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Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

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Page 1: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Michael G. Warner

1

Chartered Marketer

EMBA DipM FCIM FIDM

Chartered Marketer

EMBA DipM FCIM FIDM

Michael G.Warner MBA DipM FCIM FIDM

Page 2: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

CIM Post Graduate Diploma

Marketing Leadership & Planning

Michael G.Warner MBA DipM FCIM FIDM

2

Page 3: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Course Objectives

To deliver a coherent and deliverable

market oriented internal culture to encourage flexibility

which is SMART enough for your employer to understand and give you the go ahead.

To follow the CIM guidelines so as not to throw away marks

To maximise the LSM on-line resources=

SUCCESS3Michael G.Warner MBA DipM FCIM FIDM

Page 4: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Assessment tasks

CIM registration deadline 29th March 2013

Introduction to the assessment.

What do you have to do to pass?

Michael G.Warner MBA DipM FCIM FIDM 4

Page 5: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Session 2

Developing marketing strategies and value

proposition

5Michael G.Warner MBA DipM FCIM FIDM

Page 6: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Strategic Choice – Product Market strategies

6Michael G.Warner MBA DipM FCIM FIDM

Page 7: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Brand: A DefinitionACCORDING TO MARKETING THEORY:“…a name, term, symbol or design, or a combination of them, which is intended to signify the

goods of one seller or groups of sellers and to differentiate them from those of competitors”Kotler (1994), Marketing Management

RATHER DEFINE A BRAND IN RELATION TO THE CUSTOMER:…is the means by which the company establishes a relationship with the customer (because a

brand has an identity and a personality and a product not)…

…A sum of all available information about the company, product or service, gained from experience (functional and emotional), differentiating it from another. The appeal is both rational and emotional level; tangible and intangible…

…The space in consumers’ hearts and minds that belongs to you…

…The reason to choose you over the other guys… INSIGHT

7Michael G.Warner MBA DipM FCIM FIDM

Page 8: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

What is a Brand? Product vs Brand

A product is something that is made in a factory; A brand is something that is bought by a customer.

A product can be copied by a competitor; a brand is unique.

A product can be quickly outdated; a successful brand is timeless.

Stephen King (WPP Group, London)

8Michael G.Warner MBA DipM FCIM FIDM

Page 9: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Strategic Choice

9Michael G.Warner MBA DipM FCIM FIDM

Page 10: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

The Total Product Concept

10Michael G.Warner MBA DipM FCIM FIDM

Physical v Psychological/ emotional intelligence

Page 11: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

©Michael Warner & Snowpine Ltd

11

The brand blueprint

Inner Outerdirected directedvalues values

Core Propositionraison d’etre to the consumer

EssenceCore Valuesfundamental values

that define the brand

Functional Emotional elements elements

Supports

How thebrandmakes mefeel

What thebrand saysabout me

Brand PersonalityHow the brand speaks to me

Peripherals:values to be reduced

Absentees:desirable elements currentlylacking from the brand and needto be developed into it

Generics:Entry stakes to the category

Interbrand Newell and Sorrell

An approach to defining the brand and how to strengthen it

Page 12: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Boston Consulting Group (BCG) Growth-Share Matrix

12Michael G.Warner MBA DipM FCIM FIDM

Page 13: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

G E Business Screen

13Michael G.Warner MBA DipM FCIM FIDM

Page 14: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

What makes a Strong Brand? It must work as a product or service – no fancy advertising or clever logo will

compensate

Must appeal on both the rational and emotional level – products may all work well; price premium is justified by additional intangible, emotional benefits.

Must be integrated and coherent – tangible and intangible benefits must be consistent with each other to present a coherent and believable “brand personality” (TAG-Heuer)

What it offers must be wanted by the customer and mean something to him/her – what is relevant may change over time: e.g. “environmentally friendly” is a relevant benefit now for products from motor cars to holidays; 30 years ago – no premium paid for these products.

14Michael G.Warner MBA DipM FCIM FIDM

Page 15: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Michael Waner for Snowpineltd.com 15

What is customer-based brand equity

Customer-based brand equity is the differential effect of brand knowledge on consumer response to the marketing of a brand.

• market oriented internal culture to encourage flexibility

Aaker model

Page 16: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Brand Equity

16Michael G.Warner MBA DipM FCIM FIDM

Aaker model

Page 17: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

©Michael Warner & Snowpine Ltd17

Service quality gaps model

CUSTOMER

PROVIDER

Word-of-mouthcommunications Personal needs Past experience

Expected service

Perceived service

Servicedelivery

Service qualityspecifications

Management perceptionsof customer expectations

Externalcommunications to

customers

Gap 5

Gap 4

Gap 1

Gap 3

Gap 2

Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a; Asubonteng et al ., 1996; Wisniewski and Donnelly, 1996).

