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Brand Management

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Brand Management (MKT624)
VU
Lesson 32
CUSTOMER RESPONSE HIERARCHY
Introduction
This lecture looks into the importance of understanding the response effects as generated by a
communication campaign. The understanding of these effects in relation to developing a
strategic communication framework is important. What are the principles that come into play
while creating a brand-based communication strategy will be discussed!
Awareness and comprehension ­ basic denominators
Regardless of the model, the starting point of any campaign is creation of awareness followed
by comprehension. Unless awareness is created and comprehension developed, message cannot
be reinforced and, hence, communication objectives cannot be fulfilled.
Customer response effects ­ CRE
As briefly discussed in the previous lecture, communication evokes a hierarchical set of
customer
response
effects.
Building
Figure 40
awareness,
Customer Response Effects
comprehension,
intentions, and actions
are  all  steps  in
Action
ascending order of the
90%
1
hierarchy .  This  is
Intention
graphically expressed
70%
here.
What
the
graphic
expression
Comprehend
No action
amply explains is the
10%
80%
fact that all those
Awareness
No intention
aware of the brand
30%
75%
may not translate that
Do not comprehend
awareness  into  an
20%
action to buy. As you
Not aware
move
along
the
25%
ascending order of the
hierarchy,  you  see
less and less target customers responding to the hierarchical effects. If the target population
consists of 100 customers, then 75 of them (75%) are aware of the brand. Those who take
action to buy are about 38 or 90% of that 70% who intended to buy.
It is difficult to think of major brands that have done well without communications ­
advertising in particular. We have to have some level of communications that we can control.
Therefore, we can make three statements about brand communications:
1. Every brand must have some means of communicating with its buyers. The way to talk
has to be direct, if not advertising.
2. There can be many other ways apart from advertising. The message has to be new and
interesting.
3. All the means of communication and the messages transmitted must be coordinated to
make sure they all talk about the same thing.
These fundamentals become the basis of a brand-based strategy for communication.
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Brand Management (MKT624)
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Brand-based strategy
With the understanding how important is communication, we now move on to building a
brand-based communication strategy. Four guiding principles to implement the strategy are as
follows2:
1. We have to use a combination of all communication strategies to realize our overall
strategy and brand vision.
2. We have to use the brand picture and positioning as the guiding force to determine our
communication strategies.
3. We have to integrate the communication strategies to use the same message and create
impact all along the successive stages of customer response effects/hierarchy.
4. We have to execute communication strategies all across the organization and create
internal involvement for the success of the strategies.
Must couple the principles with hierarchy
These principles along with the understanding of customer response hierarchy give us leads
into determining the right strategic framework for our communications. It is here that we
decide about the tools in relation to their execution properties.
We, first of all, must be mindful of the stage of the hierarchy that may need our attention. We
must then determine the objectives of communication according to the stage of either
introduction (awareness) or reinforcement to stimulate comprehension and motive the final
action to buy.
Must reach target customers along the hierarchy
If a marketing communication fails to reach its target customers and create awareness, the
successive steps of the hierarchy will not emerge. And, a business will have to target its
customers at each successive stage of the response hierarchy to improve its performance. Each
stage lays the foundation for the next stage. It may call for repositioning or it may demand
more hammering depending on the nature of the campaign.
Two classical examples enhance our understanding of the above3.
Example 1
Ray-Ban Challenge: The sunglasses expert experienced decline as the brand was
perceived outdated and too limiting being too masculine, and hence not very
competitive.
The strategy: The Company challenged consumers' perception by kicking off a
campaign with a renewed brand persona and positioning. The persona was created that
of modern, intelligent, appealing to all, and hence confident products.
The result: The contract was delivered not only to men, but also to women and younger
customers. The company approached its target market of existing users, non-users, and
potential users. Brand resilience brought it back.
Example 2
BMW challenge: 1997 was the first year that the company lost its number 1 position in
the high-performance luxury car market. BMW had no new launches in the pipeline
whereas competitors like Mercedes, Lexus, and Infinity had many.
The strategy: BMW being aware of a strong brand picture decided to
strengthen/reinforce its existing position with an intensive communication campaign.
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The result: BMW' campaign "Ultimate Driving Machine" brought the car back on top
thus solidifying its strategic position.
The first example of Ray-Ban relates brand persona and brand extension. The company
identified a few gaps (needs) that could have been fulfilled. It fulfilled those and created a
renewed awareness about extending its line proving in the process their ability to meet
customers' perception.
The other one relating BMW is sheer reinforcement reminding the targets to act upon
something great they were not paying attention to. It is a case of sheer reinforcement.
Principles of response hierarchy
These two examples beautifully explain the importance of understanding the response effect
hierarchy. With the understanding to make strategic adjustments in view of the stages of the
response effects, we now take a look at the principles one by one.
