Marketing And IT initiatives. Marketing Session One: Marketing For the 21 st Century Session Two:...

Marketing

And

IT initiatives

Marketing

• Session One: Marketing For the 21st Century

• Session Two: Core Marketing Concepts

• Session Three: Core Marketing Concepts

• Session Four: The CMO, CIO, and Strategic IT Initiatives

Session One

Marketing For the 21st Century

Starbucks!

• Phenomenal growth

• Battling it out in the USA

• World class competitor

• Practicing both the “art” and “science” of marketing!

What is marketing?

• Advertising• Selling • Branding• Market segmentation• Product development • Market forecasting• Sales forecasting• Sales promotion

What is marketing?• Pricing

• Product/Market positioning

• Repositioning

• Market analysis– Geographic– Demographic– Psychographic– Behavioral

What is Marketing?

• Competitive analysis

• Market research

• Product rollout strategies

• Distributing: retailing, wholesaling, supply chain management

• Marketing strategies

• Marketing plans

What is Marketing?

• Marketing is extremely broad and touches nearly every aspect of the firm

• Marketing is horribly misunderstood and poorly defined, even by many business professionals

• Marketing, as it is practiced today, has evolved, particularly since WWII

Marketing: A Brief History

• 16th century & scientists

• Copernicus: The sun, not the earth!

• Business parallel: The customer, not the product

• “If you build a better mousetrap . . .”

• Really?

Marketing: A Brief History

• Production Era: 1870’s-1930’s (Industrial Revolution)

• Sales Era: 1930-1950’s (Quality Products)• Marketing Department Era: 1950’s

(“Marketing” emerges)• Market Driven Era: 1960-2000 (Customer

focus)• “Experience” Driven Era (Appealing to

“senses”) Ex. Disney, Starbucks

Marketing Defined

“An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” American Marketing Association, 2004

Marketing Management

“The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.” A Framework for Marketing Management, Kotler & Keller, 4th Ed., Pearson Prentice Hall, 2009

Marketing Basics

• Focus: The CUSTOMER: His needs (wants) must be satisfied

• Duration: Begins by analyzing the customer and his needs (wants) and ends . . . well, marketing never really ends as long as there are repeat purchases to be made.

• Away from transactional to relational

• Away from short term to long term

Marketing Basics

• “The Marketing Concept”

• The “catch phrase” for modern marketing through the last 50+ years

• Simply put, “Find out “what” the customer wants and do what it takes to satisfy him.”

• The key is to “focus on the customer.”

• “The customer is king?”

Marketing Basics

• From a marketer’s perspective, the critical business issue in today’s global economy:

• Not “can we produce enough . . .”

• But “will we produce the “right . . .”car . . . house . . .ceiling fan . . .shotgun software . . .textbook. . .dining experience, educational program, etc.

Marketing Basics

• For nearly everything that is purchased in today’s developed economies, we’re in a buyer’s market.

• The customer does not have to purchase his groceries, wallpaper, chainsaw, oil change, coffee, car, airplane, or software from you and your company.

• Your firm doesn’t even have to pay YOU to provide their IT support services!!!

Marketing Basics

• Great marketing is “market” oriented, not “product” oriented

• Especially in developed nations, the customer is king

• The customer can find what he wants in today’s mature, technology driven, global economy

“Q”: He can find high quality

“P”: He can find the low price

“S”: He can find great service

What is a market?

• Marketers see sellers as the industry and buyers as constituting the market

• Marketers talk about – Need markets (diet-seeking market)– Product markets (shoes)– Demographic markets (youth)– Geographic markets (French)– Voter, labor, and donor markets

What is a market?

• Marketers serve:– Consumer markets– Business markets– Global markets– Nonprofit markets– Government markets– Some combination of the above

What is a market?

• Marketers talk about “metamarkets,” referring to clusters of products that would appeal to two people getting married, expecting their first child, buying a vehicle, and “metamediaries” to assist buyers in moving through these groups.

