CHAPTER 5:

DESIGNING MARKETING
PROGRAMS TO BUILD BRAND
EQUITY

Kevin Lane Keller

Tuck School of Business
Dartmouth College

5.1

Overview

How do marketing activities in

generaland product, pricing, and
distribution strategies in particular
build brand equity?
How can marketers integrate these
activities to enhance brand
awareness, improve the brand image,
elicit positive brand responses, and
increase brand resonance?
5.2

New Perspectives on
Marketing

The strategy and tactics behind marketing

programs have changed dramatically in
recent years as firms have dealt with
enormous shifts in their external marketing
environments:

Digitalization and connectivity (through Internet,

intranet, and mobile devices)
Disintermediation and reintermediation (via new
middlemen of various sorts)
Customization and customerization (through
tailored products and ingredients provided to
customers to make products themselves)
Industry convergence (through the blurring of
industry boundaries)
5.3

Implications for the

Practice of Brand
Management

They have a number of implications for

the practice of brand management.
Marketers are increasingly abandoning
the mass-market strategies that built
brand powerhouses in the 1950s, 1960s,
and 1970s to implement new
approaches.
Even marketers in staid, traditional
industries are rethinking their practices
and not doing business as usual.
5.4

Integrating Marketing
Programs and Activities

Creative and original thinking is

necessary to create fresh new
marketing programs that break
through the noise in the marketplace
to connect with customers.
Marketers are increasingly trying a
host of unconventional means of
building brand equity.
5.5

Personalizing Marketing

All of these approaches are a means to create

deeper, richer, and more favorable brand
associations.
Relationship marketing has become a powerful
brand-building force.

Can slip through consumer radar

May creatively create unique associations
May reinforce brand imagery and feelings

Nevertheless, there is still a need for the control

and predictability of traditional marketing activities.
Models of brand equity can help to provide direction
and focus to the marketing programs.
5.6

Group discussion

Read the case Making out of Brand

Scents on pages: 190-191. Answer
the following questions:
1. What was the problem happened to
Rolls-Royce in the 1990s?
2. How did Las Vegas, Nike, Westin hotels
succeed in attracting their customers?
3. Do you think that the same strategies
developed by these organizations can be
applied to the IU case? Why or Why not?

5.7

Personalizing Marketing
Concepts

Experiential marketing
One-to-one marketing
Permission marketing

5.8

Reconciling the New

Marketing Approaches

One-to-one, permission, and

experiential marketing are all
potentially effective means
of
getting consumers more actively
involved with a brand.

5.9

Experiential Marketing

Focuses on customer experience

Focuses on the consumption situation
Views customers as rational and emotional
elements
Uses electric methods and tools
Promote a product by not only communicating its
features and benefits but also connecting it with
unique and interesting experiences. How a brand
can enrich the customers life?
Five types of experiences: sense, feel, think, act,
and relate customers perception.
5.10

One-to-One Marketing:
Competitive Rationale

Consumers help to add value by providing

information.
On-to-one relation: customers provide
information to marketers. Marketers add
value and reward experiences for customers
Focus on individual consumers through
databases.
Let consumers talk to us
Firm adds value by generating rewarding
experiences with consumers.
5.11

Creates switching costs for consumers

Reduces transaction costs for
consumers
Maximizes utility for consumers

5.12

One-to-One Marketing:
Consumer Differentiation

Treat different consumers differently

Different needs
Different values to firm

Current
Future (lifetime value)

Devote more marketing effort on most

valuable consumers (and customers)

5.13

One-to-One Marketing: Five

Key Steps

Identify consumers, individually and

addressably
Differentiate them by value and needs
Interact with them more costefficiently and effectively
Customize some aspect of the firms
behavior
Brand the relationship
5.14

Permission marketing

Permission marketing
Practice of marketing to customers only
after gaining their express permission
to build and increase their loyalty.
Offer customers an incentive to
volunteer
Teach customers about the product or
service being marketed.
Offer incentives to get their permission

5.15

Permission Marketing (Seth

Godin)

Encourages consumers to participate in

a long-term interactive marketing
campaign in which they are rewarded in
some way for paying attention to
increasingly relevant messages.
Anticipated
Personal
Relevant

Permission marketing can be contrasted

to interruption marketing.
5.16

Five Steps in Permission

Marketing

1.

2.

3.

4.

5.

Offer the prospect an incentive to

volunteer.
Offer the interested prospect a curriculum
over time, teaching consumers about the
product.
Reinforce the incentive to guarantee that
prospect maintains the permission.
Offer additional incentives to get more
permission from the consumer.
Over time, leverage the permission to
change consumer behavior toward profits.
5.17

Group Discussion

Read the case Understanding Consumer

Price Perceptions on pages 202- 203.
Answer the following questions:
1. How many pricing strategies do you know
from the Marketing course? Explain each
type of the strategies.
2. Explain how customers perceive product
prices , based on their way of thinking.
3. For each price perception case, choose
appropriate products to be applied.

5.18

Integrating the Brand

Into Supporting Marketing
Programs

Supporting marketing mix should be designed

to enhance awareness and establish desired
brand image.

Product strategy
Pricing strategy
Channel strategy

5.19

Product Strategy

Perceived quality and value

Brand intangibles
Total quality management and return on quality
Value chain

Relationship marketing
Mass customization
Aftermarketing
Loyalty programs

5.20

Perceived quality and

value

Product performance
Product features
Conformance quality: meet
specifications and free of defect
Reliability
Durability
Serviceability
Style and design
5.21

Brand Intangibles

Speed, accuracy, care of product

delivery and installation
Promptness
Courtesy
Helpfulness of customer service and
training
Quality of repair service
5.22

Pricing Strategy

Price premiums are among the most important

brand equity benefits of building a strong brand.
Consumer price perceptions

Consumers often rank brands according to price tiers

in a category.

Setting prices to build brand equity

Value pricing
Everyday low pricing

5.23

Group discussion

Read the case Procter & Gamble

Launches EDLP Value Pricing on
pages 212-213. Answer the following
questions:
1. How did P&G carry out their pricing
strategies?
2. What were the results? Comment on
the results.

5.24

Channel Strategy

The manner by which a product is

sold or distributed can have a
profound impact on the resulting
equity and ultimate sales success of a
brand.
Channel strategy includes the design
and management of intermediaries
such as wholesalers, distributors,
brokers, and retailers.
5.25

Channel Design

Direct channels

Indirect channels

Selling through personal contacts from the

company to prospective customers by mail, phone,
electronic means,
in-person visits, and so forth
Selling through third-party intermediaries such as
agents
or broker representatives, wholesalers
or distributors, and retailers or dealers
Push and pull strategies

Web strategies
5.26

Push and Pull Strategies

By devoting marketing efforts to the

end consumer, a manufacturer is said
to employ a pull strategy.
Alternatively, marketers can devote
their selling efforts to the channel
members themselves, providing direct
incentives for them to stock and sell
products to the end consumer. This
approach is called a push strategy.
5.27

Channel Support

Two such partnership strategies are retail

segmentation activities and cooperative
advertising programs.
Retail segmentation

Retailers are customers too

Cooperative advertising

A manufacturer pays for a portion of the

advertising that a retailer runs to promote the
manufacturers product and its availability in
the retailers place of business.
5.28

Web Strategies

Advantage of having both a physical

brick and mortar channel and a
virtual, online retail channel
The Boston Consulting Group
concluded that multichannel retailers
were able to acquire customers at
half the cost of Internet-only retailers,
citing a number of advantages for the
multichannel retailers.
5.29