Chapter 12: Strategic Considerations in Marketing Communications

Chapter 12: Strategic Considerations in Strategic Considerations in Marketing CommunicationsMarketing Communications

©2010 Pearson Education, Inc. publishing as Prentice Hall

How is the term brand perceived by marketers versus customers?

What advantages and risks are associated with a strong brand?

How does a firm build a strong brand? What are the issues involved in ingredient branding?


When should a company pre-announce new products?

What are the pros and cons of pre-announcing?

What are the tactical issues involved in pre-announcing?


Strategic brand management is critical to establish/nurture corporate identity

The 2008, Interbrand, top 10 global brands:

6. Toyota

7. Intel

8. McDonald's

9. Disney

10. Google

1. Coca-Cola

2. IBM

3. Microsoft

4. GE

5. Nokia


Brand: a name, term, symbol, or design ◦Protected through registered trademarks◦Intangible asset = adds value to company

Identify/differentiate goods and services of one seller from another

Allows a company legal protection for its products


To a marketer a brand refers to:

◦Awareness and reputation in a marketTo a customer, a brand represents:

◦A promise of specific product performance◦Company must deliver on “moments of truth”

Each interaction a customer has with the company, its products, its brand

◦Emotional connection with the company/product

◦A symbol of customer’s self-image


Branding Strategies: specific activities to create awareness and prominence in the market

Brand elements- logos, symbols, slogans Usage experience Associations with other entities Internal communication with employees Customer service/support


Drivers of Brand AttitudeDrivers of Brand AttitudeChanges in innovation road map

New blockbuster products enhance, while failure to innovate erodes brand attitude

Changes in top management

CEO identity and persona

Competitor actions

Hard-hitting, direct comparison can negatively impact brand attitude

Legal actionsMay negatively effect brand attitude


Brand Equity: power of a brand to positively affect consumer response to marketing

Three key drivers of brand equity:

1.Customer brand awareness

2.Customer brand attitude

3.Customer perceptions of brand ethics


Advantages Disadvantages• Command premium prices • Can be expensive• Strong impact on consumer behavior • Trigger backlash if

actions are inconsistent with brand message

• Bestow credibility• Send signal of product quality• Facilitate entry into new markets • Long-term commitment• Reduce risk with new initiatives• Positive return in financial performance• Earn higher margins• Attract high-quality employees• Elicit support from partners• Gain licensing opportunities

For CompaniesFor Companies


For CustomersFor Customers

Advantages Disadvantages

• Provide a decision-making heuristic • Can become angry if

company doesn’t live up to promises• Provide a signal of safety, or

pledge of quality


Branding is more important for high-tech than incremental products/innovations

Brand awareness and strong brand image require well-designed/funded marketing programs

Branding strategies must be viewed as long-term investments


High-tech services

◦Nature of services: intangibility and variability

◦Branding may make abstract nature of service more concrete

◦A brand can help identify the services provided by the firm


• Create a steady stream of innovations with strong value proposition

• Emphasize advertising (rather than price promotions) to create awareness and brand image

• Effectively harness Web 2.0 technologies and new media

• “Influence the influencers” and stimulate word of mouth

• Think strategically about corporate social responsibility (CSR) efforts


• Brand the company, platform, or idea• Rely on symbols or imagery to create

brand personality• Engage in internal branding to enlist the

support of all company personnel

• Effectively manage all points of contact (“touch points”) with customers

• Work with partners (co-branding and ingredient branding)


Don’t brand the individual product (overbrand)

◦Prohibitively expensive

◦Makes it difficult for customers to develop product or brand loyalty Causes confusion

Brand Hierarchy◦ Includes company name, technology platform, and

then the product

◦Example: Microsoft Vista Windows


Beneficial at the corporate level

Provides stability

Helps establish a presence in financial markets

The brand must have trustworthiness, especially in the high-tech arena


Customers commit to a long-term relationship, the corporate brand should be strong, enduring