• Ex: Edmunds (www.edmunds.com) will help you buy your car by finding the features, prices, lowest price dealer, financing, car accessories, and more that meets your requirements

http://www.edmunds.com/

Everything needs to be marketed!

• Goods

• Services

• Events

• People

• Places

• Properties

• Organizations

Everything needs to be marketed!

• Information

• Ideas

• Experiences

The

Core

The

Coreof the

Core

The CoreOf

The CoreOf

The Core

Core Marketing Concepts

1) Needs, Wants, and Demands2) The Marketing Plan3) Environmental (situation) Analysis4) SWOT Analysis5) Marketing Strategies6) Market Segmentation, Targeting, and

Positioning7) Product Development8) Brands and Branding

Marketing Defined

“The aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.”

Peter Drucker, 1973

Session #2

Core

Marketing

Concepts

Core Marketing Concepts

1) Needs, Wants, and Demands2) The Marketing Plan3) Environmental (situation) Analysis4) SWOT Analysis5) Marketing Strategies6) Market Segmentation, Targeting, and

Positioning7) Product Development8) Brands and Branding

Core Marketing Concept #1

Needs, Wants,

and

Demands

Needs, Wants, and Demands

• Needs are basic human requirements: food, air, water, clothing, and shelter to survive. Recreation, education, and entertainment might also be classified as needs.

• Wants develop when these needs are directed toward specific products/services: You “need” food but you want a burrito, etc.

• Wants seem to be shaped by one’s culture.


• Demands are wants for specific products along with the ability to pay

• A firm must not only measure the “wants” for their products/services but also the willingness and ability to make the purchase.


• Marketers are often falsely charged with “creating needs,” but need preexist marketers.

• Marketers, along with other societal factors, influence wants.

• Marketers might promote the idea that living in a certain neighborhood would satisfy your “need” for social status, but they don’t create the need for such status.

Five types of Needs

• Stated needs: An inexpensive car

• Real needs: Low operating costs but not low initial price

• Unstated needs: Good service from dealer

• Delight needs: Free onboard navigation system

• Secret needs: Recognized by friends as “hip.”


• An important point: Simply providing customers with what they say they want doesn’t quite get it anymore.

• Great marketers get a leg up on competitors by helping customers learn what they want.

• The challenge and necessity of this important aspect of great marketing is directly related to the increasing complexity of 21st century lifestyles and opportunities.


The

Marketing Plan

The Marketing Plan• Executive Summary

• Environmental Analysis

• SWOT Analysis

• Marketing Goals & Objectives

• Marketing Strategy

• Marketing Implementation

• Evaluation & Control


Environmental

Analysis

Environmental Analysis

• Also known as environmental monitoring– Gathering and analyzing information– Forecasting impact of environmental trends


• The Internal Environment

• The External Environment

• The Customer Environment

External Macroenvironment

• Demographics

• Economic conditions

• Competition

• Social and cultural forces

• Political and legal forces

• Technology

Demographics• Characteristics of population groups• Size• Distribution (rural, urban)• Population growth • Income• Education• Gender• Race

42

Economic Conditions

• Stage of the business cycle (recovery, prosperity, recession, depression)

• Inflation

• Unemployment

• Interest rates

43

Competition

• Brand competitors: directly similar products (Coke vs Pepsi)

• Total Budget competitors: totally dissimilar products (New car vs room addition)

• Substitute products: Same class of products (entertainment: baseball vs symphony or wood flooring vs carpeting)

44

Competition

• The goal: to gain a “differential advantage”• Also known as “competitive differential

advantage”• Should provide at least a “temporary

monopoly in your own little market.”• Should provide a “hard to copy marketing

mix.”• Opposite of a “differential disadvantage.

