International University

School of Business
MBA class 02 - Group 6
Phan Minh Nhat Tran Thi Tuong
Vi

Nguyen Ngoc
Dieu Thi

Tran Ngoc Son Le Ngoc

Trung
Chapter 09: Creating Brand Equity
Chapter 10: Crafting the Brand Positioning
Chapter 14: Developing Pricing Strategy &
Programs
Creating Brand
Equity
What is a brand & How does
branding work?
What is brand equity?
How is brand equity built, measured,
and managed?
What are the important decisions in
developing a branding strategy?
A brand is a name, term, sign, symbol
or design, or a combination of them,
intended to identify the goods or
services of one seller or group of sellers
and to differentiate them from those of
competitors.
Identify the maker
Simplify product handling
Organize accounting
Offer legal protection
Signify quality
Create barriers to entry
Secure price premium & competitive
advantage
Branding is endowing
products and services with
the power of the brand.

Brand equity is the added value endowed

on products and services, which may be
reflected in the way consumers, think, feel,
and act with respect to the brand.
Improved perceptions Larger margins
of product More inelastic
performance consumer response
Greater loyalty Greater trade
Less vulnerability to cooperation
competitive Increased marketing
marketing actions communications
Less vulnerability to effectiveness
crises Possible licensing
opportunities
Additional brand
extension opporunities
A brand promise is the marketer’s vision
of what the brand must be and do for
consumers.
Brand Asset Valuator
- Differentiation, Energy, Relevance,
Esteem, Knowledge)
BRANDZ
- Follow a squential series of steps
- Challenge : help people be high earnings
& high potential customers
Aaker Model
- Brand identity, Core identity elements,
Extended identity elements, Brand essence)
Brand Resonance
Brand Resonance Pyramid
Choosing brand elements
Trademarkable devices that identify and
differentiate the brand
Designing holistic marketing activities
Brands are not built by ad alone.
Leveraging secondary associations
The associations indirectly transferred to the
brand by linking the brand to other entities
(company, distribution channels,...)
 Criteria of choosing
Memorable Transferable
Meaningful
Adaptable
Linkable
Protectable
Brand building Defensive

Developing brand elements (brand name, slogan, URL, Logo,

Symbol) can play a number of brand building roles
Slogans: an extremely efficient means to build brand equity
Personalization
Making sure the brand and its
marketing are as relevant as possible,
to as many customers as possible
Integration
Mixing and matching marketing
activities ==> reinforce the brand
promise
Internalization
"Walk the walk" to deliver the brand When You're Here, You're
promise Family

Choose the right moment

Link internal & External marketing
Bring the brand alive for employees

Answers That Matter

 Ingredients Company

Alliances Extensions

Other
Brands Country of
Employees
Origin

People BRAND Places

Endorsers Channels
Things

3rd party
Events endorsemen
ts

Causes
Secondary Sources of Brand Knowledge
Brand audits
Brand tracking
Brand valuation
Value stages

Marketing
Customer Brand Shareholder
Program
Mind-set Performance Value
Investment

• Product • Awareness • Price premiums • Stock price

• Communications • Associations • Price elasticity • P/E ratio
• Trade • Attitudes • Market share • Market capitalization
• Employee • Attachment • Expansion success
• Other • Activity • Cost structure
• Profitability

Program Customer Market

Multiplier Multiplier Multiplier
Multiplier

• Clarity • Competitive reactions • Market dynamics

• Relevance • Channel support • Growth potential
• Distinctiveness • Customer size & profit • Risk profile
• Consistency • Brand contribution

Fig: 9-6 Brand value chain

Source: Kevin lane Keller, Strategic Brand Management, 3rd ed. (Upper Saddle River, NJ, Prentice Hall, 2008)
The World's 10 Most Valuable Brands in 2010
Source: Millward Brown Optimor, BrandZ Top 100 Most Valuable Global Brands ranking
Brand reinforcement
Brand revitalization
Brand crises
Market segmentation
Financial analysis
Role of branding
Brand strength
Brand value calculation
Develop new brand elements
Apply existing brand elements
Use a combination of old and new
Crafting the Brand
Positioning
1. What is positioning?

2. How to create an effective positioning

strategy?

