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Customer Centered
Brand Management
Afzaal Ali
Yasir Shahab
University of International Business and
Economics
Roland Rust
Ph.D., Business Administration, University of North Carolina at Chapel Hill
At the University of Maryland in College Park
David Bruce Smith Chair in marketing at Robert H. Smith School of Business
Executive Director, Center for Excellence in Service, Executive Director, Center for Complexity in Business
Valarie
Zeithaml PhD and MBA from the University of
Maryland, & BA from Gettysburg College.
Associate dean of MBA programs and the Roy and Alice H. Richards Bicentennial Professor at the Kenan-Flagler Business School at the University of North Carolina in Chapel Hill
Consultant with companies including IBM, Kaiser Permanente, GE, John Hancock Financial Services, Aetna, AT&T, Metropolitan Life Insurance, Bank of America, Chase Manhattan Bank, Allstate, and Procter and Gamble.
Katherine
Lemon PhD from University of California,
Berkeley
Associate professor at Carroll School of Management at Boston College in Chestnut Hill, Massachusetts
Prior to receiving her PhD, Lemon held senior marketing positions in the fields of health care and high technology.
Research and expertise is in the areas of customer equity, customer asset management and customer-based marketing strategy.
Problem Area
Customer
Customer
Customer
What most managers
say...
What they do in
reality…
Brand
Brand
Brand
Incompatible with Growth
Reasons for Oldsmobile
Tragedy
Campaigns “This is not your father’s Oldsmobile” and “New Generation of Olds”
Why neither campaign turned back the clock….
Because in large consumer-goods companies like GM brands are the reason for its existence.
Absolute focus is on brands not on customers
How to avoid such problems?
Reinvention of Brand Management
Larger goal…..Growing Customer Equity
Long Lasting Impact
Changing the thinking style of
management
About goals, roles and metrics associated
with a well managed brand
Its Ok, I am with the Brand George Clinton, Age 73 (Songwriter and Performer)
In 1970s he sought attention of “two different segments” of record buyers:-
Mainstream listeners (who liked vocal soul music with horns)
Progressive listeners (who liked harder-edged funk)
Band was accomplished enough to play both kinds of music
Alternating between the styles would muddy the band’s image
He made two different Band names
Parliament, when the music was aimed at popular tastes
Funkadelic, when it was edgier
Both bands were very successful, even though some Parliament fans would never listen to Funkadelic and vice versa.
Clinton’s branding reflected his customers’ identities instead of his band members’.
Honda’s Successful Brand
Strategy In the 1980s, U.S. buyers associated the Honda brand with
economy cars.
Rather than work to change that image, management
decided to launch a new brand.
In the United States as Acura Legend and in Japan as the
Honda Legend.
“Acura” had no positive equity established with upscale
buyers, but neither did it have baggage to overcome.
Volkswagen disappointment with
Phaeton Excellent brand equity among buyers of
low- to medium-priced cars
The Phaeton, a high-priced luxury car,
positioned to compete with such icons as
BMW and Mercedes.
The objective attributes of the Phaeton (fit
and finish, comfort, and power) are
competitive with those of other luxury
marques.
Unfortunately, the company’s brand is
defined not so much by its exacting
producers as by its customers.
It has virtually no brand equity among
luxury buyers. When the Phaeton was
launched in Europe in 2003, Volkswagen
predicted 15,000 would be sold. Several
months later, it admitted that only about
2,500 had been.
DIET COKE
“Companies must focus on
“Customer Equity” rather than Brand Equity.”
“Brands exist to serve customers, not the other way around. But you would never know that from the way brands are managed.”
Best Perspective
Life time
value of
Customer
Relationshi
p
Building
Loyalty
and
Retention
Fulfilling
more
customer
needs
Customer
Equity
WiLL– Japanese Brand
Marketing approach shared by a small group of Japanese
companies from August 1999 until July 2004 in Japan.
Kao Corporation Toyota Asahi Breweries
PanasonicEzaki Glico Candy Kokuyo Co., Ltd.
WiLL Consortium– Japanese Brand
Target segment of consumers—“New Generation”
women in their twenties or thirties who like things that
are “Genuine” and fun—defines the WiLL brand.
Exclusively focused on narrow demographic and
psychographic profile.
WiLL Vi (an automobile manufactured by Toyota),
WiLL PC (made by Panasonic),
WiLL beer (brewed by Asahi).
These megabrands have chosen to become, in
essence, private label manufacturers behind a
brand they own jointly.
Independently, none of them would have invested
so heavily in a branding effort.
WiLL brand would remain strong—because its
meaning and value stem from its customers.
Customer Equity Is the Point
Most companies today are geared toward aggrandizing their brands, on the assumption that sales will follow.
But for firms to be successful over time, their focus must switch to maximizing customer lifetime value—that is, the net profit a company accrues from transactions with a given customer during the time that the customer has a relationship with the company.
Out attitude should be that Brands come and go but Customers must remain.
The sum of
customers’
assessments
of a brand’s
intangible
qualities,
positive or
negative
Brand Equity Customer Equity
The sum of the
lifetime values of
all the firm’s
customers, across
all the firm’s
brands
More Focus on Customer
Equity
Value of a Brand Depends on the
Customer The value of Brand is highly individualized.
For some Coke is best and for others Pepsi
is more valuable.
A customer might grow tired of a brand,
independent of how other customers are
responding to it.
Most marketing managers measure brand
equity with a summary metric of brand
strength. i.e.
The “flaw of averages.”
The value they arrive at is true for
practically no one - and hardly a useful
management tool.