Page 18: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Customer Relationship Marketing (CRM)Customer Relationship Management CRM)

CRM strategies are important for all organisational aspects and industries and segments. However, they are a must in heterogeneous markets. In homogeneous markets the rules

can, perhaps, be relaxed to an extent.

Customer Acquisition

CR

Mgt.

Customer Retention

Customer Enhancement

Marketing Mix

Augmentation of product/service offer

Branding strategies

MIS MkIS DSS Other

Sustainable competitive advantages and increase in shareholder value

Knowledge Management

CR

Mark.

© Dr George Panagiotou 2009

18Michael G.Warner MBA DipM FCIM FIDM

Page 19: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Ethical stance - Four types of Firm on Ethical Issues

Ethically dependentFirms whose ethical standing is a key aspect of their product offeringExamples: Oxfam, The Body Shop, Innocent

Ethically positiveFirms whose ethical standing is important to their credibility but not itself a key attributeExamples: Honda, Sainsbury’s, ,Virgin,

Ethically NeutralFirms whose ethical standing is less significant though unethical behaviour would be damagingExamples: British Gas, British Airways

Ethically NegativeFirms perceived as being a business with negative ethical connotationsExamples: Shell, BAT, Banks

19Michael G.Warner MBA DipM FCIM FIDM

Page 20: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

International Marketing Strategies

20Michael G.Warner MBA DipM FCIM FIDM

Page 21: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

International investment opportunities based on the directional policy matrix

Source: Harrel, G.D. and R.D. Kiefer (1993), ‘Multinational market portfolio in global strategy development’, International Marketing Review 10 (1); Phillips, C., I. Duole, and R. Lowe, International Marketing Strategy, Routledge 1994, pp. 137–8.

21Michael G.Warner MBA DipM FCIM FIDM

Page 22: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Value Proposition • Value proposition refers to total benefits of using company’s

products and services. In other words, value proposition summarises why a customer should buy company’s products or services.

Generally there are three approaches/ strategies of developing a value proposition.

• Product leadership – value proposition created through best quality innovative products. Value focus on quality.

• Operational excellence – lowest cost achieved through operational excellence. Value focus on cost.

• Customer intimacy – total solution providers with greater focus on relationship building. Value focus on relationship/ service

22Michael G.Warner MBA DipM FCIM FIDM

Page 23: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Characteristics & design of the Value Proposition

Characteristics

Clear

Concise

Credible

Consistent over time

Core elements

Service

Price

Quality

Image

23Michael G.Warner MBA DipM FCIM FIDM

Page 24: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

24

Key Business Concepts: Ikea Example

Ikea is a low-cost retail service provider

Sells home furnishing items at retail directly to the public

Provides low-cost, easy-to-assemble items in a pleasant shopping environment

Businessmodel

Revenuemodel

Valueproposition

Page 25: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

25

Balanced ScorecardKaplan and Norton 1992

is a management system (not only a measurement system) that enables organisations to clarify their vision and strategy and translate them into action.

It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.

Page 26: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

26

The Balanced Scorecard (1992)

Kaplan and Norton

Page 27: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Michael G.Warner MBA DipM FCIM FIDM 27

Page 28: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Michael G.Warner MBA DipM FCIM FIDM 28

Page 29: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Agenda

Strategic choice

Environmental analysis

Industrial and consumer markets

Segmenting, targeting and positioning

Warfare Strategies

Total product concept and Branding

International marketing strategies

Balanced score card

29Michael G.Warner MBA DipM FCIM FIDM

Page 30: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Methods of growth Advantages of acquisitions / mergers

Alliance Advantages

Marketing advantages e.g. Market power

Shared investment risk

Production advantage economies of scale

Complementary resources

Overcome entry barriers Possible government condition

Resource and competencies Joint financial strength

Disadvantages of acquisitions / mergers

Alliance Disadvantages

Costly Difficult to select and agree with partner

Integration issues E.g. Cultural clashes Managing relationship

Conflicts of objectives Loss of competitive advantage through imitation

Potential for diseconomies of scale Limits integration/coordination of activities across countries

Michael G.Warner MBA DipM FCIM FIDM

Page 31: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Methods of growth Advantages of licensing Advantages of joint

ventures

Capital not tied to operations Synergies through Shared resources and competencies

Contractually agreed income Flexibility

Limit financial/economic risk Shared risk

Greenfield – state of art and government finance

Disadvantages of licensing Disadvantages of joint ventures

Difficult to select and agree with partner

Integration issues

Loss of competitive advantage through imitation

Imbalanced level of expertise and investment

Limits participation Greenfield – time consuming and unpredictable cost

Licensees become competitors Diminished control over Michael G.Warner MBA DipM FCIM

FIDM

Page 32: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Invest or hold

If the business position is strong of the company and the industry environment is favorable then the

company should try to retain in the market as there are still opportunity for the organisation to make

profits.

