WPS Management Workshop - Business Segmentation

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					Strategically Branding A
       Destination


         William D. Neal
     Senior Executive Officer
            SDR, Inc.
What Values Come to Mind?

     Coca Cola


                            2
What Values Come to Mind?

Hewlett Packard


                            3
What Values Come to Mind?

       Honda


                            4
What Values Come to Mind?

       Disney


                            5
What Values Come to Mind?

     Las Vegas


                            6
      Branding is a Strategy
• Great brands are built strategically
• Great Brands are a central element of
  strategic business planning.
• Great Brands dominate the market
  planning process.



                                          7
Strategy - integrated
 actions in the pursuit of
 competitive advantage
George Day

                             8
 Strategic Market Planning

A planning process to
develop or improve
sustainable competitive
advantage.
                             9
      “If it moves,
     we sponsor it,
if it doesn’t move, we
      paint it red.”
      Roberto C. Goizueta, Coca Cola
Can we adopt strategic
business planning models to the
Travel & Tourism Industry?
Yes !
But we must change our
thinking a bit
     Think in terms of BUSINESS
• The location can be thought of as the ENTERPRISE.
  – ORLANDO
• Individual destinations can be thought of as
  STRATEGIC BUSINESS UNITS dominated by
  Brands.
  – Disney World
  – Universal Studios
  – Sea World
• Specific activities can be thought of as CUSTOMER
  REQUIREMENTS.
  – Rides & Attractions     - History Education
  – Culture/Heritage        - Nature
  – Night Life              - Educational Programs 12
      Think in terms of BRANDS
• The destination area can be thought as an
  AUTHORITY BRAND.
   – ORLANDO
• Individual destinations can be thought of as
  STRATEGIC BRANDS.
   – Disney World
   – Universal Studios
   – Sea World
• Specific activities can be thought of as
  INDIVIDUAL BRANDS to meet customer needs.
   – Indiana Jones Theme Park   - Theme Hotels
   – Old Town Orlando           - Nature Island   13
    The Brand Hierarchy
                Orlando
            Authority Brand

Sea World             Disney                  Universal
Strategic             Strategic               Strategic
Brand                 Brand                   Brand



        Sub-            Sub-         Sub-
        Brand           Brand        Brand
       Indiv. Rides    Attractions   Theme Hotels         14
 What Master Brands come to
mind for this Authority Brand?

 San Antonio
  The Riverwalk
  The Alamo
  The Five Missions
  Texas Museum of History
  The Spurs
 What Master Brands come to
mind for this Authority Brand?

       Atlanta
     The Braves & Turner Field
     Stone Mountain Park
     Buckhead
     Emory Medical Center
     Lake Lanier
 What Master Brands come to
mind for this Authority Brand?


Ocracoke Island?
 Where is Ocracoke?
    The Marketing Concept
         External Environment
            Other Co. Activities
             Marketing Activities


                 CONSUMER


                Marketing Mix
        Finance, Production, Legal
Economic, Political, Technological, Social, Demographic   18
 The Marketing Concept
• The purpose of business is
  satisfied customers
  – Drucker, Levitt, McKitterick
• The purpose of business is to
  deliver value
  – Porter, Reichheld, Berry

                                   19
      Brand Value Concept
Satisfaction simply
keeps you in the
Consideration Set
                       Consideration Set
                       Brand Hierarchy
       All Products &
                       * Brand V
       Services in the
                       * Brand X
       Category
                       * Brand Z

              The rational buyer
              purchases the brand with
              the highest value to them
  The Marketing Concept
REALITY:
• Marketing Concept must also address
  the competition
• The purpose of business is to deliver
  higher relative value.
• To survive and grow, you must
  provide: SUSTAINABLE
  COMPETITIVE ADVANTAGE
                                          21
 Goal of Marketing Strategy


Develop Sustainable
Competitive Advantage

                              22
    Strategic Market Planning

A planning process to
develop or improve
sustainable competitive
advantage. (Neal, “Introduction to Marketing
Strategy”)

