Measuring and Interpreting Brand Performance - . Kettle and Smiths - Assignment Example

Measuring and Interpreting Brand Performance Name Institution Date Course Summary The brands in the case demonstrate significant competition, each brand claiming a significant portion of the market. Smith’s and Kettle are the two most competitive in terms of market share and penetration. As seen in the first table, the variance in market share has significant influence in other measures like purchase frequency and share of category requirements. Table two reveals that the brands share to a great extent share customers among themselves. This shows high competition among the brands; the brand with low market share still managing to share up to 28% of the major brand’s customers. While particular patterns are expected based on the Duplication of purchase law, the table reveals significant deviations. These have been discussed in the paper. The paper also compares brand attitude and brand salience, investigating the definition of the concepts and discussing how they influence consumer behaviour. As will be seen in the paper, brand salience continues to draw increasing interest and organizations continue to use effective advertising to build their brand salience. It is also directly related to customer behaviour and therefore becomes important to measure compared to brand attitude. Organizations can also enhance their brand equity and value to influence customer decision. Smith’s should consider enhancing its brand image to be able to attract the customers who may not be buying the brand as a result of negative attitudes towards the brand. Smith’s should work on increasing positive attributes of the brand to attract new customers and at the same time keep the existing customers satisfied. Given the segmentation revealed in demographics and segmentation tables, Smith’s should see opportunities to enhance its brand and win new customers that are now loyal to other brands. Q1: Differences or patterns between competing brands There is significant competition among the brands, each brand claiming a significant portion of the market. Kettle and Smith’s, however, share more than half of the market each one commanding 24% and 34 % respectively. These two brands therefore, remain the most significant in the market. Smith’s has managed to command a big percentage of the market due to its bigger market penetration which has enabled it access more customers and win their commitment. As Bass (1993) observes, brands involved with fast moving consumer goods show greater variance in the number of loyal customers than any other measure. This means that brands with greater share of the market also manage to achieve a significantly higher penetration as compared to those with lower market share. Market share also influences other brand performance measure like purchase frequency and share of category requirements (Ehrenberg, Uncles & Goodhardt, 2004). This is easily revealed in the table. Smith’s has maintained a leading edge in its claim to the market and has enhanced its penetration. This means that customers can become loyal and become confident that their demands will be met easily by Smith’s. This loyalty is demonstrated by the high average purchase frequency of 2.2 as compare to Jumpy’s’ 1.2. Bhattacharya, Fader, Lodish & Desarbo (1996) define share of category requirements as a brand’s share among the households under consideration who purchased the brand within a given time period. Smith’s has recorded the greatest value in this category, a clear indication of its unmatched customer loyalty and penetration. With sole loyalty of 22 (in a market whose average is 6.9) Smith’s has worked hard, not only in growing its market size, but also in ensuring that its customers buy more of its products. Jumpy’s and Red Rock Deli scored 0.0 Sole Loyalty; and have not claimed significant market shares. These brands are performing poorly. Q2: Duplication of purchase law and any deviations to the pattern. Key implications of this pattern for any marketing manager Smith enjoys a huge market, but the competitors have also managed to share in this market. Up to 72% of Smith’s customers also buy Kettle products. Jumpy’s, with a market penetration of only 24% also has 28% of Smith’s buyers buying its products. Greatest competition, however, comes from Kettle and Doritos who share 72% and 62% of Smith’s customers. The Duplication of Purchase Law according to Ehrenberg (1996) states that customers who buy a given brand will buy another brand in proportion to the penetration of the second brand. The penetration of each brand, therefore determines the extent of purchase duplication. As Sharp & Sharp (1997) states, according to this law, a brand will have a significant percentage of its buyers also purchasing from the larger brands but only a small percentage of its buyers purchasing from smaller brands. From the table, however, the law does not entirely apply. 