Posts Tagged ‘Brands’
Consider a firm that wishes to increase current year profits p, as well as market share m. As shown in the figure, for some values of m profits increase, and then it starts to decrease beyond a point. Beyond a point increased market share comes only with reduced current year profits because of increase expenditures on advertising, R&D, price reductions, and other promotions and marketing activities. Thus, telling a manager to maximize current year profits, market share, future growth in profits will make the manager wonder “what should I do?”
Though the assumption is that if get more people to use or get people to use more number of times (increase in market share), we can reap profits in future. It doesn’t work so simply on the ground as people might very well stop buying you the moment you stop investing or shouting.
The decision to increase revenues either by investing in gaining more share or trying to extract additional profit is very crucial and itdepends upon the Brand Managers and the Marketing Managers. As said, though we all theoretically know that this is where we have to stop and this is how we have to optimize, it is extremely difficult on ground to understand whether the brand has future potential to grow from the consumers or is it the maximum?
Positioning of a product is how do you intend the consumer to perceive your product. It is to understand where and for what do you want to stand in the consumer’s mind. After segmenting a market and then targeting a consumer, next step will be to position a product within that market. It refers to a place that the product offering occupies in consumers’ minds on important attributes, relative to competing offerings. How new and current items in the product mix are perceived, in the minds of the consumer, therefore re-emphasizing the importance of perception.
With big companies involved in multiple categories, multiple brands, different sets of competitors in each category positioning can become extremely complex. For example, there are mother brands like Dettol, Lifebuoy, Cinthol, Palmolive, etc in the toilet soaps category. If the consumers are increasingly becoming health and hygiene conscious and let us suppose it is observed that there is huge potential in the market. Now, immediately Cinthol cannot launch a variant saying Cinthol Germ Kill, because it doesn’t go with its existing brand positioning (freshness, aroma) within the category and across other categories. May be the alternative is to launch a new brand like ‘Godrej Protekt’ where the brand is positioned towards germ-kill and at the same time to gain the equity it is endorsed by the ‘Godrej’ brand. These things become extremely complex and requires excellent understanding of the markets, categories, consumers, brands, etc. It is not only research, but the marketer has to have the intuition about the workings.
As said, Positioning is more to deal with the perceptions and it spans across different parameters. Positioning can be based on product characteristics, price quality perceptions, usage, culture, geography, symbols, product class, competition. Sometimes you being excellent at something itself becomes your rival of not being able to position yourself as something else. I personally believe that this is one of the most trickiest parts of Marketing and Brand Development. It involves understanding the category, competition, customer attitudes and perceptions, product life cycle, distribution, positioning of different players in different ways, growth and opportunity areas, strengths and weaknesses, finding out the gaps in the positioning and trying to develop a proposition towards developing a perception in the consumer’s mind. Once we develop a position in the consumer’s mind, it is important to monitor the positioning and understand how it has to be shaped in future w.r.t the category stage. This is what I call as Positioning Life Cycle, as your positioning strategies differ a lot based on the category stage.
There is a big difference between feeling rugged when wearing Levi’s jeans and expressing the strong, rugged side of you by wearing them. The differences between the two can be important.
Brands essentially deal with different kinds of benefits. An identity that is based on intangible associations or brand personalities provides the brand with more strategic scope and gives you more liberty to extend the brand.
On the other hand, a brand that relies on the superior performance of a key attribute will eventually get beaten by competition, because the attribute is a fixed target for competitors. The result can be a loss of differentiation, or worse an inferior position on an attribute that is associated with the brand.
The Marlboro Man is an iconic symbol of American Marketing and Brand Management. The ‘Marlboro Cowboy’ is one of the most brilliant advertisements ever made in history. The Marlboro Man conveys freedom, attitude, charm, and masculinity. He is the cowboy of the world and his allure helped Marlboro outsell its competitors by almost three times.
But, as we all know, it is not easy to remain at the top. Marlboro started to feel pressure from Camel, Chesterfield, and other bargaining brands. On April 2, 1993, Marlboro announced that it would cut the prices by 20 percent. This day is popularly called ‘Marlboro Friday’ in the marketing world.
Marlboro Friday is considered to be one of the most important case studies for business school graduates around the world. It is used to teach business school graduates the significance of price discounts, price wars, profit maximization, co-operating with competitors and the evolution of branding. People in the business circles believe ‘Marlboro Friday’ changed the dynamics of Consumer Marketing forever.
What happened that Friday ?
The Marlboro Man is considered invincible and demanded a premium price for his brand of cigarettes. But with increased competition, Marlboro announced a heavy price-cut to compete on price. This made people feel that if the Marlboro Man cannot sustain by demanding a premium price in the market, then no other premium brand in the world can sustain. So, alongside the stock of Marlboro, the stock of other premium brands like Coca-Cola, Disney, P&G and other companies fell marking the death of premium price. People took the case of ‘Marlboro Friday’ and said that consumers will always get attracted to the better priced products and will not pay premium price for any brand.
But thank goodness, people are still paying for the premium brands such as Apple and Starbucks. So, what has changed in consumerism? What has changed is the very definition of branding. Branding is no more just about outsourcing to another advertising company and putting up your billboard. Branding has become a key strategy in business. Branding has evolved from just advertising to the whole end to end experience. It is what your customers feel when they go to the store, it is the feeling that they buy, it is how the product talks to the customer, it is how the product talks to the competitor, and it gives your consumers an identity in the society.
Harvard Business School Case Study of Malboro Friday –