Market Communications & Branding - Part 1 CPS 181s Feb 13, 2003

Customer Interface The customer interface brings to life the value proposition and associated business model Market Communications & Branding The motivators that a company can utilize to motivate consumer traffic and ultimately consumption

Integrating Market Communications and Branding  Branding  Customer’s perception of the offering  Performance >Looks >How does it make me feel >Messages it sends to others  Branding Basics >What makes a good brand >Framework for brand equity >10-step process to build brands >Branding choices  Market Communications  Nurtures perceptions  Four Categories >Broad vs. individual >Offline vs. online

BrandingBranding  Necessary but not sufficient condition for success  Maybe more important in online than offline environment  Adds value in each step of the decision process  Pre-purchase (driving traffic to the site)  Purchase (erasing doubt)  Post-purchase (assurance )

What is a “Good” Brand?

Value Objective  Brand creation  initially awareness, then follows loyalty  communications initially awareness, later detailed information of the brand  Store traffic – brand campaign lead to increased traffic  Product trial  Product sales – based on actual increase of usage  Brand reinforcement – communication mix to increase brand awareness, recognition, and customer benefit awareness

Do Strong Brands Matter On-Line? Brand is EssentialBrand is Side-show 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. 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. pets.com, FreePC). Speed is more important than brand. Need to build customer base. Everything is about customization. It is a “personal” brand experience.

Branding Basics  Core product or service  “Wrap-arounds” such as superior service, clubs, environment  Communications  A simple conceptual model of brand equity  A set of assets and (liabilities) linked to a brand’s name and symbol  Financial criteria - dollar value  Customer responses to brand  Benefits to both customer and the firm

Component of Brand Equity  Brand awareness - depth and/or breadth  Brand associations  Strength – of association, intensity of word, phrase, or brand meaning >Two criteria – relevancy and consistency  Valence – association is positive or negative  Uniqueness – memorable and/or distinctive  Customer benefits  Confidence  Loyalty  Satisfaction with experience  Firm benefits  Revenue growth  Increased margins  Lower marketing costs

What Is a Good Brand? Brand Prestige “Wrap-arounds” Marketing Communications Core Product / Service Core Product / Service Mix of off-line and on-line advertising Emphasizes advantages to AAdvantage memberships, including non-expiring miles and on-line services Superior service AAdvantage frequent flier mile club Award winning Admirals Club lounges Comfortable chairs Portable defibrillators on every flight Safe, on-time transportation from A to B

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

Types of Brands Traditional Brands On-line Brands 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 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 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 offline in the bricks-and-mortar world Examples: –The Gap –UPS –Dell –JCrew –McDonalds –OfficeMax –Ragu –Coca-Cola –Disney

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 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 Integrated Campaign Value Cluster

Similarities and Differences in Off-Line vs. On-Line Branding

Similarities and Differences in Off-Line vs. On-Line Branding, cont’d

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? On-Line Branding Choices Source: Forrester Research, Monitor Analysis

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 attract more visitors as compared to AA.com) Existing brands are less likely to “get it” (e.g. less usable interfaces) 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 attract 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 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

Assessment of Key Branding Elements On-line Branding Best-in-Class Comparison American AirlinesContinental CVc = very low= low= moderate= high= very high CV

Assessment of Key Brand Attributes On-line Branding Best-in-ClassComparison American AirlinesContinental = very low= low= moderate= high= very high

Assessment of Key Branding Elements Online Branding Best-in-Class Comparison Monster.com Hotjobs.com

Assessment of Key Brand Attributes Online Branding Best-in-ClassComparison Monster.comHotjobs.com

Branding Examples  Coca Cola  Cartier  Jaguar  Beatles  Starwars  Tide  Barbie

Market Communications  Interaction with the brand  Other’s experience  Mass marketing approaches  “Shelfspace equals marketshare”  “Mindshare leads to marketshare”  Mentalspace is marketspace  Innovation in communications techniques for business  Power and impact of strong brands  Opportunity to reinforce online with offline and visa versa  Hybrid approaches to marketing communications

Categories of Market Communication  Offline communications (one-way)  Television  Advertising  Promotions  Sales calls  eCommerce communication types (two-way)  General on-line  Personalized online  Traditional mass media  Direct communications

Customer Decision Process and Market Communications  Objectives of off-line marketing communications  Facilitates moving the customer through the buying stage process (big-ticket item)  eCommerce – shifts away from the process above  New buying process >Awareness >Consideration >Preference >Purchase >Loyalty  Communications and branding are the media of which the web is made

Establishing the Customer Relationship  Permission marketing is a marketing strategy in which companies obtain permission from consumers before sending them information or promotional messages  Affiliate marketing is where one Web site agrees to pay another Web site a commission for new business opportunities it refers to the site

Establishing the Customer Relationship  Viral marketing is the process of getting customers to pass along a company’s marketing message to friends, family, and colleagues (examples??)  Leveraging brands refers to the process of using the power of an existing brand to acquire new customers for a new product or service

Customer Retention  One-to-one marketing means segmenting the market based on a precise and timely understanding of an individual’s needs, targeting specific marketing messages to these individuals, and then positioning the product vis-à-vis competitors to be truly unique

Evolution of Customer Buying Process Web Market Communication  television ads  general interest magazines  niche magazines l  point-of sale promotions  direct marketing  product experience  buyers’ clubs  television ads  general interest magazines Traditional Market Communication Source: Forrester Research, Monitor Analysis Consideration Preference Purchase Loyalty Awareness  buttons  banners  sponsorships  banners  interstitials  brochureware  daily specials  sweepstakes  first-time order incentives  alerts  newsletters eCommerce Buying Process

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

Banner Ads  Impressions – gross exposures or ad views  CPM’s – cost per thousand impressions $3-250  Leads – viewer takes action (info request)  Sales – commissions to host  Click-Throughs

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

Personalized Online Communications  Permission Marketing  Establishing a mutually beneficial and trusting relationship between a firm and its customers  Relevant to customer from general to specific  Personalized Recommendations  Past purchases  Sites previewed  Survey information  Personalized Advertisements  Dynamic, in real-time  Include past behavior, time of day, page, recency/frequency search keywords  Personalized eCommerce Stores -- Use knowledge of Internet technology and customers