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Brand Management

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Brand Management (MKT624)
Lesson 35
For communication to be effective, it is important that we do not rely on just one tool.
Experience shows that more then one tool should come into play to create the desired effect ­
the final action of consumer to buy. Promotions complement advertising and the objective of
this lecture is to see how that works!
Sales promotions
No matter how good is the copy and the response effects like awareness and comprehension,
they may still not actuate the target customers to go for the action. It is there that the role of
promotions comes in. It becomes essential, especially in case of new products, to have those
products tried by the customers so that they can know the benefits the brand offers. In other
words, advertising does its part by creating awareness and comprehension that form a level of
customer pull.
Having created the pull, you then have to create a push so that the pull-and-push effect results
in the desired action. To create that push, you have to involve intermediaries. Without their
help marketing communication programs and whatever those translate into will not succeed.
According to one estimate, one-third of communication budgets are spent on advertising and
two-third on promotions1.
Of promotions, 37% is spent on channel intermediaries and 63% on customer promotions2.
Push communications are directed toward channel members (37%) so that they have an
incentive in carrying stocks and making sure there are no stock-outs. The second step toward
the push is customer incentives (63%) that actuate the customers to test the product either as
frees or through other inducements.
In other words, just like we created a media-mix in terms of advertising, we again have to
create a promo-mix in order to ensure the desired action on part of the customer.
Promotions ­ trade-directed
The reason it costs to involve traders in the promo game, because they know their role and
power. While you offer something to customers, the retailers expect something to themselves
also, for they are stocking your product more than the normal levels in the hope that push will
You may also need extra space or prime space in order to make your promo-based offerings
stand out for the customers not to miss those. For that you have to offer some incentives to
retailers to do what you want.
Involvement of sales staff
Involvement of your sales staff is of high importance. They were involved while you were
building the brand picture. You also involve them while you review the picture. Being close to
the customers and trade, the sales people understand the market better than anyone else, and
hence, must be involved in working out the levels of discounts and incentives. They understand
the purchasing criteria and the overall process through which not only customers, but also
traders go. Keep them involved amounts to keeping everyone in the company close to reality3.
Relationship marketing takes on an added importance here. Sales people take on the role of
customer relationship managers as well.
Promotions ­ customer-directed
Such promos are on the increase. The main types used are:
Brand Management (MKT624)
·  Store price reduction
·  Multi buy/Multi-save
·  Additional quantity in pack
·  Manufacturer's price reduction
·  Coupons
·  Rewards and gifts
·  Free items (sampling)
Involvement of sales staff becomes important here also. Extremely important here for brand
managers is to stay in close coordination with sales and finance. Working out accounting
modalities while promotions are to start is important to keep records straight. Let sales people
inform members of the channel through company circulars about the campaign.
Effects of promotions4
1. Promo increases sales in short-term
According to one source the elasticity (the increase in sales as a result of a certain
expenditure on promotions) of sales to promotions is much bigger than that of
advertising. It is 20 times as much. This doesn't mean that every promo is successful.
But, a well chosen and well planned promo certainly increases sales in the short term.
The effect of promo is, therefore, short lived. It may not last beyond the period of
activity. Period after that may see a drop in sales, for customers buy in excess of their
requirements. This is what can be termed as "borrowed sales syndrome" ­ borrowing
high sales from future at a certain point in time and then seeing a drop at a later stage.
2. Promos may be unprofitable
All promotions cost money. They definitely cut into your contribution margins, leaving
the company less profits. When you add the costs of disrupted production schedules,
distribution and logistics and the net effect may well take you into a loss situation.
Businesses, according to one argument, exchange profits for volumes, which may slide
immediately after the promo is over. You must see to it that promos do not land you in a
loss situation.
3. Duration should be short
Duration should be short and promos should not be repeated too often giving the
consumer the feeling that your brand is not worth regular purchasing and needs crutches
all the time to sell. Instead of the fact that brand should generate value by charging
premium, which must be central to its core, it devalues itself if subjected to prolonged
or very frequent promotions.
You have to be careful about the response effect stage, determine your goals, and then
see how best you can create customer value by also ensuring profitability for the
company in the long run.
The devaluation occurs all the more so because promos are easy to imitate by
competitors. Imitation leads to a cycle of escalation and eventually to price war. The
whole category suffers and the brands are reduced to commodities with no winners.
4. Other Effects
Promos, though expensive, have a lot of power to do good things to brands. Getting a
brand trial in itself is an achievement. If the product is good, then consumers will hook
on to that. In other words, it depends on the brand what promise it carries and how it
delivers that. Brand with a good contract along with other factors of marketing-mix will
Brand Management (MKT624)
do well if promoted sensibly. Marketing people should relate the extra expenditure with
the extra volume that can offset the expense.
Effective consumer promotions drive traffic, enhance awareness, increase trial, and build the
brand. All you need do is be very clear about your objectives and goals, which are to gaining
and keeping customers, enhance brand's image instead of focusing on cutting price.
Roger J. Best: "Market-Based Management ­ Strategies for Growing Customer Value
and Profitability"; Prentice Hall (312)
Roger J. Best: "Market-Based Management ­ Strategies for Growing Customer Value
and Profitability"; Prentice Hall (312)
Scot M. Davis: "Brand Asset Management ­ Driving Profitable Growth through Your
Brands"; Jossey-Bas, a Wiley Imprint (173-177)
Geoffrey Randall: "Branding ­ A Practical Guide to Planning Your Strategy"; Kogan
Page (74)
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