More options:◦Family names/umbrella brands ◦Brand the idea

Use distinct brands for different product platforms


Have a brand strategy that provides a roadmap for the future◦The company with the best technology does

not always win

Know that brands are owned by customers, not developers/engineers◦Tech companies often do not invest in

building strong brands, though they should


Rapid pace of innovation demands that companies stay in tune with their internal and external environments

Invest the time to understand the technology and value proposition; don’t be afraid to ask questions◦Marketers must be educated in the technology

to build credibility with the developers/engineers and customers


Supplier

OEM/ManufacturerRetailer

Customers

-raw materials-components-production equipment-services

-personal consumption-business use


Pulls demand from end users through the distribution channel back to the original equipment manufacturers (OEMs)

◦OEMs feel pressure to use the branded ingredient on the goods they make

Stimulates derived demand


Ingredient supplier provides cooperative advertising dollars to OEMs◦Typically provided as percentage of revenue

for product◦OEMs feature the “ingredient” or component

in their own ads for their own products

Makes sense when the supplier’s “ingredient” is integrally related to the performance capabilities of the end-product


ADVANTAGES

Brand awareness creates a competitive advantage in the marketplace for the ingredient supplier

For a small OEM, co-branding can◦ strengthen its brand credibility◦ provide incremental advertising dollars


DISADVANTAGES Expensive for supplier Halo effect: supplier’s/OEM’s reputation may be

tarnished if OEM/supplier experiences product or performance problems

Erode ability of OEM to differentiate its product –particularly when lesser-known brands use the same ingredients

Supplier and OEM may not share the same goals Ingredient supplier may attempt to enter OEM’s

marketplace in the future


No-brand strategy◦ Have customers resell product under their brand

name

Creativity is crucial for attracting attention to the product

Piggyback on brand names of larger companies by leveraging business relationships

Acquire or license a brand name


Announcement of new high-tech products and innovations before they are ready for the market

Signals the firm’s future intentions

Appealing tool for strategic marketing communications


“Vaporware” Products announced early that are slow or

fail to materialize◦“Yesterday’s technology tomorrow” ◦Undermines the credibility of the high-tech

firm◦May result in negative publicity


PROS CONSPioneering advantage: preempt competitors, create entry barriers

Cue competitors

Stimulate demandCannibalize current

products

Encourage customers to delay purchasing

Confuse customers

Help customers plan Create internal conflict

Gain customer input, feedbackGenerate anti-trust

concerns

Stimulate development of complementary products

Product delays damage reputation or jeopardize

firm survivalProvide access to distribution

Increased value to shareholders


Timing

Nature & Amount of Info

CommunicationVehicles

Target Audience


EARLIEREARLIER Complements are

necessary for success

Highly novel/ complex products

Long buying process High switching costs

Timing*

LATERLATER Threat of

competitors Product features are

frozen late in the process

Minimize risks of cannibalization

*Regardless, the pre-announcement must coincide with the customer purchase

cycle


How much?

What kind?◦Reveal product attributes? ◦Reveal how product works? ◦Reveal how it compares to existing

products? ◦Reveal pricing/delivery?

Information


Trade shows Advertisements Press releases Press conferences

CommunicationVehicles


◦Customers◦Competitors◦Distributors◦Partners

Target Audience

◦Shareholders◦Employees◦Industry Experts◦Media


Avoid Pre-Announcements When:

Cannibalization might be high◦Firm has strong portfolio of products◦Customers would postpone current

purchases

Firm is large and might be accused of predatory intent


Pre-Announcements are Useful: When firm has low market dominance

◦Faces lower cannibalization risks◦Faces fewer antitrust concerns

When firm believes competitors not likely to respond

To advance the customer decision process◦Product requires customer learning or

customers face switching costs


Chapter Features Opening Vignette: Samsung’s global

branding strategy Technology Expert: Foveon (chip/image

sensor for digital cameras) Technology Tidbit: IDE treadle pumps End-of-Book Case: Xerox, Goomzee, SELCO-

Solar Power in India


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Chapter 12: Strategic Considerations in Marketing Communications