summarize this chapter

(DESIGNING MARKETING PROGRAMS TO BUILD BRAND EQUITY)

-Learning Objectives

• Identify some of the new perspectives and developments in marketing
• Describe how marketers enhance product experience
• Explain the rationale for value pricing
• List some of the direct and indirect channel options
• Summarize the reasons for the growth in private labels

-New Perspectives on Marketing

1. firms are dealing with enormous shifts in their external marketing environments:
   • The marketing strategies and tactics have changed dramatically

-Marketers Adopt New Approaches

• Rapid technological developments
• Greater customer empowerment
• Fragmentation of traditional media
• Growth of interactive and mobile marketing options
• Channel transformation and disintermediation
• Increased competition and industry convergence
• Globalization and growth of developing markets
• Heightened environmental, community, and social concerns
• Severe economic recession

-Integrating Marketing

Personalizing marketing

The rapid expansion of the Internet and continued fragmentation of mass media have brought the need for personalized marketing into sharp focus.

Modern economy celebrates the power of the individual consumer.

To adapt to the increased consumer desire for personalization, marketers have embraced concepts such as experiential marketing and relationship marketing.

Reconciling the different marketing approaches

The different approaches of personalizing marketing help reinforce a number of important marketing concepts and techniques.

According to the customer-based brand equity (CBBE) model these different approaches emphasize different aspects of brand equity.

-Personalizing Marketing

Experiential marketing

• Promotes a product by communicating a products features and benefits and connecting it with unique and interesting consumer experiences.

Relationship marketing

• Attempts to provide a more holistic, personalized brand experience to create stronger consumer ties.
• Benefits:
  • Acquiring new customers can cost five times as much as satisfying and retaining current customers.
  • The average company loses 10 percent of its customers each year.
  • A 5 percent reduction in the customer defection rate can increase profits by 25 to 85 percent, depending on the industry.
  • The customer profit rate tends to increase over the life of the retained customer.

-Relationship Marketing

Mass customization

• Making products to fit the customers exact specifications.
• The advent of digital-age technology enables companies to offer customized products on a previously unheard-of scale.

One-to-one marketing

• Consumers help add value by providing information to marketers.
• Marketers add value by taking that information and generating rewarding experiences for consumers.

Permission marketing

• The practice of marketing to consumers only after gaining their express permission.
• An influential perspective on how companies can break through the clutter and build customer loyalty.

-Reconciling the Different Marketing Approaches

13. customization and one-to-one and permission marketing are:
    • Potentially effective means of getting consumers more actively engaged with a brand
    • to customer-based brand equity (CBBE) model:
      • Different approaches emphasize different aspects of brand equity
      • four approaches can build stronger consumerbrand bonds
      • must still devise product, pricing, and distribution strategies as part of their marketing programs

-Product Strategy

Perceived quality

• Customers perception of the overall quality or superiority of a product or service compared to alternatives and with respect to its intended purpose.

Aftermarketing

• To achieve the desired brand image: Product strategies should focus on both purchase and consumption.

-Pricing Strategy

Consumer Price Perceptions

• The pricing strategy can dictate:
  • How consumers categorize the price of the brand.
  • How firm or how flexible they think the price is, based on how deeply or how frequently it is discounted.
• Consumers rank brands according to price tiers in a category.
• Price bands: Range of acceptable prices that indicate the flexibility and breadth marketers can adopt in pricing their brands within a tier.
• Value-based pricing strategies: Attempting to sell the right product at the right price to better meet consumer wishes.

Setting Prices to Build Brand Equity

• Choosing a pricing strategy to build brand equity means determining the following:
  • A method for setting current prices.
  • A policy for choosing the depth and duration of promotions and discounts.

-Setting Prices to Build Brand Equity

Value pricing

• Objective is to uncover the right blend of product quality, product costs, and product prices that fully satisfies the needs and wants of consumers and the profit targets of the firm.
• It should strike the proper balance among three key components:
  • Product design and delivery
  • Product costs
  • Product prices
• Communicating value - Marketers may need to engage in marketing communications to help consumers better recognize the value.

Price segmentation

• Sets and adjusts prices for appropriate market segments.
• Because of wide adoption of the Internet, firms are increasingly employing yield management principles or dynamic pricing to vary their prices for different market segments according to their different demand and value perceptions.

Everyday low pricing (EDLP)

• Has received increased attention as a means of determining price discounts and promotions over time.
• Reasons for Price Stability:
  • Forward buying
  • Diverting

-Channel Strategy

Channel design

• Classified into direct and indirect channels.
  • Direct channels sell through personal contacts from the company to prospective customers by mail, phone, electronic means, and in-person visits.
  • Indirect channels sell through third-party intermediaries such as agents or broker representatives, wholesalers or distributors, and retailers or dealers.

Indirect channels

• Retailers - Can have a profound influence on the equity of the brands they sell, in terms of the brand-related services they can support or help create.
• Pull strategy - Consumers use their buying power and influence on retailers to pull the product through the channel.
• Push strategy - The manufacturer is attempting to reach the consumer by pushing the product through each step of the distribution chain.

Direct channels

• Company-owned stores - To gain control over the selling process and build stronger relationships with customers:
  • Some manufacturers are introducing their own retail outlets, as well as selling their product directly to customers through various means.
  • Benefits:
    • They are a means to showcase the brand and all its different product varieties in a manner not easily achieved through normal retail channels.
    • Functioning as a test market to gauge consumer response to alternative product designs, presentations, and prices.
  • Disadvantages:
    • Some companies lack the skills, resources, or contacts to operate effectively as a retailer.
    • Potential conflict with existing retail channels and distributors.
• Store-Within-a-Store - This concept can take hold through actual leasing arrangements or less formal arrangements where branded mini-stores are used.
  • Goal in all these situations is to find winwin solutions that benefit channel partners and consumers alike.
• Other Means - Sell directly to consumers via phone, mail, or electronic means.
• Online strategies
• Multichannel retailers were able to acquire customers at half the cost of Internet-only retailers, citing a number of advantages :
• They have market clout with suppliers.
• They have established distribution and fulfillment systems.
• They can cross-sell between Web sites and stores.