Services Marketing

A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). A product is tangible (i.e. material) since you can touch it and own it. A service tends to be an experience that is consumed at the point where it is purchased, and cannot be owned since is quickly perishes. A person could go to a café one day and have excellent service, and then return the next day and have a poor experience. So often marketers talk about the nature of a service as:

Inseparable - from the point where it is consumed, and from the provider of the service. For example, you cannot take a live theatre performance home to consume it (a DVD of the same performance would be a product, not a service).

Intangible - and cannot have a real, physical presence as does a product. For example, motor insurance may have a certificate, but the financial service itself cannot be touched i.e. it is intangible.

Perishable - in that once it has occurred it cannot be repeated in exactly the same way. For example, once a 100 metres Olympic final has been run, there will be not other for 4 more years, and even then it will be staged in a different place with many different finalists.

Variability- since the human involvement of service provision means that no two services will be completely identical. For example, returning to the same garage time and time again for a service on your car might see different levels of customer satisfaction, or speediness of work.

Right of ownership - is not taken to the service, since you merely experience it. For example, an engineer may service your air-conditioning, but you do not own the service, the engineer or his equipment. You cannot sell it on once it has been consumed, and do not take ownership of it.

Western economies have seen deterioration in their traditional manufacturing industries, and a growth in their service economies. Therefore the marketing mix has seen an extension and adaptation into the extended marketing mix for services, also known as the 7P's - physical evidence, process and people.

Lets now look at the remaining 3 p’s:

People

An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. Consumers make judgements and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for. Many British organisations aim to apply for the Investors In People accreditation, which tells consumers that staff are taken care off by the company and they are trained to certain standards.

Process

Refers to the systems used to assist the organisation in delivering the service. Imagine you walk into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company.

Physical Evidence

Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgements on the organisation. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down!
Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service.

New Product Development

There are several general categories of new products. Some are new to the market (ex. DVD players into the home movie market), some are new to the company (ex. Game consoles for Sony), some are completely novel and create totally new markets (ex. the airline industry). When viewed against a different criteria, some new product concepts are merely minor modifications of existing products while some are completely innovative to the company.

• Changes to Augmented Product
• Core product revision
• Line extensions
• New product lines
• Repositionings
• Completely new

These different characterizations are displayed in the following diagram.

There are several stages in the new product development process...not always followed in order:

1. Idea Generation (The "fuzzy front end" of the NPD process)
   • Ideas for new products can be obtained from customers (employing user innovation), designers, the company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or through a policy of Open Innovation. Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.
   • Formal idea generation techniques can be used, such as attribute listing, forced relationships, brainstorming, morphological analysis and problem analysis
2. Idea Screening
   • The object is to eliminate unsound concepts prior to devoting resources to them.
   • The screeners must ask at least three questions:
     • Will the customer in the target market benefit from the product?
     • Is it technically feasible to manufacture the product?
     • Will the product be profitable when manufactured and delivered to the customer at the target price?
3. Concept Development and Testing
   • Develop the marketing and engineering details
     • Who is the target market and who is the decision maker in the purchasing process?
     • What product features must the product incorporate?
     • What benefits will the product provide?
     • How will consumers react to the product?
     • How will the product be produced most cost effectively?
     • Prove feasibility through virtual computer aided rendering, and rapid prototyping
     • What will it cost to produce it?
   • test the concept by asking a sample of prospective customers what they think of the idea
4. Business Analysis
   • Estimate likely selling price based upon competition and customer feedback
   • Estimate sales volume based upon size of market
   • Estimate profitability and breakeven point
5. Beta Testing and Market Testing
   • Produce a physical prototype or mock-up
   • Test the product (and its packaging) in typical usage situations
   • Conduct focus group customer interviews or introduce at trade show
   • Make adjustments where necessary
   • Produce an initial run of the product and sell it in a test market area to determine customer acceptance
6. Technical Implementation
   • New program initiation
   • Resource estimation
   • Requirement publication
   • Engineering operations planning
   • Department scheduling
   • Supplier collaboration
   • Logistics plan
   • Resource plan publication
   • Program review and monitoring
   • Contingencies - what-if planning
7. Commercialization (often considered post-NPD)
   • Launch the product
   • Produce and place advertisements and other promotions
   • Fill the distribution pipeline with product
   • Critical path analysis is most useful at this stage

Product lining and Price Lining

Product lining is the marketing strategy of offering for sale several related products. Unlike product bundling, where several products are combined into one, lining involves offering several related products individually. A line can comprise related products of various sizes, types, colours, qualities, or prices. Line depth refers to the number of product variants in a line. Line consistency refers to how closely related the products that make up the line are. Line vulnerability refers to the percentage of sales or profits that are derived from only a few products in the line.

The number of different product lines sold by a company is referred to as width of product mix. The total number of products sold in all lines is referred to as length of product mix. If a line of products is sold with the same brand name, this is referred to as family branding. When you add a new product to a line, it is referred to as a line extension. When you add a line extension that is of better quality than the other products in the line, this is referred to as trading up or brand leveraging. When you add a line extension that is of lower quality than the other products of the line, this is referred to as trading down. When you trade down, you will likely reduce your brand equity. You are gaining short-term sales at the expense of long term sales.

Image anchors are highly promoted products within a line that define the image of the whole line. Image anchors are usually from the higher end of the line's range. When you add a new product within the current range of an incomplete line, this is referred to as line filling.

Price lining is the use of a limited number of prices for all your product offerings. This is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. Its underlying rationale is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices.