45

Social & Cultural Environment

• Concern about natural environment

• Changing gender roles

• A premium on time

• Physical fitness and health

Political & Legal Forces

• Monetary and fiscal policies

• Social legislation & regulations

• Governmental relationships w/industries

• Legislation related specifically to marketing

Technology

• Living in a technology revolution

• Tech breakthroughs affect us in three waysBy starting entirely new industriesRadically altering/destroying existing

industriesBy stimulating markets/industries not

related to the new technology. Rippling effect

Technology (continued)

• Affects how marketing is carried out

• Global market/sourcing

• 24/7

External Microenvironment

• The firm’s market

• The firm’s suppliers

• Various marketing intermediaries

External Microenvironment

• External to the firm

• Generally uncontrollable

• But they “can” be influencedPressure on suppliers and middlemenAdvertising influences your market

The firm’s market

• Market defined:

• People or organizations with Needs (synonymous with wants) to

satisfyMoney to spendWillingness to spend it (buying

behavior)

Suppliers

• Often carelessly overlooked by marketers

• Increasing need for cooperative relationships with suppliers

• Increasingly competitive due to technology and instant global communication

Marketing Intermediaries

• Independent organizations aid in the flow of g/s between businesses and suppliers as well as their markets

• Middleman: wholesalers, retailers, distributors

• Various facilitating organizations: transportation companies, warehousing, financing (banks and other lenders)

Marketing Intermediaries

• Huge question: To what degree should our firm use marketing intermediaries?

• I could buy directly, sell directly, do my own shipping, warehousing, financing, etc.

• Or I could hire specialists to do a “better, more efficient” job.

• Answer: Examine the value chain• Challenge: Value can be intangible and

difficult to measure

Universal Functions of Marketing

• Buying• Selling• Transporting• Storing• Standardizing or grading• Financing• Risk-taking• Information gathering

Universal Functions of Marketing

• Super-critical issue

• Each of these functions must be performed for every product/service that is successfully marketed

• Responsibility can be shifted and shared


• Customer Environment– Who are our current/potential customers?– What do customers do with our products?– Where do customers purchase our products?– When do customers purchase our products?– Why/how do customers select our products?– Why do potential customers not purchase our

products?


SWOT

Analysis

Major Benefits of SWOT Analysis

• Simplicity

• Lower Costs

• Flexibility

• Integration and Synthesis

• Collaboration

SWOT Analysis• Strengths and Weaknesses are internal• Opportunities and Threats are external• Try to convert weaknesses into strengths• Try to convert threats into opportunities• Strengths matched with opportunities

provide capabilities• Capabilities provide competitive

advantages if they provide better value to customers than competitive offerings

SWOT Analysis• SWOT Analysis allows the marketer to

“get his arms around the business.”

• SWOT Analysis can be done quantitatively or qualitatively or both

• A major goal of SWOT Analysis: The development of competitive advantage

Common Sources of Competitive Advantage

• Relational Advantages• Legal Advantages• Organizational Advantages• Human Resource Advantages• Product Advantages• Pricing Advantages• Promotion Advantages• Distribution Advantages

Strategies for Competitive Advantage

• Operational Excellence

• Product Leadership

• Customer Intimacy


Marketing

Strategies

Marketing Strategy

1) Selecting a Target Market(s)

2) Developing a Marketing Mix(es)1) Product

2) Price

3) Promotion

4) Placement (distribution


Market Segmentation,Targeting

And Positioning

Dunkin’ Donuts!!

• A sleeping giant!

• Serving the same market as KK and Starbucks?

• How are they alike?

Ans: Coffee and pastries

DD, Starbucks, & KK

• How are they different?• SB: Upscale hangout providing “an

experience.” Work, home, and Starbucks, the “third” place

• KK: “Dietary splurge” or “special indulgence” rather than a regular habit

• DD: “Get ‘em in, sell ‘em coffee & snack, and get ‘em out.”

Question: “Is it wise (or even necessary) for the firm to bet that a large part of the coffee and pastry market is more interested in convenience and speed of service than dunking?

DD, Starbucks & KK

• Additional questions to ponder

• “How are these “competitors different?”