                                         23
                                The Kotler Model*
                                                                                Environment
    Corporate & Divisional Levels: Strategic Planning Process                 Macro-environment
                 Objectives                              Business
 Company                                Growth
                      and                                 Portfolio                Publics
  Mission                              Strategy
                     Goals                                  Plan
                                                                                 Competitors

                                                                              Marketing Channels
      Product & Market Levels: The Market PlanningProcess
                                                                                   Markets
 Marketing         Target            Marketing         Marketing
Opportunity        Market              Mix              Systems
 Analysis                                                                       Target Markets
                  Selection          Strategy         Development
                                                                                  Customers
                                                                Information


                                                                Execution

  Market Segmentation
              Product Positioning                                                     * Philip Kotler
                      Prod. Optimization                                            Business Magazine
                                Market Forecasting                                 May-June 1980, pp3
                   Brand Value           Customer Satisfaction                     Modified by W.D. Neal
                                                                                      30 April, 1986

                                                                                                 24
 The Major Elements of the
Strategic Planning Process at
    the Enterprise Level

 • Mission
 • Goals & Objectives
 • Growth Strategy
 • Business Portfolio Plan
                  Mission
•   Short statement of the business you are in
•   Used to focus and limit your purview
•   Often the hardest step in the process
•   Often accompanied with a VISION
    STATEMENT - what do I want to be in
    the future.


                                             26
        Goals & Objectives
• Goals - longer term, broader outcomes you
  are seeking (e.g. lead the industry in sales and
  service)
• Objectives - shorter term, totally measurable
  outcomes (e.g. sustain a 10% increase in
  annual profitability for each of the next three
  years)
• Each goal should have multiple, time-phased
  objectives crafted so that their
  accomplishment will fulfill the goal.
                                            27
            Growth Strategy
• To grow by how much over what time period.
• How will we measure growth - sales, profits,
  share, operating ratios, etc.
• How will we grow?
  –   Higher Demand
  –   New products
  –   Market expansion
  –   New market penetration
  –   Production efficiency
  –   Acquisition
  –   etc.                               28
       Business Portfolio Plan
• What elements of my business will I put
  under the same management group?
  –   By brand family
  –   By product line
  –   By geographic/country location
  –   By channel
  –   By buyer benefits delivered
  –   etc.

                                            29
Developing The Strategic
    Marketing Plan
         Step 1 - Assessment
                    Areas to Address
SWOT Analysis         Internal Opns
  – Strengths         Competitors
                      Markets
  – Weaknesses
                      Marketing
  – Opportunities     Environment
  – Threats           Core knowledge
                      Experience
                                       31
              The Kotler Strategic Planning Model
                     The Company                                                         The
      Corporate & Divisional Levels: Strategic Planning Process                      Environment
 Company            Objectives          Growth             Business                  Macro-environment
                       and              Strategy           Portfolio
  Mission             Goals                                  Plan                          Publics

                                                                                        Competitors

                                                                                     Marketing Channels


                                                                                          Markets
        Product & Market Levels: The Marketing Process
                                                                                       Target Markets
 Marketing           Target            Marketing          Marketing
Opportunity          Market               Mix              Systems
 Analysis           Selection          Strategy          Development                     Customers



                                                                       Information


                                                                       Execution
Market Segmentation
        Product Positioning
                    Product Optimization                                                       Philip Kotler
                           Market Forecasting                                               Business Magazine
                                                                                                      32
                                                                                           May-June, 1980, pg..3
                       Brand Value Customer Feedback
Step 2 - Marketing Opportunity Analysis
  • Segment the market - What bases?
    –   Needs/preferences
    –   Values/benefits sought
    –   Occasions
    –   Demographics
  • Align your strengths against competition’s
    weaknesses - BY SEGMENT
    – Share of market, Share of preference,
    – Channel control, Price advantage, Brand strength,
    – Price/value perception, Production capability, etc
                                                      33
   Market Segmentation

Firms that properly segment
their market and focus their
resources on deep penetration of
targeted segments almost always
exhibit higher profitability.

