Chapter 5 Market Communications and Branding

Exhibit 5-1: Evolution of Customer Buying Process Awareness Consideration Preference Purchase Loyalty Buying Process television ads general interest magazines television ads general interest magazines niche magazines collateral point-of sale promotions direct marketing product experience buyers’ clubs Traditional Market Communication Early Web Market Communication buttons banners sponsorships banners microsites brochureware web site daily specials sweepstakes first-time order incentives e-mail alerts newsletters Source: Forrester Research, Monitor Analysis

Table 5-1: Framework for Marketing Communications Direct Personalized Individualized Audience Focus Traditional Mass Marketing General Approaches Broad Off-line On-line Communication Media

Table 5-2: The Four Categories of Communications Direct Personalized Permission Marketing Personalized Recommendations Personalized Advertisements Personalized Web Pages Personalized Upsell Personalized E-commerce Salesforce Retail sales Customer service reps Traditional Mass Marketing General Approaches Television Radio Print Billboards Superior Customer Service Banner Ads E-Mail Viral Marketing Portal Sponsorship/Exclusive Agreements Associate Programs On-line and Off-line Partnerships Provide Information to Entice Customer Purchases Leverage Customer Base

Supporting Slide 5-A: Quotes on On-Line Branding “E-branding is more important [than e-commerce]. And it must come first. Because few people will buy your stuff -- on-line or off -- unless you are top-of-mind.” -- Annette Hamilton, Executive Producer, ZDNet “Brand is the price of entry [to the internet], not the winning strategy.” -- Dylan Tweney, InfoNet “By the time your potential customers log on, they already know what they're looking for, and they often know from whom they want to buy it. . . They're just not listening to branding messages anymore.” -- Michael Fischler, Principal of The Pubs Group “Brands stand as comfort anchors in the sea of confusion, fear and doubt. In dynamic markets, strong brands have more value than ever, precisely because of the speed with which these markets move.” -- Chuck Pettis, Technobranding “It took more than 50 years for Coca-Cola to become a worldwide market leader, but only five years for on-line search engine Yahoo! to gain market dominance. The role of the brand has changed dramatically and has created a vacuum between off-line and on-line brands.” -- Mark Lindstrom, Executive Director ZIVO “A company's web site IS the brand. It's the hub of consumer experience, the place where all aspects of a company, from its annual report to its products to its support, intersect. It's the company in a nutshell, all there in a way that just is not possible in the analog world.” -- Sean Carton, Carton Donofrio Interactive

Supporting Slide 5-B: Do Strong Brands Matter On-Line? Point — Counterpoint Brand is Essential Flood of new entrants. Too many brands. Hence, need to build your presence. Strong brands -- customers come to you vs. you chasing customers. All winners currently have strong brands. It is an “instant message” that contains a lot of associations. Conversion rates. Clear brand associated with higher conversion rates. Brand is Side-show Alliances lock-up the market. Considerably more important than brands. Third-party evaluator sites decrease power of brand (e.g., bizrate.com). But… we expect a lot of well-known brands will go “belly-up” (e.g. beyond.com, FreePC). Speed is more important than brand. Need to build customer base. Everything about customization. It is a “personal” brand experience.

Exhibit 5-2: Banner Click-Through Rates Banner Click-Through Rates (Apr 1999-Jan 2000) Note: Source: Nielsen-NetRatings

Exhibit 5-3: What Is a Good Brand? Mix of off-line and on-line advertising Emphasizes advantages to AAdvantage memberships, including non-expiring miles and on-line services Marketing Communications “Wrap-arounds” Superior service AAdvantage frequent flier mile club Award winning Admirals Club lounges Comfortable chairs Portable defibrillators on every flight Core Product / Service [Start with only bullet-point] It is fundamental to remember that a good brand extends the “product” from functionality into meaning. This is done by consistently delivering and communicating a distinct and appealing customer experience. [Add dash-points as they are mentioned] A good, branded customer experience needs to: 1) Be based on a good core product, 2) Have its wrap-arounds or add- ons to be delivered in a distinctive way, and 3) Have marketing communications frame the customer experience. A good core product alone is not enough, distinctive wrap-arounds alone are not enough, and marketing communications alone are not enough. All of these things need to be delivered with consistency and integrity to shape the customer experience into a brand. [Add example at bottom of page, except for arrow and “Hip Prestige”] Virgin Atlantic Upper Class is a brand. It provides safe, usually on-time transportation from A to B (where either A or B is London). With Virgin, you get the “wrap-arounds” of many entertainment options — particularly modern music. With Upper Class, you get the “wrap-arounds” of more comfortable chairs, shorter check-in lines, lounges, and special luggage tags. Most of these wrap-arounds are delivered in a distinctive way such as bright colors and contemporary furniture in their lounges. With Virgin Atlantic Upper Class, the product is framed by marketing communications such as provocative, racy advertising (from Virgin tie-ins with Austin Powers movie “The Spy Who Shagged Me”) and direct mail that emphasizes exclusivity (from Upper Class). [Add arrow on bottom and “Hip Prestige”] The same Brand Intent behind these marketing communications also guides how managers put together the core-product and “wrap-arounds” and guides how customers experience the Virgin Atlantic Upper Class brand as Hip Prestige. Safe, on-time transportation from A to B Brand Prestige