There are many important decisions about product and service development and marketing. In the process of product development and marketing we should focus on strategic decisions about product attributes, product branding, product packaging, product labeling and product support services. But product strategy also calls for building a product line.

The product mix includes all the product lines and items that the library makes available. The product line is a group of closely related products such as different kinds of genre reading or the different services for seniors. The product mix has length, width, and depth.

Length is the number of product lines--collections and services.

Width is the number of categories within a product line such as the SF or large print collections or the number of services for adults.

Depth is the number of copies for each item or the number of times that a service is available.

Thus the product mix can be expanded by adding length or new product lines, width of a new category to an existing product line [graphic novels], or depth [adding more copies to make particular content more accessible.

Brand Identity Prism (Kapferer)

The conception of brand identity was mentioned for the first time in Europe by Kapferer, 1986. The importance of the conception and its understanding quickly disseminated in the entire world. The literature on brand management, which has been widely examined, uses the terms “equity” (Aaker, 1996).

According to J. Kapferer, brand identity could be de-fined by answering the following questions:
- What is the aim and individual vision of a brand?
- What makes a brand distinguished?
- How satisfaction could be achieved?
- What is brand‟s equity?
- What are brand competence, validity and legitimacy?
- What are the features of its recognition?

it could be claimed that the conception of brand identity includes the uniqueness, meaning, aim, values, and personality and provides a possibility to position the brand better, and, thus, achieve the competitive advantage.

Sources of Brand Identity:
Goods
Name
Personage (emblem)
Visual Symbols and Logotypes
Brand developer
Communication together with its content and form

Prism of brand identity

First of all brand contains an external specificity that is physical appearance, which is the core of brand and its value added. This determines a traditional brand management due to orientation to “know how”, classical positioning, selecting a principal good or brand features and the benefit. The first step building up a brand is the definition of physical factors, identifying what it is, what it does and how does it look like. Physical appearance is closely connected with a brand prototype, revealing the quality of a brand (for example Coca-Cola bottles on tins of Coca-Cola).

The second element of identity prism is brand personality. With a help of communication brand character is being developed and this is a way by which any brand “talks” about its goods and services and indicates a particular human person. The trait of personality within the prism of identity is inner source. It should not be mixes up with the image of consumer‟s reflection which is an ideal portrait of every recipient. Brand personality is described and measured using those features of consumer personality that are directly related to brands. Since 1996 the research was directed towards studies of brand personality (Kapferer, 2003). D. Grundey (2002) claims that the success of brand expression percentage in the market depends on the choice of every element of personality and its reconciliation. Brand personality is closely connected with self-image and image of a consumer because the identification of consumers‟ with a particular segment reflects brand features.

Brand is culture. Brands possess that culture in which they originated. Brand is a representative of its culture, including communication. From this perspective culture entails a lot of values that provide brand with inspiration. Cultural features a correlated with external principles of brand management (a good and communication) Culture is in the core of brand. Global brands usually reveal their culture (Benetton, Coca-cola, IBM). The aspect of culture enables to discover differences between other competing brands. The attention is focused on brand personality; however, eventually only those brands become leaders that possess not only personality but culture. Brand culture is based on the culture, values and aims of an enterprise. This is one of good lineaments while comparing brands of different companies as it is not likely that tow different companies will have identical cultural features ( Grundey, 2002). Countries producers are the sources of brand culture as well. However, this is not the only factor, providing value added. The degree of brand freedom is frequently restricted by the culture of a company as this is the most visible and external brand feature. Culture plays the essential role in brand differentiation as it indicated what moral values are embodied in goods and services. This feature helps identifying the strongest brands because sources, basic ideals and a set of values are revealed.

Brand includes relationship as brands frequently take the most important place in the process of human transactions and exchange. This is extremely reflected in the sphere of services and retail companies. This feature emphasizes the way of behavior which is identified with brand most of all. A lot of actions such as the fact how brands influence and provide services in connection to their consumers determine this feature. According to Kapferer (2003), brand is a voice that consumers should hear because brands survive in the market because of communication. D. Grundey (2002) singles out the following ways of communication:
-Advertising and other support elements;
-Direct consumer‟s communication while purchasing a good.
Marketing culture of a company is extremely significant as it is a constitutive part of company‟s culture, manifested through the relationship of consumers and the company. Invisible communication is created with a means of associations and its can start between people (a seller, buyer or employee) seeking for the same or different goals. Communicating it is important to reconcile different need of people and present the entire useful information allowing perceiving the essence and peculiarities of a brand.

Brand is a customer reflection. Consumers can easily define what goods of a particular brand are produced for a particular type of consumers (for example, this automobile was developed only for show stars). Brand communication and goods aim at reflecting a consumer, for whom those goods are addressed. Consumer reflection is often confused with the target market (Kapferer, 2003). The target market determines potential consumers though consumer reflection does not define target market. A consumer has to be reflected in a way, which would show how he or she could image themselves consuming a particular good. The representatives of the target market should be presented differently from what they are but what they would like to be. Consumers use goods of certain brands seeking to create their own identity. Brands should control their consumer reflection. A constant repetition stating that this brand was developed for a certain target group weakens brand image.