                               34
 Why is Market Segmentation
     usually successful?
• Focuses the resources of the firm on a
  specific target of similar customers.
• Limits competitive pressure.
• Allows the firm to develop a deep
  marketing-mix experience with the
  segment.
• Provides a platform for expansion into
  contiguous segments.
                                           35
The Multi-Dimensional Segmentation Model

     Activities




                  Demographics
                  (Life Stage)
              The Kotler Strategic Planning Model
                     The Company                                                         The
      Corporate & Divisional Levels: Strategic Planning Process                      Environment
 Company            Objectives          Growth             Business                  Macro-environment
                       and              Strategy           Portfolio
  Mission             Goals                                  Plan                          Publics

                                                                                        Competitors

                                                                                     Marketing Channels


                                                                                          Markets
        Product & Market Levels: The Marketing Process
                                                                                       Target Markets
 Marketing           Target            Marketing          Marketing
Opportunity          Market               Mix              Systems
 Analysis           Selection          Strategy          Development                     Customers



                                                                       Information


                                                                       Execution
Market Segmentation
        Product Positioning
                    Product Optimization                                                       Philip Kotler
                           Market Forecasting                                               Business Magazine
                                                                                                      37
                                                                                           May-June, 1980, pg..3
                       Brand Value Customer Feedback
 Step 3 - Target Market Selection
• Evaluate segments in terms of your perceived
  strengths and weaknesses vs competitions’ -
  develop perceptual maps for segment groups
• First, select segments you currently dominate
  and determine how to defend and improve
  your position
• Next, select segments that you could
  dominate and prioritize by cost of
  domination.
                                          38
Step 3 - Target Market Selection (cont.)
  • Finally, find any remaining segments that
    represent high growth potential and look at
    ways you could successfully enter those
    segments.
    – New product introduction
    – New brand platform
    – Power promotion
  • Order segments by financial attractiveness
    and prioritize investments
                                            39
              The Kotler Strategic Planning Model
                     The Company                                                         The
      Corporate & Divisional Levels: Strategic Planning Process                      Environment
 Company            Objectives          Growth             Business                  Macro-environment
                       and              Strategy           Portfolio
  Mission             Goals                                  Plan                          Publics

                                                                                        Competitors

                                                                                     Marketing Channels


                                                                                          Markets
        Product & Market Levels: The Marketing Process
                                                                                       Target Markets
 Marketing           Target            Marketing          Marketing
Opportunity          Market               Mix              Systems
 Analysis           Selection          Strategy          Development                     Customers



                                                                       Information


                                                                       Execution
Market Segmentation
        Product Positioning
                    Product Optimization                                                       Philip Kotler
                           Market Forecasting                                               Business Magazine
                                                                                                      40
                                                                                           May-June, 1980, pg..3
                       Brand Value Customer Feedback
 Step 4 - Marketing Mix Strategy
FOR EACH TARGETED MARKET…
• Determine how you will optimize VALUE for
  each target market, now and in the future
• Plan the product/service attributes you will
  emphasize
• Plan your advertising/promotional support
  program
• Plan your channel/delivery strategy - avoid
  channel conflict
• Plan your pricing strategy
                                         41
Step 4 - Marketing Mix Strategy (cont.)
  FOR EACH TARGETED MARKET…
  • Develop contingency plans for likely
    competitor counter-attacks
  • For each segment, determine how you will
    enhance your brand equity
  • Use market simulation (preference or choice
    models) to test likely market response to your
    initiatives and to test competitive responses
  • Check for incompatible brand and product
    positions across targeted segments
                                             42
              The Kotler Strategic Planning Model
                     The Company                                                          The
      Corporate & Divisional Levels: Strategic Planning Process                       Environment
 Company            Objectives          Growth             Business                   Macro-environment
                       and              Strategy           Portfolio
  Mission             Goals                                  Plan                           Publics

                                                                                         Competitors

                                                                                      Marketing Channels


                                                                                           Markets
        Product & Market Levels: The Marketing Process
                                                                                        Target Markets
 Marketing           Target            Marketing          Marketing
Opportunity          Market               Mix              Systems
 Analysis           Selection          Strategy           Development                     Customers



