Product Branding

Brands - What makes them valuable?

In current global economy, with changing market dynamics and heightened competition, the need for highly valued brand has become increasingly important. Brand creates a distinct identity and differentiates a product from the competition. The stronger the brand, the more it encourages customer loyalty, attracts new customers, and boosts customer lifetime value (CLV), the total amount a customer spends on a brand.

The latest results from research agency Millward Brown's 2014¹ 100 Top BrandZ report says Google out-innovated Apple with its various "Google X" initiatives like Project Loon and contacts that measure glucose levels for diabetics. This year's Top BrandZ report was first spotted by Business Insider. Apple, meanwhile, was criticized by some for failing to keep breaking new ground, settling instead for incremental upgrades to its breakthrough products like the iPhone and iPad.

The result, Apple’s brand value dipped by 20% 10 $147.88 billion dollars, whereas Google’s brand value got a jumped by 40% to $158.84 billion dollars.

 

Source: Millward Brown

 

A study by Interbrand in association with JP Morgan (see Table 2.1) concluded that on average brands account for more than one-third of shareholder value.

Though, this is against the Generally Accepted Accounting Principles (GAAP) rules, I believe that brands belongs in the balance sheet since brand provide enhanced stream of continuous future cash flows.

References

1 http://appleinsider.com/articles/14/05/20/google-usurps-apple-as-worlds-most-valuable-brand-name-report-says

2 http://www.cnn.com/2014/05/21/tech/innovation/google-apple-brand-value/index.html

 

"If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trade marks, and I would fare better than you." 
— John Stuart, Chairman of Quaker (ca. 1900)

 

 

Week 8 - Pricing/Channel and IMC

Apple Inc. is the top in the list of 100 top companies with the highest brand equity followed by google and IBM. Surely this is because Apple has a strong and effective marketing mix strategy that entails profiting from brand loyalty.

      4 P’s of Apple
      Product

Apple’s product include portable computers, iPhone, iTunes and other storage devices, servers and accessories. Apple’s strategy is to offer small number of products that focus on high end quality and service and entails unique product that is attractive to customers

Price

Apple is a premium brand that does not compete on price. Apple uses premium pricing strategy by offering a high-quality products with great and innovative features and amazing user experience. I believe that Apple’s high price is often perceived as indication of its high quality product offering, and reducing the price may negatively impact its brand image.

Place

Vast majority of the Apple’s suppliers are in Asia with China and Japan as major suppliers. Apple has retail stores located worldwide. Apple service providers are certified technician, who complete apple training and assessment, and offers repair services and exclusive access to genuine Apple parts. Customer can either buy online or shop with a specialist or make purchase from his iPhone.

Promotion

Apple uses advertising heavily in television network, technology magazines and internet. Apple's online store offers free shipping and school offers. The other way Apple promotes its product and differentiates from others is by personal selling through its Apple Stores. Apple conducts free workshops that includes one on one training and free youth programs like Apple Camp. Apple also provides special offers in refurbished Macintosh computers, and iPods. Apple's emphasis is primarily on customer service that allows them to gain loyalty from new customers.

Target audience for Apple

Target audience for Apple is widely distributed. Apple uses a unique form of marketing strategy called “psychographic segmentation” to appeal to all consumers no matter the age, race, income level, and/or demographic.  For example, teenagers use iPods to socialize with friends and playing games. College and university students also use iPads and MacBook, for taking notes, watching videos and reading books online. Business professionals uses MacBook and iPhone for productivity and efficiency. Apple products are even useful to young children and kids for learning. Although, I believe that Apple typically appeals to middle and high class who do not mind spending extra cash for quality.

Communications with the target audience

Apple uses advertising, public relations, sales promotion, and personal selling as a part of their promotional and communication strategy. Apple’s ads have a lot of white space in them. It’s designed to create a sense of openness.  It shifts the focus onto the product that they are sharing and on to their words. There are no distractions and it makes it easy to connect with their key message. Apple promotes its product and differentiates from others is by personal selling through its Apple Stores. Trained sales associates provide effective customer support and promote brand loyalty.