Consumer self-image. Brand is closely related to the understanding of consumer self-image that is the features with which consumers identify themselves and the very same features they would like to be reflected by the chosen good and its brand. Consumer self-image is important in the explanation of consumer behaviour as consumers purchase goods, corresponding to their self-image. The conception of consumer self-image includes an amount of individual ideas, thoughts and feelings about him in relationship with other objects within socially defined boundaries (Onkvisitir Shaw, 1994). This is the understanding of an individual about his ability, semblance and characteristics on personality. The conception of consumer self-image is developed within timeframes and is based on that what a consumer sees around himself and how other consumers evaluate and respond to him. The conception is a set of beliefs about oneself, retained in memory. The conception of consumer self-image can be determined and strengthened by examining purchase and consumption. Consumers acquire the reconciliation of oneself having positive attitude towards a certain goods of that brand ( for example, a man who identifies himself as strong and muscular will choose Marlboro” cigarettes, while a woman, identifying herself as attractive and modern will choose,Virginia Slims cigarettes) ( Graeff, 1996).

All six elements emphasize brand identity. The prism of identity originated from the basic conception that brand is marked by the gift of “speech”. Brands can exist only then when they communicate. Physical appearance and personality allow determining the sender. The recipient is defined by consumer reflection and self-image. The last two elements of brand identity: culture and relationship link the sender and the recipient.

The prism of brand identity maintains a vertical subdivision: the elements on the left such as physical appearance, relationship and consumer reflection are social and provide brand with external expression (image) and are visible.
The elements on the right such as personality, culture and consumer self-image are connected with the inside of a brand and its soul.

Summing on the prism of brand identity it can be noted that it is the unit of brand identity as a live system of elements, possessing internal and external sides and determining possible limits for brand development and variation.

Training Manpower: TATA

Mumbai, Oct. 27

The group would soon roll out an in-house recruitment and training set up for its retail business, on the lines of Tata Administrative Services (TAS).

Internal cohesion

The group would encourage entry level managers working in stores such as Westside or Titan to work their way up to top managerial positions in that set up.

There would also be a system of internal cohesion whereby a staff member from any of its retail brands could shift to work in its other customer-facing brands, which could be front desk jobs in Taj hotels too.

The Tatas have a presence in the organised retail space through Tanishq, Titan, Croma, Westside, and Star Bazaar selling jewellery, watches, electronics, apparels & accessories, and food & beverages respectively.

Tackling attrition

According to Mr Ajit Joshi, CEO and Managing Director of Infiniti Retail Ltd which operates Croma, by enabling growth opportunities for staff within the Tata group, the company is to a great extent tackling the issue of high attrition, which is plaguing the Indian retail industry.

“Attrition is as low as five per cent as compared to 60 to 70 per cent prevailing in the industry,” he added.

Mr Arun Gandhi, Director, Tata Sons, said the new administrative set up for retail is likely to be in place within one year.

Manpower Hierarchy in Retail: ITC

We'll first look at an example of the Choupal Saagar retail business of ITC where the different roles are listed below.

Store Level: (in Ascending Order)
Helper
Customer Service Associate (Cashiers & Category Salespersons)
Stock In charge
Assistant Store In charge
Store Manager

State Level:
Retail Accountant
Area Manager (around 3 stores)
State Retail Manager (entire state)

Headquarters:
Buying Assistants
Assistant Managers
Merchandising Managers (each category)
Business Development Manager
Retail Head

There might be a few other levels in the Headquarters level.

Croma: Electronics MegaStore: Tata group's Infiniti Retail

Owned and managed by Infiniti Retail, a 100 per cent subsidiary of Tata Sons, Croma receives technical and strategic sourcing support from Woolworths India, a subsidiary of Woolworths. The latter is an Australian retail giant with over 2,000 stores in 12 different formats in Australia.

The above 20,000 sq feet chain at Juhu in Mumbai retails products in eight categories. These are white goods, home entertainment, small appliances, computers and peripherals, communication, music, imaging and gaming software. In each of these categories, the buyer is spoiled for choice, with nearly 6,000 products and 180 brands to choose from.

Currently organised retail is only 3 to 6 per cent whereas the total retail turnover in India was 250 million dollars last year. But organised retail is growing at a speed of 40 per cent. The pie is large enough." These facts were disclosed at an AT Kearney summit held in Mumbai recently.

There are other measures that he hopes to use to attract the customer. These include job-related training and motivational programmes to ensure that the sales staff is able to give optimum service to customers, and extended warranties on products from Tata AIG General Insurance. These measures help give further credence to Croma's claim of "We don't sell, we help you buy."

http://www.tata.com/infiniti_retail/articles/20070305_croma_electronics.htm

Ties-up with Microsoft: MS@Retail

The joint initiative of the two companies brings for the first time networking solutions for every room of a house.

The technology available at Croma, Juhu, will showcase Microsoft connected homes which bring together music and movies, thereby enriching and enhancing the lifestyles of consumers, he said. The MS@Retail shop in shop pilot project kiosk at Croma Juhu would showcase technology that will create homes where everyone is connected to everything.

The technology will help in assisting to connect camera to a Xbox and put up a show for the whole family, watch movies by connecting Xbox to the LCD, as also convert the PC to a gaming machine, thereby providing the unique technology for a completely networked home.

Presently, there are nine Croma stores in India.
http://economictimes.indiatimes.com/News_by_Industry/Tata_groups_Infinity_Retail_ties-up_with_Microsoft/articleshow/2491094.cms

BPCL Retail Outlets: 'Ghar'

Indo-Asian News Service

In a bid to expand its presence in the expanding Indian retail market, the state-run oil major Bharat Petroleum Corp Ltd (BPCL) said that the company will invest Rs 6 billion in retail over the next five years.

The BPCL plans to set up about 250 retail outlets called 'Ghar' to sell its fuel products. These outlets would also offer customers non-fuel facilities like shopping, entertainment and eateries.