                                                                        Information


                                                                        Execution
Market Segmentation
        Product Positioning
                    Product Optimization                                                        Philip Kotler
                           Market Forecasting                                                Business Magazine
                                                                                                       43
                                                                                            May-June, 1980, pg..3
                       Brand Value Customer Feedback
    Step 5 - Marketing Systems
• Forecast the growth in each targeted segment
• Develop selling and delivery systems that will
  support the current market and can handle
  the forecasted growth.
  – Market information systems
  – Customer service operations
  – Communications programs
• Develop a customer feedback system that
  measures plan vs. actual
                                           44
              The Kotler Strategic Planning Model
                     The Company                                                          The
      Corporate & Divisional Levels: Strategic Planning Process                       Environment
 Company            Objectives          Growth             Business                   Macro-environment
                       and              Strategy           Portfolio
  Mission             Goals                                  Plan                           Publics

                                                                                         Competitors

                                                                                      Marketing Channels


                                                                                           Markets
        Product & Market Levels: The Marketing Process
                                                                                        Target Markets
 Marketing           Target            Marketing          Marketing
Opportunity          Market               Mix              Systems
 Analysis           Selection          Strategy           Development                     Customers



                                                                        Information


                                                                        Execution
Market Segmentation
        Product Positioning
                    Product Optimization                                                        Philip Kotler
                           Market Forecasting                                                Business Magazine
                                                                                                       45
                                                                                            May-June, 1980, pg..3
                       Brand Value Customer Feedback
         Strategic Planning
• Strategic market planning is non-linear and
  recursive (and sometimes chaotic)
• The interface between the overall business
  strategy and the strategic marketing plan is
  critical - they must be fully integrated
• Ultimately, the strategic business plan
  dictates the amount of investment you can
  afford in your marketing plan
• Develop a plan to measure costs,
  effectiveness, and progress to objectives -
  ROMI
                                          46
       Winning Strategy -
Maximize value which maximizes
 loyalty for each target market
• The KEY to customer LOYALTY and growth
  is to:
  – Get into the consideration set
  – Then, consistently deliver the BEST VALUE to
    the targeted customers.
• VALUE is the KEY DRIVER of choice, thus
  LOYALTY!
• Brand Equity should be a major element of the
  VALUE PROPOSITION.
        Why is Brand Equity
           Important?
• Prevents commoditization of the category.
• Communicates added value beyond the tangible
  product performance characteristics, improving
  selling price and margins.
• Provides a strong defense against low price generic
  brands.
• Provides a platform for new product introductions.
• Gives more channel control to the
  manufacturer/producer.
• Improves stockholder value and stock price.
  Competing Theories of Brand
            Equity
Financial Orientation
  – Interbrand - Premium over category avg.
  – Accepted Accounting Procedures
  – Farquar - New Accounting Procedure
Market Orientation
  –   Total Research - Equitrend
  –   Landor Associates
  –   Aaker
  –   Young & Rubican
  –   CDB Research
  –   Vanderbilt/SDR (Srinivasan, Russell, Kamakura)
MARKETPLACE
  APPROACH
     TO
BRAND EQUITY
  Competing Market Theories of
         Brand Equity
• Aaker-Building Strong Brands. Views brand
  equity as the total value of a brand, including
  price premium, satisfaction, product attributes,
  image attributes, public opinion, and so forth.
• Vanderbilt Model - (MSI Series on Brand
  Equity.) (Srinivasan, Russell, Kamakura) Views
  brand equity as just the imagery that surrounds
  the brand name by buyers in the product
  category. Brand equity is separate from price
  and product performance attributes and may be
  measured as a price differential.
        Aaker’s 10 Measures
• Loyalty Measures
  – Price Premium
  – Satisfaction/Loyalty
• Perceived Quality/Leadership Measures
  – Perceived Quality
  – Leadership/Popularity
• Associations/Differentiation Measures
  – Perceived value
  – Brand Personality
  – Organizational Associations
                                          52
  Aaker’s 10 Measures (cont.)
• Awareness Measures
   – Brand Awareness
• Market Behavior Measures
   – Market Share
   – Market Price & Distribution Coverage
“The price premium may be the best single
  measure of brand equity available, because it
  directly captures the loyalty of customers in a
  most relevant way.” Aaker, pg 321.

