Wits sld 2016 part 4

Part 4

Module 3

Brands and Branding

Agenda: Module 3•What are “branding” and “brands” and how have they evolved?•Levels of meaning and how brands are used•Brand typology and brand value•Why brands fail•The impact of the internet on brands

Core

Generic

ExpectedAugmented

Potential!

Definition of a Brand

A brand is a name, term, sign, symbol, or design or any

combination of them, intended to identify the products (goods,

services or anything else,) of one seller or group of sellers, and to differentiate them from those of

competitors.

Why Brands? For Customers•Give customers a range of choices to meet their needs

•Make a product instantly identifiable and familiar, and therefore saves time in making choices and …

•Create customer loyalty, confidence & reassurance•Make a promise to deliver a specific set of features, benefits, advantages and quality to customers

•Specific brands are associated with specific feelings

•Allow for comparisons between brands

Why Brands? For Customers

Thus, brands are useful because they

help us to avoid confusion

Why Brands? For Companies

•Create resources (through increased sales and larger profits) to build marketing strengths…

•That are easy to defend....•And reduce impact of rivals’ advertising & promotional efforts, (cause challengers to think twice: high barriers to entry)

•Create barriers to switching for customers

Brand Myths – Taken by Surprise•If a product is good, it will succeed•Brands are more likely to succeed than fail•Big companies will always have brand success•Strong brands are built on (expensive) advertising

•If it’s something new, it’s going to sell•Strong brands protect products

Such a powerful brand that the last time we bought 1,5 litres we paid R44.00!

Module 4Customers and

Competitors

Agenda: Module 4•The factors that influence buying behaviour, and how to influence

•Use of market research•What customers want – and don’t want•Carrying out a competitor analysis•Principles of marketing warfare•Attack and defence strategies and tactics

If you’ve made the choice to differentiate your company, products and services, then

there are hundreds of possibilities that exist…•First, list the many stages of the buyers’

experience cycle•Next, list the dozens of ways (at least 82,) in which you can add value – at each stage

•Then decide which factors are most viable for you, and most important to customers

•Finally, redraw the value curve for your business

For example, in the airlines industry…•Booking process•Price•Getting to (and from) airport, and parking

•Check in queues•Lounges/ Freq Buyer Prog.

•Different classesNow look at your own

industry factors

•Seating arrangements•Friendly/fun service•Meals•Speed/turnaround•Frequent point to point departures

Case Study: Virgin Atlantic• Industry assumptions: Let’s walk away

from 1st Class, you can have fun and offer a massage, serve snacks between meals, drive customers to and from airport, etc.

• Strategic focus: Who cares what BA and others do! “Upper Class” service for Business Class fares

• Customers: Let go of the snobs, but go for “Upper Class” and the “riff raff” - and spoil them to bits with legendary personal service.

• Assets & Capabilities: Let’s redesign the ‘planes with sleeper seats, mini-casino, showers & gym, TV sets for everybody, and create a feeling of spaciousness when they walk in

• Product & service offerings: “We’re in the business of time management.” Includes door-to-door “limobikes”, breakfast and showers at the end of the journey, choice of more than 48 channels, transporting goldfish, etc.

Case Study: Virgin Atlantic

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Virgin

Kulula.com

SAA

Airlines Value Curves

It should be fairly obvious that customer satisfaction is very important in terms of buying

again, buying more, and enhancing your company’s image – and customer

dissatisfaction has the reverse effect!

But customer satisfaction is simply not enough – it’s the minimum required. For loyalty,

customers need much more than that, and you need to understand what are the factors that

affect this.

(We’ll return to this later)

You have already had a chance to do a competitor analysis, and to understand how competitors play

a role in your decision-making.

But how do you need to focus? Where should you spend your time and money? How much energy

should you put into fighting off competitor moves?

Like many other situations we have examined so far, the answer is “it depends”

Competitors and Rivals

Self-Centred

Competitor - Centred

Customer-Oriented

Market Driven

Minor

MajorMinor Major

Emphasis on Customer Needs

Emphasis on Competitor Comparisons

Market Orientation

And it doesn’t have to be

50:50. Perhaps we should be looking to

make competitors irrelevant!

Marketing Warfare

“The study of marketing warfare is not just a study of how to win – it is also equally important to know how not to

lose.”

The Marketing BattlegroundMarketing wars are fought inside the mind: this is the difficult and tricky

terrain that is so hard to understand.

You try to outmanoeuvre and outfight your competitors in an intellectual war.

