Monday, July 13, 2009

Viral Marketing - Love it or Lose it?

Viral marketing describes any strategy that encourages potential consumers to forward a marketing message to friends and family (or anyone for that matter), creating the potential for astronomical growth in the message's exposure and impact. Similar to viruses, these strategies use rapid multiplication to spread the message to thousands, and even millions.

So, have you ever been exposed to viral marketing? View this viral marketing from Mentos and you'll have been infected as a consumer of viral marketing. It's very creative and very cool. The real question is . . . does it make you want to go out and purchase a Mentos or a Diet Coke? So although it may be creative and explosive, does it work to increase sales? Time will tell.

Sunday, July 12, 2009

Understanding the Concept of Brand Equity

My palms were clammy and my throat was dry. “Just Do It” I kept telling myself. Come on, “It’s so easy a caveman can do it” I tried to convince myself. As I stood at the jewelry counter, it hit me, “Diamonds are forever.” I looked at the stone like I knew what I was doing and questioned the clarity. Don’t worry, “You’re in good hands” the sales clerk reassured me. To my surprise, my girlfriend was in the mall and saw me at the counter. She ran over, looked at the ring and asked, “It’s the real thing.” I was too stunned to utter a word as she grabbed the ring and said, “I’m loving it.” Seems like an opening monologue for an annual commercial program on cable television. OK, maybe not. But it does demonstrate the concept of brand equity as your mind reacts to the slogans associated to these popular company brands. (Nike, Geico, DeBeers, AllState, Coca-Cola, and McDonalds respectfully).

Developing a strong, successful brand image may be the best marketing investment a company can make. A company’s brand image is the total of all intangible and intangible characteristics such as history, values, ideas, beliefs, prejudices, interests and features that make it unique. The company’s brand image visually represents the internal and external characteristics of a company. “A brand is thus a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need. These differences may be functional, rational, or tangible – related to product performance of the brand. They may also be more symbolic, emotional, or intangible – related to what the brand represents.” (Kotler and Keller. 2009. pg. 239)

Ultimately, the brand is only as strong as it is in the mind of the consumer. In order for a brand to hold value, the consumer must believe that distinctive differences exist among other brands within a product category. This value can be a direct result of establishing brand equity. “Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands for the firm.” (Kotler and Keller. 2009. pg. 239) Brand equity depends on related associations made by the consumer and is considered a very valuable intangible asset. Three recognized perspectives of brand equity are; financially based, brand extensions and consumer based.

Brand equity measured in financial terms can “determine the price premium that a brand commands over a generic product.” (NetMBA. Nd. para. 4) Measured in terms of brand extensions, a successful brand can be used to introduce new products. Consumer based brand equity can increase the consumers feelings toward the brand. “The premise of customer-based brand equity models is that the power of a brand lies in what customers have seen, read, heard, learned, thought, and felt about the brand over time.” (Kotler and Keller. 2009. pg. 240)

Customer based brand equity involves three unique attributes. First, brand equity is developed based upon unique customer responses to the brand. In addition, the unique responses are a direct result based upon the consumer’s knowledge regarding the brand. And finally, brand knowledge is a very important aspect of brand equity. “Brand knowledge consists of all the thoughts, feelings, images, experiences, beliefs, and so on that become associated with the brand.” (Kotler and Keller. 2009. pg. 241)

Different reactions and feelings to the brand are a result of the consumers familiarity and knowledge of the brand. And “the differential response by consumers that makes up brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand.” (Kotler and Keller. 2009. pg. 241) Strong brands lead to strong revenues. As a result, companies leverage strong brand equity for strong profit results. “Understanding consumer brand knowledge – all the different things that become linked to the brand in the minds of consumers – is thus of paramount importance because it is the foundation of brand equity.” (Kotler and Keller. 2009. pg. 242)

Building brand equity is developed with three main forces. First, brand elements have a very important influence on brand equity. Brand elements are used to identify and differentiate the brand. They include elements such as the brand name, logo, slogan and character. “A brand element that provides a positive contribution to brand equity, for example, conveys certain valued associations or responses.” (Kotler and Keller. 2009. pg. 246)

Selecting brand elements involves 2 themes: branding building and brand preservation. Within these two themes, marketers consider 6 criteria when selecting elements. The first three characteristics, regarding the brand as memorable, meaningful and likeable, are associated with building a strong brand. The last three characteristics, regarding the brand as transferable, adaptable and protectible, are associated with preserving and leveraging brand equity through elements. It focuses on how a brand is positioning to adapt opportunities and threats, for long term success.

The second force in building brand equity involves the relationship and combined effort to associate the product and service, along with all marketing efforts, activities and programs. All of the messages, images, perceptions and promotions of the brand must stay consistent when presented to the consumer. The consumer must be able to associate the marketing effort with the brand. This aspect is also very important when you consider internal branding as well. Internal and external branding must coincide so that employees of the company deliver on the promise and properly represent the brand.