                                                    53
   Aaker’s 10 Measures (cont.)

• Aaker model uses very disparate measures for
  each of the 10 criteria.
• Uses judgement to weight measures, depending
  on the product category, in order to construct a
  single summary measure.
• Does not work cross-culturally because of
  measurement and scaling issues.
• Gives no examples
• Ultimately, it is totally judgmental.          54
      BRAND VALUE
    Vanderbilt/SDR Model
(Combines market orientation and financial orientation)
 The Brand Value Model
•Idea developed from literature of
 Srinivasan, Russell & Kamakura
• Very similar model described by
 Srinivasan & Park (JMR, May 94) (used
 expectancy-value measurement model)
• SDR’s approach uses tradeoff exercises
 combined with other measurements.
      Brand Value Concept
1. Buyers who are considering a purchase, scan their
 product/service options and develop a consideration
 set.
2. Within the consideration set, they develop a
 hierarchy of brands/products based on their
 assessment of VALUE.
3. Typically, they choose the brand or product at the
 top of their value hierarchy, if available.
THIS MAY BE A CONSCIENCE COGNITIVE
 PROCESS, OR A SUB-CONSCIENCE PROCESS
 WITH SOME EMOTIONAL ELEMENTS
Brand Value Concept
 All Products/services
 in the Category
                    Consideration Set
                   Brand Hierarchy
                   * Brand V
                 The Brand X
                   *
                   * Brand Z

     The rational buyer
     purchases the brand with
     the highest value
     How Brands Get Into the
       Consideration Set
• Awareness
• Satisfaction in previous experience, or
  reputation for high satisfaction of customers
• Trusted
• Compatible image with purchaser
• Perceived acceptable price range
• Not socially irresponsible
• Acceptable country of origin                    59
     Brand Value Concept
Elements of Brand Value:
- A BUNDLE of tangible attributes delivered
 by the product/service or its channel.
- A BUNDLE of intangible attributes
 delivered by the name of the brand or
 producer (brand image or brand equity.)
- The price of those combined bundles.
    Brand Value Concept
 Customers determine brand value
 Varies by customer and customer segment
 Varies by product/service category
Any one Customer may have a different
 value set for different product categories
   Brand Value Model
     Value



What Drives Value ?
         Brand Value Model
                 Value

                  Price is one element
  Price           Price includes:
Initial Price         - Initial Costs
Operating Cost
                      - Operating Costs
     Brand Value Model
                           The bundle of
         Value             tangible product/
                           service attributes
                           is another.
         Product/Service
Price    Deliverables

                                     Attribute 1
Product            Service/Channel   Attribute 2
Performance        Performance       Attribute 3
                                     etc..
       Brand Value Model
                                Brand equity
              Value             is the third
                                element.

              Product/Service    Co./Brand
Price         Deliverables       Equity

Attribute 1      Attribute 1      Image Driver 1
Attribute 2      Attribute 2      Image Driver 2
                 Attribute 3      Image Driver 3
                 etc..            etc..
Brand Value Model
                                      Each element of
                  Value               the brand value
                                      model has a weight

   WPrice              WiAttributes          Wbrand

                  Product/Service           Co./Brand
   Price          Deliverables              Equity
                  Wi   Attribute 1     Wi   Image Driver 1
 Wi Attribute 1
                  Wi   Attribute 2     Wi   Image Driver 2
 Wi Attribute 2
    etc..         Wi   Attribute 3     Wi   Image Driver 3
                  Wi   etc..           Wi   etc..
Brand Value Model
                                      Each buyer has
                  Value               a different weight
                                      structure

   WPrice              WiAttributes          Wbrand

                  Product/Service           Co./Brand
   Price          Deliverables              Equity
                  Wi   Attribute 1     Wi   Image Driver 1
 Wi Attribute 1
 Wi Attribute 2   Wi   Attribute 2     Wi   Image Driver 2
    etc..         Wi   Attribute 3     Wi   Image Driver 3
                  Wi   etc..           Wi   etc..
Brand Value Model
                                      The buyer’s weight
                  Value               structure is their
                                      Value Equation

