Post on 16-Aug-2015
What are Brands Good For ?
MIT Sloan Management Review
Harvard Business School Case
What is a
Brand ? Harvard Business School Case
A brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts so that it can be easily communicated and usually marketed.
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Brands
Indispensable part of modern business.
Aggregating consumers -- reaching large number of people with a promise to deliver a clearly stated benefit that sets it apart from competitors.
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Key Players
Consumers Brand Managers/Firms
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How Does
Brands Help
People?
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Clearly state benefits of using the product,
Reduce people’s perceived risk,
Makes it easier for the people to make a
purchase decision.
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Role of
Brands in
Organizations
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Role of Brands (1/4)
Advertising and promotions of brands
drive traffic and sales volume.
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Prime platform for building
relationships with the consumers.
Role of Brands (2/4)
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Role of Brands (3/4)
Central to firm’s responses to short-term competitive moves.
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Source of MARKET POWER and
HIGHER RETURNS.
Role of Brands (4/4)
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Objectives
Of This Case
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OBJECTIVES
To learn about role of the brands in the consumer disaggregation marketing.
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Situation
Analysis Harvard Business School Case
Brands lead to aggregation of consumers by influencing the mass
With the rise of Information revolution 2 way communication has been better than 1 way communication
Consumer disaggregation is more efficient and profitable than traditional source of Brand Power, Aggregation
Then, What are Brands Good For? Firms have to highlight the role of brand in disaggregation Marketing.
Retailers argue that in the eyes of consumer, they have greater credibility in assembling an assortment of products and brands that make sense for the consumer and is not perceived to be driven by an interest in selling one brand over another
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Aggregation or Disaggregation
Marketing ? Harvard Business School Case
The Information Revolution is making consumer disaggregation vastly more efficient and profitable than aggregation (traditional source of brand power)
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AGGREGATION
Involves treating all consumers as if
they are the same.
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Create a single type of product.
Use mass-market advertising to
deliver a single sales message to the
entire market.
DISAGGREGATION
Segmenting the market into distinct groups.,
Designing different versions of the product/service, customizing each to suit the needs of a particular segment.,
The company will be able to market each product to a group that is likely to buy it. Harvard Business School Case
Question to be addressed..
What are Brands
good for in an
era of
disaggregation? Harvard Business School Case
The answer can be found by examining three core areas of Brand Management:
Consumer Relationship
Channel Relationship
Organization of Brand management
1. Consumer Relationship (1/3)
Disaggregation offers companies the possibility of establishing relationships in which each interaction b/w consumer and firm builds on history of past interactions.
Firm responds to the needs of the consumers
from one interaction to the next.
Consumer pulls information from the company
according to their needs.
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1. CONSUMER RELATIONSHIP (2/3)
Companies that employ disaggregate marketing.
Quick to respond to consumer needs.
Better able to tailor their offerings.
Quick to respond to consumer needs.
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1. CONSUMER RELATIONSHIP (3/3)
Communication costs are
dramatically reduced
More precise and profitable pricing.
Consumer satisfaction
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Example
Kraft Foods Inc.
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K af Food …
Distributing free magazines quarterly to the registered consumers with personalized to the individual consumer ( name of the reader on the inside cover page)
Consumers appreciate the personalized information
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Impact
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Impact of the program(1/2)
The locus of the consumer relationship shifts away from the
product brands toward a trusted and
credible umbrella brand
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Impact of the program (2/2)
Tactical activities such as product-trial coupons and selective
promotions are implemented with the
targeted consumers rather than
at the brand level.
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2. The Channel Relationship (1/3)
Retailers use well known brands to attract consumers to their stores.
In eyes of consumers, the retailer has greater credibility in assembling an assortment of products that makes sense for the consumer. Not perceived to be driven by an interest in selling one brand over another.
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Risk for manufacturers
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Consumer’s relationship will be more with the
retailers’ umbrella brand instead of the branded
goods manufacturers.
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How to Conquer?
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2. The Channel Relationship (2/3)
Disaggregation provides manufacturers
with a new medium to influence consumer
decisions that is independent of the retailer.
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Outcome
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2. THE CHANNEL RELATIONSHIP (3/3)
Manufacturers realize that their brand’s chances of
survival will be better if they become an essential
element of the retailer’s value proposition to consumer segments.
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EXAMPLE
P&G made an alliance with Tesco Plc(grocery chain in U.K.) ,
Launched Physique hair-care brand in U.K. through the Tesco channels, using its publications and consumer information.
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3. The Brand Management
Organization
The old era model of Brand management allowed budgets and profits to be measured and marketing initiatives to be developed at the brand level without interference from other brands.
But…
Brand management systems have much to commend,
They are designed for an era of mass marketing and are not well suited to make good use of valuable information that is now available.
3. The Brand Management
Organization
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Problems…
Difficulty in pulling together information to determine
whether a specific customer is profitable, or whether
the customer and his family is loyal to the brand.
Whether the general segment to which that customer belongs
is financially attractive.
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Solution
Consumer-centric
organization
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Three elements to make consumer-centric organization
3. The Brand Management
Organization
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1. Relationship based on trust and responsiveness.
3. The Brand Management
Organization
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They should never be unsolicited
2. Targeted communications which
are always based on an individual’s permission.
3. THE BRAND MANAGEMENT
ORGANIZATION
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3. THE BRAND MANAGEMENT
ORGANIZATION
3. Obtaining expertise in new-product and brand development so that the portfolio of product brands can be continually rejuvenated.
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Take away from the case
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The Value Proposition of Brands
Whereas assembly lines shrank the cost of building products, brands reduced the cost of building markets.
Brands have unique ability to aggregate consumers into viable markets economically and efficiently.
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The Value Proposition of Brands
Brands are an excellent means of developing and communicating a differentiated value proposition in the market.
Brands with a basket of such value propositions establishes a deep relationship with the customer.
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Created By: Dipanshu Sehjal, IIIT Allahabad
During an Internship under the guidance of
Prof. Sameer Mathur
IIM Lucknow
www.IIMInternship.com