Strategic Branding and Marketing Mix Elements

Posted on Feb 16, 2025 in Economy

Strategic Role of Branding

Branding plays a crucial role in a company’s success. It helps to:

  • Defend market share.
  • Attack competitor brands.
  • Act as a market entry barrier (strong brands with large market share make market entry difficult for competitors).
  • Enter new markets.
  • Satisfy different market segments.

Brand Portfolio (Model of Riezebos)

Example: Volkswagen Group

  • Bastion brand: Volkswagen
  • Fighter brands: Seat, Skoda
  • Prestige brand: Infinity (for Nissan)

Brand Positioning

Brand positioning is the managerial process of designing a marketing mix that leads consumers to perceive a brand as having a distinctive image compared to competitor brands.

Brand Personality and Management

Brand Management

Brand management involves marketing activities aimed at protecting and growing the brand, ultimately achieving the desired positioning.

Brand Values and Brand Equity

  • Brand Values: These are the emotions and values that a brand reflects to the customer. An effective brand depicts the organization’s philosophy and benefits, reflected through the brand’s values and positioning. Examples include quality, reliability, innovation, fun, safety, and value for money.
  • Brand Equity: This is the actual asset value placed on the brand itself. It’s difficult to value, unlike physical assets. Brand equity is strongly influenced by brand awareness and market perception.

Brand Value Equation: Benefits Received by Customers / Costs to Customer of Brand Purchase

Price as a Marketing Mix Element

Price is the value someone is prepared to pay for a product or service. It’s the only element of the marketing mix that generates revenue, income, and profit.

Price elasticity refers to how susceptible demand is to price changes.

Price Perception and Product Positioning

Customer perception of price is influenced by the perceived value of the product.

Effective Positioning Requirements:

  • Clarity
  • Credibility
  • Consistency
  • Competitiveness

Pricing Methods and Strategies

Methods of Pricing

  • Cost-based pricing: A monetary amount or percentage is added to the product’s cost.
  • Demand-based pricing: High prices when demand is strong, low prices when demand is weak.
  • Absorption-costing: Prices include all production costs, including overhead. It doesn’t consider customer willingness to pay.
  • Competition-based pricing: Costs and revenue are secondary to competitor prices.
  • Marketing-oriented pricing: A wide range of factors are considered, including marketing strategy, competition, customer value, costs, and price-quality relationships.

Pricing Strategies

  • Cost-plus pricing: Adding a specified amount or percentage to the seller’s cost after the cost is determined.
  • Mark-up pricing: Adding a predetermined percentage (the mark-up) to the product’s cost.
  • Differential pricing: Charging different prices to different buyers for the same product quality and quantity.

New Product Pricing

  • Price skimming: Charging the highest possible price that buyers who most desire the product will pay.
  • Penetration pricing: Setting prices below competitors to penetrate the market and gain a large sales volume.
  • Psychological pricing: Encouraging purchases based on emotion rather than rational responses, influencing customer perception to make the price more attractive.

Examples of psychological pricing:

  1. Reference pricing: The price customers anticipate paying or consider reasonable.
  2. Bundle pricing: Several products are offered for sale in one combined unit.
  3. Everyday low prices.
  4. Loss leader.
  5. Odd/even pricing: Setting prices in odd numbers (e.g., $2.99).
  6. Customary pricing: Based on perceived customer expectations.

Place (Distribution) in the Marketing Mix

Distribution

  • Where to sell products/services (e.g., shops, catalogs, online, door-to-door, showrooms, kiosks).
  • Consider where customers expect to buy.
  • Also known as the “distribution chain” or “channel.”

Logistics

  • How to get products/services to the customer (e.g., transport, warehousing, packaging).
  • Consider refrigeration, distribution centers, and costs.
  • Also consider planning routes, reliability, transport regulations, and customs.

Objectives of Distribution

  • Movement of Goods:
    • Availability of goods.
    • Protection of goods.
    • Cost reduction.
    • Customer satisfaction.

Distribution Strategies

Distribution strategies can be:

  • Exclusive: Limiting distribution to a single outlet. Usually for high-priced products where the intermediary provides detailed sales efforts.
  • Selective: A small number of retail outlets are chosen. Common for products like computers, TVs, and appliances, where consumers shop around and manufacturers want broad geographical reach.
  • Intensive: Used for low-priced or impulse purchase products (e.g., chocolates, soft drinks).

Distribution Channel Selection

This is the method used to get your product or service through various channels to the end-user. It focuses on:

  • Location of your business.
  • Location of your target market.
  • How to reach your target market.
  • Warehousing of your stock.
  • Transportation of your stock.