INTRODUCTION

BRAND EQUITY

It is the willingness for someone to continue to purchase a particular brand or

not. The added value to the firm, the trade, or the customer with which a given
brand endows a product. Brand equity subsumes brand strength and brand
value (where brand strength = set of associations and behaviors by customers
which permits it to enjoy advantages, and brand value = financial outcome of
management’s ability to leverage brand strength via tactical & strategic actions).

BULDING BRAND EQUITY

Building
Brand Eleme
Marketing Pr
Leverage of
BRAND EQUITY PYRAMID

Brand E

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Consumer-Level Brand Equity

Srinivasan (1979) and Kamakura and Russell (1993) define consumer-level brand
equity as the component futility that is intrinsic to the brand and cannot be
explained by the product attributes. This measure captures the incremental
and inertia values of a brand but provides only relative values of brand equity. Park
and Srinivasan (1994) measure brand equity as the difference between a consumer’s
overall utility from a brand and his or her utility based only on objective product
attributes. This definition accounts for biased perception and uses a benchmark
product that is defined in terms of objective attributes. Swait and
colleagues (1993) define consumer brand equity as the equalization price, or the
price that equates the utility of a brand to the utility the same product would obtain
in a marketplace with no brand differentiation. Because the authors
define the equalization price “with respect to any utility of interest” (Swait et al.
1993, p. 29), this measure does not provide dollar-metric values of brand equity. In
this article, we define brand equity as the difference in the consumer’s
willingness to pay (WTP) for a branded product with a particular set of features and
an identical unbranded product.

Firm-Level Brand Equity

Ailawadi, Lehmann, and Neslin (2003) define brand Equity as the revenue premium
a brand generates compared with a private-label product. Srinivasan, Park, and
Chang (2005) define firm-level brand equity as the incremental
profit contribution obtained by the brand in comparison with an identical
unbranded product, assuming that the prices of both products are the same. To
obtain this measure, they adjust the results of their demand experiment using
subjective estimates of push-based awareness and push based availability data from
a panel of industry experts. Dubin (1998) defines brand equity as the incremental
profitability that the firm would earn operating with the brand name compared
with operating without it. The key distinction among these three methods is that the
first two specify the unbranded scenario exogenously, while the third (Dubin’s
method) derives the unbranded scenario endogenously, using a competitive
equilibrium approach. In this article, we adopt Dubin’s definition to measure firm-
level brand equity. For comparison, we specify the unbranded scenarios both
endogenously and exogenously.

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MCDONALD’S BRAND EQUITY

With a familiarity rating of 95 out of 100 and a favorability rating of 72,

McDonald’s may not seem at first glance as a company that needs to revitalize its
brand image. McDonald’s is a company that consumers recognize as a corporate
identity as easily as its products. In fact, its brand equity for the second quarter as a
percentage of overall market capitalization was 18.17 percent out of a possible 20
percent, meaning the brand is contributing strongly to the total market cap of the
company.

However, as the global director for New York-based Interbrand Jeff Swystun says,
“Whether the message is about a product or the corporation, brands require
continual refreshing to stay relevant, exciting and appealing to the audience.”
So, although already successful, McDonald’s has restyled its public image. Larry
Light, chairman-CEO of management-consulting company Arcature, writes, “Over
the years, the essence of the McDonald’s brand was the perception that it was an
affordable, convenient brand for families with kids. There were those who said that
equity could not and should not be changed. But McDonald’s set out to change
people’s perceptions and go from appealing to the child in your heart to appealing to
those with a young-adult spirit at heart.”
Consulting firm CoreBrand calls corporate branding the “intentional declaration of
who you are, what you believe and why your customers should put their faith in
your products.” One way McDonald’s has declared its new youthful brand image is
by launching a 119-country campaign in September 2003. Its new signature theme
was five musical notes and the phrase “I’m lovin’ it.” The style of the new campaign
was designed to reflect McDonald’s new, young-adult spirit. The new theme has
been successful, running for the longest time in the history of the brand.