"We are planning to open around 250 outlets, each having a 'dhaba' kind of ambiance, offering shopping and entertainment experience," said Subankar Sen, BPCL's senior manager of allied retail business.

"At present we have 16 such outlets across the country, each with 40 per cent fuel-based business and the reminder comprising non-fuel activities like shopping, entertainment and eateries," Sen added.

"The company is primarily focusing on urban areas, keeping in view the increasing number of people traveling on highways, and travelers becoming more demanding," said the BPCL retail chief. The outlets will mostly be built on highways and land requirement for each unit would be about five acres.
This is in continuation with BPCL's In & Out stores which stock medium-high premium grocery products with efficient visual merchandising. While IOC's retail unit is setting up shop in rural India, BPCL's model seems very practical for a highway-urban scenario.
http://fmcg-marketing.blogspot.com/2007/10/kisan-seva-kendras-ioc.html

JWT Creative Brief

The JWT creative brief can be used to assess any advertisement (TV/Print etc.)

1. What is the Opportunity and/or Problem which the advertising must address?
A brief summary of why you are advertising. Take the consumer’s point of view, not “sales are down,” but, rather “consumers are choosing cheaper alternatives.”

2. What do we want people to do as a result of the advertising?

3. Who are we talking to?
Try to develop a rich description of the Target Group.
Indicate their beliefs and feelings about the category.
Avoid demographic information only. Add personality and lifestyle dimensions.

4. What is the Key Response we want from the advertising??
“State succinctly, what single thing do we want people to feel or notice or believe as a result of advertising.”

5. What information/attributes might help produce this response?
It could be a key product attribute, a key user need which the brand fulfills, etc.
Avoid a laundry list.

6. What aspect of the Brand Personality should the advertising express?

7. Are there any media or budget considerations?

8. Any additional information that might affect the creative direction.
“Feel free to use a visual summary, a picture, drawing or any object which aids in understanding the nature of the brief.”

Tropicana Twister Vs. Minute Maid

Indian Market Size:
Juices and Fruit Drinks: Rs 5,000 crore
Carbonated drinks: Rs 6,000 crore (cola, lime and orange)
A huge chunk of the Juices and Fruits drinks is unorganized, with respect to volume almost 90%.

Pepsi's Strategy
The launch of Twister, already successful in Vietnam, will do more than add another brand to the shelves. It will mark Pepsi’s entry into a segment in India that has opened up with the entry of Minute Maid, which, full of orange pulp, is neither pure juice like Tropicana nor plain fruit drink like Coke’s own mango drink Maaza. Unfortunately, this new brand Twister can be ill-equipped in order to take on Minute Maid in order to maintain a competitive advantage due to its association with the brand Tropicana. Tropicana Twister might be perceived as an extension to the pure juice family of Tropicana. Twister is also similarly named to Dabur Real's Twist, which hosts a combination of fruits for its juices range.

Coca Cola's Strategy
Coca-Cola might be testing its Maaza Aam Panna in UP, but this is not in direct response to Twister in any way. It is more an innovative attempt to capture new markets. Coca-Cola has a successful new brand in Minute Maid, with the product complementing the good promotional campaign during its rollout. Coca-Cola should not just concentrate on Pepsi as a competitor, but it should look at Real Twist too, which is currently being pushed heavily by the Retailers/Traders due to some excellent activation strategies by Dabur.

Coca-Cola: “Little Drops of Joy”

Coca-Cola India unveiled its ‘5-Pillar’ growth strategy to further strengthen its bonds with India. The strategy focuses on People, Planet, Portfolio, Partners and Performance. The Company announced a range of initiatives under each of the 5 pillars and also unveiled its integrated communication initiative-“Little Drops of Joy” which aims to reinforce the Company’s ‘connect’ with stakeholders in India using a single platform. Each initiative that announced are drops of a larger vision aimed at mutual growth and development. Over the last few years, the company continuously engaged with a large number of stakeholders and has incorporated their learnings in refining its strategy for India. The integrated communication platform of “Little Drops of Joy” is a tribute to their valuable inputs and truly depicts what the Company has always stood for.

‘Little drops of joy’ is also about mother-branding the offering from the house of Coke. In many ways, the campaign is a company campaign. I will not call it a corporate campaign, but it certainly is about all the brands that Coke has to offer in India. In some ways, it subliminally establishes a wee bit of distance from being painted into the corner of a cola image alone. There is more to Coca-Cola than Coke. Coca-Cola sure wants that.

In many ways, the little drops of joy could be a Kinley mineral water today and a vitamin-enriched offering in water tomorrow. It is certainly about all the other drinks in its portfolio of the carbonated kind, orange, lime and everything else included. It is about its latest offering, Minute Maid, just as it is about any other beverage it will offer in the future. Coffee is but one. There could be others.

Unfortunately it I feel the Coke mistake continues by bringing in all its brands under one platform, instead of offering distinct differentiation. It could be very good for Coke and Sprite, but might be detrimental to Kinley or the newly launched Minute Maid. Ultimately, a Coke need not position itself as a soft-drink for everyone, it just needs to be consumed by everyone.

Points of Difference & Points of Parity

Point of difference (POD) is a term used for an outcome of product differentiation. In business economics, differentiation is seen as an important strategic move for companies to make. Because of an overwhelming variety of products and services on the market, those that stand out in some manner are better noticed by consumers. There are various (positive and negative) ways of being different compared to competitors in the same market. Differentiation is the term given to the positive way in which a company's product differs from its competitors. Points of difference (PODs) describe the individual factors of differentiation.