   WPrice              WiAttributes          Wbrand

                  Product/Service           Co./Brand
   Price          Deliverables              Equity
                  Wi   Attribute 1     Wi   Image Driver 1
 Wi Attribute 1
                  Wi   Attribute 2     Wi   Image Driver 2
 Wi Attribute 2
    etc..         Wi   Attribute 3     Wi   Image Driver 3
                  Wi   etc..           Wi   etc..
        Brand Value Model
• Each buyer has a unique Value Equation
• The Value Equation provides the buyer
  with a preference structure for making a
  CHOICE among a competing set of
  products or services in a category.
• Rational buyers choose the best VALUE.
• Thus VALUE drives CHOICE.
           Brand Value Model
                 Value                    Choice

  WPrice              WiAttributes         Wbrand

                 Product/Service          Co./Brand
  Price          Deliverables             Equity
                 Wi   Attribute 1    Wi   Image Driver 1
Wi Attribute 1
                 Wi   Attribute 2    Wi   Image Driver 2
Wi Attribute 2
   etc..         Wi   Attribute 3    Wi   Image Driver 3
                 Wi   etc..          Wi   etc..
    Brand Value Management
BRAND VALUE
• Varies by product/service category.

• Price and performance features can often be met
 by competitors.
• Brand equity is more difficult to change - long
 term strategy - Both offensive and defensive.
• When there is weak brand equity and product/
 channel parity in a category, price is the only
 remaining marketing variable.
 Brand Equity Characteristics
BRAND EQUITY
 Intangible, varies by category
 Not easily duplicated, thus provides long-
     term defense against competition
 Underlying drivers are perceptual:
    –   Image imparted to the purchaser
    –   Trust
    –   Longevity in the marketplace
    –   Reputation for quality
    –   Community involvement
   Built and improved by effective advertising
Brand Value/Equity Measurement
ASSUMPTIONS
• Buyers optimize value within a product or service
 category.
• Buyers therefore assign utilities (weights) to price,
 performance attributes, and brand equity.
• Buyers trade off performance attributes and brand
 equity against price in order to optimize value.
• The utilities (weights) of price, performance
 attributes and brand equity is summative and equal
 to total brand value.
Brand Value/Equity Measurement
 • First, we use conjoint models to estimate utilities.
 • Respondent goes through two tradeoff tasks
      TASK 1 - Brand-Price tradeoff
      TASK 2 - Brand-Features-Price tradeoff
 • Merge results of both tasks at the respondent
   subgroup level and re-scale to be comparable.
 • Purpose is to get accurate estimate of price
  utility
           Measurement Model

                 Total Value
                 (Ut)

    Price (Upr) First stage conjoint        Product (Upt)




X
Price
        Attribute 1
        (u1)
                        Attribute 2
                        (u2)          …   Attribute J
                                          (uj)