However the company should take different measures to increase its performance at this level. Following

could be considered:

Exploit new markets

Exploit new products

Exploit new applications

Exploitation of growth of sub markets.

Government stimulated growth.

32Michael G.Warner MBA DipM FCIM FIDM

Page 33: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Be a profitable survivor

This could be achieved by different measures. Majorly the company could encourage

competitors to exit from the market. Following alternatives could be identified;

Be Visible About Commitment to Survive

Raise the Costs of Competing

Introduce New Products & Cover New Segments

Reduce Competitor’s Exit Barriers

Create a Dominant Brand in Fragmented Declining Market

Purchase a Competitor’s Market Share or Production Capacity.

33Michael G.Warner MBA DipM FCIM FIDM

Page 34: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Milk or harvest

The main objective here is to generate cash flow by reducing investment and

operating expenses, even if that causes sales and market share to decrease.

Conditions Favoring a Milking Strategy Decline rate is pronounced, but not excessively steep.

Stable price structure is profitable for efficient firms.

Business position is weak, but customer loyalty will still produce sales and profit.

Business is not central to strategic direction.

A milking strategy can be successfully managed.

34Michael G.Warner MBA DipM FCIM FIDM

Page 35: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Exit or liquidate

This strategy is appropriate both the business position and the industry environment is not

favorable to the entity. The logic here is to exit or to liquidate the business and avoid loss

making as soon as possible, since there is no profitability with the current market condition.

Following areas are identified as features of these markets;

Rapid and Accelerating Decline Rate

Extreme Price Pressures

Business Position is Weak; Losing Money

No Longer Part of Strategic Direction

Exit Barriers Can be Overcome

35Michael G.Warner MBA DipM FCIM FIDM

Page 36: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

INTEGRATED COMPETITOR PROFILES AND GAP ANALYSIS Titan Swiss J apan Key Factors for Success (KFS)

India Europe UK

USA India Europe UK

USA India Europe UK

USA

Innovation

Top end

Timex

Design

Needs to adapt to preferences

Quality

Needs Communications

?

Cost Base

Produce in India and export abroad

Skill

Comp. Awareness

Brand Recognition

Needs improvement

Increa-sing

After sales serv.

? ? ? ? ?

Access to supply and SMS

Varied range

?

Management skill

?

Distribution

Increa-sing

Increa-sing

Facilities

? ? ?

Operational Efficiency

Market Knowledge

? ? ?

Marketing Comms.

Needs improvement

Increa-sing

Example of a Competitor Profile

A student example 36Michael G.Warner MBA DipM FCIM FIDM

Page 37: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

A student example37Michael G.Warner MBA DipM FCIM FIDM

Page 38: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Strategic Wear-out

Strategic and tactical wear-out is the problem that any organisation will face if it continues with its current strategies and tactics without considering the changes happening in the macro and micro environment.

Followings can be identified as main reasons for strategic wear-out Market changes – customer preferences and requirements, distribution

requirements etc Competitor innovations Internal factors – poor cost control, lack of consistent investment, ill advised

change of successful strategies

38Michael G.Warner MBA DipM FCIM FIDM

Page 39: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Industrial and Consumer markets

Variable Industrial Markets Consumer Markets

Volume of sales Low High

Value of sales High Low

Supplier bargaining power Shifting - depending upon number of suppliers and organisational size and

importance

Usually high

Buyer bargaining power Shifting - depending upon number of buyers and organisational size and

importance

Usually low

Service requirements High Low

Buying decision making DMU Individual

Availability of information Usually low Usually High

39Michael G.Warner MBA DipM FCIM FIDM

Page 40: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Low

High

Business Orientations

Product Orientation

Marketing Orientation

High

Industrial Markets

Not-for-Profit

Markets

Consumer Markets

•Capital equipment

•Business-to-business

•R&D labs

•Charities

•Schools

•Hospitals

•Gov. Agencies

•FMCG

•Service-offer

•Retailing

Second Hand

Markets

•Auctions

© Dr George Panagiotou 2009

40Michael G.Warner MBA DipM FCIM FIDM

Page 41: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Main organisational Market Approaches

Producer Whole Seller

Retailer Consumer

Producer Whole Seller

Retailer Consumer

Push-Selling Techniques

Product Orientation (emphasis on own products)

Marketing Orientation (emphasis on customer needs and wants)

Pull-Selling Techniques

Flow of sales

Flow of sales

Research and development and marketing communications

© Dr George Panagiotou 2009

41Michael G.Warner MBA DipM FCIM FIDM

Page 42: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

1. Identify the organisation’s position, strengths, weaknesses and capabilities relative to competition, given aims and objectives.