The key points of difference of a company are synonymous with its unique selling proposition (USP), and are critical in defining its competitive advantage and branding strategy. They must be attributes or benefits that consumers strongly, uniquely, and positively associate with the company's brand; and not with any competing brand. Once points of difference have been clearly communicated to consumers, the company and its brand are set apart from its competitors. Brand loyalty depends upon the ability of the company to establish and maintain clarity of communication with the consumer regarding their brand; and to maintain and expand the points of difference that defines the brand.

Points-of-parity (POP) are driven by the needs of category membership to create category of POPs and the necessity of negating competitors’ Points of Difference (POD) to create competitive POPs. In choosing points-of-difference, two important considerations are that consumers find the POD desirable and that the firm has the capabilities to deliver on the POD.

There are three key consumer desirability criteria for PODs,

1.Relevance:
Target consumers must find the POD personally relevant and important. The Westin Stamford hotel in Singapore advertised that it was the world’s tallest hotel, but a hotel’s height is not important to many tourists.

2.Distinctiveness:
Target consumers must find the POD distinctive and superior. When entering a category where there are established brands, the challenge is to find a viable basis for differentiation. Splenda sugar substitute overtook Equal and Sweet ‘n Low to become the leader in its category in 2003 by differentiating itself on its authenticity as a product derived from sugar, without any of the associated drawbacks.

3.Believability:
Target consumers must find the POD believable and credible. A brand must offer a compelling reason for choosing it over the other options. Mountain Dew may argue that it is more energizing than other soft drinks and support this claim by noting that it has a higher level of caffeine. Chanel No. 5 perfume may claim to be the quintessential elegant French perfume and support this claim by noting the long association between Chanel and haute coutre.

There are three key deliverability criteria.

1.Feasibility:

2.Communicability:

3.Sustainability:

Marketers must decide at which level (s) to anchor the brand’s points–of-differences. At the lowest level are brand attributes, at the next level are the brand’s benefits, and at the top are the brand’s values.

Thus marketers of Dove soap can talk about its attribute of one-quarter cleansing cream; or its benefit of softer skin; or its value, being more attractive. Attributes are typically the least desirable level to position. First, the buyer is more interested in benefits. Second, competitors can easily copy attributes. Third, the current attributes may become less desirable.

Research has shown, however, that brands can sometimes be successfully differentiated on seemingly irrelevant attributes if consumers infer the proper benefit. Procter & Gamble differentiates its Folger’s instant coffee by its “flaked coffee crystals, “created through a “unique patented process. In reality, the shape of the coffee particles is irrelevant because the crystals immediately dissolve in the hot water. Saying that a brand of coffee is “mountain grown is irrelevant because most coffee is mountain grown.

Indian Loyalty examples

As in continuation of the previous post on Retail Loyalty programs: http://fmcg-marketing.blogspot.com/2007/10/loyalty-programs-in-india.html

Pantaloon Retail

• Pantaloon offers loyalty programs for three different retail store formats:

• “Shakti Credit Card” exclusively for housewives at Big Bazaar stores in association with ICICI Bank.

• They only need to show their Big Bazaar bill of more than Rs. 500 and a lifestyle proof like club membership card etc. to use this card (at Food Bazaar outlets too). The card carries no fee and comes with a credit limit of Rs 5,000 with 50 days' credit period.

• Central-ICICI Bank card for its Central Mall customers. Benefits: Reward points and a zero percent EMI option.

• Green card for its Apparel business which has exclusive discounts and privileges with Apparel, perfumes & cosmetics, toys, Planet Sports & accessories. They practice a 4 – tier (1, 3, 5, and 7- Star) approach to cater to different segments.
  

HUL

90% of HUL customers pay with cash. This fact prompted the behemoth to come up with a pilot of a loyalty program to drive consumption and build relationships with customers in this category. HUL test marketed the program in Southern India with plans for expansion.

The program will allow customers to earn points for all HUL products purchased with cash. The points can then be redeemed for rewards including HUL's own products, electronic items or travel tickets. The program will allow the company to track the buying habits of its cash customers, a technique crucial to maintaining market share by targeting low value transactions.

SBI Tie-ups

SBI cards and the retail chain Lifestyle announced the launch of a co-branded card to target

the frequent shoppers. The program offers four reward points for every Rs 100 spent at any of the eight Lifestyle stores, transaction fee waivers and reward points on fuel purchases above Rs 400 on IndianOil and IBP

gas pumps. SBI has also launched a co-branded card with Vishal Mega Mart.

Esprit

Esprit Privilege Card (EPC) has been launched in India as a variant of the company's loyalty card used in other countries. Any purchase at an Esprit store qualifies the customer to

enter the EPC Red Card, which grants cardholders a 10% discount at Esprit stores. Red Card holders also receive alerts to new products, special offers, and previews of seasonal collections.

Customers who make purchases of Rs.25,000 or more during a one-year period are upgraded to EPC Platinum Card membership. Benefits (Platinum level) include 10% off on every purchase made, invitations to VIP events, preview shows and special sales.

Loyalty Programs in India

1.5 million Customers since August 2006 have registered for i-Mint, an innovative co- branded loyalty program with partners like Airtel, Indian, ICICI, HPCL, and Lifestyle-International. In the program, cardholders earn points by shopping at any of the partner companies and will be made available to 5 million by 2007 end.

