Strategic Marketing Analysis Essay Example

of the parties involved are met. This is done by mutual exchange and fulfilment of promises.

(Gronroos 1990 in Brassington and Pettitt 2000: 10) The primary distinction among these three definitions is that the final one places greater importance on the relationship between customers and organizations, highlighting the mutually active role between sellers and buyers.

2.2 The role of marketing is evolving as the market transitions from an industrial society to a postindustrial society. Customers now demand high-quality products and services at affordable prices, while also seeking personalized treatment and becoming more knowledgeable. Dell computer exemplifies this trend by offering customizable features to each customer (Kotler 2000). On the other hand, organisations are experiencing increased competition from both domestic and international competitors due to globalization and technological advancements.

Organisations are reconsidering their marketing philosophies in response to the changes. The responses and adjustments of today's marketers can be identified by two primary characteristics: customer relationship management and the understanding that every employee is a marketer. For instance, it has been widely acknowledged that acquiring a new customer is significantly more expensive (around five to ten times) compared to retaining an existing one (Rosenberg and Czepiel 1984 in Buttle 1996: 5). Therefore, loyal customers are typically beneficial for organisations.

To maintain customer satisfaction, organizations must engage in interactive communication and promptly respond to their needs. Establishing positive relationships is essential for organizations to keep customers satisfied. However, it is important to acknowledge that satisfying today's customers is becoming more challenging (Kotler 2000: 72). Therefore, every employee, regardless of their role, should prioritize meeting the needs of the customer to maintain and enhance existing relationships.

While globalisation and technological advancement create intense

competition and threats, they also enable customisation, personalisation, and opportunities for organisations.

3 Develop consumer relationships through building sustainable brand equity

The previous section implies that marketing is shifting from a transactional approach to a relationship approach. The next section will explore the significance of brand relationships in marketing.

3.3 What is brand?

"According to the American Marketing Association, a brand is a 'name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.' (Keller 1998: 2)"

Brands have important functions for both consumers and organizations. By branding, organizations distinguish their goods or services from competitors and help consumers identify them. Furthermore, brands act as a bridge between consumers and organizations by offering value to consumers. To strengthen this bridge, organizations strive to create a positive and favorable brand image in consumers' minds.

3.4 Brand equity refers to the occurrence of a consumer having a high level of brand awareness and familiarity, along with holding strong, favourable, and unique brand associations in memory (Keller 1998).

According to Aaker (1991: 15), brand equity refers to a collection of brand assets and liabilities associated with a brand, including its name and symbol. These assets and liabilities contribute to or detract from the value that a product or service provides to both the firm and its customers.

According to Aaker (1991), there are five categories that encompass the assets and liabilities forming brand equity:

1. Brand loyalty
2. Name awareness
3. Perceived quality
4. Brand association, along with perceived quality
5. Other proprietary brand assets such as patents, trademarks, and channel relationships

"The concept

of brand equity is understood in various ways, but they all generally agree that it represents the additional value given to a product due to past marketing efforts for the brand (Keller 1998: 44)." Blackston (2000) asserts that brand equity is distinct from the product or service itself; rather, it encompasses the customers' awareness and perception. In other words, it is created by the customers. This distinction is particularly important in today's dynamic market. Consequently, it can be argued that a brand consists of two forms of 'equity'. The first form is tangible (such as symbols, names, the product itself, and packaging) while the second form is intangible and harder to define (such as patents, trademarks, perceived quality, and associations)."

3.5 How to develop and manage brand equity?

The process of developing brand equity involves three key factors, according to Keller (1998):

1. The selection of brand elements or identities that form the brand.
2. The marketing program and its integration with the brand.
3. Associations indirectly linked to the brand through other entities like the company, country of origin, distribution channel, or another brand.

(Keller 1998: 68)

To establish brand equity, it is essential to focus on both tangible and intangible aspects. This includes developing consumers' perceptions and creating value through elements such as symbols, brand names, products, pricing, packaging, and more. This process builds brand equity for both consumers and the firm.

