacturing Technology Marketing and sales 93 Michael G.Warner MBA DipM FCIM FIDM

94 Strategic Choice – Competitive strategies Differentiation A type of competitive strategy with which the organisation seeks to distinguish its products or services from competitors. Cost Leadership A types of competitive strategy with which the organisation aggressively seeks efficient facilities, cuts costs, employs tight cost controls to be more efficient than competitors. Focus Type of competitive strategy that emphasizes concentration on a specific regional market or buyer group. 94 Michael G.Warner MBA DipM FCIM FIDM

95 Examples of Companies along the Dimensions of the Generic Strategies in Different Industries 95 Michael G.Warner MBA DipM FCIM FIDM

96 96 Assessing the value proposition - Strategy Clock MUST DO Source: Bowman & Faulkner (1995)

97 Strategic Choice – Competitive strategies 97 Michael G.Warner MBA DipM FCIM FIDM

98 Strategic Choice – Institutional Strategies There are number of different methodologies available for a company expand its operations. management should identify the most appropriate, suitable as well as feasible option when it comes to selection of the expansion strategy. Each expansion strategy has its own merits as well as demerits and also constraints of which some are company specific and some are external. Growth Strategies Organic growthInorganic growth 98 Michael G.Warner MBA DipM FCIM FIDM

99 Hostile and declining markets Characteristics of hostile and declining markets 1. Fall in over all demand level 2. Changes in the technology causing reduction in demand for a particular good or a service 3. Change in customer needs, wants and taste 4. Changes or shifts the in government policy 5. Reduction in average margin earned by the firms. 99 Michael G.Warner MBA DipM FCIM FIDM

100 Strategic alternatives for declining markets Revitalising the market Be the profitable survivor Milk or harvest Exit or liquidate 100 Michael G.Warner MBA DipM FCIM FIDM

101 Strategic alternatives for declining markets Invest or Hold Milk or Exit Milk or Exit Exit STRONGWEAK FAVOURABLE UNFAVOURABLE Business position in the key segment Industry Environment 101 Michael G.Warner MBA DipM FCIM FIDM

102 Environmental analysis 102 Michael G.Warner MBA DipM FCIM FIDM

103 Selecting Markets Total marketing approach Designs a single marketing mix and directs it towards the entire market Assume that the needs of the target market for a specific kind of product or service are very similar Market segmentation approach Appropriate for heterogeneous markets Markets are sub-divided based on similarities 103 Michael G.Warner MBA DipM FCIM FIDM

104 Targeting Strategies Undifferentiated marketing one marketing mix strategy that is appropriate for all members of the total market. Differentiated marketing The targeting of two or more market segments, with separate and distinct market offerings, which have been designed to closely meet the needs of those particular segments Concentrated marketing Concentrating the firms market offering solely on the needs of one defined target market.. Customised marketing specific individuals 104 Michael G.Warner MBA DipM FCIM FIDM

105 Warfare Strategies Marketing Warfare is a term used to describe some of the techniques and tactics marketers use. There are two types of warfare strategies; Defensive Strategies – These are followed by market leaders to defend their market share. There are six defensive strategies. Offensive strategies – Offensive strategies and followed by market challengers and there are five Offensive strategies. 105 Michael G.Warner MBA DipM FCIM FIDM

106 Offensive Strategies 106 Michael G.Warner MBA DipM FCIM FIDM

107 Defensive Strategies 107 Michael G.Warner MBA DipM FCIM FIDM

108 Brand Equity Defined Brand Equity can be defined as consisting of 5 asset categories: Brand awareness Brand loyalty Perceived quality Brand associations in addition to perceived quality Other proprietary brand assets (patents, trademarks, etc) Aaker, D (1996), Building Strong Brands 108 Michael G.Warner MBA DipM FCIM FIDM

109 Hofstede (continued) Individual/collectivism Individualist societies stress individual responsibility and success - e.g. US, UK Collectivist societies stress loyalty to group in return for support – e.g. in South America, Asia Masculinity/femininity M. societies show assertive behaviour – e.g. Japan, Italy, Arab countries F. societies show modest behaviour, interest in quality of life – e.g. Sweden, Norway, Denmark 109 Michael G.Warner MBA DipM FCIM FIDM

110 Brands are under Threat SOURCES OF THREATS ON BRANDS: Educated consumers Became marketing literate; brands had to offer real added value; trend: loyal customers became loyal to group of brands rather than to a single brand. Powerful retailers Strong retailers dictate terms to manufacturers (e.g. Pick n Pay); retailer builds own brand (Woolworths) – customer loyal to retailer rather than product; only 1 label sold (power of the retail brand). Both of the above leading to pressure on prices No added value – consumer will not pay price premium; trend – demand both low prices AND added value 110 Michael G.Warner MBA DipM FCIM FIDM

111 Brands are under Threat (cont) The growth of own label If the retailer represents some strong brand values itself, the way is clear for own label products (Woolworths; Pick n Pay) – e.g. own Colas Brand extension instead of innovation Brands which in the past were built through real technical innovation can no longer keep pace, and may choose instead to extend an existing brand into new areas or variants. Can enhance brand, but there is danger of brand dilution or of confusing the customer (e.g. Pierre Cardin). New competition from outside the sector Existing strong brands looking to extend their franchise into other areas also pose a threat (e.g. Virgin). NB! New competitors like this are hard to fight because they are playing a different game. 111 Michael G.Warner MBA DipM FCIM FIDM

112 Value Proposition - Examples Intel: Intel inside IBM: Global solutions for a small planet Lexus: Passionate pursuit of perfection FedEx: When it absolutely, positively has to get there overnight Visa: It is everywhere you want to be Motorola University: Right knowledge, right now Nordstrom: Shopping humanized 112 Michael G.Warner MBA DipM FCIM FIDM

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