Brand Positioning through Market Segmentation and Targeting - Case Study Example

Brand Positioning through Market Segmentation and Targeting Marketing is an arena where the basic norm is to promote visibility. Visibility, in turn, depends on positioning which again depends on branding and the equity commanded by the same. (Aaker, 1991) This has promoted organisations the world over to study and implement strategies that will accentuate brand equity as this is the greatest indicator of, and the base for, the calculation of returns on investment. A decade or so ago, branding meant little to people. Branding until then simply involved designing a logo or creating a corporate profile that will help identify it and differentiate it from other brands. In the past decade, things on the branding front have undergone a sea change. There is now a strong emphasis on brand building through the explicit communication of a vision in the whole organisation where strong brands are more than mere trademarks that people recognise. In the generation of a branding idea and implementation of the same to build a brand profile, organisations behind the strong brands have managed to build a brand identity. "Brand identity should help establish a relationship between the brand and the customer by generating a value proposition involving functional, emotional or self-expressive benefits" (Aaker 1991). While the consumer's behaviour is based on a brand, and the reasons for choosing an associated product may depend on various factors including peer reference, peer approval, or other social factors beyond the direct control of the brand's investor, the brand's marketing mix is definitely within the investor's control, and something that demands big budget investment. Therefore, investor's and researchers are always concerned about the actual effects and results of marketing components including advertisement, sales promotions, and company emblems - upon the consumer's perception and their consequence upon brand equity. In the last decade, a lot of research has been dedicated to conceptualizing and measuring customer-based brand equity. However, apart from putting forth various influencing factors, no integrative framework has so far been developed to account for the complex psychological processes underlying the formation of customer-based brand equity. In this context, this paper attempts to propose such a framework by drawing on the theory of the Elaboration Likelihood Model. (Kotler, 1997) This has been firstly discussed in the case of the Coca Cola Company. A soft drink giant, the Coca Cola company shifted its strategy from mass marketing to product variety market and then to target marketing so as to cater to the growing market for soft drink products. Its strategy can be studied under the elaboration likelihood model as it wanted to be a forerunner in the market where soft drink brands were emerging with each passing day. The choice of the Elaboration likelihood Model was one that came directly from the consumer oriented characteristics of brand equity and brand knowledge. Elaboration Likelihood Model identified message relevance as one of these factors. According to this model, when message relevance is high, individuals will actively process and evaluate the information in the advertisement when forming or changing attitudes. (Aaker, 1991) When message relevance is low, individuals will not actively process the information in the advertisement, but will instead rely on peripheral message cues to form or change attitudes. Brand Identity is that element of customer perception and awareness which has its focus in the results of a certain kind of projection through the brand equity building measures. This calls for an integrative model which will combine the basic elements of the brand identity and brand equity concepts so as to create a platform for the effective discussion of the Elaboration Likelihood Model. This has been of special relevance for the Coca Cola company as far as its foray into target market and product variation is concerned. (Kotler, 1997) An integrative model will serve the following purpose: - provide as detailed summation of the various factors that influence the end user to add to the brand equity; and - study these factors in context of the psychological process taking place in the mind of the consumer as he is exposed to advertisements and other brand identity elements. The following is the theoretical framework within which ELM operates to fulfil the above functions: Coca Cola's competitor that has followed this kind of a strategy with a focus on the ELM theory is Pepsi. These two brands also started out with the strategy of mass marketing before moving onto product variation and then to the arena of target market. Both these brands have created market segmentation through their brand positioning strategy so as to achieve an up market status, especially in developing countries like India. (Walter et al, 1988) While Pepsi started with mass marketing, it did more specific target marketing and market segmentation through the launch of its products like Diet Pepsi which was aimed at weight watchers. This started in America as there are a majority of obese people in this country. This helped in a psychographics segmentation of the market in terms of emotionally reaching out to people. Brand as a notion in the mind of the consumer While on one hand a brand may have visible, tangible, and even audible owing to a presence through its brand identity elements, a brand may also be defined as a conception of the brand in terms of the affect its identity has on the customer. (Aaker 1991, p. 7). In the first instance, there is a strong emphasis on the material side of the brand, regarding the consumers' notion of the brand as a secondary criterion, while names and symbols are seen as implicating factors of what the brand represents, in the second definition. Therefore, in the modern context, "a brand is a name, symbol, design, or mark that enhances the value of a product beyond its functional purpose" (Farquhar, 1989). When studied as a perception born in the consumer's mind we define the concept of 'brand' as the sum of associations that are evoked by names or symbols. This is the first step towards the creation of the proposed integrative model as using this definition implies that I am subscribing to the brand identity angle as a base for brand equity. At the same time, the scope of this definition should not merely serve to associate with the product. It must promote an association with the organization behind Coca Cola, by helping the customer relate the Coca Cola emblem with information on the soft drink. This forms an important part of the brand identity process and may result in the creation of enhanced brand equity. Three questions on the conceptualization of brand equity For the effective conception of "brand equity", the following three questions need to be answered: 1. Inclusion