• “Is this a zero-sum game or can all three companies grow simultaneously?”

Welcome to

Market Segmentation, Targeting,

and Positioning

Structured segmentation (steps)

• Identify current and potential wants within market

• Identify characteristics that distinguish among segments

• Determine potential of segments and how well they are being satisfied

• Select the “right” segment (s) as your target market (s). Ideally, market (s) whose needs are not being met well.

Selecting a Target-Market

• Compatible with organization’s goals and image

• Matches market opportunity with company’s resources

• Attractive ROI projections

• Weak or few competitors

Characteristics of segments

• Characteristics must be measureable and data describing segments must be obtainable

• Market segments should be accessible through existing marketing institutions; middlemen, media, sales force with minimal cost, waste, and effort.

• Each segment should be substantial (large enough) to be profitable. Note: Micromarketing is more common but risky and challenging. (Trucks, houses, computers via mass-customization) Benefits vs costs!

The First “Cut”

• Consumer markets/Business markets: either or both

• Very significant

• Why?

• Both the buyers and buying process are very different

Segmenting Consumer Markets

• Consumers are still quite varied

• Need: Further subdividing’

• Four traditional segmentation dimensions– Geographic– Demographic– Psychographic– Behavioral

Geographic Segmentation

• Similarities within local/regional locations (Southwest, Midwest, South, Northeast, etc.)

• Differences between also exist• “Survey of Buying Power” provides information

on pop., income, and spending behavior by state, county, major metro markets, TV and newspaper markets

• Walmart’s initial strategy: < 35,000 to limit competition

Demographic Segmentation

• Characteristics: Age, gender, occupation, income, and education

• “Geodemographic Clustering” An application with some imagination

1) US census data: demographic

2) Claritas: private research firm

3) 36,000 zip codes turned into 15 groups and 66 homogeneous clusters or segments

Demographic Segmentation

• Clusters are defined by lifestyles, consumption behavior, etc.

• Cluster “names”– “kids and cul-de-sacs”– “gray power”– “shotguns and pickups”– “town and gown”– “blue-blood estates”

• Used for locating retail outlets, designing direct mail campaigns, selecting products and brands

Psychographic Segmentation• Personality: Critical differences exist but

very difficult to measure. Ex. What percentage of people are “aggressive?”

• How do you “access” or reach the “aggressive market.” Thru what media?

• Lifestyle: AIO variables: Can be difficult to measure and access through usual channels of distribution and promotional program

Psychographic Segmentation

• Values: “LOV” or “List Of Values” that relate to purchase behavior:

• Self respect

• Security

• Excitement

• Fun and enjoyment in life

• Having warm relationships

Psychographic Segmentation

• Values: “LOV” or “List Of Values” that relate to purchase behavior (cont’d)

• Self-fulfillment

• Sense of belonging

• Sense of accomplishment

• Being well respected

Behavioral Segmentation

• “Benefits desired”: The ideal method for segmenting a market! Why? People everywhere buy “product benefits”, not “product features.”

• Not the medication but the “extra sleep” it provides

• Not the car but the “comfortable ride” or the “coolness” it conveys

Behavioral Segmentation

• Usage rates (another behavioral measurement)

• Light, medium and heavy users• The “heavy half”: 50% of all users account

for 80-90 % of total purchases• “angels” are very profitable: purchase w/o

sales or discounts• “devils” are losers for us: shop the bargains

Segmenting Business Markets

• Fewer buyers (significantly) but still very much need to be segmented

• Why?

• Customers can still be successfully grouped for greater efficiency and satisfaction

Segmenting Business Markets

• Customer Location

• Customer Type

• Transaction Conditions

Customer Location

• Close to natural resources to minimize transportation costs

• Close to clients to minimize transportation costs

Customer Type

• Industry: Typically more efficient to segment the market and limit the number of industries you serve. Not being “all things to all potential customers.”