An example of this consistency in brand delivery is when a consumer can recognize a brand within seconds of seeing the commercial, even without viewing the logo or hearing the brand name. Target does a great job in using consistent imagery, music and themes to develop commercials. In some of their commercials, the logo and brand name are not presented for ten seconds or more. However, due to the consistency of the branding elements, consumers are able to identify the brand of Target within seconds.

The third force in building brand equity involves, “other associations indirectly transferred to the brand by linking it to some other entity (a person, place, or thing.)” (Kotler and Keller. 2009. pg. 246) Associating a professional athlete or famous star with a brand has been used by many companies for years. Michael Jordan with Nike Shoes, Tiger Woods with American Express, Catherine Zeta-Jone for T-Mobil, and Charlton Heston with the National Rifle Association are just a few. Associations can help establish credibility, popularity and other positive characteristics associated with the brand, reflective of the associated party. An example of association by a place might be coffee to Seattle to Starbucks.

Creating or adjusting a positive brand image which results in strong brand equity is a basic but necessary goal of every company. “Most business people understand the power of a well-recognized and respected brand name. It can strengthen consumer preference for your product, raise customer loyalty, insulate you from competitive forces and cut your promotional costs.” (Carey. 2007. para. 4) It builds the foundation on which companies build their futures. “Marketers build brand equity by creating the right brand knowledge structures with the right consumers.” (Kotler and Keller. 2009. pg. 245) Strong brands are based on strong products, with a clear message, differentiated from the competition, with a believable and consistent message, that is relevant to the targeted audience. With these characteristics in place, companies will experience strong brand equity.


Kotler, P., Keller, K. L. (2009). Marketing Management. New Jersey: Pearson Prentice Hall.

Internet Center for Management and Business Administration, Inc. N.d. Brand Equity. Retrieved June 21, 2009 from NetMBA Business Knowledge Center. Website:

Carey, W.P. May 9, 2007. Brand Equity. It’s Worth More Than Companies Realize. Retrieved June 21, 2009 from Marketing and Services Leadership. Website:

P&G - The Art of Masterful Marketing and Consumer Packaging

Proctor & Gamble has been recognized globally as a marketing powerhouse. They have successfully developed and nurtured numerous branding initiatives that have lead to sustained market leadership. “Proctor & Gamble (P&G) is one of the most skillful marketers of consumer packaged goods. (P&G) is a global leader in the majority of 22 different product categories in which they compete; and has total world wide sales of more than $76 billion a year.” (Kotler and Keller. 2009. pg. 239)

P&G utilizes and implements several capabilities and philosophies that help them thrive in the market. Among these are five key drivers that include customer knowledge, product innovation, quality strategy, an aggressive sales force, and manufacturing efficiency and cost cutting.

It is very difficult to succeed in business if you are trying to sell a product or service to a specific audience if you don’t know what your audience wants, likes and needs. Customer knowledge is very important in delivering products to the market in fulfillment of a need. “P&G studies its customers – both end consumers and trade partners – through continuous marketing research and intelligence gathering. (P&G) generates more than 3 million consumer contacts via its email and phone center. It also puts more emphasis on getting its marketers and researchers out into the field, where they can interact with consumers and retailers in their natural environment.” (Kotler and Keller. 2009. pg. 239) Such front line exposure to the consumer helps management understand their desires. Valuable information can be gathered and implemented to better meet the demands of the consumer.

Consider this analogy if you will. After a long, tough day at work, you decide to treat yourself to a nice relaxing dinner at one of your favorite restaurants. You sit down and the waiter brings you a glass of water. After about 10-15 minutes, he returns with your dinner, piping hot and ready to consume. You’d be a little puzzled wouldn’t you? Unless you were a frequent patron who had a standing order, you would expect the waiter to take your order first. If he simply decided what to serve you for dinner, what are the chances you would be satisfied? With dozens of different types of food, chances are he would not deliver what you had in mind. The only way for him to know what will satisfy you is to take your order. A successful waiter seeks customer knowledge because he asks questions and listens to the customer. Knowing your customer is one of the most important, if not the most important, aspects to providing satisfactory products and services. P&G recognizes this important issue and takes the necessary steps to know the customer.

Product innovations are also very important in gaining and maintaining market leadership. “P&G is an active product innovator, devoting $1.8 billion (3.5% of sales) to research and development, an impressively high amount for a packaged-goods company. It employs more science PhDs than Harvard, Berkeley, and MIT combined and applies for roughly 3,000 patents each year.” (Kotler and Keller. 2009. pg. 239) Such innovation helps provide products that are developed with cutting edge technology. As sciences and technologies advance, products and services must follow.

