CONNECTING WITH CUSTOMERS AND BUILDING STRONG BRANDS UNIT 2 CONNECTING WITH CUSTOMERS AND BUILDING STRONG BRANDS

What Influences Consumer Behavior? Cultural Factors Social Factors Personal Factors

Culture Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions.

Subcultures Nationalities Religions Racial groups Geographic regions

Social Classes Upper uppers Lower uppers Upper middles Middle class Working class Upper lowers Lower lowers

Social Factors Reference groups Family Social roles Statuses

Reference Groups Membership groups Primary groups Secondary groups Aspirational groups Dissociative groups

Personal Factors Age Self- Life cycle concept stage Occupation Lifestyle Wealth Values Personality

The Family Life Cycle

Figure 6.1 Model of Consumer Behavior

Motivation Freud’s Theory Behavior is guided by subconscious motivations Maslow’s Hierarchy of Needs Behavior is driven by the lowest, unmet need Herzberg’s Two-Factor Theory Behavior is guided by motivating and hygiene factors

Maslow’s Hierarchy of Needs

Herzberg’s Two-Factor Theory

Figure 6.4 Consumer Buying Process Problem Recognition Information Search Evaluation Purchase Decision Postpurchase Behavior

Sources of Information Personal Commercial Public Experiential

ANALYSING BUSINESS MARKETS The Business Market The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. More dollars and items are involved in sales to business buyers than to consumers Characteristics of Business Markets Fewer, larger buyers Close supplier-customer relationship Professional purchasing Several buying influences Multiple sales call Derived demand Inelastic demand Fluctuation demand Geographically concentrated buyers Direct purchasing

Buying Situations 1.Straight rebuyis when the purchasing department reorders on a routine basis and chooses from suppliers on an ―approved lists.‖ 2.Modified rebuyis when the buyer wants to modify product specifications, prices, delivery requirements, or other items. 3.New taskis when the purchaser buys a product or service for the first time. Systems Buying and Selling Systems buying Buy total solution from 1 seller Systems selling Key industrial marketing strategy -large-scale industrial projects

Participants in the Business Buying ProcessThere are seven roles in the purchase decision process: 1.Initiators—requests the product 2.Users—will use the product 3.Influencers—influence the buying decision 4.Deciders—makes the decision of what to purchase 5.Approvers—authorize the proposal 6.Buyers—have the formal authority to purchase 7.Gatekeepers—have the power to prevent seller information from reaching members of the buying center 6-10

Tapping Into Global Markets

What is a Global Firm? A global firm is one that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

Major Decisions in International Marketing Deciding whether to go Deciding which markets to enter Deciding how to enter Deciding on the marketing program Deciding on the marketing organization

Top Global Firms Based in Developing Markets America Movil Cemex China Mobile CNOOC Embraer Gazprom Haier Hisense Huawei Technologies Infosys Technologies Koc Holding Lenovo Group MMC Norilsk Nickel Mahindra & Mahindra

Five Modes of Entry into Foreign Markets Indirect exporting Direct exporting Licensing Joint ventures Direct investment Commitment, Risk, Control, Profit Potential

Table 21.2 Global Marketing Advantages Economies of scale Lower marketing costs Power and scope Consistency in brand image Ability to leverage Uniformity of marketing practices Disadvantages Differences in consumer needs, wants, usage patterns Differences in consumer response to marketing mix Differences in brand development process Differences in environment

McDonald’s Franchises Are Sold Worldwide

Identifying Market Segments and Targets

What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs ad wants.

Preference Segments Homogeneous preferences exist when consumers want the same things Diffused preferences exist when consumers want very different things Clustered preferences reveal natural segments from groups with shared preferences

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral

Crafting the Brand Positioning

What is Positioning? Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.

Examples of Negatively Correlated Attributes and Benefits Low-price vs. High quality Taste vs. Low calories Nutritious vs. Good tasting Efficacious vs. Mild Powerful vs. Safe Strong vs. Refined Ubiquitous vs. Exclusive Varied vs. Simple

Differentiation Strategies Product Personnel Channel Image

Marketing Program Modifications Prices Distribution Advertising Sales promotion Services

Creating Brand Equity

What is a Brand? A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

What is Brand Equity? Brand equity is the added value endowed on products and services, which may be reflected in the way consumers, think, feel, and act with respect to the brand.

