Customer centered brand management

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Customer Centered Brand ManagementAfzaal AliYasir Shahab

University of International Business and Economics

1Roland RustPh.D., Business Administration, University of North Carolina at Chapel Hill

At the University of Maryland in College ParkDavid Bruce Smith Chair in marketing at Robert H. Smith School of BusinessExecutive Director, Center for Excellence in Service, Executive Director, Center for Complexity in Business

Valarie ZeithamlPhD 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 LemonPhD 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 AreaCustomerCustomerCustomerWhat most managers say...What they do in realityBrandBrandBrandIncompatible with Growth5Reasons for Oldsmobile Tragedy

Campaigns This is not your fathers 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 managementAbout goals, roles and metrics associated with a well managed brand

Its Ok, I am with the BrandGeorge 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 musicAlternating between the styles would muddy the bands image He made two different Band namesParliament, when the music was aimed at popular tastesFunkadelic, when it was edgier Both bands were very successful, even though some Parliament fans would never listen to Funkadelic and vice versa. Clintons branding reected his customers identities instead of his band members.

Hondas Successful Brand StrategyIn 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 carsThe Phaeton, a high-priced luxury car, positioned to compete with such icons as BMW and Mercedes. The objective attributes of the Phaeton (t and nish, comfort, and power) are competitive with those of other luxury marques. Unfortunately, the companys brand is dened 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 COKECompanies 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 PerspectiveLife time value of Customer RelationshipBuilding Loyalty and RetentionFulfilling more customer needsCustomer EquityWiLL Japanese BrandMarketing approach shared by a small group of Japanese companies from August 1999 until July 2004 in Japan.

Kao CorporationToyotaAsahi BreweriesPanasonicEzaki GlicoCandyKokuyo Co., Ltd.Kao Corporation(a manufacturer of personal hygiene, household detergents, and cosmetics), Kokuyo Co., Ltd.(an office furniture and stationery manufacturer).

14WiLL Consortium Japanese BrandTarget segment of consumersNew Generation women in their twenties or thirties who like things that are Genuine and fundenes the WiLL brand.Exclusively focused on narrow demographic and psychographic prole. 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 strongbecause 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 rms to be successful over time, their focus must switch to maximizing customer lifetime valuethat is, the net prot 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 brands intangible qualities, positive or negative

Brand EquityCustomer EquityThe sum of the lifetime values of all the rms customers, across all the rms brandsMore Focus on Customer Equity17Value 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 aw of averages. The value they arrive at is true for practically no one - and hardly a useful management tool.

Customers Differ on Brand EquitySurvey in two cities to measure brand equity for 23 brands in ve 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 IndustriesAutomobileCellularGarmentsComputers/LaptopsFoodBeveragesSports

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.

High- end Dana Buchman Brand for Professional Women The stylish Ellen Tracy Brand for Sophisticated but Casual Women The young, upscale Laundry Brand for Individualistics The Liz Claiborne Brand for its Traditional Casual Market The Elizabeth Brand for Plus-Size Women

ContiSimilarly:

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 Tiffanys and Disney did 2- Same customer & similar products:Visa-credit cards to debit cardsYamaha- organs to pianos to guitars

Brands benefits for Consumers and SellersSymbolic device

Lower risk

Less cost of searching for a choiceSymbol of Quality