When it comes to managing brand equity, Keller (1998: 78) proposed that effective management involves establishing the branding strategy through defining the brand hierarchy and brand-product matrix, as well as creating guidelines for fortifying and leveraging the brand over time and across different geographical boundaries. Nevertheless, one could argue

that managing brand equity is even more challenging than building it, especially in today's uncertain and dynamic economy.

In the 1980s, numerous companies underwent restructuring by acquiring and divesting in order to establish themselves as global leaders in their chosen industries. The prevailing belief was that purchasing established brands was the fastest and least risky path to achieving global leadership. This strategy was based on the understanding that brands carried a higher price tag and enjoyed customer loyalty, thereby leading to increased profitability. Nonetheless, integrating acquired companies has proven to be a challenging task for many acquiring entities.

Even global brands in the 1980s were affected by competition, despite popular belief. A clear example is Philip Morris in 1993 when they chose to reduce the price of Marlboro, a leading cigarette brand worldwide. The reasoning behind this decision was their decline in market share due to cheaper alternatives. Similarly, Kodak had to make substantial adjustments to their pricing strategy in 1994 as a response to competing low-cost and undifferentiated products. These instances highlight the importance for companies to acknowledge that consumers in developed nations no longer exhibit previous levels of brand loyalty; instead, they prioritize affordability when making purchases.

3.6 The significance of brand equity

To survive and optimize profitability, organizations aim to achieve sustainable competitive advantage. In the current highly competitive environment, brand equity acts as a valuable asset that enables organizations to sustain their long-term competitive advantage.

The significance of brand equity can be analyzed using Porter's five-forces model:
1. Competition among industry sellers is intense. Branding is difficult to replicate, giving the organization a competitive advantage over industry rivals.

2. Brand equity creates a barrier

for potential new competitors as they must incur high costs to offset its effect. This provides the organization with a first mover advantage.

3. The efforts made by companies in different industries to attract customers to their substitute products are called market attempts. These attempts are hindered by customers' loyalty to the brand, which is known as brand equity, and creates barriers for the success of substitute products.

4. Supplier-seller collaboration and bargaining generate competitive pressures. The organization can leverage brand equity to enhance its position in these negotiations with suppliers.

The competitive pressures resulting from collaboration and bargaining between sellers and buyers can be addressed by positive brand equity. Positive brand equity allows the organization to charge higher prices and enhance their bargaining power with buyers.

In addition, brand equity can lead to various advantages including improved effectiveness of marketing communication, potential licensing prospects, and additional opportunities for brand extension. Additionally, all products have a finite lifespan, but by incorporating the existing brand into new product development, the organization can sustain its competitive edge. Moreover, strong brands have the ability to attract diverse stakeholders such as employees, investors, and others.

3.7 Brand equity - the bridge that connects consumers and organizations

A strong case can be made for two main aspects when it comes to building and overseeing brand equity:

1. The establishment of brand equity involves aligning consumers' brand awareness and perception with the performance of organizations.

2. The building and managing of brand equity is a process that generates value for organizations, with consumers acting as co-creators.

These two characteristics correspond to the current shifts in marketing, particularly centered around the customer and nurturing customer relationships.

Consumers

can initiate the process by purchasing goods or services from suppliers, ultimately leading to a relationship. If the value of the purchased items meets their expectations, a connection is established and further development of the relationship is possible. As the relationship strengthens, it positively impacts brand equity; vice versa.

Brands play a crucial role in connecting consumers with organizations, helping to identify and distinguish their goods and services from competitors. When consumers establish a strong, positive, and unique brand association, it enhances the likelihood of repeat purchases, thereby reinforcing the relationship. Furthermore, having brand equity that is challenging for rivals to imitate safeguards against competition and results in a lasting competitive advantage.

Brand equity is a perishable resource and requires ongoing management (Capon et al 2001: 216). If left untended, brands wither and die, eroded by market forces (cf. Dickson, 1992). Once successfully established, the brand image represents a promise or pact between the organization and consumers. Prominent examples include Philips' "Let's make things better" and Gillete's "The best a man can get." Failure to fulfill this promise results in diminishing positive brand equity and can even lead to negative brand equity for the firm.