What is Brand Equity? Brand equity is the added value endowed on products and services, which may be reflected in the way consumers, think, feel, and act with respect to the brand.

Chapter Questions What is a brand and how does branding work? What is brand equity? How is brand equity built, measured, and managed? What are the important decisions in developing a branding strategy? Chapter Questions

ESPN: A Strong Brand

Steps in Strategic Brand Management Identifying and establishing brand positioning Planning and implementing brand marketing Measuring and interpreting brand performance Growing and sustaining brand value Steps in Strategic Brand Management

What is a Brand? A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

The Role of Brands Identify the maker Simplify product handling Organize accounting Offer legal protection

The Role of Brands Signify quality Create barriers to entry Serve as a competitive advantage Secure price premium

Branding is endowing products and services with the power of the brand. What is Branding?

Brand equity is the added value endowed on products and services, which may be reflected in the way consumers, think, feel, and act with respect to the brand. What is Brand Equity?

Thoughts Feelings Knowledge Images Beliefs Experiences Brand Knowledge

Advantages of Strong Brands Improved perceptions of product performance Greater loyalty Less vulnerability to competitive marketing actions Less vulnerability to crises Larger margins More inelastic consumer response Greater trade cooperation Increased marketing communications effectiveness Possible licensing opportunities Advantages of Strong Brands

A brand promise is the marketer’s vision of what the brand must be and do for consumers. What is a Brand Promise?

Brand Equity Models Brand Asset Valuator Aaker Model BRANDZ Brand Resonance Brand Equity Models

Figure 9.3 Brand Dynamics Pyramid Strong Relationship Bonding Advantage Performance Relevance Figure 9.3 Brand Dynamics Pyramid Presence Weak Relationship

Brand Elements Brand names URLs Slogans Elements Logos Characters Symbols Brand Elements

Brand Element Choice Criteria Memorable Meaningful Likeability Transferable Adaptable Protectible

Measuring Brand Equity Brand Audits Brand Tracking Brand Valuation

Managing Brand Equity Brand Reinforcement Brand Revitalization Brand Crises

Devising a Branding Strategy Develop new brand elements Apply existing brand elements Use a combination of old and new

Addressing Competition and Driving Growth

Competitive Strategies for Market Leaders Expanding total market demand Protecting market share Increasing market share Suppose a market is occupied by the firms shown in Figure 12.1. Forty percent is in the hands of a market leader, another 30 percent belongs to a market challenger, and 20 percent is claimed by a market follower willing to maintain its share and not rock the boat. Market nichers, serving small segments larger firms don’t reach, hold the remaining 10 percent. Sometimes growth depends on adopting the right competitive strategies. To stay number one, the firm must first find ways to expand total market demand. Second, it must protect its current share through good defensive and offensive actions. Third, it should increase market share, even if market size remains constant. Competitive Strategies for Market Leaders

Marketing Strategies: Introduction Stage Pioneering advantages Recall of brand name Establishes product class attributes Captures more uses in middle of market Pioneering drawbacks Imitators can surpass innovators Once leadership is lost, it’s rarely regained Companies that plan to introduce a new product must decide when to do so. To be first can be rewarding, but risky and expensive. To come in later makes sense if the firm can bring superior technology, quality, or brand strength to create a market advantage. Marketing Strategies: Introduction Stage

Marketing Strategies: Growth Stage To sustain rapid market share growth now: Improve product quality and add new features Add new models and flanker products Enter new market segments Increase distribution coverage and enter new distribution channels Shift from awareness and trial communications to preference and loyalty communications Lower prices to attract the next layer of price-sensitive buyers By spending money on product improvement, promotion, and distribution, the firm can capture a dominant position. It trades off maximum current profit for high market share and the hope of even greater profits in the next stage. Marketing Strategies: Growth Stage