Ch# 5

Designing Marketing Programs to

Build Brand Equity
New Perspectives on
Marketing
• Fast technological progress
• More power to customers
• Breaking up of traditional media
• Increase in interactive and mobile marketing
choices
• Changes in distribution channels and removal of
intermediaries
• More competition and merging of industries
• Global expansion and rise of emerging markets
• Increased focus on environmental, community,
and social issues
• Serious economic downturn
 Clif Bar
• Foundation and Vision:
• Founded in 1990 by Gary Erickson to create a better-tasting energy bar..
• Gained popularity through word-of-mouth and PR, rather than extensive advertising.
• Expanded product line to include numerous flavors and varieties catering to different needs
such as energy, healthy snacking, and sports nutrition.
• Social and Environmental Responsibility:
• Promotes a socially and environmentally responsible corporate message.
• Actively involved in the local community.
• Employees allowed to volunteer during company time.
• Utilizes extensive organic ingredients and biodiesel-powered vehicles.
• Supports the construction of wind farms through carbon offsets.
• Nontraditional Marketing Approach:
• Focuses on athletic sponsorships and public events.
• Launched the "Meet the Moment™" campaign in 2011 to broaden appeal.
• Integrated Marketing Campaign:
• Featured a fully interactive website and mobile applications.
• Recognition and Success:
• Named the number one breakaway brand by Forbes magazine and Landor Associates from 2006 to 2009.
Integrating Marketing
• Customer-Based Brand Equity Model:
• This is a way of looking at how customers see and feel about a
brand.
• Creating Knowledge and Building Brand Equity:
• Marketers need to make sure people know about their brand.
• Customer Contacts and Brand Relationship:
• These interactions can be anything from seeing an ad, talking to
friends about the brand, or even returning a product.
• All these bits of interaction shape how customers see the brand
and how they feel about it.
• Building Brand Equity in a Competitive Marketplace:
• Due to high competition marketers are trying new and different
ways to make their brand memorable and connect with
customers.
Personalizing Marketing
1. Experiential Marketing
• Definition:
• Focuses on creating unique and engaging experiences for
consumers, going beyond showcasing product features.
• The Experience Economy:
• Pine and Gilmore introduced the idea, suggesting that
businesses must provide memorable events for customers to
thrive in the modern economy.
• Classified saleable experiences into four types: entertainment,
education, aesthetic, and escapist.
• Types of Marketing Experiences:
• Identified by Bernd Schmitt:
• Sense Marketing: Appeals to consumers' senses.
• Feel Marketing: Targets consumers' emotions.
• Think Marketing: Engages consumers intellectually.
• Act Marketing: Influences consumers' behaviors.
• Relate Marketing: Creates social connections and
community involvement.
2. Relationship Marketing:
• Definition:
Marketing strategies that go beyond the product or service to build stronger connections with consumers and
enhance brand resonance.
• Purpose:
Aimed at leveraging current customers to achieve long-term brand success.
• Approach:
Focuses on providing a personalized and holistic brand experience to foster stronger consumer relationships.
• Expansion of Marketing Programs:
Relationship marketing broadens both the depth and breadth of brand-building activities.

Brand Experience Dimensions:

1. Sensory:
Involves how the brand impacts the consumer's senses, making it visually or otherwise appealing.
2. Behavioral:
Relates to the actions and behaviors consumers engage in when interacting with the brand.
3. Intellectual:
Concerns the level of thinking and problem-solving stimulated by the brand, enhancing curiosity and
engagement.
The Science of branding
Making sense out of brand scents