Customers Differ on Brand Equity
Survey in two cities to measure brand equity for 23 brands in five industries.
For American Airlines brand, customers had widely varying perceptions of the value of the brand.
Managers defined value as average and took actions which were not right for many customers.
Assigning an average value to brand equity is dangerous
Because it obscures the fact that brand value is
individually assigned by the customer.
In truth, with consumers in the United States have very high equity while people in South America were more likely to favor local brands.
The company only redoubled its efforts at what could be called brand imperialism, with limited success.
Which Brand do you prefer in the
following Industries…
Automobile
Cellular
Garments
Computers/Laptops
Food
Beverages
Sports
Why…
1- Make brand decisions subservient to decisions
about customer relationship:
This means creating or strengthen the role of the
customer segment manager.
Assigning Managers to specific customers.
In Business- to- Business World, this is known as
managing key accounts.
Companies like Ericsson and IBM assign account
managers and give them broad authority in marketing
to important customers.
Put your Brands in their place:
If you accept that the goal of management is to grow
customer equity, not brand value, then to manage
brand in a different way.
There are seven points that go against the grain of
current practice:
2- Build brands around customer segments, not the
other way around.
Focus on the needs and requirements of a particular
customer segment.
Develop a product in such a way that consumers think that
this product is just for them..they are made for this product…
World largest Women Clothing Company Liz Claiborne has a
similar focus on the customers.
1. High- end Dana Buchman Brand for Professional Women
2. The stylish Ellen Tracy Brand for Sophisticated but
Casual Women
3. The young, upscale Laundry Brand for Individualistics
4. The Liz Claiborne Brand for its Traditional Casual Market
5. The Elizabeth Brand for Plus-Size Women
Conti…
Similarly:
Procter & Gamble market an extensive portfolio of soap
brands, each targeted to a different segment of consumers.
Like Tide, Gain, Cheer, Ivory, Bold- are differentiated more by
target customer segment than by product features.
3- Make your Brand as narrow as possible:
The purpose of a brand here is to satisfy a small customer
segment as it is economically feasible.
Magzines:
Women Magzines, Fashion Magzines, Sports Magzines,
Business Magzines, Religious Magzines, Children Magzines.
Television Channels:
Women Channel, Movies Channel, Fashion Channel, Cooking
Channel, sports Channel, News Channel , Cartoon Channel
etc...
4- Plan Brand extensions based on Customer
needs, not component similarities.
Brand extension are more likely to successful if .....
The customers are similar, even if the products are not similar.
1- Same customer but unsimilar products:
Virgin, for example has extended into a wide variety of unrelated
products like Airlines, music, stores, soft drinks, and
mobilephones.
Value pricing, high quality and a hip, fun image that attracts a
particular customer segment.
Similarly Tiffany’s and Disney did…
2- Same customer & similar products:
Visa-credit cards to debit cards
Yamaha- organs to pianos to guitars
Brands benefits for Consumers and Sellers
Symbolic
device
Lower risk
Less cost of
searching
for a choice
Symbol of
Quality
Consumers
Source of
product
Brands play a significant role in signifying certain product features to consumers.
Consumers can easily make a purchase decision based on brands. Consumers usually find brands which satisfy their need.
Brands mean lower purchase risk to consumers as they are dealing with a product or organization that they trust.
If the consumers recognize a particular brand and have knowledge about it, they make quick purchase decision and save lot of time. Also, they save search costs for product.
Consumers see ‘brands’ as a symbol of quality and remain committed and loyal to a brand as long as they believe that the brand will continue meeting their expectations and perform in the desired manner consistently.
Brands for Consumers and Sellers
Seller
Means of
Profits
Means of
Competitive
Advantage
Legal
protection of
products’
features
Satisfied
customer
A brand helps the firms to provide consistently a unique set of characteristics, advantages, and services to the buyers/consumers.
A brand helps the firms to provide consistently a unique set of characteristics, advantages, and services to the buyers/consumers.
Brand represents values, ideas and even personality and hence leads to an assortment of memories in customers’ mind and hence satisfied customers.
Brands form the basis of purchase decision among consumers and thus are a means of financial profits.
5- Develop the capability and the mind-set to hand
off customers to other brands in the company
Future profits are driven not by repeat purchases of
particular product but by customer’s purchases
across all brands.
There’s absolutely no sense in spending greatly to
hold on to a brand’s customer relationship if the
customer is more natural fit with another brand in
the company portfolio.
6- Take no heroic measure.
Sometime a brand becomes very unattractive to a customers
segment.
Reversing that impression might simply be too hard to do.
ValueJet:-
In May 1996 one of its airline crashed, killing all abroad.
The national transport safety board accused ValueJet failing
to ensure safety related issue..
Then ValueJet dumped the name, and it merged with another
carrier, AirTran……
7- Change how you measure brand equity:
Brand
awarenessAttitude toward
the brandBrand ethics
Value Equity Brand EquityRelationship
Equity
Brand Choice
Customer Lifetime
Value
CUSTOMER EQUITY
Brands are important,
but they are not all-
important
• Value Equity:
• Quality, Price and Convenience
• Brand equity:
• Brand Equity is the value, both tangible and intangible,that a brand adds to a product/service.
• Relationship Equity:
• Switching cost
• Simply as friendship with salespeople
• Customer equity:
• Customer equity may be defined as the sum of allcustomer lifetime value in company
Some Basic Concept:
Family Fun Entertainment
Disney
Low Prices and Good Values
Wal-Mart
Guaranteed Overnight Delivery
FedEx
Food and Fun
McDonalds
Innovation
Apple
Simplicity
Reliability
Toyota
