Enterprise Marketing

Question: Which is better?  Sell 10 items and make $10 profit on each one.  Sell 1 item and make $100 profit. Answer:  Sell 1 item and make $100 profit

Competitive Strategies Cost leadership strategy  Price your products lower than the competition of similar value. Better value Differentiation strategy  Make your product unique or special in some way. Better perceived value

Which strategy is better? Answer: Differentiation strategy What’s wrong with a cost leadership strategy?  Lower margins  Higher manufacturing, inventory, customer support and transactions costs  No brand loyalty. If a competitor responds with a lower price then you are uncompetitive

How do you differentiate your product?  Answer: Add value.  Customer value = Customer benefit – Cost  Customer benefit can be tangible or intangible.  Intangible benefits can be emotional, social or peace of mind.

Intangible Value  How do you increase intangible value for the customer?  Answer: Branding  Branding creates perceived value because the customer has a name that they trust.  Branding increases social status and image associated with the product.  Branding builds customer loyalty.

Branding Definition: Brand  An identifying name, term, design or symbol Definition: Brand Name  Part of the Brand that can be spoken Definition: Brand Mark  The part of the Brand not made of words Definition: Trademark  A legal designation of exclusive use of a Brand

Branding continued Definition: Brand Loyalty  A customer’s favourable attitude toward a specific Brand Definition: Brand Recognition  A customer’s knowledge of a particular Brand Definition: Brand Equity  The marketing and financial value associated with a Brand

Brand Equity Brand Loyalty Perceived Brand Value Brand Recognition Brand Image Brand Equity

Companies with the greatest Brand Equity RankBrandCountryValue in Billions $ US 1Coco-ColaUSA72.5 2MicrosoftUSA70.2 3IBMUSA53.2 4IntelUSA39.0 5NokiaFinland38.5 6General ElectricUSA38.1 7Ford Motor CompanyUSA36.4 8DisneyUSA33.6 9McDonald’sUSA AT&TUSA25.5

Branding case study: Guinness  Founded 1759, Dublin, Ireland  Guinness is the most recognized brand of beer in the world.  It is not the largest selling beer. It has a small but very loyal customer base.  Guinness is very selective about the bars and restaurants that sell its product.  The draught equipment is specialized, the presentation and customer experience are unique.

Case Study: Intel Inside  Intel is the world’s largest supplier of microprocessors  Intel is the computer industry standard.  Intel had a brand recognition problem. Most computer buyers did not know them or did not care.  Intel’s product names were numbers such as 386 and 486. Numbers cannot be trademarked.

Case study: Intel continued  Intel had a problem with cheaper “copycat” competitors that didn’t have the R & D costs of Intel  Solution: Intel invested heavily in developing an “ingredient” brand, an industry first  Intel trademarked the brand, “Pentium” which means, “number 5”

Case study: Intel continued  Intel created the “Intel Inside” co-op marketing program.  Intel created an extensive marketing campaign, educating consumers to look for the Intel Inside sticker on the computer.  Intel’s name became associated with a high quality, high performance product.  Customers perceived that if the computer maker used a non-Intel CPU that it was an inferior computer.

Case Study: Harley Davidson  Harley Davidson is the leader in manufacturing large, highway cruising motorcycles.  Harley Davidson was facing near bankruptcy due to superior, lower cost competitors from Japan  Harley Davidson had an image problem with their name being associated with undesirables.

Harley Davidson: continued  Harley Davidson correctly identified what their “value” was.  The marketing team was able to turn their negative image into a positive image.  Harley Davidson was able to take an “inferior” product and use it as a differentiation.

Harley Davidson: continued  Today Harley Davidson has a fiercely loyal customer base.  Their image is the envy of the industry  The “superior” competitors must copy Harley Davidson’s “inferior” products in order to compete.  Harley Davidson’s brand merchandise accounts for 5% of total revenue.

The marketing project  Scenario: You are a marketing manager for a Chinese manufacturing company. The company wishes to begin exporting into the Canadian market. You are asked by the V.P. to produce a marketing plan.  Work in your groups of 5 students. Imagine a product that you think will sell in Canada. You are marketing to other enterprises. This will not be a consumer item.  Create a marketing plan using the format and the analysis tools discussed in class. Due date is Wednesday, December 9 th.