• Size: Allows for different methods of promotion and distribution

Customer Type

• Organizational structure: Purchasing departments, “selling teams” for “buying centers,” lengthy government buying w/extensive approval processes

• Purchase criteria: Major purchasers can have major requirements of vendors; i.e., technical capabilities, defect rates, delivery schedules, etc.

Transaction Conditions

• Buying situation: New, modified, straight– Ex: IKON, operating supplies via inside

sales

• Usage rate: Heavy, light, nonusers (prospects)

• Purchase procedure: simple, negotiated, sealed bid

Segmentation Strategies

• Market aggregation• Multiple market segmenter• Single market segmenter: market concentration• Niche marketing: extreme concentration• Individualized marketing

– One-to-one marketing– Mass customization– Permission marketing

Positioning

• Position, positioning, perceptual maps, & repositioning

• Positioning is “the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market.

• Good brand positioning helps guide marketing strategy by clarifying the brand’s essence, what goals it helps the consumer achieve, and how it does so in a unique way.

Positioning

• Positioning is done on a “perceptual map” and is usually the result of formal marketing research that acquires information from the firm’s target market on their perceptions of:– The firm’s product (s)– Competitors product (s)– The ideal product (s)

Positioning

• A product’s “position” refers to its image on a two or three dimensional perceptual map

• A product is strategically positioned and repositioned typically by advertising to give it a competitive edge, ideally a type of “monopoly” where it is different.

Lincoln

Pontiac

Nissan

Chrysler

Saturn

Buick

PorscheMercedes

Ford

BMW

Chevy

Toyota

Cadillac

Dodge

Honda

VW

SportyConservative

Expensive/Distinctive

Affordable/Practical


Product

Development

Creativity!

• Great Ideas!

• Cornerstone of business success!

• Improved production processes!

• Better customer service!

• Greater cost savings!

• Superior products!

But…how do you get them? From where?

Great Ideas!

• Just over ½ come from customers, competitors, and suppliers

• Remainder from company employees of all types; R&D staff, salespeople, others

• Imaginatik: provides “innovation and idea management,” an electronic employee suggestion box that becomes interactive

Imaginatik

• Systematic way of developing new ideas

• Harnessing the creative potential of employees

The Importance of Product Innovation

1) Business goals: – Satisfy customers– Make a profit


2) Critical to being successful—Why???

-technological changes—obsolescence

-”cloning” by competitors

3) “The core business is innovation. If we innovate well, we will win.” (P & G head)

4) Innovate or die!


5) High failure rates of new products

-Poor differentiation

-Poor positioning

-Lack of marketing support (Big bucks and ROI)

Product!!

Product!!

Product!!

What is a product????

What is a product?

• Good

• Service

• Place

• Person

• Idea

“Formal” Definition

Product: “A set of tangible and intangible attributes, which may include:

• Packaging• Color• Price• Quality• Brand• Services• Reputation• Warranty

Classifications of Products

• Two broad classifications

• Consumer products: intended for personal consumption by households

• Business products: intended for resale, for use in producing other products, or for providing services in an organization

• Key distinguishing issues: “Who will use them” and “How will they be used”

Consumer Goods

• Convenience goods

• Shopping goods

• Specialty goods

• Unsought goods

Distinguishing issue: Not intrinsic differences in products themselves but “how” consumers go about purchasing each product

Business goods

• Raw Materials

• Fabricating Materials and Parts

• Installations

• Accessory Equipment

• Operating Supplies

Key: Classifications are based on broad uses

Three distinct categories of new products

• Really innovative

• Significantly different

• Imitative: “me-too”

New-product “strategy”

• Sales-driven: protect market share

• Investment-driven: ROI

• Expansion-driven: Establish position in a new market

Stages in Development Process

• Generating new product ideas

• Screening ideas

• Business analysis

• Prototype development

• Market tests

• Commercialization

Stages in adoption process

• Awareness

• Interest

• Evaluation

• Trial

• Adoption

• Confirmation

Adoption Categories

• Innovators

• Early adopters

• Early majority

• Late majority

• Laggards

Additional: “Non-adopters”

Organizing for Product Innovation

• Beginning in 1950’s: Brand manager or product manager

• Category Manager

• “Endangered species”

• Team efforts: new-product departments, product planning committees, cross-functional teams

The Product Life Cycle

• The concept of a product’s life applies to a generic category of product (internal combustion engines, kerosene lamps, microwave ovens, photography film) and not to specific brands (Ford, Dell, Sony, General Mills)

• The PLC consists of the aggregate demand over an extended period of time for all brands comprising a generic product category.