Similarly, the new Tata Credit Card offers cardholders the opportunity to earn and redeem loyalty points across 18 brand categories through one unit. The card, in association with the SBI card and MasterCard is a partnership of leading brands across all conceivable categories like airlines, books, departmental stores, durable goods, fuel, hospitality, telecom etc. The program is three tiered and features include: global acceptance, free insurance of up to Rs. 3 million, and zero-percent balance transfer charges for up to 75 days.

The above are just two examples of the new age loyalty programs emerging in the retail space in India. Loyalty programs will only get bigger and better with the anticipated entry of international retail giants.

Multi-partner coalition programs are the dominant loyalty model outside the U.S., and these two cases are signs of the accelerated pace of Indian marketing efforts in this arena.

Loyalty programs have been active in India since 1995, when British Airways launched the South Asia version of its Executive Club frequent-flyer program in India. That year, Shoppers’ Stop, launched its First Citizen Club (which has reached a headcount of 644,500 at the end of Q1-2007, one of India’s best known loyalty programs.)

Today, loyalty efforts have penetrated every major vertical: hospitality, travel, retail, telecoms, media outlets, and consumables.

The biggest challenge facing Indian marketers is the one facing marketers the world over: deriving actionable insight from customer data. While the more established sectors of fuel retail, travel are fairly established, most marketers still exist in a patchwork of segments with little knowledge of how to construct, administer and use loyalty programs.

The Indian loyalty industry is still in its infancy as most programs are very much standalone, points-driven or discounting schemes. They haven’t matured to the extent of providing differential treatment at all customer interface points. Without segmented databases, it’s difficult to benefit from a CRM program.

Brand Extension, Line Extension, Product Extension

The Differences between Brand, Line, Product Extensions:

Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. Organisations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name).

When done successfully, brand extension can have several advantages:

• Distributors may perceive there is less risk with a new product if it carries a familiar brand name. If a new food product carries the Heinz brand, it is likely that customers will buy it

• Customers will associate the quality of the established brand name with the new product. They will be more likely to trust the new product.

• The new product will attract quicker customer awareness and willingness to trial or sample the product

• Promotional launch costs (particularly advertising) are likely to be substantially lower.

While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a diluted or severely damaged brand image. Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity.

Product extensions are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke in same product category of soft drinks. This tactic is undertaken due to the brand loyalty and brand awareness they enjoy consumers are more likely to buy a new product that has a tried and trusted brand name on it.

Line extensions examples are different variant of 7Up, Coke, Nachos, Dove soap etc.
Indian example is HUL's Wheel Vs RIN both which offer the same core benefit which is a washing detergent, but targeted at different segments.

This is where the confusion between line and product extensions occur, because under which area would you put a Good Night mosquito mat and a Good Night mosquito Liquid. They fall under the same core benefit, which is eradicating mosquitoes, but are different categories.

Yamaha music instruments and Yamaha bikes can be termed as Product extensions, since here each category, i.e. music does not leverage upon their presence in bikes and vice versa.

But if this is true, then Good Night would fall under Line extension.

Let the arguments continue..Do throw any more clarity on these three topics if available.

Brand asset valuator (BAV)

The Brand Asset Valuator (BAV) is a database of consumer perception of brands created and managed by BrandAsset Consulting, a division of Young & Rubicam Brands to provide information to enable firms to improve the marketing decision-making process and to manage brands better. Brand Asset Valuator and BAV also describe the Y&R group managing the database.

BAV measures the value of a brand along four dimensions: "Differentiation," "Relevance," "Esteem," and "Knowledge." Differentiation and Relevance build up to "Brand Strength." Esteem and Knowledge are used to calculate "Brand Stature." BAV defines these terms as follows.

• "Differentiation" quantifies the brand's point of difference.
• "Relevance" how appropriate the brand is to you.
• "Esteem" how well the regarded the brand is.
• "Knowledge" an intimate understanding of the brand.
• "Brand Strength" describes the brand's growth potential.
• "Brand Stature" describes the brand's current power.

BAV's database is the result of the world's most extensive research project on branding, based on data on 30,000 brands across 400,000 consumers in 48 countries through 240 studies.

Young & Rubicam’s BAV IN INDIA

Young & Rubicam's proprietary Brand Asset Valuator (BAV) has studied brands worldwide since 1993, and was introduced in India in 2003.

The BAV demonstrates how brands gain and lose strength, based on the strength of the perceptions that consumers have about brands. So it can be used to evaluate how a brand is doing in relation to the entire universe of brands, and not just in relation to similar products. Its database comprises 13,000 brands as perceived by 90,000 consumers across 32 countries; it is conducted every two to three years.

In India, the fieldwork was done in the first quarter of the year across 3,000 respondents in eight centres for about 1,400 brands. It will help marketers understand the brand in totality, at a "diagnostic, analytical and predictive level," and evaluate brands against actual competition, for a better understanding of the maturity of the market and the product life cycle, said Mr K. Subramanian, Planning Director, Rediffusion DYR.

The BAV measures all brands on a set of 48 image and personality parameters on a seven-point semantic scale (`agree,' `strongly agree'... ). These attributes are then correlated to four key parameters: differentiation, or, how distinct the brand is; relevance, or how appropriate the brand is to the target consumer; esteem, or how highly the consumer regards the brand; and knowledge, or how well the consumer knows the brand.

The BAV then constructs a power grid that plots Emerging Brands (strong differentiation), Unrealised Potential (strong differentiation, with increasing relevance and esteem), Declining Leaders (with decreasing differentiation and esteem), and Eroding Potential (low on differentiation and relevance).