Thus, to be successful, you need to study the terrain before the battle, so that

you eliminate as many surprises as possible. Without information, you may

die quickly

The good news is that most of your competitors will be so busy trying to

understand their own territory…

that they may not notice you studying theirs’

Three important principles underlie all wars:First, the principle of forceAlways have larger forces than the enemy at the point which is to be attacked or defended.

Second, the superiority of defenceDefence has always proved to be the stronger form of warfare. (From 25 leading brands in 1923, 20 were in 1st place, four were in 2nd, and one was in 5th place in 1998. However, things have changed since)

Third, the necessity of intelligenceWithout information, you may find yourself wandering around, blindfolded or blind, making guesses about what should happen, and hoping for the best.

•The superiority of force is such an overwhelming advantage that it overcomes most quality differences

•Count on having a better strategy, especially if you have a larger company with more people

•Better products will not always win the battle. Don’t be fooled, because it’s more about perceptions. People will say: “Hey, if your product is better, how come you’re not the leader!”

•Winners always have the better product, and they’re always available to say so)

But beware of the two fallacies of “better people” and “better products”…

Attack Strategies: The Principles Of Offensive Marketing Warfare

• The main consideration is the strength of the

leader’s position• Find a weakness in the leader’s strength and

attack that point• Launch the attack on as narrow a front as

possible

Attack Strategies: Some Important Points• For Challengers, not for Leaders, or

Followers• Main consideration: strength of leader’s

position. Find weaknesses in leader’s strength, & attack there

• Launch attack on as narrow a front as possible

• Set high aspirations & goals, then leverage smaller resources while leader runs business as usual

• For decisive results, attacker should concentrate superior power at a critical time and place

Attack Strategies: Some Important Points (Ctd.)Attacker can choose to attack one of three types of companies:• Market leader (high risk, but high payoff

especially if leader’s position is fragile*)• Companies their own size not doing the job and

under-financed • Small local and regional companies not doing

the job and under-financed

*Fragile position of leader includes consumer dissatisfaction, or lack of innovation

Attack Strategies

Attacker Defender

Encirclement attack

Bypass attack: BOS?

Flank attack

Guerilla attack

Full front attack

Bypass AttackMost indirect assault: involves finding “easier” markets to broaden resource baseUsually three approaches:• Diversifying into unrelated products• Diversifying into new geographical

markets• Leapfrogging into new technologies to

supplant existing products(But Blue Ocean Strategy would

disagree!)

Guerrilla Attacks• Useful for challengers which are small and

under-capitalised• Consists of small, focused, narrow, and

intermittent attacks on different aspects of opponent’s “territory”: geographic, demographic, industry, products, “high-end” industries, etc. (Any narrow area in which there are opportunities)

• Desired effect: Surprise/shock/awe: “They can’t do that!”, draining resources, harassing or demoralising competitor, & eventually securing permanent foothold. (The drain of resources must be more disproportionate for competitor)

Can take a number of forms:• “Raiding the supplies”• Local attacks which inflict disproportional

losses on competitor• Bringing competitor into unprofitable attacks or

defences• Causing excessively wide distribution of their

forces• Exhausting moral, emotional, intellectual &

physical energyBoth conventional and unconventional means can be

used to attack opponents: selective price cuts, intense promotional blitzes, & occasional legal actions

• A continual stream of minor attacks usually creates more cumulative impact

• Not all guerrilla campaigns are low cost / easy to mount: may be expensive, require much detailed planning

• Consider a segment which is small enough to defend when you lead

• Best opportunities occur when larger competitor abandons the territory: jump in and fill void while market still exists - quickly

• May even be used in preparation for conventional “war” later

• Resist the temptation of changing from guerrilla warfare when things go well

• Never act like the leader!• Keeping it secret is vital to success

• If things are not going well, get out - at a moments notice - and live to fight another day

• Small guerrillas can consider strategy of co-operating with each other as allies - temporarily or permanently

• Create an army of guerrillas by franchising certain operations (top-down approach)

• But also possible to get co-operation from bottom-up (joint marketing, or mass-buying of raw materials)

• Price discounting: Three assumptions must be true for success:

• Challengers must persuade customers that products/service are comparable to leader’s

• Buyers must be sensitive to price difference• Must also feel comfortable about turning

backs on existing suppliers• Market leader must refuse to cut prices in

spite of attack

Which Actual Marketing Strategies Are Available to Challengers?