The Product Life Cycle

Traditionally, there are four stages

• Introduction: pioneering stage

• Growth: market-acceptance stage

• Maturity

• Decline

Product Life-Cycle Stages

Length of Product Life Cycles

Total PLC times can varyTimes in each stage can vary, too• Extended introduction stage: very

unusual• Fads: hoola hoops, nasal dilators,

Livestrong bands (by Lance Armstrong)• Indefinite maturity stage: traditional

automobiles and the internal combustion engine

Length of Product Life-Cycle

Life Cycles related to Markets

• A product could be in the maturity or decline stage in one market (U.S.) and the introductory stage in another market (a primitive or emerging market)

Ex: wringer washing machines

• So, it would be correct to label the product life cycle as a product/market life cycle

Entry Strategies

• Is there a “best” time to enter a market? • Is there any legitimacy to the “first-mover

advantage,” or “pioneering advantage” concept?

• Answer: No consistent advantage. It is temporary and not lasting.

• The “first-mover” vs the “early-leader” who emerges in the growth stage: early leaders seem to have the advantage in the long-run

Managing On The Rise

• Putting your product on “auto-pilot” would not work well

• Careful management (pricing, promotion, distribution, additional product uses, and further product development/alteration, etc) through the PLC is the key to success

• Eventually, products “may” need to be abandoned, a critical marketing decision


Brands

and

Branding

Cadillac!

• King of the luxury car market—1950’s

• Definitely dethroned by the imports! (80’s-90’s)

• Cool again! (After 2000)

The lesson: A brand can lose it’s luster and if carefully managed, regain it once again.

Brands, Packaging, and Other Product Features

• Brands• Brand names• Branding strategies• Brand equity• Packaging and labeling• Packaging strategies• Other product features: design, color

& quality

Brands

Brand: Comprehensive term, a name and/or mark; identifies and differentiates a seller’s product or group of products

• Brand name: words, letters and/or numbers that can be vocalized

• Brand mark: the part of the brand that appears in the form of a symbol, design, or distinctive color or lettering, “recognized by sight but cannot be expressed when pronouncing the brand name

Brands

3) Trademark: A brand that has been adopted by a seller and given legal protection; includes both brand name and brand mark

Examples

1) Brand names: Altec, Sony, Maytag

2) Brand marks: Nike’s “swoosh,” Prudential’s “rock,” Allstate’s “better hands”

3) Trademarks: Green Giant, Arm & Hammer

Brands: Ways of classifying

1) Producer’s brands: like Florsheim and Prozac (Eli Lilly antidepressant)

2) Middlemen’s brands: Craftsman (Sears) and St. John’s Bay (J.C. Penny)

Reasons for brandingFor the buyer:• Ease of identification by consumers• Aids shoppers in locating and decision-

making• Guarantee of qualityFor the seller:• Reduces price comparisons• Increases customer loyalty• Differentiates commodities

Reasons for not branding

• Promoting the brand (takes time & money)

• Maintaining a consistent quality of output (requires a high level of commitment)

Selecting a Good Brand NameThe Challenge!

Running out of possibilities

Average 10,000 new products per year

Only 50,000 words in a standard dictionary

Many words already being used

Many words unsuitable

Solution: combine words, numbers, letters

Ex: Formula 409, WD-40, Lotus 123

Desirable characteristics• Suggests benefits and uses of product:

Mr. Goodwrench, La-Z-Boy, Dustbuster• Easy to pronounce, spell, remember:

Tide, Ban, Aim• Distinctive: National, Ideal, United are not• Be adaptable to additions to product line.