With innovative advancements, products continue to evolve and the market continues to expand. In a speech in 2000, Federal Reserve Chairman Alan Greenspan summed it up when he stated, “We appear to be in the midst of a period of rapid innovation that is bringing with it substantial and lasting benefits to our economy.” (Mandel. 2009. p. 36) New benefits typically means increased demand. It helps retain loyal customers and attract new ones. At the time of his speech, it seemed like we were experiencing a boom in innovation that was helping markets to thrive. “But (today) there’s growing evidence that the innovation shortfall of the past decade is not only real but may also have contributed to today’s financial crisis. . . With far fewer breakthrough products than expected, Americans had little new to sell to the rest of the world.” (Mandel. 2009. p. 35-36)

This recognizable trend demonstrates the importance of innovative capabilities and R&D philosophies within a company. Innovation can dramatically differentiate products within the same category, providing the competitive advantage needed to emerge as a market leader. “Part of (P&G’s) innovative process is developing brands that offer new consumer benefits.” (Kotler and Keller. 2009. pg. 239) This innovation has helped them stay on top of the industry. Lack of innovation may have affected other companies, but P&G’s commitment to innovation has helped it maintain its leadership position.

Another vital key to a company’s success is the quality of their products or services. “P&G designs products of above average quality and continuously improves them. When P&G says ‘new and improved,’ it means it.” (Kotler and Keller. 2009. pg. 239) In today’s hyper competitive markets, quality products can provide a competitive advantage through differentiation among numerous offerings. An increase number of consumers are considering quality over cost, focusing on the value of a product that will last. It has been unfairly perceived that among low income families, that cheaper is considered a better way to go. Research is uncovering that in today’s markets, low-income families are also considering quality as an important aspect to the decision making process of a purchase.

Another capability and philosophy that sustains P&G as a market leader is an aggressive sales force. “P&G’s sales force has been named one of the top 25 sales forces by Sales & Marketing Management magazine. A key to its success is the close ties its sales force forms with retailers, notably Wal-Mart.” (Kotler and Keller. 2009. pg. 239) As a critical part of the marketing effort, the sales force must ensure that P&G’s products are visible, accessible and prominent among the various offerings within the retail stores. By proactively leveraging positive working relationships with retailers, P&G can streamline the operational and promotional efficiencies, from production to distribution. The sales force can work closely with the retailer to gather useful information which can help improve the product. Improved product quality in turn helps the retailer by increased demands and ultimate sales, as well as helping the profits of P&G. In addition, improved products increase the likelihood of satisfied consumers.

Positive working relationships can also help in negotiations and by establishing a partnership mentality between the 2 companies. In the case of Wal-Mart, a strong working relationship established by an aggressive sales force might provide P&G with a competitive advantage over the competition. The “partnership power” of the relationship can help P&G avoid certain elements required of other companies seeking to do business with Wal-Mart. “A recent JPMorgan Chase report says Wal-Mart wants manufacturers to spend more on promotions and ads that appear on the retailer’s in-store TV network. ‘Failure to participate could have meaningful consequences,’ the report concluded.” (Boyle. 2009. p. 52-53) A strong historical relationship developed by an aggressive sales force may encompass more bargaining power and a reflection of partner as opposed to manufacturer. This can be a very valuable asset for power promoting a company’s brands.

As stated earlier, quality is definitely a valuable aspect of P&G’s products. However, cost considerations are also very important in many consumer minds. Many consumers are willing to pay a premium for superior product quality. However, each product premium has a limit based on perceived value. The goal of a good marketer is to help develop cost efficient operations that can help set proper pricing levels for a product. “P&G’s reputation as a great marketing company is matched by its excellence as a manufacturing company. P&G spends large sums developing and improving production operations to keep its costs among the lowest in the industry, allowing it to reduce the premium prices at which some of the goods sell.” (Kotler and Keller. 2009. pg. 239) Providing top quality products at lower prices develops competitive advantages that will sustain market leadership.

P&G has proven that they have what it takes to sustain market leadership. As P&G states on its website, “Invest in technology. Create superior products. Make each product a brand behind a distinctive strategy. And when you get it right, invest in it over time to establish a brand equity.” (P&G. Nd. para. 7) They have accomplished this through capabilities and philosophies that have been engrossed throughout the company. Among the five key drivers that P&G uses include customer knowledge, product innovation, quality strategy, aggressive sales force, and manufacturing efficiency and cost cutting. Their success can not be attributed to one simple task, but on the successful combination and relational interdependency of many different aspects. As a result, this combined effort has developed a market leader that has been recognized globally, as a benchmark for success.


Kotler, P., Keller, K. L. (2009). Marketing Management. New Jersey: Pearson Prentice Hall.

Mandel, M. (2009, June 15). Innovation Interrupted. Business Week. The McGraw-Hill Companies.

Boyle, M. (2009, June 15). Management & Leadership. Wal-Mart’s Magic Moment. Business Week. The McGraw-Hill Companies.

P&G Global Operations. Nd. Retrieved June 20, 2009 from Proctor & Gamble. Website: l