References

http://appleinccasestudy.weebly.com/apples-target-market.html

http://www.marketwatch.com/story/apple-attacks-two-key-markets-2013-09-10

http://wvillefranche.blogspot.com/2011/11/segmenting-and-targeting-markets.html

Individual Case submission

Submitting Cleopatra assignment this week.

Three levels of Product
Customer often thinks of product as a tangible or physical item but there is more to a product than its physical appearance and tangible aspect. There are 3 levels of a product - Core, Actual and Augmented. I will us the example of automotive industry in order to explain this

	1.      Core Product - This defines the benefits of the product. If you consider a car as a product, the core product is not the actual car. The core product is the "benefit" to the consumer and in case of a car it the fast transportation. 2.      Actual Product - This defines the actual product and in our example it is the actual car. In addition, it includes the brand, color, design, quality, and durability of the car 3.      Augmented Product - This defines the additional elements that can be added to the actual product. In our example this can be the manufacturing warranty, servicing and maintenance, financing service and customer service.
Product Lifecycle The image on the right illustrates the typical lifecycle of a product. The product is introduced in the market and starts with initial growth where sales are rising, slowly followed by maturity where prices are at peak with stable sales and finally followed by a gradual decline.

The product gets obsolete inevitably (the decline phase of product lifecycle) and gets replaced by a better product that provide superior benefits. Below are some classic example of products that went obsolete
1. PDAs - Everyone remembers PDAs, aka palmtop computers, the mobile device that functions as a personal information manager. With the introduction smartphones, PDA are now surely things of past. The reason is pretty simple, why carry a PDA when your smart phone can be PDA, camera, MP3 player, and GPS.
2. Dial up – I still remember when we used a dialup connection and waited forever for the page to render on the browser. The slow speed (56 kbps) and intermittent connection disruption was so annoying. Now we use high speed internet with zooming speed of 5-12 mbps
3. The landline - Today with the wireless penetration in US is currently at 89%, most of the people are using mobile and internet voice services as their primary way to connect with people. It is much cheaper than the landline and in some cases, with internet voice services, you can make international call free. If you have a landline, it’s time to change.
Here is an interesting article on what’s gone obsolete in last decade    
http://www.businessinsider.com/21-things-that-became-obsolete-this-decade-2009-12?op=1
http://www.debate.org/opinions/will-cds-become-obsolete

Product Lifecycle getting shorter

Noticeably, with the advent of technology, increasing consumer awareness, rapid changing demand, and growing market competition the product lifecycle is getting shorter day by day. This trend has put a lot of pressure on the organization to react to the change in market and consumer trend and quickly turnaround with the right fit product. This changing demand means that demand planning and forecasting needs to be accurate. The introduction of technology in understanding customer's buying patterns can help organization plan and adjust with the market trend. To ensure maximum profit, it is inevitable for the company to launch sooner and gain early bird bonus. Technology has played primary role in reducing the product development lifecycle. If we look at Apple and Samsung, the furious market competition is forcing these companies to launch new product models almost every year resulting in cannibalization of their older models.

References

http://www.trustedreviews.com/opinions/half-life-get-used-to-shorter-product-cycles
http://www.supplychaindigital.com/procurement/the-product-life-cycle-is-in-decline
http://www.bloomberg.com/video/product-life-cycles-are-getting-shorteroringerCsHeGitCTmSUO4Ia4gR5ig.html

Week 4: STDP Segmentation, Target, Differentiation and Promotion

1. Does segmentation Facilitate consumer obsession?

Let me start by explaining why consumer obsession is important. I stumbled across a reading from a book "Customer Obsession" by Abaete de Azevedo & Ricardo Pomeranz. One of the statements from the books states that "Consumer obsession is definitive roadmap of all business that want to achieve maximum return for their market investments." Amazon has already proved this and their acquisition of Zappos is primarily based on the fact that both companies values customer satisfaction and incorporate this value in their organization strategy. It is the customer obsession that is driving Amazon to plan on how to use drones (auto copters) for order delivery. The purpose is to simply reduce the order delivery time to 30 minutes or less. They have researched that 86% of their orders weigh 5 pounds of less and can potentially be delivered using the drones or auto copters. Though the technology to do this is 4 to 5 years away and there are FAA restrictions to be resolved, this has not stopped Amazon from planning as this adds a lot of value to the customer.