• Cheaper goods: Works only when sufficient buyers are interested only in price. (Over time, many challengers upgrade quality & price)

• Prestige goods: (Can later roll out lower-priced products to take advantage of “name” & charisma)

• Product proliferation: Attack leader by offering buyers many more choices / much larger variety

• Product innovation: Launching new, improved version of leader’s products. (Also a good defense strategy for leaders.) Real winners tend to be consumers

• Improved services: The “We try harder” strategy

• Distribution and logistics improvement: Challenger may discover / develop new channels of distribution. Some innovative approaches: direct selling, multi-level marketing, internet & e-business

• Manufacturing cost-reduction: The “low-cost producer”. (Because of better raw material purchasing, lower labour costs, increased productivity, use of more modern technology, and even outsourcing.) Company can use this strategy to price aggressively, or can also reinvest additional money into improved promotion / service

Intensive advertising promotion: Challengers attack leader by increasing promotion expenditure. (Not usually a sensible strategy unless product or advertising message exhibits superiority)

Blue Ocean Strategy: Make competitors irrelevant

Remember: Challengers rarely improve market share by relying on one strategy: a

combination of several over time works best.

A final word on attack strategiesIn any industry, most companies will be waging guerrilla warfare, with a very small number of the really big companies using big offensive attacks

For every 100 companies, one will be leader, (play defensively), two play offense, three flank or encircle, and the other 94 are guerrillas. (Generally)

• Only the market leader(s) should consider playing defence• The best defensive strategy is to have

the courage to attack yourself – even cannibalising current offers• Strong competitive moves should

always be blocked

The Principles of Defensive Marketing Warfare

Some points to remember about defence• “The leader”, is defined from customer’s perspective.

Companies don’t create leaders - customers do. And they don’t care what you think.

• “The leader” means the leader, not a leader. (A pretender cannot will their way to the top through positive thinking). Fool the competition, but never fool yourself.

• The best way to improve leadership position is to constantly attack yourself: introduce new products, services, & systems making existing ones obsolete

• Why is this a superior strategy? Competitors continually struggle to catch up

• Attacking self sacrifices short-term profits, but has the fundamental benefit of protecting market share

• Reverse is also true: a company which hesitates to attack itself usually loses market share & ultimate leadership

• Market leaders do get a second chance if they haven’t attacked themselves, by copying competitive moves. (But must move quickly: no time for ego’s, & to “wait and see”)

• Why is defensive blocking effective? Because battleground of marketing is customer’s mind. (You may even be credited with innovation)

There should be no surprises: good reconnaissance must give info and intelligence to make competitor predictable. The intelligence is most important to understand? The customer’s mind!

Leaders don’t spend much time on defense, but should always have “something in reserve”. (Lay low until sales start to falter. Then launch massive campaign to get sales moving again. A version of “attack yourself” strategy.)

Module 5Customer Loyalty

and Retention

Agenda: Module 5• Why customer loyalty and management is important• Why loyalty is more important than satisfaction, (hostages,

terrorists, mercenaries and angels)• What customers want: ServQual, B2B needs, CES, and

activities in identifying touchpoints and customer journey maps

• How to create customer loyalty – only four ways to do this• Getting basics right, create barriers to switching, putting

relationships first, and value innovation• Internal customer care• A complete strategy for customer management

• R & D and market research• Product & service development, and launch• Advertising and promotion• Getting new customers on board

Customer loyalty is extremely profitable

Year0 1 2 3 4 5

Cust

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Pro

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Acquisition Costs

Base ProfitMarketing Cost ↓Cost to Serve ↓Increased SalesReferralsPrice PremiumBut benefits also accrue from…

Oh, and one final challenge…

In recent surveys asking executives to rate their success in customer care, customer

loyalty, and customer management, most rate their companies as good, very good, or

exceptional

When asked the same questions, most of their customers disagreed!

This is the business world’s great delusion

Customer Loyalty

Behaviour

Low

High

Customer Satisfaction Perceptions

Low High

So What is Customer Management?Customer management is aimed at building a portfolio of loyal customers by offering them

on a continuous basis a product/service package tailored to their individual needs.

It is the strategic management process that uses individual customer data to enable a tailored, mutually trusting, valuable and

win:win proposition

(Today supermarkets and hotels are more trusted than banks, police and politicians!)

If you cannot be distinct, then you’re going to be extinct

Be interesting, or be invisible

What is your competitive advantage?

Why should anybody do business with you?

Companies want their customers to be loyal to

them…

But they are not prepared to be loyal to their

customers

Who is Wayne Duvenage?

“Smooth” Touchpoints: Get the basics incredibly right. Kill “dumb contacts” (3)

High barriers to switching

Continuous value

innovation

Put Relation-ships First

Sustainable Customer Loyalty



Maximising Value through Customer Management

What do you want when you spend your money?