McDonald’s has also charged its brand with a hip, youthful image by extending its
product range to reflect growing concerns and desires for healthy fast food. It has
been including meal choices like salads, yogurt parfaits, and small-sized snack
wraps, as well as optional apple slices and milk instead of fries and sodas.
McDonald’s also offers coffee on its menu with its recent McCafé choices.

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BRAND LOYALTY

Brand loyalty, in marketing, consists of a consumer's commitment to repurchase or

otherwise continue using the brand and can be demonstrated by repeated buying of
a product or service or other positive behaviors such as word of mouth advocacy.[1]

Brand loyalty is more than simple repurchasing, however. Customers may

repurchase a brand due to situational constraints (such as vendor lock-in), a lack of
viable alternatives, or out of convenience. Such loyalty is referred to as "spurious
loyalty". True brand loyalty exists when customers have a high relative attitude
toward the brand which is then exhibited through repurchase behavior. This type of
loyalty can be a great asset to the firm: customers are willing to pay higher prices,
they may cost less to serve, and can bring new customers to the firm. For example, if
Joe has brand loyalty to Company A he will purchase Company A's products even if
Company B's are cheaper and/or of a higher quality.

An example of a major brand loyalty program that extended for several years and
spread worldwide is Pepsi Stuff. Perhaps the most significant contemporary
example of brand loyalty is the dedication that many Mac users show to the Apple
company and its products.

From the point of view of many marketers, loyalty to the brand — in terms of
consumer usage — is a key factor:

It has been suggested that loyalty includes some degree of pre-dispositional

commitment toward a brand. Brand loyalty is viewed as multidimensional
construct. It is determined by several distinct psychological processes and it entails
multivariate measurements. Customers' perceived value, brand trust, customers'
satisfaction, repeat purchase behaviour, and commitment are found to be the key
influencing factors of brand loyalty. Commitment and repeated purchase behaviour
are considered as necessary conditions for brand loyalty followed by perceived
value, satisfaction, and brand trust. Fred Reichheld, one of the most influential
writers on brand loyalty, claimed that enhancing customer loyalty could have
dramatic effects on profitability. Among the benefits from brand loyalty —
specifically, longer tenure or staying as a customer for longer — was said to be
lower sensitivity to price. This claim had not been empirically tested until recently.
Recent research found evidence that longer-term customers were indeed less
sensitive to price increases.

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The new millennium is not just a new beginning; it is a continuation of trends in
human behavior that have been following cyclical patterns throughout our country's
history. Just because we have entered a new era does not mean we have to start
from scratch when it comes to interpreting why certain consumers are loyal to
certain brands, and what type of factors influence these allegiances.

Brand loyalty is the consumer's conscious or unconscious decision, expressed

through intention or behavior, to repurchase a brand continually. It occurs because
the consumer perceives that the brand offers the right product features, image, or
level of quality at the right price. Consumer behavior is habitual because habits
are safe and familiar. In order to create brand loyalty, advertisers must break
consumer habits, help them acquire new habits, and reinforce those habits by
reminding consumers of the value of their purchase and encourage them to continue
purchasing those products in the future.

The image surrounding a company's brand is the principal source of its competitive
advantage and is therefore a valuable strategic asset. Unfortunately, many
companies are not adept at disseminating a strong, clear message that not only
distinguishes their brand from the competitors', but distinguishes it in a memorable
and positive manner. The challenge for all brands is to avoid the pitfalls of
portraying a muddled or negative image, and instead, create a broad brand vision
or identity that recognizes a brand as something greater than a set of attributes that
can be imitated or surpassed. In fact, a company should view its brand to be not just
a product or service, but as an overall brand image that defines a company’s
philosophies. A brand needs more than identity; it needs a personality. Just like a
person without attention-grabbing characteristics, a brand with no personality can
easily be passed right over. A strong symbol or company logo can also help to
generate brand loyalty by making it quickly identifiable.