How segmentation facilitates consumer obsession? In order to better serve the customer, it is essential for an organization to know who their customers are or going to be. This is where segmentation comes into play. This allows you to understand the cluster, a sizable group, of consumer in the market with homogeneous purchasing behavior and needs. Segmentation allows an organization to focus on a particular group of consumer, provides promising opportunities and opportunity to enter into a market with competitive offering.

2. When a firm chooses a particular segment for targeting what are its primary considerations?

While assessing a marketing segment following factors needs to be considered

1. Market Factors
1. Is the segment representative of observable variable like age, gender, life cycle, lifestyle, income, price sensitivity etc.
2. Is it predictable and big enough for sustainable profit?
3. What is the growth rate of the segment? Does it promise future growth?
4. What is the cyclicality of the demand?
2. Competitive Factors
1. Who is the competitor? What are their product offerings? Are there any threats of price war?
2. How is your product different from the competitor?
3. Economical & Technological Factors
1. Are there any barriers to entry or exit? The barriers to entry can include government regulations, inelastic demand, customer loyalty etc. The barrier to exit can include sunk costs.
2. How much investment is required?
3. What is the profit margin?
4. Business & Environmental Factors
1. What is the impact economic fluctuations?
2. What is the impact of political legal and government regulations? 

3. What is positioning?  Where does a firm's position reside. 

Positioning is a strategy to differentiate company's brand on the basis of attributes that customers find meaningful. Meaningful differentiation can be based on several attributes like physical attributes for e.g. product features and service features or pricing attributes such as bargain pricing. 

Positioning should be strategized to clearly articulate who the target customers are, what needs the product fills and why your product is the best option to satisfy those needs. Additionally,  marketing programs should be designed to support and reinforce the differentiation of a product in order to effectively position a product.

4. Example of companies within same space but different customer segment focus
If you look at food service industry. There are 2 largest segments - full service and fast food segments. Companies like McDonalds, Burger king, Denny's, Wendy's, Arbys and subway have captured the fast food segment.
Within the fast food segment, McDonalds has put more focus on children, youth and young urban family. The Happy Meal is a combination meal that is suitable for kids and incudes toys that attracts children to McDonalds. McDonalds has strategically added play area for kids in selected places to attract families with kids.

Subway on the other hand targets customer within the fast food segment who are health conscious. Subway's marketing strategy is to address health, include fresh ingredients, and low-calorie custom made sandwiches. Subway promotes its products that is directed towards healthy living by sponsoring in events such as Heart Association heart Walks and local triathlon events.

Week 3 - Using marketing research to gain consumer insights

Does your company use research to understand it's customer's?  What type of research? 

My company is one of the leading technology and transformation programs for insurance industry in North America.

Since our market segment is business market, our company relies on the market research on technology and trends in insurance industry. Celent, Gartner and Novarica research companies provides a valuable insight into the insurance industry. These research companies provide valuable information that includes reports and briefs on market, operations, and technology trends. These reports are based on consumer and company executive survey data and interviews, the personal experience, and ongoing research.

 

Our company also uses this information to gain insight on the current position of competitors in the market and what differentiated services they are providing. 

 

What Insights does Dr. Rosling gain from the data collection and analysis he conducts in the video.  How important is the visual display of data in creating these insights? 

The presentation from Dr. Rosling was very impressive. The animated bubble chart provided a compact yet simplified view of the economic, and social trends of countries across the world for past 200 years. The detailed segmentation provided great insight on the diversity of economic and social trends within a country.   Human mind react faster, in fact 400,000 times faster, to visual stimuli than to text. The impactful presentation in Dr. Rosling's presentation proves the same with the use of animated visual aids.

 

Where will you go to collect data for your marketing plan? How can you learn about the type of consumers in the market you have been assigned.  How will you convey and provide insights to your client using this information?

