1. Marketing And IT initiatives

2. Marketing Session One: Marketing For the 21 st Century Session Two: Core Marketing Concepts Session Three: Core Marketing Concepts Session Four: The CMO, CIO, and Strategic IT Initiatives

3. Session One Marketing For the 21 st Century

4. Starbucks! Phenomenal growth Battling it out in the USA World class competitor Practicing both the “art” and “science” of marketing!

5. What is marketing? Advertising Selling Branding Market segmentation Product development Market forecasting Sales forecasting Sales promotion

6. What is marketing? Pricing Product/Market positioning Repositioning Market analysis –Geographic –Demographic –Psychographic –Behavioral

7. What is Marketing? Competitive analysis Market research Product rollout strategies Distributing: retailing, wholesaling, supply chain management Marketing strategies Marketing plans

8. 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

9. Marketing: A Brief History 16 th century & scientists Copernicus: The sun, not the earth! Business parallel: The customer, not the product “If you build a better mousetrap...” Really?

10. 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

11. 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

12. 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, 4 th Ed., Pearson Prentice Hall, 2009

13. 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

14. 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?”

15. 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.

16. 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!!!

17. 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

18. 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

19. What is a market? Marketers serve: –Consumer markets –Business markets –Global markets –Nonprofit markets –Government markets –Some combination of the above

20. 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 requirementswww.edmunds.com

21. Everything needs to be marketed! Goods Services Events People Places Properties Organizations

22. Everything needs to be marketed! Information Ideas Experiences

23. The Core

24. The Core of the Core

25. The Core Of The Core Of The Core

26. Core Marketing Concepts 1)Needs, Wants, and Demands 2)The Marketing Plan 3) Environmental (situation) Analysis 4) SWOT Analysis 5) Marketing Strategies 6) Market Segmentation, Targeting, and Positioning 7) Product Development 8) Brands and Branding

27. 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

28. Session #2 Core Marketing Concepts

29. Core Marketing Concepts 1)Needs, Wants, and Demands 2)The Marketing Plan 3) Environmental (situation) Analysis 4) SWOT Analysis 5) Marketing Strategies 6) Market Segmentation, Targeting, and Positioning 7) Product Development 8) Brands and Branding

30. Core Marketing Concept #1 Needs, Wants, and Demands

31. 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.

32. 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.

33. 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.

34. 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.”

35. 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 21 st century lifestyles and opportunities.

36. Core Marketing Concept #2 The Marketing Plan

37. The Marketing Plan Executive Summary Environmental Analysis SWOT Analysis Marketing Goals & Objectives Marketing Strategy Marketing Implementation Evaluation & Control

38. Core Marketing Concept #3 Environmental Analysis

39. Environmental Analysis Also known as environmental monitoring –Gathering and analyzing information –Forecasting impact of environmental trends

40. Environmental Analysis The Internal Environment The External Environment The Customer Environment

41. External Macroenvironment Demographics Economic conditions Competition Social and cultural forces Political and legal forces Technology

42. Demographics Characteristics of population groups Size Distribution (rural, urban) Population growth Income Education Gender Race 42

43. Economic Conditions Stage of the business cycle (recovery, prosperity, recession, depression) Inflation Unemployment Interest rates 43

44. 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) 44

45. 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. 45

46. Social & Cultural Environment Concern about natural environment Changing gender roles A premium on time Physical fitness and health

47. Political & Legal Forces Monetary and fiscal policies Social legislation & regulations Governmental relationships w/industries Legislation related specifically to marketing

48. 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

49. Technology (continued) Affects how marketing is carried out Global market/sourcing 24/7

50. External Microenvironment The firm’s market The firm’s suppliers Various marketing intermediaries

51. External Microenvironment External to the firm Generally uncontrollable But they “can” be influenced Pressure on suppliers and middlemen Advertising influences your market

52. 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)

53. Suppliers Often carelessly overlooked by marketers Increasing need for cooperative relationships with suppliers Increasingly competitive due to technology and instant global communication

54. 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)

55. 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

56. Universal Functions of Marketing Buying Selling Transporting Storing Standardizing or grading Financing Risk-taking Information gathering

57. 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

58. 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?

59. Core Marketing Concept #4 SWOT Analysis

60. Major Benefits of SWOT Analysis Simplicity Lower Costs Flexibility Integration and Synthesis Collaboration

61. SWOT Analysis 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

62. 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

63. Common Sources of Competitive Advantage Relational Advantages Legal Advantages Organizational Advantages Human Resource Advantages Product Advantages Pricing Advantages Promotion Advantages Distribution Advantages

64. Strategies for Competitive Advantage Operational Excellence Product Leadership Customer Intimacy

65. Core Marketing Concept #5 Marketing Strategies

66. Marketing Strategy 1)Selecting a Target Market(s) 2)Developing a Marketing Mix(es) 1)Product 2)Price 3)Promotion 4)Placement (distribution

67. Core Marketing Concept #6 Market Segmentation, Targeting And Positioning

68. Dunkin’ Donuts!! A sleeping giant! Serving the same market as KK and Starbucks? How are they alike? Ans: Coffee and pastries

69. DD, Starbucks, & KK How are they different? 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.”

70. 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?

71. DD, Starbucks & KK Additional questions to ponder “How are these “competitors different?” “Is this a zero-sum game or can all three companies grow simultaneously?”