66% of Red Rock Deli buyers and 65% of Doritos buyers bought from Kettle, although Doris is more popular than Red Rock Deli. This is also observed on Kettle buyers (50%) and Smith’s buyers (45%) who also purchase from Red Rock Deli. This may be as a result of uneven distributions and concentration of certain brands in particular locations. The Duplication of purchase law enables managers to develop an understanding of the buyer behaviour and purchasing trends and therefore, they can develop better strategies to guard their own customers. The table also identifies the greatest competitors in the market, giving the management an idea of where to start from to become more competitive. Brand Attitude Q3: Comparison of Attitude and Brand Salience Brand attitude describes a customers’ attitude towards a given product or brand. Attitude valence has been defined as degree of positivity or negativity with which a given object (like a brand) is evaluated (Park et al, 2010). The attitude towards a given brand guides behaviour and influences the brand consideration, brand choice and intention to buy. Researchers suggest that brand attitude could be developed as a result of indirect experiences like advertising and the corporate image. Consequently, past experiences, corporate image and advertising are critical factor that will determine attitude. Brand salience, on the other hand, describes the extent to which a given brand visually stands out from its competitors (van der Lans, Pieters & Wedel, 2008). Psychologists have also associated brand salience with its ability to stand out from its background or environment. It is based on the fact that some of human’s beliefs stand out more prominently within his cognitive field. Greater interest has, been drawn on brand salience in recent years; organizations continuing to build their brand salience as an outcome of effective advertising (Romaniuk & Sharp, 2004). Solomon (1992) argues that brand attitude a lasting evaluation that reminds one to act; it may therefore only have a weak influence on future behaviours. It may be argued that brand attitude’s influence on customers’ buying behaviour will depend on whether the customer will remember (maybe a previous experience with the product) or whether the attitude is strongly motivational. These factors may not happen instantly for a customer, making brand attitude a weak determinant of buyer behaviour. Brand salience, on the other hand, is mostly about having the opportunity to think about the brand (not remember) and will easily influence the buyer’s choice. It has significant effect of brand repertoire (Romaniuk & Sharp, 2004), and is therefore very important to measure Q4: discussion of table 2 relating to attitudes. Smith’s performance within whole sample and within customer base Generally, the majority of the customers do not have positive attitudes with the products sold by all the brands. A greater percentage believes that the brands are unhealthy. Smith’s, even with the biggest penetration and dominance, has 68% of the respondents say that the brand is unhealthy. The trend, however, is dependent on the penetration level. The majority of dedicated brand users show even greater dissatisfaction with the brands. 68% and 74% of the total sample and users only respectively of Smith’s’ customers believe that the brand is unhealthy. Again 56% of the total sample and 65% of users only believe that Smith’s is their favourite brand. These figures are the highest in their respective categories and this is what is expected given the diverse customers served by Smith’s and its penetration. The huge number of customers shopping at Smith’s may only be doing so because of its market penetration and therefore availability. Smith’s does not have to be their favourite brand. Many customers shopping at Smith’s actually believe that it is the beast brand. This explains the figures recorded. Q5: How brands grow and whether changing negative attitudes impact this Brands strive to ensure that increased brand value (brand equity) is achieved to enhance market performance and dominance. Consumers will make decisions about their buying based on the factors that they consider significant and based on their assessment of brands that are more important. Accordingly, a brand is considered to have positive equity if customers can respond in a favourable manner to marketing activities when they come across the brand as compared to when they don’t (Hoeffler & Keller, 2003). Smith’s should therefore work on enhancing the positive attributes of its brand to attract more customers. These efforts should be directed towards encouraging new customers to like the brand and at the same time, motivate existing customers to remain loyal. It is true that a certain percentage of customers do not buy from Smith’s due to their perceived brand attitudes. This percentage of buyers remains an opportunity that can be exploited by Smith’s. While enhancement of brand promises great rewards, Smith’s must understand that establishing a brand driven culture will require long-term commitment to the mindset and way of life that will take time. It will also need proper planning and the willingness to persevere in order to produce intangible outputs (Ghodeswar, 2008). When these difficulties have been overcome, Smith’s will enjoy increased customer satisfaction, reduced customer defections, reduced price sensitivity, increased referrals, and greater share of the customers wallets. Smith will however, need to focus on product differentiation, and understanding of the customers, business environment, and competitors. Brand enhancement will help Smith’s attract more customers and remain competitive in