1. Use all communication strategies to achieve corporate strategy and brand vision
All possible tools or a combination of communication tools are to be used to achieve the
corporate strategy and brand vision. Since the overall strategy, the vision, and the brand
vision are all established already, they give rise to compatible communication
strategies.
Brand managers must have the management's commitment to exercise strategic
execution. Having had that, they should be clear about when to implement the
strategies.
The amount of time needed to see results depends on the type of the market and the
amount of resources employed.
The important point here is not to forget that we have to set ourselves realistic time limit
for creating awareness, comprehension, and action. Also, that it is brand vision that
dictates the strategy.
2. Brand picture and brand positioning help determine the right strategies
The image defines the actual associations customers have with the brand and the
persona suggests the personality traits customers think your brand has. This tells you
where the brand stands.
If the brand has not been able to evoke the right associations and customers do not
rightly understand the persona then there is a gap. You must see where that gap is. Only
that will help you achieve the intended position. You must fill the gap in order to fill
brand's picture, fulfill its vision, and achieve the intended position.
The gap is a reflection of not being at the position that you want occupied in customers'
mind. BMW's example reflects the significance of this principle. Another example that
illustrates this principle is HP printers4.
Despite being at the forefront of introducing variety of products, HP lost its compatible
position in the minds of the customers due to decentralization of the organization and
fragmentation of communication strategies relating the brand.
Getting convinced (through sales less than the goals) that the brand was underutilized;
the company through research reassured itself of the positive associations customers
had with the brand describing its persona as innovative, reliable, and scientific etc. It
kicked off a campaign emphasizing the inventiveness on part of HP. Campaign was a
huge success.
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The gap between where the brand was and where the company wanted it was closed and
intended position achieved. It looks like a problem of not talking the same thing through
all communications. This was due to decentralization of the organization and
fragmentation of communication. Centralizing the campaign in view of the
homogeneous profile of its customers, HP centralized the campaign and gave them a
reminder of the persona they always had in their mind. This again is a classic example
of reminding customers of good products and reinforcing their intention to buy those.
3. Use an integrated marketing communications strategy
Experience has shown that advertising and promotions when used together create a
compound impact. The reasons are common sense-based. A mix of all communications
has a better chance of achieving synergy. If synergy is to be achieved, then advertising
and promotions have to be mutually consistent, so that they can complement each
other's effect.
Having the two tools complement each other leads to a cumulative impact in the minds
of customers in a coherent way. Fragmented messages at unrelated times do not create
as much of an impact as consolidated messages through all the possible vehicles of
communications. The integration therefore calls for certain methods to be followed. The
generally followed principles are:
Principle of IMC (Integrated Marketing Communication)
1. Always look for opportunities to blend various possibilities of communication.
2. Ensure that all of them convey the same message, consistently.
3. Track all expenditure by product, promotional tools, and relate the observed effects with
improvements in future applications.
4. Create a philosophy of capabilities and cost effectiveness of each tool.
It forces you to consider all the possible tools at your disposal to communicate brand's
positioning directly with your customers by making sure nothing is left uncovered.
The question of budgeting
It involves a very sensitive question of budgets here. Before budgets could be allocated, you
have to carry out situation analysis - where we are and why? This analysis has to be related
with objectives - what the brand is aiming for in sales and share?
On the basis of these two elements, the communication strategy is crafted, which means you
have to determine what role advertising and promotions will play? Long term brand building is
of utmost importance.
The appropriations are made in a few different ways.
Methods of appropriations
You allocate resources as percent of sales. Some argue this is not good. This gives the
impression that sales drive communications. In reality it is the other way around. But, this
remains the most popular method of appropriations. Once you have the budget, you must break
that into allocations to different tools ­ advertising, promotions, and any other.
Whatever the budgets and further subdivisions are, those have to be allocated to the brand in
light of the response effects and in relation to all the tools of communication. The tools must fit
well into the brand-based strategies.
Summary
Understanding of the response effect hierarchy is of paramount importance. Without that
understanding, brand managers will not know which stage needs emphasis in terms of
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communication at a given point in time. With this limitation present, they will not be able to
formulate the right communication strategy. While making a strategy, managers have to be
mindful of keeping in sharp focus corporate strategy and vision, brand positioning, and the
need to kick off an integrated campaign with a competitive bite.