                      Second stage conjoint
                                                        Brand
                                                        (Ub)
       Task 3 - Choice Task
• Respondent then goes through a CHOICE
  TASK that is based on their conjoint results.
• Respondent is asked if they would switch
  to, or purchase next, their highest rated
  conjoint profile.
• IF YES, we ask about another (lower)
  profile, and so on until they would not
  purchase or switch.
• PURPOSE: measure barriers to switching
  and confirm conjoint results
  Task 4 - Brand Image Ratings
• Each brand in the competitive set is also rated
  (0-10 scale) on its imagery, for example:
   – A brand I can trust
   – A brand that I want seen in my home
   – A company that will fix any problems I may have with their
     product
   – etc.
• Ratings are then (ridge) regressed against derived brand
  equity from the conjoint to get the relative weight of
  each image driver.
  Task 4 - Brand Image Ratings
• The beta coefficients from the ridge
  regression (or similar models) reveal the
  key drivers that are most associated with
  each brand’s utility (derived brand equity)
• Thus, you can reveal the key drivers of
  brand equity, improve your imagery on
  those attributes and improve brand equity
 Brand Equity DRIVERS – Service Co.
 Honest in its dealings with customers
 Concerned about my family’s needs
 Progressive and innovative
 Respects me as a customer
 Is well managed
 Efficient in coordinating the service activities
     of different departments
 Keeps me informed of energy matters that are
     important to my family’s health
 Easy to do business with
 Contributes to the community
             Average Importance of the
             Elements of Brand Value
           Category           Price   Product/Channel   Brand/Co.
                                         Attributes      Equity
Carbonated Soft Drinks        22%          40%            38%
A Class of Automobiles        24%          68%             8%
Consumer Paper Products       48%          46%             6%
Sports Drinks                  8%          34%            58%
Canned Pet Food               50%          43%             7%
Electric Utility              15%          80%             5%
Industrial Electronic Equip   16%          72%            12%
    Brand Valuation RESULTS
• With this type of model, you can build a
  market response simulator to determine
  how each marketing mix variable effects
  share of choice.
• Changes in BRAND EQUITY can be
  tracked over time.
• Changes are relative to other products/
  brands in the category.
           Brand Value Model
                 Value                    Choice

  WPrice              WiAttributes         Wbrand

                 Product/Service          Co./Brand
  Price          Deliverables             Equity
                 Wi   Attribute 1    Wi   Image Driver 1
Wi Attribute 1
                 Wi   Attribute 2    Wi   Image Driver 2
Wi Attribute 2
   etc..         Wi   Attribute 3    Wi   Image Driver 3
                 Wi   etc..          Wi   etc..
          Winning Strategy -
Maximize value which maximizes loyalty
        for each target market

  • The KEY to customer LOYALTY and
    growth is to consistently deliver the BEST
    VALUE to the customer.
  • VALUE is the KEY DRIVER of choice,
    thus LOYALTY!
  • Brand Equity can be a major element of
    the VALUE PROPOSITION.
Market Segmentation Based on
      the Value Model
• Derive the value equation for each
  respondent in the survey.
• Each buyer’s value equation can be used
  as the basis for segmenting the market.
• Form groups of respondents who have
  similar value structures (e.g. price
  sensitives, service sensitive groups,
  product performance sensitive groups,
  etc.)
     Brand Value Model
• Each buyer has a unique value equation.
• We use modified conjoint/choice
  exercises to determine that value
  equation for each respondent.
• From the derived utilities and choice
  information, we can determine each
  respondent’s switching behavior under
  different competitive scenarios.
From the Brand Value Model

• We can determined who switched.
• We can determine why they switched.
• We can describe the switchers.
• We can describe the non-switchers.
FOR EACH COMPETITIVE SCENARIO
   This led us to a discovery!
There are different kinds of loyalty!
• Some people are loyal because they are
  committed to a brand or company.
• Some are loyal because a particular brand
  offers some unique benefits or performance
  characteristics.
• Some are loyal because they won’t spend the
  time or effort to make an evaluation.
• Some are loyal because they have little choice.
• And some are just disloyal, buying on price or
  convenience alone.
      Some Parting Thoughts
• A label is not a Brand!
• Advertising and Promotion costs to support a
  brand is an investment, not an expense.
• The starting point, and the KEY to building
  Brand Equity, is to define what you want your
  brand to stand for - the implied contract you
  have with the consumer.
• Then, support that brand image in every way -
  in all selling materials, with distributors &
  retailers, in advertising, promotion, and PR.
       Some Parting Thoughts

• You can stake out a brand promise in many
  ways:
   –   The highest quality in the category
   –   Good & Economical
   –   Available everywhere - systems, parts and repair
   –   The best designs in the business
   –   Extreme versatility/diversity
• Make sure your performance (and your
  channels’ performance) backs up your promise -
  walk the talk!
     Some Parting Thoughts

• Strong brands mitigate channel dominance and
  product commoditization.
• Strong brands pull product through the channel.
• Strong brands improve profit margins.
• Strong brands build stockholder equity.
• If you do not build strong brands in your
  category, someone will do it to you!
Questions and Comments

  WDNEAL@sdrnet.com

				
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