• Scent in Marketing:
• Distinctive Smell in Cars:
• Rolls-Royce addressed complaints about new cars lacking the appeal of older models by recreating the aroma of a 1965 Rolls and
incorporating it into new models.
• Use in Casinos and Retail:
• Las Vegas casinos use scents to keep gamblers engaged, and now more companies are exploring scent's role in enhancing the shopping
experience to differentiate their brand.
• Appeal in Retail:
• Retailers, including Victoria’s Secret and Samsung Experience stores, use scents to attract customers and prolong their stay, though
effectiveness varies.
• Impact on Brand Perception:
• Scents consistent with a product can influence brand evaluation; for example, Westin Hotels' White Tea fragrance creates a relaxing
ambiance.
• Sensory Marketing Advantage:
• Some brands, like Crayola Crayons, unintentionally acquire a recognizable scent, enhancing brand recognition and value.
• Product Line Expansion:
• Companies like Procter & Gamble have built successful brands, like Febreze air freshener, by expanding their product lines to include
various scented solutions for different needs and preferences.
Benefits of Relationship Marketing
• Acquiring new customers is five times more • 3 Concepts
expensive than satisfying and retaining
current ones. • Mass Customization
• On average, companies lose 10 percent of • One-to-One Marketing
their customers annually. • Permission Marketing
• A 5 percent decrease in customer defection
rate can lead to profit increases ranging from
25 to 85 percent, depending on the industry.
• The customer profit rate typically rises
throughout the retained customer's lifespan.
 Tesco
• Tesco Clubcard: Tesco's loyalty program, launched in 1995,
celebrated its fifteenth anniversary in 2010, boasting as one of the
world's most successful retail loyalty schemes.
• Unique DNA Profile: Each of the 10 million members has a unique
"DNA profile" based on their purchase history, with products
classified on up to 40 dimensions to categorize customers.
• Benefits: Members provide purchase and demographic information
in exchange for various benefits, including discounts and offers
across a wide range of products and services.
• Data Utilization: Tesco tracks customer purchases to uncover price
trends, offer targeted promotions, and enhance marketing efficiency,
resulting in estimated cumulative savings of over £350 million.
• Tailored Solutions: Customer data informs product range,
merchandising strategies, and store locations, enabling Tesco to
develop tailored solutions to meet customer needs.
• Innovations: Over the years, Tesco has introduced innovations like
key fobs and redesigned cards to enhance the Clubcard program's
effectiveness.
Introduction to Product Strategy

• - Product strategy plays a crucial role in

building brand equity by shaping perceived
quality, enhancing customer loyalty through
aftermarketing efforts and fostering
engagement with loyalty programs.
• - Perceived quality influences customer
satisfaction and brand loyalty, impacting how
consumers perceive a brand's offerings and
differentiate them in the market.
• - Aftermarketing initiatives, such as customer
service and post-purchase interactions,
contribute significantly to customer
satisfaction, retention and long-term brand
allegiance.
Perceived Quality in
Product Strategy
• - Perceived quality is the customer's subjective
assessment of a product's overall excellence and
superiority in relation to alternatives, influencing
purchase decisions and brand loyalty.
• - Intuit and Corel have elevated perceived quality
by creating user manuals with user-friendly
design, clear instructions, and interactive features,
enhancing user experience and brand perception.
• - The impact of perceived quality on brand equity
includes increased customer loyalty, positive
brand associations, higher pricing power, and a
competitive edge in the market.
Aftermarketing
Strategies
• - Aftermarketing involves strategies
implemented post-purchase to enhance
customer experience, such as loyalty
programs and customer service.
• - Customer service plays a vital role in
aftermarketing by resolving issues
promptly, building trust, and fostering
customer loyalty.
• - Examples like American Airlines'
AAdvantage and CVS's ExtraCare show
how aftermarketing strengthens brand
loyalty and increases customer
satisfaction.
Loyalty Programs for Customer
Retention

• - Loyalty programs like AAdvantage and ExtraCare

increase repeat purchases by rewarding customers
for their loyalty, fostering emotional connections
with the brand.
• - Successful loyalty programs, such as American
Airlines' AAdvantage and CVS's ExtraCare,
significantly boost customer retention rates and
enhance brand loyalty.
• - Loyalty programs contribute to brand equity by
creating differentiation, driving customer
engagement, and increasing the lifetime value of
consumers.
Building Brand Equity through Perceived
Quality