From the design of a new product to the extension of a mature brand, effective
marketing strategies depend on a thorough understanding of the motivation,
learning, memory, and decision processes that influence what consumers buy
Theories of consumer behavior have been repeatedly linked to managerial decisions
involving development and launching of new products, segmentation, timing of
market entry, and brand management. Subsequently, the issue of brand loyalty has
been examined at great length. Branding is by far one of the most important factors
influencing an item's success or failure in the marketplace, and can have a dramatic
impact on how the "company behind the brand" is perceived by the buying public.
In other words, the brand is not just a representation of a company's product; it is a
symbol of the company itself, and that is where the core of brand loyalty lies.

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MCDONALD’S BRAND LOYALTY

This business plan gave Ray Kroc the success and leverage he needed to get the loan
to buy out the McDonald brothers in 1961. By 1963, Kroc opened his 500th
McDonald's restaurant. Also in that year, he introduced Ronald McDonald, a clown
originally played by actor Willard Scott, who was famous for playing Bozo the
Clown. This marked the beginning of McDonald's instilling brand loyalty in
customers at a young age, a practiced it would later be attacked for.

In 1965, the company went public, and Kroc made $3 million. Two years later, he
took McDonald's restaurants outside the U.S. to Canada, and eventually to Europe
and Asia. His wealth would amass to $500 million in the following 10 years. Twenty
years after it went public, McDonald's was included in the 30-company Dow Jones
Industrial Average. The McDonald's Web site boasts that the company has been a
wise investment, saying about $2,000 worth of stock in 1965 would translate to more
than $3 million worth in 2006

As we've seen, McDonald's is drenched in the business of real estate as much as it is

in food. And, as we've all heard, the three most important elements of real estate are
"location, location, location." Back in Kroc's days with the company, he would fly
around in a plane or helicopter looking for the best spots to set up McDonald's
restaurants. He specifically looked for land near schools and churches in a
community

Today, as most of us can see, McDonald's restaurants are everywhere. But there's
still a method to the madness. McDonald's typically looks for locations that are the
most convenient for people -- in malls, near colleges or in airports This strategy
continues Kroc's tradition of getting to the heart of a community through its
gathering places.

Let's get to the nitty-gritty: McDonald's looks for intersections with traffic signals --
typically corners of two well-trafficked streets -- and ample parking. In terms of
physical space, developers look for a site larger than 32,000 square feet (9,753
square meters) and a height of 22 feet (6.7 meters)

After the franchisee and the site are lined up, the restaurant is built. You may have
noticed that the architecture of McDonald's restaurants has begun to evolve away
from the classic double-sloped roof. Many new restaurants are popping up with
sleeker looks. These include restaurants with a cafe-style interior featuring lounge
chairs to go along with the McCafe line of specialty espresso drinks. The immortal
arches that don the facades have also been replaced by what's known as the "swish
eyebrow," a yellow arch over a restaurant

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Today's McDonald's restaurants -- whether cafe-style or not -- still incorporate
classic production line procedures in the kitchen. Each employee is typically in
charge of a certain task so that orders are filled quickly, but technology has come a
long way since Multimixers. New technology has made the process even faster and
more convenient for the customer. In the drive-thru, for instance, McDonald's
restaurants now have digital displays where the driver can look at his order.
Increasingly automated equipment, such as those that dispense drinks and make
french fries, has also helped keep things moving faster. These are part of a long line
of increasingly efficient practices since Kroc switched from fresh potatoes to frozen
fries in 1966.

McDonald's amazed many when some of the restaurants began outsourcing their
drive-thru order-taking to call centers. To make sure the right order got to each car,
a camera hidden in the drive-thru menu took a photo of the driver placing the order
and sent it to the restaurant employee who doled out the food at the pickup window.
This innovation proved to increase production and efficiency

But technology aside, the business wouldn't have succeeded so well without its
famous menu, which we'll talk about next.