72. Welcome to Market Segmentation, Targeting, and Positioning

73. Structured segmentation (steps) 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.

74. Selecting a Target-Market Compatible with organization’s goals and image Matches market opportunity with company’s resources Attractive ROI projections Weak or few competitors

75. Characteristics of segments 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 mass- customization) Benefits vs costs!

76. The First “Cut” Consumer markets/Business markets: either or both Very significant Why? Both the buyers and buying process are very different

77. Segmenting Consumer Markets Consumers are still quite varied Need: Further subdividing’ Four traditional segmentation dimensions –Geographic –Demographic –Psychographic –Behavioral

78. Geographic Segmentation 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

79. Demographic Segmentation 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

80. Demographic Segmentation Clusters are defined by lifestyles, consumption behavior, etc. Cluster “names” –“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

81. Psychographic Segmentation 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

82. Psychographic Segmentation Values: “LOV” or “List Of Values” that relate to purchase behavior: Self respect Security Excitement Fun and enjoyment in life Having warm relationships

83. 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

84. Behavioral Segmentation “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

85. Behavioral Segmentation Usage rates (another behavioral measurement) 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

86. Segmenting Business Markets Fewer buyers (significantly) but still very much need to be segmented Why? Customers can still be successfully grouped for greater efficiency and satisfaction

87. Segmenting Business Markets Customer Location Customer Type Transaction Conditions

88. Customer Location Close to natural resources to minimize transportation costs Close to clients to minimize transportation costs

89. 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

90. Customer Type 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.

91. Transaction Conditions Buying situation: New, modified, straight –Ex: IKON, operating supplies via inside sales Usage rate: Heavy, light, nonusers (prospects) Purchase procedure: simple, negotiated, sealed bid

92. Segmentation Strategies Market aggregation Multiple market segmenter Single market segmenter: market concentration Niche marketing: extreme concentration Individualized marketing –One-to-one marketing –Mass customization –Permission marketing

93. Positioning 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.

94. 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)

95. 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.

96. Lincoln Pontiac Nissan Chrysler Saturn Buick Porsche Mercedes Ford BMW Chevy Toyota Cadillac Dodge Honda VW Sporty Conservative Expensive/Distinctive Affordable/Practical

97. Core Marketing Concept #7 Product Development

98. 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?

99. Great Ideas! 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

100. Imaginatik Systematic way of developing new ideas Harnessing the creative potential of employees

101. The Importance of Product Innovation 1)Business goals: –Satisfy customers –Make a profit

102. 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!

103. The Importance of Product Innovation 5) High failure rates of new products -Poor differentiation -Poor positioning -Lack of marketing support (Big bucks and ROI)

104. Product!! What is a product????

105. What is a product? Good Service Place Person Idea

106. “Formal” Definition Product: “A set of tangible and intangible attributes, which may include: Packaging Color Price Quality Brand Services Reputation Warranty

107. Classifications of Products 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”

108. 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

109. Business goods Raw Materials Fabricating Materials and Parts Installations Accessory Equipment Operating Supplies Key: Classifications are based on broad uses

110. Three distinct categories of new products Really innovative Significantly different Imitative: “me-too”

111. New-product “strategy” Sales-driven: protect market share Investment-driven: ROI Expansion-driven: Establish position in a new market

112. Stages in Development Process Generating new product ideas Screening ideas Business analysis Prototype development Market tests Commercialization

113. Stages in adoption process Awareness Interest Evaluation Trial Adoption Confirmation

114. Adoption Categories Innovators Early adopters Early majority Late majority Laggards Additional: “Non-adopters”

115. Organizing for Product Innovation Beginning in 1950’s: Brand manager or product manager Category Manager “Endangered species” Team efforts: new-product departments, product planning committees, cross- functional teams

116. The Product Life Cycle 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.

117. The Product Life Cycle Traditionally, there are four stages Introduction: pioneering stage Growth: market-acceptance stage Maturity Decline

118. Product Life-Cycle Stages

120. 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

121. Length of Product Life-Cycle

122. Life Cycles related to Markets 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

123. Entry Strategies 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

124. Managing On The Rise 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

125. Core Marketing Concept #8 Brands and Branding

126. Cadillac! 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.

127. Brands, Packaging, and Other Product Features Brands Brand names Branding strategies Brand equity Packaging and labeling Packaging strategies Other product features: design, color & quality

128. 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

129. Brands 3) Trademark: A brand that has been adopted by a seller and given legal protection; includes both brand name and brand mark

130. 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

131. 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)

132. Reasons for branding For the buyer: Ease of identification by consumers Aids shoppers in locating and decision- making Guarantee of quality For the seller: Reduces price comparisons Increases customer loyalty Differentiates commodities

133. Reasons for not branding Promoting the brand (takes time & money) Maintaining a consistent quality of output (requires a high level of commitment)

134. 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

135. 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!

136. 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 21 st century –Huge in software—very easy

137. 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.

138. 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

139. Branding Strategies Producer’s strategies Middlemen’s strategies

140. 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

141. 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

142. 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

143. 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

144. 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

145. 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

146. 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

147. 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

148. 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!!

149. Trademark Licensing 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

150. 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)

151. Session Four The CMO, CIO, and Strategic IT Initiatives