• - Perceived quality plays a pivotal role in

building brand equity, influencing customer
perceptions and loyalty through the lens of
quality, reliability, and superiority.
• - Apple's emphasis on premium materials and
sleek design exemplifies how perceived quality
drives brand equity, creating a loyal customer
base willing to pay premium prices.
• - The long-term impact of perceived quality on
brand reputation is evident in luxury brands
like Rolex, where consistent quality has
established a prestigious and timeless brand
image.
Measuring Customer
Satisfaction and Loyalty
• - Utilize surveys, feedback forms, and Net Promoter
Score (NPS) to gauge customer satisfaction and loyalty
levels, providing quantitative and qualitative insights for
improvements.
• - Key Performance Indicators (KPIs) include customer
retention rates, repeat purchase behavior, and customer
lifetime value to evaluate the success of product strategy
elements.
• - Assess the impact of perceived quality, aftermarketing
efforts, and loyalty programs by tracking brand advocacy,
customer referrals, and sentiment analysis to measure
overall brand performance.
Understanding Pricing
Strategy
• - Consumer price perceptions greatly influence
brand equity by shaping how customers value a
product's quality and status.
• - Different pricing strategies, such as premium
pricing or value pricing, can impact how a
brand is perceived in the market.
• - Setting prices strategically to build brand
equity involves aligning pricing with the brand's
positioning and value proposition for long-term
success.
Consumer Price
Perceptions
• - Consumers perceive prices based on value,
quality, and comparison to competitors,
influencing their willingness to pay for
products.
• - In the ice cream market, price tiers create
different perceptions: premium brands like
Häagen-Dazs convey luxury, while budget
options signal affordability.
• - Psychological factors, such as reference prices
and perception of fairness, can significantly
impact how consumers interpret and react to
pricing strategies.
Marlboro's Price
Drop Strategy

• - Marlboro's price drop strategy aimed to

increase market share by undercutting
competitors on price, potentially leading to a
higher volume of sales.
• - Price adjustments in competitive markets can
impact consumer perception of a brand's value
and quality, influencing buying decisions and
long-term brand loyalty.
• - The impact of price changes on brand equity
should be carefully evaluated to ensure they
align with brand positioning and do not erode
customer trust and perceived value.
Setting Prices to Build Brand Equity
• - Pricing strategies can enhance brand equity by signaling quality,
targeting specific segments, and creating a premium image that
resonates with consumers.
• - Improper pricing can weaken brand positioning, leading to consumer
skepticism, brand dilution, or being perceived as low-value and
compromising brand equity.
• - Visuals can illustrate how pricing affects brand perception,
showcasing the relationship between price points, perceived value,
and brand image in consumers' minds.
Price-Quality
Relationship
• - Premium pricing reinforces top-tier brand
positioning by signaling exclusivity, luxury,
and superior quality to consumers.
• - Value pricing attracts price-sensitive
consumers without compromising brand
equity, balancing affordability with
perceived quality.
• - Pricing strategies play a crucial role in
shaping consumer perceptions, brand
positioning, and overall market
competitiveness, influencing long-term
brand success.
Psychological Pricing
Tactics
• - Odd pricing, such as ending prices in 9
or 99, creates the perception of a lower
cost, increasing purchase likelihood
through pricing illusion.
• - Price anchoring sets a reference point
for consumers by introducing a high
initial price, making subsequent prices
seem more reasonable and enticing.
• - Price bundling combines multiple
products or services into a single
package, offering perceived value by
creating synergies and reducing the
perceived cost per item.
Competitive Pricing Strategies
• - Skimming pricing involves setting a high initial price to target early
adopters and recoup development costs quickly, establishing a
premium brand image.
• - Penetration pricing aims to attract a larger customer base by offering
low prices, fostering rapid market share growth but potentially
impacting brand perception.
• - Dynamic pricing adapts to real-time market demand, optimizing
revenue and consumer surplus, tailored promotions, ideal for
industries with fast-changing market conditions.
• Channel Strategy
Title: Crafting a Winning Channel Strategy
Definition: Channel strategy is the blueprint for product distribution,
linking brands with consumers. - Importance: A well-defined channel
strategy aligns distribution methods with business goals, ensuring
seamless market penetration.- Considerations: Analyze target markets,
product characteristics, and competitive landscape to tailor a strategy
that optimizes reach and customer engagement.
• Channel Design
Title: Structuring Success: Channel Design
Essentials- Definition: Channel design is
the intentional structuring of distribution
channels for maximum efficiency.-
Objectives: Enhance accessibility,
minimize costs, and elevate customer
satisfaction through thoughtful channel
design.- Key Elements: Evaluate the most
suitable channel types, whether direct,
indirect, or hybrid, to ensure effective
market coverage.
• Indirect and Direct Channels
Title: Navigating Indirect and Direct
Channels- Indirect Channels: Explore
partnerships with wholesalers, retailers,
or agents for extended reach and
logistical support. Manage relationships
carefully to maintain brand consistency.-
Direct Channels: Establish a direct
connection with consumers through
company-owned stores, e-commerce,
or direct sales teams. Balance control
with effective management for a
seamless brand experience.
The End.