A real example to demonstrate this is the Chinese famous brand "Guanshengyuan", which is a food company in China. In the fall of 2001, it was reported that Nanjing Guanshengyuan Food Corporation used overdue stuffing to make moon cakes. After the report, consumers no longer purchased the moon cakes labeled with "Guangshengyuan". The consequence was disastrous - investors disinvested, market share diminished, and then the company went bankrupt (Wu Zhixiong 2002). In this case, the brand still functions as a bridge connecting the

company and consumers. However, this bridge does not strengthen the relationship but instead destroys it.

Is today's global marketing becoming solely focused on clever interactive marketing communications? As mentioned earlier, the role of marketing is evolving and organizations are placing significant emphasis on developing consumer relationships and building sustainable brand equity. However, there are concerns that global marketing may be narrowing down to just clever interactive marketing communication.

Marketing communication is undeniably crucial for developing brand equity. According to Keller (1998: 218), it serves as the means through which firms inform, persuade, and remind consumers about the brands they sell. Essentially, marketing communication acts as the "voice" of the brand and enables a dialogue and relationship-building with consumers. In today's marketing landscape, consumers are actively involved from the initial stages, and marketers utilize various tools to drive sales.

Customization and personalization of products is becoming increasingly important in marketing. For example, while Ben & Jerry's and Hagen Daz may be loved worldwide, Texans remain loyal to their local favorite, Blue Bell ice cream. Texan pride in homemade products is strong. Additionally, brands that identify with a specific state, such as Budweiser's association with Texas in its advertising, have found success.

However, marketing communication alone cannot create brand equity. If the service processes or physical products do not meet customer expectations, no amount of planned marketing communication can compensate for it. Brand equity is built through various assets like quality, price, culture, and geographic boundaries.

An example of this is the growth of hotel franchising in the UK. British hoteliers are increasingly turning to franchising because recognized brands offer guaranteed quality, wider distribution systems, and large IT systems.

Meanwhile, once the relationship

and brand image are successfully established, it becomes a promise or agreement between the organization and consumers. This is why modern marketing emphasizes the importance of every employee being customer-focused. Marketing should shift from deceiving consumers to satisfying them. For instance, on 14 November, General Motors Corp. issued a recall for 1.5 million cars and minivans from the model years 1996 to 1998 in the United States and Canada. The recall was due to steering unit defects that could cause loss of power in some cases (Reuters 2002). The previous example of "Guanshengyuan" also exemplifies this point.

Marketing communications play a crucial role in meeting consumers' needs by establishing strong consumer relationships and enhancing brand equity. However, to effectively satisfy consumers and maintain a positive brand reputation, organizations must continuously enhance their overall performance. This ultimately leads to sustainable competitive advantage.

5 Conclusion

The current trend in marketing is to focus on building long-term brand equity through cultivating consumer relationships. It should be noted that relying solely on clever interactive marketing communications cannot override this trend.

From a strategic perspective, an organization's competitive advantage lies in its uniqueness and sustainability. However, achieving uniqueness and sustainability is increasingly difficult in today's rapidly changing market. Brand equity, which is challenging for competitors to replicate and serves as a major source of competitive advantage, can provide a more stable and long-term focus. It is important to note that brand equity is 1) invested by consumers, 2) a perishable resource requiring ongoing management, and 3) derived from various assets. According to Prahalad (in London 2002: 14), "Consumers have shifted from passive individuals to active co-creators of products, services, and value."

Furthermore, adopting a consumer-centric

approach where value is generated through dialogue, collaboration, and partnership [with customers] becomes crucial. As a result, the interaction between producers and consumers extends beyond the point of transaction. There are opportunities for exchanging ideas during design, manufacturing stages; even after-sales when the company no longer holds warranty responsibilities." The potential benefits include gaining deeper customer understanding, increasing loyalty while exploring new business lines. Only through continuous and authentic value creation can brand equity be sustained leading to sustainable competitive advantage.