3. How to differentiate brands?

4. What marketing strategies are

appropriate at each stage of the
product life cycle?
Positioning is the act of designing the
company’s offering and image to
occupy a distinctive place in the mind
of the target market.
Competitive frame of reference
Points-of-parity (POPs)

Points-of-difference (PODs)
Frame of reference

Category membership
 Announcing category benefits
 Comparing to exemplars

 Relying on the product descriptor

Associations that are not necessarily
unique to the brand but may be shared
to other brands
Definition

Criteria
Desirability Deliverability
Criteria Criteria
Relevance Feasibility
Distinctiveness Communicability
Believability Sustainability
 Product

Channel Personal

Image
Product form Style
Features Design
Performance Ordering ease
Conformance Delivery
Durability Installation
Reliability Customer training
Reparability Customer consulting
Maintenance
Source: www.bauer.uh.edu/pgalvani/files/MARK6361/kotler10.ppt
"To remove the Singapore Girl icon from SIA is like removing Mickey
Mickey Mouse from Disneyland...” - Singapore's The Straits Times
VS
The product life circle

Marketing strategies for each stage in

PLC
Source: www.bauer.uh.edu/pgalvani/files/MARK6361/kotler10.ppt
Improve product quality and add new
product features and improved styling
Add new models and flanker products
Enter new market segments
Increase distribution coverage and enter
new distribution channels
Shift from product-awareness advertising
to product-preference advertising

(www.suu.edu/.../Kotler%20Keller%20PwrPt/Kotler_MM_13e_Basic_10.ppt)
Expand number of brand users by:
Converting nonusers
Entering new market segments
Winning competitors’ customers
Convince current users to increase usage
by:
Using the product on more occasions
Using more of the product on each occasion
Using the product in new ways
Shift from product-preference advertising to
product-reminding advertising
(www.suu.edu/.../Kotler%20Keller%20PwrPt/Kotler_MM_13e_Basic_10.ppt)
Increase firm’s investment
Decrease the firm’s investment level
selectively by dropping unprofitable customer
groups, while simultaneously strengthening
the firm’s investment in lucrative niches
Harvesting (“milking”) the firm’s investment
to recover cash quickly
Get rid of the business quickly by disposing of
its assets as advantageously as possible.

(www.suu.edu/.../Kotler%20Keller%20PwrPt/Kotler_MM_13e_Basic_10.ppt)
Quality improvements

Feature improvements

Style improvements
Developing Pricing
Strategy & Programs
Understanding pricing
 Setting the price
 Adapting the price
 Initiating and responding to Price
Changes
 Although nonprice factors have become more important in
modern marketing, price is the most important elements
determining market share and profitability
Effectively designing and implementing pricing strategies
requires a thorough understanding of consumer pricing
psychology and a systematic approach to setting, adapting,
and changing prices
Consumer pricing psychology  how consumers arrive at
their perceptions of price, the marketers must think of:
a. Reference price: consumers get pricing information from internal
reference price (used as habitual decision making) or external
reference price (used as limited decision making and extended
decision making)
b. Price-quality inferences: many consumers use price as an indicator of
quality whenever the information is not available
c. Price cues: consumers tend to process prices in a “left to right”
manner rather than by rounding e.g. stereo amplifier priced at 299
instead $300 as a price in the $200 range rather than $300 range
In setting pricing policy, a company follows a Six-Step
procedures :

Step1: Selecting the Pricing Objective

Step 2: Determining Demand : price elasticity of demand

Step 3: Estimating costs

Step 4: Analyzing Competitors Costs, Prices, and Offers

Step 5: Selecting a Pricing methods

Step 6: Selecting the final price

Step1: Selecting the Pricing Objective through
 Survival: face overcapacity, intense competition
or changing consumer wants.
 Maximum current profits: knowledge of
customer demand and cost function
 Maximum market share: set “the lowest price”
assuming the market is price sensitive
 Maximum market skimming: setting “higher
price” as to communicate superior product
 Product-Quality leadership: high levels of
perceived quality, taste, and status with a price
e.g. Jaguar car
 Other objectives: suitable to nonprofit and public
organization
 Step 2: Determining Demand :
 Price sensitivity:
(a) Inelastic Demand (b) Elastic Demand

$15 ------------------------------------------------------------------------------------------
$15
Price

$10 --------------------------------------------------------------------------------------------------------------------------
$10