the market. Demographics and Segmentation Q6: How customer base of Smith’s differs from customer bases of the other cereal brands Smith’s demonstrates interesting trends in its customer base; particular unique characteristics differentiating it from the rest of the competitors. The brand is the most favourite among singles, recording a high 22 in a category with an average of 20. Other brands like Doritos scored only 16 in this category, indicating its inferiority in the segment. this means that Smith’s attracts singles more than any other brand. It performed the poorest in the couple category, recording the lowest (62, in a category whose average is 66). This reveals that couples do not find Smith’s as an attractive purchasing destination. Kettle and Red Rock Deli were the best performers in this category. Smith performed almost averagely in the divorced/ separated category (scoring 14, category average 13). The total household income demographic also reveals interesting trends for Smith’s. It comes out as low incomes’ and middle income earner’s favourite shopping destination. Smith’s records a positive deviation of 3.0 in the “Less than $50, 000” category and 5.8 in the $50,000 - $70,000 category. This means that households with income between $ 50,000 and $ 70, 000 prefer shopping at Smith’s more than any other brand. Doritos performs below average in the two categories recording negative deviations for both of them. Kettle outperforms all the brands with a significant margin in the “More than $ 70, 000” category. Smith performed the poorest in this category, scoring the lowest among all the brands. Even with the least penetration and brand popularity, Jumpy’s has managed to attract a huge percentage of middle income and high income earners. It is the second in the $ 50,000 - $70,000 category as well as the “More than $70,000” category. Jumpy’s, however, only out performed Doritos in the “Less than $ 50,000” category. More males also prefer shopping at Smith’s than any other brands. Kettle seems to attract high income couples and female shoppers. It scored the higher in the female’s category with 66. Kettle scored only 34 in the male’s category with a 36 average. The other brands performed almost averagely in the gender demographics. Q7: Implications of Smith’s marketing strategy Smith’s has the potential to grow and gain more customer loyalty by exploiting some of the existing avenues in market distribution and demographic. Smith’s should work on retaining or extending its leadership on single and low income earners. Before exploring new customer segments, it is important that strategies are put in place to keep the current customer base intact. Smith’s should then consider development of strategies to claim the loyalty of couples and benefit from their huge capacity to purchase. Couples are usually the biggest spenders due to the variety of items and bulk of their shopping. They should be the target market for brands aiming at increasing sales. Marketing strategies should therefore aim at enhancing brand attitudes and popularity among the couples. Kettle and Red Rock Deli have performed well in this segment and this is the reason for their competitiveness in the market. Smith’s has again performed well in the low income and middle income earners, but has lost the battle in the high income segment. Kettle and Jumpy’s have performed exceptionally well in the high income segment. This presents opportunities for growth for Smith’s which had the lowest deviation of -7.6 in the segment. High income earners are usually the biggest spenders and should therefore be attracted. The marketing strategies should therefore aim at attracting this segment. The strategies must be carefully designed to ensure that the other segments where Smith’s has maintained a leading edge are not lost. List of References Bhattacharya, CB, Fader, PS, Lodish LM & Desarbo WS, 1996, The Relationship Between the marketing Mix and Share of Category requirements, Marketing Letters, 7(1): 5-18 Bass FM, 1993, The future of research in marketing: Marketing Science, Journal of Marketing Research, 30: 1-6 Ehrenberg, ASC, Uncles, MD & Goodhardt, GJ, 2004, Understanding brand performance measures: using Dirichlet benchmarks, Journal of Business Research, 57: 1307-1325. Ehrenberg, ASC, 1996, Towards an integrated theory of consumer behaviour, Journal of the Market Research Society, 38 (4): 395-427 Sharp, B, Sharp, A, 1997, Loyalty programs and their impact on repeat-purchase loyalty patterns, International Journal of Research in Marketing, 14: 473-486. Park et al, 2010, Brand Attachment and Brand Attitude Strength: Conceptual and Empirical Differentiation of Two Critical Brand Equity Drivers, Journal of Marketing, Vol. 74 (November): 1–17 Romaniuk, J & Sharp, B, 2004, Conceptualizing and measuring brand salience, Marketing theory, 4 (4): 327-342 Solomon, MR, 1992, Consumer Behaviour: Buying, Having, and Being, Needham Heights, MA, Allyn and Bacon Van der Lans, R, Pieters, R, Wedel, M, 2008, Competitive Brand Salience, Marketing Science, 27 (5): 922-931 Hoeffler, S & Keller KL, 2003, The marketing advantages of strong brands, Brand amanagement, 10 (6): 421-445 Ghodeswar BM, 2008, Building brand identity in competitive markets: a conceptual model, Journal or Product & Brand Management, 17 (1): 4 - 12 Read More