For planning my marketing research, I will rely on the secondary research which includes existing information on the web for electric and hybrid car market, target consumer segment with demographic and geographic concentration, existing manufacturers/competitors in North America, anticipated future trends in the electric and hybrid car market and lifestyle of targeted consumer to identify right channel for advertising/positioning our products. Unfortunately all the websites I have visited so far provides paid reports like Pike Research, and Navigant research

Week 2 - Analyzing Current Situation

I work of an global IT company that provides technology solutions, insurance products and service across the globe. Our company serves the business market and below are some external factors that may impact our company

Economic Trend

Foreign exchange is one of the factors that will inadvertently impact our company. Since the company is based on offshore onsite model, the change in foreign exchange will impact the revenue and profit margin.

Technological Trends

Since we are IT shop this is the most critical factor that impacts our organization. Our North America division primarily focuses on providing industry leading product solution to insurance carries. Following are some of the technology trends that can impact our company like Aerial Digital imaging, Business Intelligence designed specifically for insurance industry, and mobility

Competitive Trends

Competitive trends, especially in the insurance product solution, includes speed to implementation, product capability in specialty lines of business and advance mobility solutions.

Company's mission

It is so surprising that I have worked in this company for past 12 years and yet I had to go look for the company's mission. I could not find official statement  but below is what I could find.

Build a valuable and evergreen Institution by sustained contribution and spotless reputation, success of every stakeholder, collaborative culture, and 100% responsibility for outcome.

Now that I have watched the video it makes sense that the marketing goals are broad. If I would have looked at this mission statement before watching the video, it would not have made any sense. Our company provides IT services as well as leading insurance product solutions to our customers. The mission statement talks strongly about the company culture, quality and customer experience of our organization.

What needs do the products of my company satisfy?

Our company offer insurance products like policy administration system that helps insurance carriers to launch new lines of business to stay competitive and sustain growth. The product also offers workflow automation to reduce underwriting effort hence reducing the operational cost of insurance carriers.

Week 1 - What is Marketing?

As per my understanding so far, Marketing in simple terms is a set of activities and strategies that organizations implement in order to make a product available that satisfies customer needs while making profit for the company.

In order to do so, the company needs to understand who the customers are, what are their needs, customer trends etc. by utilizing research and existing information from various sources. Customer today also expects the organizations to be transparent,  environment friendly, and have social responsibility. All this defines a perceived value of the organization and its product to a customer. To accomplish this desired value, organization needs to create a marketing plan and include set of organizational objectives and strategies.

Marketing Myopia reading was a great learning and eye opener for me. The reading poses a very interesting question for an organization. "What business we are really in?". The answer to this simple question can tell whether an organization is building a sustainable product that is oriented towards customer.

Video from Jeff Bezos is amazing. The video was short, concise,  and top-notch. I was amazed by the simplicity of the video in explaining powerful thoughts on how Amazon has created a huge market presence with high value customer oriented products and services using a short list of marketing principles. Below is the list.

1. Obsess over consumer - Pay attention to customer and work your way backwards to build quality product that are customer oriented. Relentless focus over customer helps realize errors while building a successful product/services for end users.
2. Invent - Invent on customer's behalf.  This is really important as many technology organizations organization forgets this and assumes technical superiority in itself will make the product more desirable.
3. Think long Term - Long term solution is necessary for an organization to create long lasting value. It will reap benefits for the customer right away but may take 5-7 yrs. for the company to realize benefits.
4. It's always day 1 - More inventions, more innovation and more ways to obsess over consumers. This provides the organization tendency to react and improve its products and services to remain competitive in the market and better serve the customers.

Introduction

This is my learning blog for C570 Strategic Marketing Management.

To introduce myself, I am an IT professional with total of 12 years of experience in IT services and insurance product solution. I am completely new to marketing world and through this course I intend on grasping the concepts of strategic marketing and build my basic learning foundation.

I am also scared of public writing and hope to conquer my fear through this course; Not that this is my excuse of starting late on the blog ;) .