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Assessment 6 Context
Promotion Analysis
Consider the different channels through which a company might market its products: direct
mail, large and small retail stores, outlet stores, and other retailers (where competition is not a
factor).
Brands and Competitive Advantage
The value of a brand can never be quantified precisely; however, it can be impactful. Many
companies actually carry a factor (sometimes called customer goodwill) on their financial
books that represents what the primary corporate brand means in dollars and cents. Goodwill
can literally be worth millions of dollars. Consider the following examples:
A few years ago, Toyota and Chevrolet manufactured the same car (Corolla and Prism,
respectively) on the same assembly line in the U.S. The cars were exactly the same except
for the nameplates. Chevy charged hundreds of dollars less for that car, yet the Toyota
outsold the Chevy by tens of thousands of units because of the value of the Toyota Corolla
brand and its history.
In the early 1980s, Audi was accused of producing cars that mistakenly accelerated on their
own. Company executives were interviewed on television and responded with rebuttals,
stating that the problems were caused by driver error. It is hard to tell your customer-base that
they are bad drivers and maintain any kind of customer loyalty. Audi was nearly driven out of
the American market. It took the company years to recover.
Some containers of Tylenol, a very trusted brand of pain reliever and the market leader (40%
share), were found to be tinged with cyanide, and people died because of it. Tylenol, seeking
to maintain trust in a situation over which they had absolutely no control, pulled every single
capsule off every single shelf. Months later, in new tamper-proof packaging, they re-entered
the market and ultimately regained their market leadership position (and their consumers’ trust
in the brand).
Brand values such as these take a long time to build and a significant effort to maintain. We
should not underestimate the value of a brand. Marketing management has to support a brand
name with the right mix of name, term, logo, and any other features that will make it distinctive
from other, similar products. Marketers also have to know when to use the brand, such as in a
line extension (Diet Coke) or when not to use it (Toyota’s new line of cars, called Scion).
Some of the world’s best known brands have huge value in their respective markets. This
brand value helps support the price associated with the products and services of the
organization. Consider the brand value of familiar companies such as Sony, Coke, Disney,
and so on.
Customers respond to brands in a variety of ways, with various degrees of brand loyalty,
recognition, preference, and even insistence. Marketing research should be collected and
interpreted in order to predict these traits. The degree to which consumers exhibit these traits
is referred to as the brand equity of a product or company.
There are three basic categories of brands: private distributor brands, manufacturer brands,
and generic brands. Your local food store carries all three types of branded products on its
shelves in different price categories and with different profit margins. The store brand carries
the store name as a private distributor brand, while a generic may have no name other than
the description of the product (such as corn). Manufacturer brands of corn include Del Monte,
Hunt’s, Green Giant, and others.
BUS-FP3030 Assessment 6 Context
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Assessment 6 Context
Marketers seek and achieve competitive advantage throughout the entire marketing process
in each area of the four Ps. “Creating competitive advantage is the central goal of competitive
strategy. As the marketing concept has been widely adopted in the last decade, it has become
the dominant conceptual foundation for the development of competitive strategies. According
to that view, buyers know what they want, and the objective of competitive strategy is to five it
to them. Competitive strategy in other words is customer driven” (Iacobucci, 2001).
Porter’s Five Forces Model demonstrates a view of competitive forces in the marketplace that
affect an organization’s decision processes and ability to compete in the marketplace.
Consumer Behavior and Customer Relationship Management
The process consumers
undertake when purchasing
products is complex and loaded
with ambiguities. For some
products (houses, cars,
computers, education), we
search long and hard for
important information upon which
we will base a buying decision;
other products we buy on
impulse (Trident gum, The
National Enquirer). Generally, the
greater the investment required
for the purchase, the greater the
amount of time that will be
devoted to the purchasing
decision process. For any
business, it is imperative to know
how the consumer undertakes
this process and how to develop
a marketing effort that will assist
that process at any given point.
The proliferation of technology in recent years has created tools that allow easier means of
tracking customer buying habits and to subsequently find ways to develop relationships with
those customers. Amazon.com is a terrific example of this. Visit the Amazon.com Web site,
read a book review or two, buy a book or two, and Amazon will instantly develop a profile of
you, compare that profile to others who have read or bought the same kind of books, and then
make recommendations for other books that you would probably like to read. This kind of
customer profile can be done digitally; it cannot be done as effectively by the bookstore clerk
at your local bookstore.
BUS-FP3030 Assessment 6 Context
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Assessment 6 Context
The five parts of the consumer
buying process are:
1.
2.
3.
4.
5.
Problem Recognition.
Information Search.
Evaluation of Alternative.
Purchase Decision.
Postpurchase Behavior
(Kotler, 2000).
Our decisions are influenced by our
lifestyles, family, friends, attitudes,
learning, perceptions, motives, and
personality. Consumers, once they
have recognized a need, search for
information. Depending on the
importance of the decision, they
search a variety of sources including
reference groups, friends, family,
media and direct searches via the
Web or visits to a retail store.
On the other side of the buying process is the organization and its customer relationship
management (CRM) system or processes. CRM is an organizational model used by
businesses today to build lasting customer relationships. Studies have consistently shown that
the cost of gaining a new customer is many times the cost of maintaining a satisfied customer.
What distinguishes the CRM model is that it changes an organization’s processes and
systems to focus on customer satisfaction. CRM processes and technologies are used to
gather information about consumers, identifying which customers and market segments are
most profitable for the organization; what the most cost-effective ways are to acquire them;
how to retain them for as long as possible; and how to secure customer loyalty. There are a
host of CRM systems and technologies on the market today to assist businesses in optimizing
their customer relationships, thus enhancing the organization’s profitability and increasing
revenues.
Strategy Formulation
In a complete market analysis, the assessment of the opportunity will provide a picture of all of
the forces that may come into play in marketing: segment definition, size, growth, and possible
competitive response. The firm’s strategic direction will be to produce a product or service with
differentiating factors that stand out in the customer’s mind, and to position the product or
service well for changes that will take place in the selected market segment.
References
Iacobucci, D. (2001). Kellogg on marketing. New York, NY: Wiley.
Porter, M. E. (1998). Competitive strategy: Techniques for analyzing industries and
competitors. New York, NY: Simon & Schuster.
Kotler, P. (2000). Marketing management. Upper Saddle River, NJ: Prentice Hall.
BUS-FP3030 Assessment 6 Context
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