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Marketing Strategy:

Marketing Strategies: A marketing strategy serves as the foundation of a marketing

plan. A marketing plan contains a list of specific actions required to successfully
implement a specific marketing strategy. An example of marketing strategy is as
follows: "Use a low cost product to attract consumers. Once our organization, via
our low cost product, has established a relationship with consumers, our
organization will sell additional, higher-margin products and services that enhance
the consumer's interaction with the low-cost product or service."

A strategy is different than a tactic. While it is possible to write a tactical marketing

plan without a sound, well-considered strategy, it is not recommended. Without a
sound marketing strategy, a marketing plan has no foundation. Marketing strategies
serve as the fundamental underpinning of marketing plans designed to reach
marketing objectives. It is important that these objectives have measurable results.

A good marketing strategy should integrate an organization's marketing goals,

policies, and action sequences (tactics) into a cohesive whole. The objective of a
marketing strategy is to provide a foundation from which a tactical plan is
developed. This allows the organization to carry out its mission effectively and
efficiently.

One used the following techniques to device the Marketing Strategy for the
product/service:
• Segmentation
• Targeting
• Positioning

TYPES OF MARKETING STRATEGIES

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Every marketing strategy is unique, but if we abstract from the individualizing
details, each can be reduced into a generic marketing strategy. There are a number
of ways of categorizing these generic strategies.

A brief description of the most common categorizing schemes is presented below...

Strategies based on market dominance. In this scheme, firms are classified based on
their market share or dominance of an industry. Typically there are four types of
market dominance strategies:

• Leader

• Challenger

• Follower

• Nicher

Porter generic strategies - Michael Porter assessed strategy on the dimensions of

strategic scope and strategic strength. Strategic scope refers to the breadth of
market penetration while strategic strength refers to the firm’s sustainable
competitive advantage. He felt three types were important:

• Cost leadership

• Product differentiation

• Market segmentation

Innovation strategies - This deals with the firm's rate of new product development
and business model innovation. It asks whether the company is on the cutting edge
of technology and business innovation. There are three types:

• Pioneers

• Close followers

• Late followers

Growth strategies - In this scheme we ask the question, “How should the firm
grow. There are a number of different ways of answering that question, but the most
common gives four answers:

o Horizontal integration

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 o Vertical integration

o Diversification (or conglomeration)

o Intensification

Aggressiveness strategies - This asks whether a firm should grow or not, and if so,
how fast. One scheme divides strategies into:

o Building

o Holding

o Harvesting

A more detailed schemes uses the categories:

• Prospector

• Analyzer

• Defender

• Reactor

Warfare based strategies - This scheme draws parallels between marketing

strategies and military strategies. There are many types of marketing warfare
strategies, but they can be grouped into:

• Offensive marketing warfare strategies

• Defensive marketing warfare strategies

• Flanking marketing warfare strategies

• Guerrilla marketing warfare strategies

Marketing strategies explain how the marketing function fits in with the overall
strategy for a business. Examples of marketing strategies could be:

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Business Strategy Example Marketing Strategies
Grow sales Launch new products
Expand distribution (e.g. open more shops)
Start selling products into overseas markets

Increase profits Increase selling prices

Reduce the amount spent on television advertising

Build customer Implement a public relations programme
awareness
Invest more in advertising

Once a strategy has been identified, then the business must develop an action to turn
the strategy into reality. The starting point for this plan is the setting of marketing
objectives.

Marketing objectives are the specific targets for marketing set by the business to
achieve their corporate objectives.

Examples of marketing objectives might be:

• Increase sales by 10%

• Launch a new product by the end of the year
• Achieve a 95% customer satisfaction rating
• Increase the number of retail outlets selling our products by 250 within 12
months

It is important for a business to set marketing objectives because managers can then
have targets for their work. They can then measure more effectively the success or
failure of their marketing strategies to achieve these objectives.

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