of the correct sources of brand equity To have an integrative base of source to define brand equity, one needs to start by separating customer-based and company-based brand equity. While Customer-based brand equity remains to play an important role, it is not the sole source of the company's brand value. A brand may also hold its own in other markets. These markets include: - the capital markets, - the labour markets, - other factor markets - in dealings with political decision makers. The focus of this paper is on the following aspects which have been derived through our five areas of research to reach an integration of brand equity and brand identity. - Customer-based brand equity. In this paper, there is a strong emphasis on the definition of brand equity as the value the brand adds to a good or service for the end user. In this case, the trade does most of the work as far brand equity creation is concerned. If the final consumers lack specific brand preferences the trade may even become the only source of brand equity. - Current Brand Equity. This includes the brand value that is generated by the products presently on the market which helps calculate the potential value of a brand when new products are launched. 2. What units should be used to measure brand equity The measurement of customer-based brand equity should have the following elements: - Evaluation must take place in non-monetary terms using such criteria as brand recall and recognition, sympathy for a brand or quality assessment. On this basis, an index value from which they derive a financial value for the company, must be set. (Swait 1998, p 131) - If there is monetary quantification, it must strictly be from a customers perspective (Blackston 2000, p 101). According to our research areas, this approach is based on the consumer's willingness to pay a price premium or on the higher price actually achieved by a given brand. Thus, with the above mentioned criteria for measure of brand equity, there is an inclination towards monetary quantification of customer-based brand equity through an emphasis on the profit reaped by the perception of the brand in the customer's eyes. This kind of measurement leaves little room for any significant quality assessment to take place. The control parameters where include the reaction of a customer to the brand identity elements like logos, etc. Therefore, the contribution of quality assessment measures becomes minimal in case a brand is strong enough to command a higher price. In response to this, alternative approaches, such as deriving company-based equity from weighted indexes, share prices, "production costs" or from the market price of a brand, are either questionable from a methodical point of view or cannot be universally applied (Langer 1997). 3. Should brand equity be tangible or intangible This third question pertains to that area of the research background which deals with the possible effects of preconscious or subconscious processing of advertising messages so as to facilitate brand recall. In this context, there has been a long standing debate the basic elements of the kind of brand equity to be employed. On one hand there is the question of objectively measurable advantages of a product which contributes to the theory of tangible brand equity. On the other hand, there is a separatist model that has focus in the added value generated by the brand as such. When regarding brand equity from a tangible perspective, for example, one might also rate the value of better seat covers offered by a specific soft drink brand as compared to another, as brand equity. While the intangible view does not regard such a product advantage as part of brand equity, there is no consensus on the accurate position. This is where the approach towards brand recall comes in through a study of the perceptions. This might fuel the case of intangible equity to the extent of embedding it as a full fledged element in the integrative model for studying brand knowledge and equity. Therefore, the model aims to explain intangible brand equity where it may also be extended to a tangible brand equity concept. Conclusion At the end, one must regard the background of brand building so as to understand the elements that go into affecting the attitudes and perceptions of the end user. While most people turn to the manager for brand building, they forget that product designers have a vital role to play in building a strong brand. In order to develop their knowledge of brands, designers are required to place special emphasis on the development of the field of branding and how brand identities can integrate every level of the organisation. The main focus in business was concentrated around manufacturing in the beginning of 20th century owing to the changing roles of industrial design. These changes had wide ranging effects on the development of business, besides being closely related to the same. With growing importance attributed to the strategic market positioning of the mid 50s in the face of growing competition, businesses need to develop strong brands to meet the complexities and multi tasking arenas of the modern markets. Tools like emblems and logos contribute to the symbolic experiences with a brand. These experiences are largely the result of indirect observations and may come in different forms. A few examples for such symbolic experiences include making contacts with brand advertising, participating in a sponsored event, observing a specific type of brand user or just simply obtaining word-of-mouth information from friends and neighbors. Distinguishing between indirect (symbolic) and direct (personal) experiences is a daunting, yet useful task when there is a need to apply an approach that deals with direct experiences. This is owing to the fact that direct experiences have a more pronounced influence on the customer's judgment. Therefore, this dissertation shows that advertising is a measure in brand building and brand equity which may be used to bridge the gap between the customer's attitude toward the ad and his or her attitude toward the brand. In terms of influencing attitudes and carrying out effective persuasion, the ELM may be primarily defined as a heuristic instrument for the brand manager. This instrument can be used for mental stimulation of the effect of marketing measures on customer-based brand equity, so as to create brand equity through the right sources and a broader base of brand knowledge in context of brand identity. References 1. Bennett, R; Blythe, J (2002) International Marketing: Strategy Planning, Market Entry and Implementation. Kogan Page. 2. Walter, I; Murray, T (1988). Handbook of International Management. John Wiley and Sons. 3. Aaker, David A. Managing Brand Equity. New York, NY: The Free Press, 1991. 4. Kotler, P. ( 1997 ). Marketing management (7th ed.). Upper Saddle River, NJ: Prentice Hall. 5. Wikipedia. URL: www.wikipedia.com (Accessed during February, 2008) Read More