2. Identify desired segments in the industry and segmentation variables within.

3. Develop profiles for each segment

The Stages of the Segmentation, Targeting, Positioning (STP) Process

4. Evaluate the attractiveness of each potential segment(s).

5. Select segment(s) to enter

6. Identify the positioning concept within each target segment.

7. Select and develop the appropriate positioning concepts.

8. Develop a relevant marketing mix for each segment

Situational analysis

Market Segmentation

Market Targeting

Product Positioning

The 7 Ps-based Marketing Mix

42Michael G.Warner MBA DipM FCIM FIDM

Page 43: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Customer Related

•Geographic

•Continent; Country; Region; City; Rural; Urban; population Density

•Demographic

•Age; Gender; Family Size; Family Lifecycle (old/New); Income; Occupation; Education;

Race; Nationality; Social Class.

•Lifestyle (psychographic)

•Tastes; Preferences; Motivation; Inclinations; Status.

Situation Related

•Benefits Offered/Benefits Sought

•Need Satisfiers; Product Features; Low Price; Reliability; Safety; Convenience.

Bases for Segmentation

43Michael G.Warner MBA DipM FCIM FIDM

Page 44: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Macro Environmental Analysis Political environment Economic environment Socio-cultural environment Technological environment International environment Environmental and ecological environment

In addition to the above factors followings may also be considered. Business Life-Cycle Elasticity/Inelasticity of Demand and Supply Socio-Politico Frameworks Market Structures

44Michael G.Warner MBA DipM FCIM FIDM

Page 45: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Meso Environmental AnalysisIndustry Market Place

Competitor Profiles (PIMS/Other databases)

Segmentation, Targeting, Positioning (STP)

Benchmarking Customer profiles

Industry Life-Cycle (ILC) Branding/communications Models

General Electric (GE) Matrix Product Life-Cycle (PLC)

Shell Directional Policy Matrix Consulting Group (BCG) Growth Share Matrix

Ansoff Matrix

Forces/Dynamics of competition & KFS

Strategic Groups

Positioning/Perceptual/Cognitive Maps

All positive and negative observations/ findings should be included in the opportunities and threats sections of the overall SWOT Analysis/ Telescopic

Observations Framework.

© Dr George Panagiotou 200945Michael G.Warner MBA DipM FCIM FIDM

Page 46: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Micro Environmental Analysis

Organisation’s vision, mission and values Corporate strategy and Resource and competency audit Portfolio analysis Value chain and resource utilisation Innovation audit Cost efficiency Product life cycle ‐ Degree of customer and market orientation Comparative and best practice analysis Core competencies Organisational culture Financial performance Critical factors for success

46Michael G.Warner MBA DipM FCIM FIDM

Page 47: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Bases for Segmentation

Consumption or Use pattern

Rate of Use; Use with Other Products; Brand Familiarity.

Buying Situation

Kind of Shop or Distribution Channel; Kind of Shopping; Depth of Assortment; Type

of Product.

Questions to Ask:

Who is the customer?, What is their bargaining power?, What do they buy?,

Where do they buy from?, Why do they buy?, When do they buy?, From which

competitor can they buy from and why?

47Michael G.Warner MBA DipM FCIM FIDM

Page 48: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Process of creating favourable relative position:

1. Identification of target market2. Determination of target market's needs, wants,

preferences and desired benefits 3. Examination and assessment of competitors’

characteristics and positioning4. Comparison of product offerings with competitors5. Identification of unique position6. Development and implementation of a marketing

program7. Continuous Review and reassessment

48Michael G.Warner MBA DipM FCIM FIDM

Page 49: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Corporate positioning Market positioning

Product positioning Total Repositioning

Brand/Image Positioning Strategies

49Michael G.Warner MBA DipM FCIM FIDM

Page 50: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Portfolio Analysis

Portfolio

A collection of products/ SBUs owned by one entity in which each

product/ SBU can be separately identified for decision-making and

performance measurement.

Portfolio Analysis

Analyzing elements of a firm's product mix to determine the optimum

allocation of its resources.

Portfolio Planning

The process of managing the products/ SBUs, including choosing and

monitoring appropriate markets & industries and allocating funds

accordingly.

50Michael G.Warner MBA DipM FCIM FIDM

Page 51: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Shortcomings of BCG Matrix

Growth rate is only one aspect of industry attractiveness and high growth markets

are not always the most profitable.

Definition of the market is sometimes difficult.