50 150
100 105
 Quantity Demanded Quantity Demanded per Period
per Periodcurves
Estimating demand
Survey: how many units customers would buy at
difference price
Experiments: can vary the prices of different
products in a store
Statistical analysis: past prices, quantities sold,
other relationship
Step 3: Estimating costs
Type of costs and levels of production and
Accumulated production
Fixed costs: not vary with production level or sales revenue
Variable costs: material, office expenses
Average costs: is the cost per unit at that level of production
Total costs: Comprise variable costs and fixed costs

$10 -----------------------------------------------------------------------
I Current price
I
B I I
Cost per unit

$8 A
I
TI I
$6 I
$4 I Experience
I curve
$2 I
I I I I
100,000 200,000 400,000 800,000
Accumulated Production
 Step 4: Analyzing Competitors’ Costs, Prices, and
Offers:
 Consider the nearest competitors’ price
 The introduction of any price or change of any existing
price can provoke a response from customers,
competitors, distributors, suppliers, and even +
government
 Anticipating a competitor’s reactions
High price Customers’ Competitors’
(No Orientin Low price
Ceilin assessment prices and Costs Floor
possible g point (No
g of unique prices of price
demand price possible
product substitute profit at
at this features
price) this price)
Advantages: Disadvantages:
Easy to perform, especially difficult to Not count the factors of price for self-
estimate costs company
Avoid a war of price Skip profits at higher price levels
Setting high price maybe attract more
rivals to enter the market
 Step 5: Selecting a Pricing methods:
 MARKUP PRICING
Variable cost per unit $ 10
Fixed costs $ 300,000
Expected $ 50,000
The manufacture’s unit cost is given by:
Fixed cost $300,000
Unit cost = variable cost + = $10 +
= $16 Unit $50,000
Assume the manufacturer wants to earn a 20% markup
sales
on sales. The manufacturer’s markup price is given by:
Unit cost $16
Markup Price = = =
$20 1 – desired return on sales1 – 0.2
 TARGET-RETURN PRICING

desired return x invested 0.2 x $1000,000

Markup Price = unit cost + = $16 +
capital unit sales 50,000
= $20
Step 5: Selecting a Pricing methods (cont)

Advantages: Disadvantages:
Compensated costs Unit cost depend on sold
Rapidly and easily products  wrong pricing
Considered equal price, Disregarding rivals and
decreasing price fluctuation of demand levels
competition Skip profits at higher levels
Step 6: Selecting the final price : the company must
consider additional factors such as:
 Impact of other marketing activities: the final price
must take the brand’s quality, advertising media,
channel selection and services provided
 The salespeople quote prices that are reasonable to
customer and profitable to the company
 Risk and gain sharing pricing: the company must
aware “the risk of pricing” such as consumers will
see uncompetitive price for homogeneous products
or loss of customers if it does not deliver the full
promised value for non homogeneous products.
 Companies usually do not set a single price, but
rather a pricing structure that reflects variation in:
a. Geographical pricing: the company decides how to price its
products to different customers in different locations and
countries
b. Price discounts and allowance: most companies will adjust
their list price and give discounts and allowances for early
payment, volume purchases, and off-season buying
c. Promotional pricing: companies can use several pricing
techniques to stimulate early purchases or attract
customers attention such as loss leader pricing, special
event pricing, longer payment terms
d. Differentiated pricing or price discrimination: companies
often adjust their basic price in customer segment pricing
(adult vs child), product form pricing (1 for $10, 2 for $15),
location pricing and time pricing
 Companies face situations where they need
to cut or raise price
Initiating Price Cuts: as a drive to dominate
the market through lower cost and excess
plant capacity. A price-cutting strategy
involves possible traps:
a. Low quality trap
b. A low price buys market share but not market loyalty
c. Little cash receives due to price wars
 Initiating Price Increases: as a drive to face the
cost inflation and the over demand. A price-
increase strategy involves different impact on
buyers:
a. Delayed quotation pricing: the company does not set a final
price until the product is finished or delivered
b. Unbundling: the company prices separately one or more
elements that were part of the offer such as delivery and
installation cost
c. Reduction of discounts: the price increase makes the company
to instruct its sales force not to offer its normal cash e.g. 30%
discount but price already changes
Market leaders attacked by lower-priced
competitors can choose: to maintain price, raise
the perceived quality of their product, reduce
price, increase price and improve quality, or
launch a low-priced fighter line
International University
School of Business
MBA class 02 - Group 6