Dimensions of Service QualityGetting the Basics Right

Reliability: Consistency of performance and dependability. The company performs its work right first time, and honours its promisesResponsiveness: The willingness or readiness of staff to provide service, (rather than apathy). It also involves timeliness and a sense of urgency. It’s about short queues and no delaysCompetence: The possession of the required skills and knowledge to do the job and perform the serviceAccess: Approachability and ease of contact, both by telephone, and in a “live” face-to-face situation. We can include things like hours of business and convenient location in this category

Courtesy: Politeness, respect, consideration, friendliness, warmth, and even love from staff who deal with customersUnderstanding the Customer: Knowing customer’s specific needs & requirements, & who they are. Examples: individual attention and recognising themCommunication: Keeping people informed always. Especially true if something goes wrong, (reassure customer that problems will be handled.) Includes explanations, training & clarity about prices/costs. Half communication is about listening


Credibility: Trustworthiness, believability, honesty, ethics and integrity are all important here. It’s about having the customer’s best interests at heart. Your name, brands and reputation contribute to this, but so do the personal characteristics of the people who work thereSecurity: Freedom from risk, danger, doubt, and/or worry. Whether customers feel comfortable doing business with you. Includes elements of physical safety, financial security, & confidentiality. Tangibles: The physical evidence which impacts on the customer: appearance of staff, the physical facilities, the tools and equipment, even other customers. Anything that affects or attacks any of the five senses is important here. (Customers use physical representations of the company as symbols of the quality of products and service.)


Creating the “perfect customer experience” begins with making it

easy to do business with your company

Getting the Basics Right – Part 2: Customer Effort Score - CES

Why is CES a good idea?•Drives advocacy value for loyalty•Reduces customer churn from difficult experiences•Applicable to all channels•Resonates with and engages staff

•Low effort usually also means lower costs for everyone – customers and company

Customer Effort Defined

The physical, mental/cognitive/intellectual, emotional, and time-effort energy needed to do

something

Making things appear simple

Making things simple

The Pillar ATM

Mapping the Customer Journey

Touch Points in Time Sequence

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Location

Check In

Car Park

Lounges

Security

Shopping*

Signs

Hurry up and Wait*

Home Check In

Aircraft seating

BoardingGate seating

Toilets

Gate seating

ToiletsAircraft seating

LocationCar Park

Home Check In Lounges

No need to wait*

Signs

Shopping*

Security

Boarding

“I hate this! Why do I keep doing it?

“Aaaah! If only I could do this always”





Relationships First!

•1200+ flights•Still don’t know who I am•Unable to detect patterns

1986 20132001

So much for CRM!



Continuous value

innovation



Fish!Your Personal

Power to Make a Difference

How do we make ourselves indispensable?

By giving them irresistible experiences…

And thereby making competitors irrelevant!

Commodity or Speciality - Is It Worth It?

“There is no such thing as a commodity” (Ted Levitt)

R11/kg

R5,50/kg

R28.50c/kg

R66/kg

Experience!

Experience!Experience!

How can you add value to toilet paper?

Customer of the Year

It’s very possible to

create a lot of perceived

value at not much cost to your business

And it was unanimous

A Perfect Customer Experience?

Start spreadin’ the news…

But who can’t/won’t be friendly?

There’s always an answer!

•Did you send my goldfish to London?

•Who is going to organise my seatbelt?

The opposite is also true… It is perfectly possible to spend a

fortune without creating much real loyalty in customers! (Value, yes; loyalty,

no)

There are at least

82 ways to add value

for Your customers!

Getting to Unbelievable!

The Four Actions FrameworkReduce

Which factors should be reduced well below

industry’s standard?

RaiseWhich factors should be

raised to well above industry’s standard?

EliminateWhich factors that industry takes for granted should be

eliminated?

CreateWhich factors should be created that the industry

has never offered?

A new industry value curve

before you can get into

their pockets

You have to be

able to get into your

customer’s heads…

“There are only two things of importance. One is the customer, and the other is the product. If you take care of customers, they come back. If you take care of products, they don’t

It’s just that simple.And that difficult”

Stanley Marcus, Neiman Marcus

Every morning in Africa, a buck wakes up and knows that it must run faster than the fastest lion, or it will be killed. But

every morning in Africa, a lion wakes up, and knows that it must run faster than

the slowest buck, or it will starve to death.

In Africa, it doesn’t matter whether you are a lion or a buck…

When the sun comes up, you’d better be running!

So just in case you need reminding…

Education

Wits sld 2016 part 4