Exhibit 5-4: A Simple Conceptual Model of Brand Equity A good brand... … provides positive consumer responses... … and benefits both target customers and the firm BRAND AWARENESS Depth Breadth CUSTOMER BENEFITS Confidence Loyalty Satisfaction Market Communication “Wrap-arounds” Core Product / Service BRAND ASSOCIATIONS Strength relevant consistent Valence Uniqueness memorable disinctive FIRM BENEFITS Reduce marketing costs Increased margins Opportunity for brand extensions Source: Keller (1996), Aaken (1996), Strategic Market Research Group, Marketspace Analysis

Table 5-3: Types of Brands Traditional Brands On-line Brands The product / service with which the brand is associated was established offline in the bricks-and-mortar world Examples: The Gap UPS Dell JCrew McDonalds OfficeMax Ragu Coca-Cola Disney The product / service with which the brand is associated was established in the online world Examples: Amazon Yahoo! Chemdex ZDNet AOL Priceline CDNow Wingspanbank E*Trade

Exhibit 5-5: Brand Presence Mix of Promotional Activities Off-line On-line Online Brands Yahoo! Egghead Yahoo! Magazine Product Establishment Wingspan bank Schwab Ragu Traditional Brands Source: Monitor Analysis

Exhibit 5-6: Building an On-Line Brand 1. Clearly define the brand audience 2. Understand the customer 3. Identify key leverage points in customer experience 4. Continually monitor competitors 5. Design compelling and complete Brand Intent 6. Execute with integrity 7. Be consistent over time 8. Establish feedback systems 9. Be opportunistic 10. Invest and be patient Value Cluster Integrated Campaign 1. Clearly define the brand audience Based on thorough understanding of market Don’t necessarily need mass audience to have successful brand 2. Understand the customer Environment, desired on-line experience, company / product / service beliefs and associations, and purchase and usage behavior 3. Identify key leverage points in customer experience Successful brands do a superior job of fulfilling customer needs Heavy-users of a brand will know more about it than most managers 4. Continually monitor competitors Ensure brand continues to be differentiated and is not de-positioned by competitors 5. Design compelling and complete Brand Intent Should provide customers with functional, end-use, emotional and self-expressive benefits 6. Execute with integrity All marketing activities should be consistent with Brand Intent and mutually reinforcing 7. Be consistent over time Stay true to brand’s heritage Recognize that brand must be believable, based on customer’s current and previous experience 8. Establish feedback systems Measure and track multiple aspects of brand performance 9. Be opportunistic Continually update understanding of market segments and plan for sequenced growth 10. Invest and be patient Brand building requires time, money and effort

Table 5-4: Similarities and Differences in Off-Line vs Table 5-4: Similarities and Differences in Off-Line vs. On-Line Branding

Table 5-4: Similarities and Differences in Off-Line vs Table 5-4: Similarities and Differences in Off-Line vs. On-Line Branding, cont’d

Table 5-5: Case Studies of Successful On-Line Branding Efforts

Exhibit 5-7: On-Line Branding Choices Brand reinforce-ment Broad vs. Focused (specific products / services) Brand association Brand awareness Firm Benefits Customer Benefits Product sales Sales leads Brand creation Product trial Store traffic What value do you want to derive from your on-line presence? What part of brand equity do you want to build? What product / service are you offering them? Value Objective Component of Brand Equity Product Scope Target Audience Broad vs. Focused (specific segments) Who do we want to target? Source: Forrester Research, Monitor Analysis

Supporting Slide 5-C: Point-Counterpoint: New Brand vs Supporting Slide 5-C: Point-Counterpoint: New Brand vs. Use Existing Brand Point — Counterpoint New Brand An existing brand name limits the size of the user base A single company brand name cannot be the “objective, third party portal (I.e. Travelocity will atract more visitors as compared to AA.com) Existing brands are less likely to “get it” (e.g. less usable interfaces) Use Existing Brand Enormous amounts of time and money are necessary to build new brands Customer understands and will respond to a known brand Customer will understand the value of being able to use both on-line and off-line services interchangeably Target customers will not be confused

Exhibit 5-8: www.aa.com

Exhibit 5-9: Assessment of Key Branding Elements On-line Branding Best-in-Class Comparison American Airlines Continental CV CV CVc = very low = low = moderate = high = very high

Exhibit 5-10: Assessment of Key Brand Attributes On-line Branding Best-in-Class Comparison American Airlines Continental = very low = low = moderate = high = very high

Exhibit 5-11: www.monster.com

Exhibit 5-12: Assessment of Key Branding Elements Online Branding Best-in-Class Comparison Monster.com Hotjobs.com

Exhibit 5-13: Assessment of Key Brand Attributes Online Branding Best-in-Class Comparison Monster.com Hotjobs.com