It considers the product or business in relation to the largest player only. It ignores

the impact of small competitors whose market share is rising fast.

The use of four categories is too simplistic

It ignores interdependence and synergy.

Market share is only one aspect of overall competitive position.

51Michael G.Warner MBA DipM FCIM FIDM

Page 52: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Determinants of Strengths and Attractiveness

Industry Attractiveness

Market size

Market growth

Demand variability

Price elasticity

Industry rivalry

Global opportunities

Industry profitability

Macro-environmental factors

• Business Strengths

• Market share

• Growth in market share

• Brand equity

• Distribution

• Production capacity

• Management skills

• Perceived differentiation

• Profit margins relative to

competitors

52Michael G.Warner MBA DipM FCIM FIDM

Page 53: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Disadvantages of Portfolio Planning

Portfolio models do not reflect the uncertainties of decision making

Most of the models do not take risk in to account

Most of the models ignore the importance of niche markets

Most of the models ignore the opportunities for creative segmentation

Markets are assumed as given rather than created and nurtured

Complex assessments and calculations

53Michael G.Warner MBA DipM FCIM FIDM

Page 54: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Shell Directional Policy Matrix

54Michael G.Warner MBA DipM FCIM FIDM

Page 55: Michael G. Warner 1 Chartered Marketer EMBA DipM FCIM FIDM Chartered Marketer EMBA DipM FCIM FIDM Michael G.Warner MBA DipM FCIM FIDM

Elements of a Brand

APPROACH: Separate the physical attributes from emotional benefits. What lies at the core of the brand’s identity?

Arnold, D (1992), The Handbook of Brand Management)55Michael G.Warner MBA DipM FCIM FIDM

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Benefits of brand equity

Brand awareness•Influences attitude and perceptions•Anchor for associations•Signal of substance

Perceived quality•Price premium•Differentiation /Positioning•Reasons to buy•Brand extension potential •Channel member interest

Strong brand associations •Differentiation /Positioning•High price premium•Memory retrieval potential•Reasons to buy •Brand extension potential

High brand loyalty•Reduced marketing costs•Trade leverage•Attracting new customers •Time to respond to competitive threats

56Michael G.Warner MBA DipM FCIM FIDM

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Measuring Brand Equity

Interbrand – tracks leading brands on a number of variables:

Sales Market growth Internationalisation Well protected in law, etc.

Good practice to measure your own and the competition brands – part of broader evaluation of strategic health of company.

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Brand Dimensions (according to Interbrand)

BRAND WEIGHT (dominance)

BRAND LENGTH (stretch)

BRAND BREADTH (franchise)

BRAND DEPTH (commitment)

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Brand Weight

Dominance in category or market

Dominant market share (market leaders)

Standard setter

McDonald’s, Coca-Cola, Kodak, Gillette

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Brand Length

Stretch and strechability into new categories and markets

Wide “area of competence”

Disney, Johnson & Johnson, Harrods, Virgin, Sony

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Brand Breadth

Breadth of franchise in terms of age spread, consumer types and international

appeal.

A “broad brand” can cross social, cultural and national boundaries.

Coca-Cola, MaDonald’s, Kodak, Somy, Visa, Microsoft

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Brand Depth

Degree of commitment the brand has achieved among its customer base and the

proximity, intimacy and loyalty they feel to the brand.

Intimate relationship with customers, usually on the basis of shared “central” or

“higher” values.

Apple Computer, Disney, Body Shop, Harley-Davidson, Camel

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Brand Identity

Must be relevant to customer needs and wants Must be clear and easy to understand Is at the heart of the relationship between customer and company Heart of any brand strategy Has a personality of its own Has human qualities which appeal to customers See brand as a person and ask:

If this brand were a person, what sort of car would it drive? What is its favourite drink? What would it say to you?

If answer is not obvious, the brand personality and also brand identity is not clear

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Brand Extension

A way of strengthening a brand’s positioning Recent example of classic line extension: McGraw-Hill --publisher of textbooks and

educational materials into children’s educational software. They started with the brand’s long-standing reputation for educational excellence. Virgin

Today’s definition of brand extension: Globalisation Demographic shifts – new classes of consumers Technology – new channels of marketing (Internet, Satellite TV) Industry consolidations – fewer brand choices; likely to become loyal to

one Increasing emphasis on relationships – customers want brands to be

accountable for their products and promises.

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Brand Chartering

Recent development (concept) Tough internal audit to charter the underlying strength of their brands on a regular

basis Brand Chartering – probes the organisation (strategic strengths) behind the brand Brand Equity – strength of the brand in the marketplace How to do brand chartering:

Is there a common interpretation of the brand’s essential meaning throughout the organisation?