Brand Resonance Pyramid

The first level of the pyramid deals with establishing the identity of the brand. Keller suggests a single building block for this phase and terms it brand salience. In building a highly salient brand, he argues that it is important that awareness campaigns not only build depth (ensuring that a brand will be remembered and the ease with which it is) but also breadth (the range of situations in which the brand comes to mind as something that should be purchased or used).

Richard Branson’s Virgin brand has achieved depth of awareness and is easily recognized and recalled in South Africa. The challenge facing the brand is to make consumers aware about its breadth and diversity of offerings including air travel, game lodges, finance, health clubs, drinks, and mobile communication. Follow the Virgin brand around the globe, and that challenge stretches to books, trains, cosmetics, jewellery, wines, radio, and even space flights in the next few years.

The second layer of the pyramid deals with giving meaning to the brand and here Keller presents two building blocks: brand performance and brand imagery. Brand performance is the way the product or service attempts to meet the consumer’s functional needs. Brand performance also has a major influence on how consumers experience a brand as well as what the brand owner and others say about the brand.

Delivering a product or service that meets and, hopefully, exceeds consumer needs and wants is a prerequisite for successful brand building. In communicating brand performance, Keller identifies five areas that need to be communicated: primary ingredients and supplementary features; product reliability, durability and serviceability; service effectiveness, efficiency and empathy; style and design; and price

Brand imagery deals with the way in which the brand attempts to meet customers’ psychological and social needs. Brand imagery is the intangible aspects of a brand that consumers pick up because it fits their demographic profile (such as age or income) or has psychological appeal in that it matches their outlook on life (conservative, traditional, liberal, creative,etc). Brand imagery is also formed by associations of usage (at work or home) or via personality traits (honest, lively, competent, rugged, etc).

It is in this building block that advertising plays a major role in shaping the image of the brand, although word-of-mouth recommendations and a consumer’s own experience are equally important. However brand imagery is built, it is important that brand managers and strategists craft strong, favourable and unique associations for a brand.

Luxury cars, BMW in particular, are brands that work hard to communicate brand performance and imagery. Sales people, brochures, Internet sites and car journal reviews will all tell you about the performance of a BMW. The delivery of this type of communication has largely remained consistent, only being updated at regular intervals to reflect the specifications of new models. What has changed is the imagery used to communicate the brand from the power-impregnated advertisements of a BMW outrunning a land speed rocket car to the more esoteric imagery of innovative kinetic sculptures being powered by the wind. The change in advertising imagery reflects a shift by the German automaker away from targeting the affluent automobile enthusiast to targeting the “ideas class”, a market segment which comprises up-market buyers more interested in design and innovation than brute performance.

Having dealt with brand identity and meaning, we move upwards to the third tier of the pyramid to develop a consumer response to the brand. Keller proposes two building blocks for this tier, namely brand judgments and brand feelings. Judgments about a brand emerge from a consumer pulling together different performance and imagery associations. These judgments combine into a consumer’s opinion of a brand and whilst there are multiple judgments that an individual can make, Keller believes there are four that companies must pay attention to in their brand-building efforts. They are the perceived quality of the brand; brand credibility (the extent to which the brand is perceived as having expertise, being trustworthy and likable); brand consideration (the brand must be relevant to the consumer so that they are likely to purchase or use it); and brand superiority (the extent to which consumers view the brand as being unique and better than other brands).

Maintaining brand judgement is particularly important when a company embarks on brand extension as what counted as quality, credibility, consideration and superiority in one market can evaporate as the brand extends its product line and/or market reach. Baby food manufacturer Gerber tried to enter the adult food market in the 1970s by producing small helpings of fruits, vegetables, desserts, etc in the same jars it used for infant food. Unable to garner credibility (adult food is very different to baby food), consideration (how many adults would think about buying food for themselves that is packaged in a well-established baby-food jar) and superiority (many other brands specialize in adult food) for its new product range, Gerber quickly ditched which was widely regarded as a spectacular failure.

Whereas brand judgments can be fairly logical, brand feelings are consumers’ emotional responses to the brand. Keller identifies six brand-building feelings that he regards as important emotions that a consumer can have towards a brand, namely warmth, fun, excitement, security, social approval and self-respect.

The first three are experiential and immediate and increase in the level of intensity whilst the latter three are private and enduring and increase in the level of gravity. These responses are likely to come together in different combinations for individual consumers and the distinct brands they are relating to.

What is important for the brand manager and strategist is that responses are positive and come to mind when a consumer thinks about the brand.

Telecommunication companies often depict the emotional rewards of making a call such as a child bringing joy to his or her geographically-distant grandparents by speaking to them on the phone. Fun is a major component of brand communication with well-known South African examples such as Castrol’s “Boet and Swaer” and “Mad About Oil” campaigns and Vodacom’s “Yebo Gogo” and “Meerkat” campaign. Volvo plays on the brand feeling of security by emphasizing the safety of its cars. Investment management firm Allan Gray also targets the feeling of security by emphasizing the long-term performance of the investments it makes on behalf of its clients.

The final tier of the pyramid deals with the consumer’s relationship with the brand and here Keller introduces the sixth building block which he calls brand resonance. Resonance is characterized by the intensity of the psychological bond that customers have with the brand and their level of engagement with the brand. The challenge for the brand manager and strategist is to develop the bond and increase the number of interactions (repeat purchases of a product or service) through the development of marketing programmes that fully satisfy all the customers’ needs, provides them with a sense of community built around the brand and even empowers them to act as brand champions.