Good: McDonalds Not so good: Burger King, Alaska Air

• Be capable of registration/legal protectionNote: Cost? $25,000 and up!

Protecting a brand nameAn asset: protect it from damage and/or loss

Two ways you can get hurt:

• Product counterfeiting: the use of someone else’s brand illegally: Ex: Rolex, Gucci

– $250 B annual losses by U.S. companies– FBI: “The crime of the 21st century– Huge in software—very easy

Protecting a brand name

• Generic usage: Your brand name becomes the commonly descriptive term for a generic class of goods. Ex: aspirin, escalator, linoleum, thermos, cellophane

The result: You may lose your legally protected right to the use of the name.

Protecting a brand name

• Generic Usage: This can be prevented by using the “R” symbol right after the name (or TM or SM if not registered)

• The better approach: Use the brand name together with the generic name like, “aspirin pain reliever” or “linoleum floor covering”

• Call attention and challenge misuses of your brand name

Branding Strategies

• Producer’s strategies

• Middlemen’s strategies

Producer’s Strategies

1) Marketing entire output under producer’s own brands

– Usually seen only in large, well-financed, well-managed firms

– Uncommon – Very difficult for a new firm– Diminishing as a strategy– Ex: Gillette


2) Branding of fabricating materials and parts. Likely to be effective

– if the good is also sold as a consumer good (replacement good)

Ex: spark plugs, batteries, light bulbs

– if an integral part of the finished product where it might get attention/recognition


3) Marketing under middlemen’s brands

-”hedging your bets” by broadening your market

-the risk: you are depending on the marketing skill of the middlemen

Middlemen’s Strategies

1) Carry only producer’s brands: The most common strategy. Why? Lack of resources to promote your own

2) Carry both producer and middlemen (store) brand

• Control• Differentiation

The “Battle of the Brands”

• What is it?

• Producer brands vs Middlemen Brands

• Who is winning?

• Middlemen are showing significant gains

• There is lots of fighting yet to be done

Strategies Common To Both

Branding Within A Product Mix

• Family branding: All your products carry your “family” name; sometimes alone and sometimes combined with a product name.

Well-known family names: Heinz, Campbells, Kellogg, Libby, Armor All

Strategies Common To Both

Branding for Market Saturation:

1) Multiple-brand strategy

Ex: P&G Tide, Dreft, etc

Ex: GM: Chevy, Olds, Pontiac, Cadillac

2) Cobranding: dual branding

Ex: Betty Crocker’s Sunkist Lemon Bars mix

Ex: Pizza Hut and Taco Bell

A big decision: Costs vs. Benefits

Brand Equity

• A critical issue

• “The value a brand adds to a product”

• “The present value of the future earnings that can be attributed to the brand itself.”

Ex: Coke: estimated at $60B

• Negative brand equity is possible

Ex. Firestone

Brand Equity

1) Can provide critical differential advantage

2) Can provide a protective “barrier to entry”3) Can facilitate international expansion4) Can help a product survive changes in

the operating environment; i.e. economic cycles, changing consumer tastes, etc.

5) Can be overused at no gain: Harley Davidson cigarettes!!! Dunkin Donuts cereal!!

Trademark Licensing

• Also known as brand licensing

• Licensor charges a fee of 5-10% of wholesale price

• Very big in toys but the biggest is in apparel.

Ex: Calvin Klein, Ralph Lauren

Other Related Topics

• Packaging and Labeling– Purposes and Importance of Packaging

• Protect: primary historic purpose• Promote (persuade): an increasing differentiator

• Packaging Strategies– Family packaging (the entire product line)– Multiple packaging (several units/container)– Changing the package (to fix problems or

improve promotion)

Session Four

The CMO, CIO,

and

Strategic IT Initiatives

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