What core competencies does the brand represent? Would the people be proud to be called manifestations of the brand?

Macrae, C (1996), The Brand Chartering Handbook

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Global Brands

Global brands can reap benefits of economies of scale in production, marketing and distribution. They must stay responsive of customer wants – may vary from one country or region to another. The issue is how to balance global economies of scale with local responsiveness. Country specific?

Other factors (youth, luxury?) – not country specific

Different type of channels?

Competition local or international?

Communication will have to be different even for global brands (Coke has more than 20 different advertisement versions)

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Positioning the Brand (Definition)

DEFINITION OF BRAND POSITIONING:

A company’s attempts to influence the customer’s (target market’s) perception of its brand by presenting (communicating) it in a certain way through:

Advertising Point of sale material Direct mail PR Etc

NB! The brand is actually positioned by the consumer – all the company can do is send “positioning prompts” to influence.

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Positioning: How to Build a Brand that Sells

Focus Choose one distinctive thing that will give you the edge

Halo effect Invest in one positive image that will impact on the whole portfolio

Start with current position Turn current customer perceptions into benefits (if gap between

perception and reality is too big, they won’t make the leap) Be different

Positioning is about clear, positive difference Be distinctive

Message need to be unique, hard-hitting, sensory, creative

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Developing a Brand Positioning

3 ESSENTIAL COMPONENTS FOR DEVELOPING A CLEAR BRAND DEFINITION:

Clear vision – why are you in business?; where are you going? (3M: “to solve unsolved problems innovatively”)

Concise meaning – what your brand represents to the marketplace Understand parameters of relevance – what your brand is and

what it is not (limits to which you can extend your brand beyond its core meaning without compromising your credibility)

Examples – Disney (clear vision – “to make people happy”); Microsoft (vision – “a computer on every desk in every home”)

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PositioningOrganisational Alignment

ORGANISATIONAL ALIGNMENT PROGRAMME

Use “tagline” or theme – can make or break brand building Identify a few words that communicate the full weight and force of brand message All activities get their energy from this positioning device. Tagline must:

Provide clear and recognisable differentiation Respond to customer’s most pressing needs in a believable

manner Provide guidance for management decision-making, hiring,

training and resource allocation

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Positioning the BrandKey Factors

Successful brands are not created overnight – result of careful positioning,

supported by long term strategies and consistent investment

Frequent change in brand positioning – customer becomes confused

Considerable time and effort must be spent in understanding how the customer

perceives the brand, before thought can be given to changing that perception

Changes in customer perception – only achieved in small steps over long periods of

time

71Michael G.Warner MBA DipM FCIM FIDM

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Communicating the Brand (cont)

Recently, experts have stressed the inadequacy of relying on mass media to communicate a brand:

Cost of mass media is increasing Poorly targeted for today’s increasingly fragmented markets

Use the “new media” -- direct marketing, database marketing and building relationships (vouchers, free samples, advice booklets – build relationship with customer). Rather rely on these to communicate brands successfully

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Brand Extension (cont)

4 WAYS TO EXTEND: Licensing

Pierre Cardin – to a variety of marginal products – brand weakened Co-branding

Disney and McDonald’s – there has to be a fit Sponsorships

E.g. Olympic Games – linking up with big events Brand agents

Individuals that are not only celebrities, but stir emotions that support the brand in a meaningful way (e.g. Tiger Woods & Nike)

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Brand Identity

DEFINITION OF BRAND IDENTITY

Brand identity is how the company wants the brand to be perceived.

Aaker (1996), Building Strong Brands

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Brand Loyalty

Customers become loyal if brand identity is communicated effectively and

positioned positively in their minds

However, this does not mean they will never buy any other brand

Customers tend to use “repertoires” of brands rather than single brands

The specific brand they buy on any one occasion will depend on other factors such

as availability, special price offers, recent advertising campaigns, point of sale

factors.

Highly educated and affluent groups are found to be less loyal! (not willing to pay a

price premium for branded products)

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Positioning & Communication

Positioning is the development and communication of a differential advantage that

makes the organisation’s product or service superior and distinctive in the

perception of target customers.

Positioning should be meaningful to the target market segment, believable and

unique (biggest, most reliable, etc). Positioning involves giving the target market

segment the reason for buying your product.