Along with Apple, Harley-Davidson is a brand that succeeds in creating a strong and lasting bond with its customers. The motorcycle manufacturer’s primary vehicle for achieving this is the global Harley Owners Group, known affectionately as HOG, which organizes regular events for its more than 600,000 members. Executive from the company often join these rides, which can number up to 25,000 riders, which successfully reinforce the brand’s message of freedom, individualism, self-expression, etc as well as building the sense of community that the brand creates. Harley-Davidson customer are famously loyal with over 45 percent of owners having previously owned one of the brand’s distinctive motorcycles.

In wrapping up this review of the pyramid model, it is useful to heed Keller’s advice not to take shortcuts: “The length of time to build a strong brand will therefore be directly proportional to the amount of time it takes to create sufficient awareness and understanding so that firmly held and felt beliefs and attitudes about the brand are formed that can serve as the foundation for brand equity.”

BRANDZ: Brand equity Model

What is the BrandDynamics Pyramid?

For each brand, each person interviewed is assigned to one level of the pyramid depending on their responses to a set of questions. The BrandDynamics Pyramid shows the number of consumers who have reached each level.
Bonding – Rational and emotional attachments to the brand to the exclusion of most other brands

Advantage – Felt to have an emotional or rational advantage over other brands in the category

Performance – Felt to deliver acceptable product performance and is on the consumer's short-list

Relevance – Relevant to consumer's needs, in the right price range or in consideration set
Presence – Active familiarity based on past trial, saliency or knowledge of brand promise

Purchasing loyalty increases at higher levels of the Pyramid - consumers at the level of Bonding are likely to be active advocates of the brand. There is also an increase in share of wallet - the proportion of consumer expenditure within the category on that brand - as you ascend the Pyramid.

The goal is to build as large a group as possible of truly loyal consumers, by sustaining a suitable relationship and increasing their loyalty to the brand.

What is Brand Signature?

In sustaining a relationship with the consumer and increasing loyalty, a brand will succeed in converting more individuals up the BrandDynamics Pyramid.

The rate at which a brand converts people from one level to the next is calculated; by comparing this with what you would expect given the brand's size, we can identify the strengths and weaknesses of a brand relative to other brands in its category. This method eliminates the effect of size, thus allowing you to compare the strengths of two brands regardless of whether they are small or large.

A Brand Signature might look like this:

Each bar corresponds to one level of the BrandDynamics Pyramid. Red bars on the left of the line indicate that the brand converts fewer people than expected; blue bars to the right indicate the brand converts more people than expected.

Therefore, we can identify a brand with this Brand Signature as a Cult Brand. It is not widely known and not relevant to everyone - but those for whom it is relevant form a committed and fanatical following.

otal, BrandZ has asked over 650,000 consumers and professionals across 31 countries to compare 23,000+ brands

What is Brand Voltage?

Brand Voltage is a one-number summary of the growth potential of a brand.

Brand Voltage takes into account how many people are very loyal to the brand (the brand's bonding score) and claimed purchasing data for the category to produce a single Brand Voltage number.

+ A brand with a positive voltage score has potential to gain share from its own marketing actions and resist the actions of competitors.

– A brand with a negative voltage score can still grow, but will have to work harder still; over time it will be more vulnerable to the actions of other brands.

Here is an example from the US apparel market.



The Bonding Score quantifies the current strength of the brand while Brand Voltage indicates its future potential.

Therefore, we can see that although Nike and Tommy Hilfiger have the same percentage of consumers who are bonded with the brand, Tommy Hilfiger has a positive voltage score, meaning that it is more efficient at converting consumers up the pyramid than Nike. Old Navy is in an even stronger position and more likely to gain market share in the future, as indicated by its voltage score.

The link between Brand Voltage and market share has been validated by tracking brands over three years.

A Proven Link Between Brand Voltage and Market Share



Analysis of the BrandZ database has shown that, on average, brands with a high Voltage have subsequently grown market share. Being moderately strong is not sufficient to generate significant share gains.

Household Potential Index (HPI)

Something that is “wanted by many” but “consumed by few” is our definition of Premiumness. Simply put, premuimness is defined as the inverse of penetration. For example, 41 per cent of all homes in India have Television. Only 2 per cent have a flat TV. Hence, homes with a flat TV is considered to be “premium” by HPI measure.

The concept of HPI allocates high scores for less penetrated product categories and services. On the other hand, lower scores to higher penetrated categories or mass consumed categories. Thereby, HPI eliminates judgmental factors and is therefore a more systematic approach, making it applicable across all segments of households, from the “super affluent” to the so-called “desperates”. HPI is a holistic measure of potential, and not just based on few durables.

In order to ensure that a specific ownership of a durable or consumption of a particular category of FMCG or services does not result in very high scores, 50 different measures have been incorporated into the HPI system.

HPI considers a wide spectrum of categories from Durables, FMCGs, Services, which are covered in IRS and scores are assigned in a scientific and automated method to products owned, consumed/ used. In addition to product categories, HPI also takes into account the key differentiating household demographics, such as, Highest Education in the household, Number of working members, education of the housewife, area occupied by the household vis-à-vis the number of people residing etc.

Look at the table-1 below. Going by the definition of SEC, A1 should be the most affluent class. However, it is not the reality. As per HPI, if we look at the top 1 per cent of consuming homes in India, only 39 per cent is from the uppermost SEC A1 and the remaining 61 per cent is from other SECs in Urban and Rural segments.

Conversely speaking, 61 per cent of SEC A1 does not feature in the Top 1 percent of the consuming households.