Bibliography:
1. Roger J. Best: "Market-Based Management ­ Strategies for Growing Customer Value
and Profitability"; Prentice Hall (300-303)
2. Scot M. Davis: "Brand Asset Management ­ Driving Profitable Growth through Your
Brands"; Jossey-Bas, a Wiley Imprint (157-177)
3. Scot M. Davis: "Brand Asset Management ­ Driving Profitable Growth through Your
Brands"; Jossey-Bas, a Wiley Imprint (156)
4. Scot M. Davis: "Brand Asset Management ­ Driving Profitable Growth through Your
Brands"; Jossey-Bas, a Wiley Imprint (159)
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Table of Contents:
  1. UNDERSTANDING BRANDS – INTRODUCTION:Functions of Brand Management, Sales forecast, Brand plan
  2. INTRODUCTION:Brand Value and Power, Generate Profits and Build Brand Equity
  3. BRAND MANIFESTATIONS/ FUNDAMENTALS:Brand identity, Communication, Differentiation
  4. BRAND MANIFESTATIONS/ FUNDAMENTALS:Layers/levels of brands, Commitment of top management
  5. BRAND CHALLENGES:Consumer Revolt, Media Cost and Fragmentation, Vision
  6. STRATEGIC BRAND MANAGEMENT:Setting Objectives, Crafting a Strategy, The Brand Mission
  7. BRAND VISION:Consensus among management, Vision Statement of a Fast Food Company, Glossary of terms
  8. BUILDING BRAND VISION:Seek senior management’s input, Determine the financial contribution gap
  9. BUILDING BRAND VISION:Collect industry data and create a brand vision starter, BRAND PICTURE,
  10. BRAND PICTURE:Brand Value Pyramid, Importance of being at pinnacle, From pinnacle to bottom
  11. BRAND PERSONA:Need-based segmentation research, Personality traits through research
  12. BRAND CONTRACT:The need to stay contemporary, Summary
  13. BRAND CONTRACT:How to create a brand contract?, Brand contract principles, Understand customers’ perspective
  14. BRAND CONTRACT:Translate into standards, Fulfill Good Promises, Uncover Bad Promises
  15. BRAND BASED CUSTOMER MODEL:Identify your competitors, Compare your brand with competition
  16. BRAND BASED CUSTOMER MODEL:POSITIONING, Product era, Image Era, An important factor
  17. POSITIONING:Strong Positioning, Understanding of components through an example
  18. POSITIONING:Clarity about target market, Clarity about point of difference
  19. POSITIONING – GUIDING PRINCIPLES:Uniqueness, Credibility, Fit
  20. POSITIONING – GUIDING PRINCIPLES:Communicating the actual positioning, Evaluation criteria, Coining the message
  21. BRAND EXTENSION:Leveraging, Leveraging, Line Extension in detail, Positive side of line extension
  22. LINE EXTENSION:Reaction to negative side of extensions, Immediate actions for better managing line extensions
  23. BRAND EXTENSION/ DIVERSIFICATION:Why extend/diversify the brand,
  24. POSITIONING – THE BASE OF EXTENSION:Extending your target market, Consistency with brand vision
  25. DEVELOPING THE MODEL OF BRAND EXTENSION:Limitations, Multi-brand portfolio, The question of portfolio size
  26. BRAND PORTFOLIO:Segment variance, Constraints, Developing the model – multi-brand portfolio
  27. BRAND ARCHITECTURE:Branding strategies, Drawbacks of the product brand strategy, The umbrella brand strategy
  28. BRAND ARCHITECTURE:Source brand strategy, Endorsing brand strategy, What strategy to choose?
  29. CHANNELS OF DISTRIBUTION:Components of channel performance, Value thru product benefits
  30. CREATING VALUE:Value thru cost-efficiency, Members’ relationship with brand, Power defined
  31. CO BRANDING:Bundling, Forms of communications, Advertising and Promotions
  32. CUSTOMER RESPONSE HIERARCHY:Brand-based strategy, Methods of appropriations
  33. ADVERTISING:Developing advertising, Major responsibilities
  34. ADVERTISING:Message Frequency and Customer Awareness, Message Reinforcement
  35. SALES PROMOTIONS:Involvement of sales staff, Effects of promotions, Duration should be short
  36. OTHER COMMUNICATION TOOLS:Public relations, Event marketing, Foundations of one-to-one relationship
  37. PRICING:Strong umbrella lets you charge premium, Factors that drive loyalty
  38. PRICING:Market-based pricing, Cost-based pricing
  39. RETURN ON BRAND INVESTMENT – ROBI:Brand dynamics, On the relevance dimension
  40. BRAND DYNAMICS:On the dimension of knowledge, The importance of measures
  41. BRAND – BASED ORGANIZATION:Benefits, Not just marketing but whole culture, Tools to effective communication
  42. SERVICE BRANDS:The difference, Hard side of service selling, Solutions
  43. BRAND PLANNING:Corporate strategy and brands, Brand chartering, Brand planning process
  44. BRAND PLANNING PROCESS:Driver for change (continued), Brand analysis
  45. BRAND PLAN:Objectives, Need, Source of volume, Media strategy, Management strategy