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Communicating the Brand (cont)

INTERACTIVE BRAND COMMUNICATION

New phenomenon brought on by: Reduced effectiveness of mass media advertising Emergence of the new media Emphasis on relationship and database marketing

Other Free telephone numbers Care lines Eliciting feedback (not just complaints) from customers Loyalty cards and clubs (e.g. Voyager)

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Brand Management in the New Economy

Brand used to guide all activities surrounding it Coordinate these activities Manage relationships with external partners and agencies (research companies,

advertising agencies, and channels) Whole organisation must understand brand Integrated approach to brand management – key issues:

Cross functional working Company culture Internal communication CEOs important role to personify the brand (e.g. Richard Branson, Bill

Gates, Raymond Ackerman) The corporate brand is of increasing importance (e.g. Virgin) – the corporate brand

sells the product! New corporate identities created if parent company has inappropriate or unclear

associations (Flora Food Co, Unilever)

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New Keys to Brand Building

Use of marketing communications (mass-market advertising-agency model) as primary driver of corporate brand management is fast becoming obsolete.

Replaced by an array of communications channels that can target increasingly narrow customer segments.

All experiences affect brand image. Customer experience is key to brand building (e.g. Harley Davidson – owner groups, rallies)

Align communication of brand to all 4 main audiences – customers, investors, employees and regulators (media, public interest organisations). Align -- key to building brand equity.

Communication messages need to line up with experiences of customers. Ensure that entire business deliver the promise implicit in the brand (favourable

advertising versus negative service experience – the latter will be remembered)

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Positioning & Communication Process

3 steps:

Choose brand identity Begin positioning Communicate (marketing mix):

Product / service (together with packaging, logo, design) Price (including discounts, etc) Place (where and how it is distributed) Promotion (advertising above and below the line, PR, sponsorship, etc)

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81

Traditional Marketing versus CRM

Traditional Marketing CRM

Aim is to expand customer base and to increase market share by mass marketing

Aim is to establish a profitable, long-term, one-to-one relationship with customers

Product oriented view Customer oriented view

Mass marketing / mass production

Mass customization, one-to-one marketing

Standardization of customer needs

Close customer-supplier relationship

Transactional approach/ relationship

Relational approach

Michael G.Warner MBA DipM FCIM FIDM

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Porter’s Diamond

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Assessing country attractiveness

possible criteria

Attractiveness

Market size

Market growth

Absence of barriers

Profit potential

Competitive structure

Entry opportunities

Compatibility

Language

Currency

Legal systems

Technical standards

Culture

Consumption patterns

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12C framework for analysing international markets

Country

Concentration

Culture/consumer behaviour

Choices

Consumption

Contractual obligations

Commitment

Channels

Communications

Capacity to pay

Currency

Caveats

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Direct export.

Indirect export

Licensing

Franchising

Contracting

Manufacturing abroad

Partnership/Alliance

Joint Venture

Organically Market Entry Methods

Slow

Time

Quick

Control Is

sues

Market Entry Methods

Less

More

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Inter-Country Differences

PESTILE differences

Barriers to entry

Market entry methods

Cross-Country Similarities

Power-distanceCollectivism vs. individualismFemininity vs. masculinityUncertainty avoidanceLong- vs. short-term orientation

International Strategies - Hofstede’s Cultural Similarities

Cultural Similarities: For example, Anglo-Saxons; Hispanic; Nordic; Germanic; Arabic; Other. 86Michael G.Warner MBA DipM FCIM FIDM

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Hoftede’s Model of National Cultures

Power distance.

Uncertainty avoidance.

Individualism –collectivism.

Masculinity.

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Hofstede’s comparative analysis

Distinguished four dimensions:

Power distance (high or low)

High – accept inequality of wealth and power: e.g. France, Brazil

Low – do not accept inequality – e.g. Sweden, UK

Uncertainty avoidance

High – tolerate ambiguity - e.g. US, Australia

Low – uncomfortable with uncertainty, prefer clarity – e.g. Latin

America, southern Europe

88Michael G.Warner MBA DipM FCIM FIDM

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The Strategy Clock

89Michael G.Warner MBA DipM FCIM FIDM

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Examples of measures for the financial perspective

Return on capital employed (ROCE)

Operating margins

Economic value added (EVA)

Cash flow

Sales growth

90Michael G.Warner MBA DipM FCIM FIDM

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Examples of measures for the customer perspective

Market share

Brand image and awareness

Customer satisfaction

Customer retention

Customer acquisition

Ranking by key accounts

91Michael G.Warner MBA DipM FCIM FIDM

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Examples of measures for the internal perspective

Percentage of sales from new products

Manufacturing costs

Manufacturing cycle time

Inventory management

Quality indicators

Technological capabilities

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Examples of measures for the innovation & learning perspective

Product development

Purchasing

Manufacturing

Technology

Marketing and sales

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Strategic Choice – Competitive strategies

Differentiation A type of competitive strategy with which the organisation seeks to distinguish its products or services from competitors.

Cost Leadership A types of competitive strategy with which the organisation aggressively seeks efficient facilities, cuts costs , employs tight cost controls to be more efficient than competitors.

