CHAPTER 7 Branding and Positioning 2014 Cengage Learning
CHAPTER 7 Branding and Positioning © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Branding Strategy n Involves selecting the right combination of name, symbol, term, or design that identifies a product n Brands n n have two parts Brand name – words, letters, and numbers that can be spoken Brand mark – symbols, figures, or a design n Critical to product identification and the key factor in differentiating a product from its competition n Makes it easier for customers to find and buy products n Firms must protect brand names and brand marks from trademark infringement by other firms 2 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Good Brands Answer Questions for Customers n Where can I find information quickly? n Where can I get a quick meal and make my kids happy? n Where can I buy everything I need, all at decent prices? n Where can I get the best deal on car insurance? n How do I find a value-priced hotel in midtown Manhattan? 3 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Consider the notion that a truly effective brand is one that succinctly captures the product offering in a way that answers a question in the customer’s mind. Now, consider these brands (or choose your own): Coca-Cola, Disney, Marlboro, American Express, and Ford. What questions do these brands answer? Why are these effective brands? 4 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Potential Brand Attributes (Exhibit 7. 1) 5 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic Issues in Branding n Corporate Branding n n Basic Branding Decisions n n n Manufacturer vs. private-label brands Individual vs. family branding Strategic Brand Alliances n n n Equally as important as product-related branding Aimed at a variety of stakeholders Designed to build and enhance the firm’s reputation Cobranding Brand licensing Brand Value n Brand loyalty n Brand equity n Packaging and © 2014 Cengage Learning. All Rights Reserved. Labeling May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6
The Strongest and Weakest U. S. Corporate Reputations (Exhibit 7. 2) 7 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Advantages of Branding n Product Identification n Comparison n Shopping n Risk Shopping Efficiency Reduction n Product Acceptance n Enhanced Self-Image n Enhanced Product Loyalty 8 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Basic Branding Decisions n Manufacturer n n n Private-label brands are owned by the merchants that sell them (Gap, Craftsman, Sam’s Choice) Private-label brands are more profitable for the retailer Manufacturer brands have built-in demand n Individual n n vs. Private-Label Brands vs. Family Branding Individual branding – when a firm gives each of its product offerings a different brand name Family branding – when a firm uses the same name or part of the brand name on every product 9 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Manufacturer (Name) Brands versus Private-Label Brands (Exhibit 7. 3) 10 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic Brand Alliances n Cobranding n The use of two or more brands on one product n Leverages the image and reputation of multiple brands to create distinctive differentiation n Brand n n Licensing A contractual agreement where a company permits an organization to use its brand on non-competing products in exchange for a licensing fee Licensed brands typically have instant recognition among consumers 11 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Brand Value n Brand Loyalty n A customer-centric view of brand value n A positive attitude toward a brand that causes customers to have a consistent preference for the brand Three degrees: n n Brand recognition n Brand preference n Brand insistence n Brand n n Equity A firm-centric view of brand value The marketing and financial value associated with a brand’s position in the marketplace 12 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The World’s Twenty-Five Most Valuable Brands (Exhibit 7. 4) 13 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Compare the corporate reputation scores in Exhibit 7. 2 with the brand valuations in Exhibit 7. 4. Why does Apple sit at the top of both lists? How has the company used good branding and positioning strategy to achieve this result? How is it that Wells Fargo can have a very high brand valuation, but a very low corporate reputation score? 14 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Packaging and Labeling n Goes hand-in-hand with branding in developing a product, its benefits, its differentiation, and its image n Includes issues such as color, shape, size, convenience n Often used to reposition the product or give it new and improved features n Vital to helping customers make proper product selections n Can have important environmental and legal consequences 15 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Differentiation and Positioning n Differentiation n Creating differences in the firm’s product offering that set it apart from competing offerings n Positioning n Creating a mental image of the product offering and its differentiating features in the minds of the target market n Relative n n Position A product’s position vis-à-vis the competition Addressed through two tools n Perceptual mapping n Strategy canvas 16 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Hypothetical Perceptual Map of the Automotive Market (Exhibit 7. 5) 17 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Hypothetical Strategy Canvas for the Book Retailing Market (Exhibit 7. 6) 18 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Bases for Differentiation n Branding n Other n n is the most important tool of differentiation. important bases for differentiation Product Descriptors (see Exhibit 7. 7) n Product features – factual descriptors of the product and its characteristics n Advantages – performance characteristics of how the product behaves n Benefits – positive outcomes or need satisfaction Customer Support Services n May be the best way to overcome commoditization 19 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Using Product Descriptors as a Basis for Differentiation (Exhibit 7. 7) 20 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Look back at the Top 10 brands in Exhibit 7. 4. What bases do these brands use for differentiation? What strategies do they use to create a relative position in their respective markets? Why do these brands hold so much value? 21 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Positioning Strategies n Strengthen the Current Position n Constantly monitor customer perceptions, needs, and wants n Raise the bar of customer expectations n Repositioning n Often requires a fundamental change in one or more marketing program elements 22 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Managing Brands over Time n The product life cycle is a useful tool for addressing brand product strategy over time. n Limitations n n of the product life cycle Most new products never get past development Most successful products never die Life cycles really refer to industries, not products or brands The length of each stage depends on the actions of other firms n The product life cycle forces managers to consider the future of their industry and their brand. 23 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Stages of the Product Life Cycle (Exhibit 7. 8) 24 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic Considerations During the Product Life Cycle (Exhibit 7. 9) 25 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Product Life Cycle: Development Stage n No sales revenue during this stage n Components n n of the product concept An understanding of desired uses and benefits A description of the product The potential for creating a complete product line An analysis of the feasibility of the product concept n Customer needs should be discerned before developing marketing strategy n Test marketing is conducted in this stage. 26 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Product Life Cycle: Introduction Stage n Begins when development is complete and ends when customers widely accept the product n Marketing n n n strategy goals during this stage Attract customers by raising awareness and interest Induce customers to try and buy Engage in customer education activities Strengthen or expand channel and supply chain relationships Build on availability and visibility through trade promotion Set pricing objectives 27 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Product Life Cycle: Growth Stage n Be ready for sustained sales increases and the rapid increase in profitability early in the growth stage n Length depends on nature of product and competitive reactions n Two n n main priorities during growth Establish a strong, defensible marketing position Achieve financial objectives that repay investment n Marketing strategy shifts from customer acquisition to customer retention and building brand loyalty. 28 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Marketing Strategy Goals During the Growth Stage n Leverage the product’s perceived differential advantages n Establish a clear brand identity n Create unique positioning n Maintain control over product quality n Maximize availability of the product n Maintain or enhance the product’s profitability to partners n Find the ideal balance between price and demand n Keep an eye focused on the competition 29 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Product Life Cycle: Maturity Stage n Typically, no more firms will enter the market n Still an opportunity for new product features and variations n Typically the longest stage in the product life cycle 30 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Goals and Strategies During the Maturity Stage n Four n n Generate cash flow Hold market share Steal market share Increase share of customer n Four n n general goals during the maturity stage strategic options to achieve these goals Develop a new product image Find attract new users to the product Discover new applications and uses for the product Apply new technology to the product 31 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Product Life Cycle: Decline Stage n Two n n options during the decline stage Attempt to postpone the decline Accept the inevitability of decline n Harvesting n Divesting n Factors n n to be considered during this stage Market segment potential The market position of the product The firm’s price and cost structure The rate of market deterioration 32 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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