Focus Type of competitive strategy that emphasizes concentration on a specific regional market or buyer group.

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Examples of Companies along the Dimensions of the Generic Strategies in

Different Industries

95

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Michael G.Warner MBA DipM FCIM FIDM 96

Assessing the value proposition - Strategy Clock MUST DO

Source: Bowman & Faulkner (1995)

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Strategic Choice – Competitive strategies

97Michael G.Warner MBA DipM FCIM FIDM

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Strategic Choice – Institutional Strategies

There are number of different methodologies available for a company expand its

operations. management should identify the most appropriate, suitable as well as

feasible option when it comes to selection of the expansion strategy. Each expansion

strategy has its own merits as well as demerits and also constraints of which some are

company specific and some are external.

Growth Strategies

Organic growth Inorganic growth

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Hostile and declining markets

Characteristics of hostile and declining markets

1. Fall in over all demand level

2. Changes in the technology causing reduction in demand for a particular good or a

service

3. Change in customer needs, wants and taste

4. Changes or shifts the in government policy

5. Reduction in average margin earned by the firms.

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Strategic alternatives for declining markets

Revitalising the market

Be the profitable survivor

Milk or harvest

Exit or liquidate

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Strategic alternatives for declining markets

Invest or Hold Milk or Exit

Milk or Exit Exit

STRONG WEAK

FAVOURABLE

UNFAVOURABLE

Business position in the key segment

Industry Environment

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Environmental analysis

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Selecting Markets

Total marketing approach Designs a single marketing mix and directs it towards the entire market Assume that the needs of the target market for a specific kind of product or service are very

similar

Market segmentation approach Appropriate for heterogeneous markets Markets are sub-divided based on similarities

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Targeting Strategies

Undifferentiated marketing one marketing mix strategy that is appropriate for all

members of the total market.

Differentiated marketing The targeting of two or more market segments, with

separate and distinct market offerings, which have been designed to closely meet

the needs of those particular segments

Concentrated marketing Concentrating the firm’s market offering solely on the

needs of one defined target market..

Customised marketing specific individuals

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Warfare Strategies

Marketing Warfare is a term used to describe some of the techniques and tactics

marketers use.

There are two types of warfare strategies;

Defensive Strategies – These are followed by market leaders to defend their

market share. There are six defensive strategies.

Offensive strategies – Offensive strategies and followed by market challengers

and there are five Offensive strategies.

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Offensive Strategies

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Defensive Strategies

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Brand Equity Defined

Brand Equity can be defined as consisting of 5 asset categories:

Brand awareness Brand loyalty Perceived quality Brand associations in addition to perceived quality Other proprietary brand assets (patents, trademarks, etc)

Aaker, D (1996), Building Strong Brands

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Hofstede (continued)

Individual/collectivism

Individualist societies stress individual responsibility and success -

e.g. US, UK

Collectivist societies stress loyalty to group in return for support – e.g.

in South America, Asia

Masculinity/femininity

M. societies show assertive behaviour – e.g. Japan, Italy, Arab

countries

F. societies show modest behaviour, interest in quality of life – e.g.

Sweden, Norway, Denmark

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Brands are under ThreatSOURCES OF THREATS ON BRANDS: Educated consumers

Became marketing literate; brands had to offer real added value; trend: loyal customers became loyal to group of brands rather than to a single brand.

Powerful retailers Strong retailers dictate terms to manufacturers (e.g. Pick ‘n

Pay); retailer builds own brand (Woolworths) – customer loyal to retailer rather than product; only 1 label sold (power of the retail brand).

Both of the above leading to pressure on prices No added value – consumer will not pay price premium; trend –

demand both low prices AND added value

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Brands are under Threat (cont)

The growth of own label If the retailer represents some strong brand values itself, the way is

clear for own label products (Woolworths; Pick ‘n Pay) – e.g. own Colas

Brand extension instead of innovation Brands which in the past were built through real technical innovation

can no longer keep pace, and may choose instead to extend an existing brand into new areas or variants. Can enhance brand, but there is danger of brand dilution or of confusing the customer (e.g. Pierre Cardin).

New competition from outside the sector Existing strong brands looking to extend their franchise into other

areas also pose a threat (e.g. Virgin). NB! New competitors like this are hard to fight because they are playing a different game.

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Value Proposition - Examples

Intel: Intel insideIBM: Global solutions for a small planetLexus: Passionate pursuit of perfectionFedEx: When it absolutely, positively has to get there overnightVisa: It is everywhere you want to beMotorola University: Right knowledge, right nowNordstrom: Shopping humanized

112Michael G.Warner MBA DipM FCIM

FIDM