The Strategic Value of Branding
Introduction
Branding is an important feature in marketing. Branding determines organization failure or success. Branding holds the largest share in the organization and it is what an organization does to build the perception of customers that their product s and services in the market are unique and better than those from other firms. Branding is using the trademark of a company in order to position itself in a specific product.
The goal of branding is to get additional sales and enhance equity in order to increase perceived quality, improve recognition, increase brand loyalty and increase customer base. The marketing problems in the hotel industry arise in the event of developing a good brand that will help gain competitive advantage. This problem needs marketing approach and marketing thoughts that will help the organization focus on the best strategy to use on the product as well as company to be superior among their competitors (Egan, 2007, p. 12).
Branding strategy has acted as a solution of product strategies in the strategic marketing for the company. A company can only create a better strategy by having a good and clear objective. Brand values will work well with laid out strategies. It is the role of the marketing department to implement these strategies for effective branding. Branding strategy aims at creating a long-term solution for gaining competitive advantage.
Value refers to promise and satisfaction of experience and guaranteed profits in future. Brand value shows a positive differentiation impact on the recognition of brand on customer experience with the product and service investigated. The value of the brand can be seen in five perspectives: respect, integrity, innovation, customer centricity and excellence (Kahn, 2005, p. 234).
Porter in his study suggested that for a company to be successful they need to use more than one value activities in a way that results in more values than for the competitors. First, it will help the company to assess, analyze changes and dynamics of the market and evaluate the current structures. Secondly, it will assist determine the profitability of the company and competition strategy by looking at the strengths and threats of the company. Thirdly, it will help them make informed decisions on whether to increase capacity in other sectors or develop strategies. Fourthly, it helps the company to determine and understand the importance of services and products in ascertaining potential profits. Finally, it will help the company to identify the strengths as well as threats to improve their company and avoid such mistakes (Knox, 2004, p. 232).
Porter Value Chain Strategy
The brand is a term, name, symbol, sign, design, and logo or a combination of any of these that are used to identify products and services of one supplier and differentiate it from the competitors. Brand value has a history in the management and fall under product category. Branding achieves its objective through marketing mix. This marketing mix involves price, product, promotion, and place. This will help marketers to have a strong network for distribution i.e. services of distributors, manufacturers, and retailers to sell products through convenience stores, hypermarkets, discount stores, corner stores and supermarkets in order to reach wider coverage. Mixing all these attributes creates a strong brand than the competitor (Knox, 2004, p. 230).
Have various pricing strategies that allow an organization to satisfy its customers. Consider prices as a differentiating factor with distinct features e.g. accessibility, affordability, high quality and great taste. This will ensure its products are at the same level with those of competitors to retain customer loyalty. The company can offer a variety of incentives e.g. discounts and bulk deals (Knowles, 2000, p. 123).
Have a regular promotion strategy in order to increase sales volume. This will lead to maximum sales and extra profits within a short time. There is two fields research branding i.e. consumer behavior and brand management. Consumer behavior focuses on the perspective of external customers while brand management focuses on internal brand perspective.
A brand will help gain customer confidence. It motivates consumer attitudes and feelings towards the good or service. These attitudes depend on the experience with the good/ service. Brand awareness creates a perception of quality, attributes and brand loyalty. A company can gain competitive advantage through cost reduction- this must be accompanied by acceptable quality and differentiation. This is because one brand can be cheap and its attributes easily imitated. Differentiation is used to compete in the market (Callon, 1996).
Branding values are achieved when the company focuses on:
- Strategic competitiveness- the goal of competitive advantage is attained when managers of organization successfully implement and formulates strategy that has value
- Sustainable strategies- the Competitiveadvantage is gained when organization use strategies that have not been used by their main competitors.
- Profitability more than average- Investors will benefit as they will be satisfied since profit rate and projected revenue will be promising.
It is developed when the company brands its name and other company’s product under one name. This assists to convey the mission, vision, intention, and values of the company. It is cost effective and aims to create preference, differentiation and extends value beyond consumers and stakeholders.
Introduction
Pringles is one of the American brands of potato snack chips. It began the year 1967. It is owned by Kellogg’s. It became the fourth largest the year 2012. It operates in 140 countries with a market share of 2.2 % globally. Their main product is potato snack. Gamble and Procter created a better chip to meet customer complaints about greasy, stale and broken chips. Other products includes saddle shape chips, crisps (Robson, 2002, p. 122).
Marketing Mix Strategy
Pringles competes and operates in retail snack industry in the UK. The company was affected by changing customer needs, revenue changes and change in market structures. Due to these changes customers spent less on leisure and choose to buy products of the low price of the quality they want. Pringle’s main competitors are Lay and Great Value.
The company is the second largest snack provider with various product flavors. Their market share in the industry is 2.2 % in 2012 thus having power to market trends (Shiffman & Kanuk, 2009, p. 145).
The demand for the product is determined by the attitudes of consumers, pricing, availability, disposable income and investment income and population. Unemployment creates a reduced disposable income and wages leading to recession. This causes profitability and revenue to decrease. Increase in disposable income improves the economy and company at large. Attitude concerning their health determines the demand of the product. There is a shift in diet and healthy eating among customers. This is a potential threat as consumers become aware of the problems related to obesity and weight loss. Menus have changed towards the use of healthy flavors.
According to Kahn (2005, p. 48), Porter’s five forces refers to factors that determine the company competition e.g. industry rivalry, suppliers, customers, new entrants and alternative products. Even though the strength of forces differs between industries, when they are put together they help determine profitability. It affects the investment, prices, market share, profit margins and volume of the industry. These forces include:
Threats of new entrants are due to:
- Product differentiation of the company including brand identification to ensure customers loyalty.
- Reduction in the cost of a unit of product or economies of scale.
- The frequencyof switching costs to absorb the cost of the buyer and supplier.
- Accessibility to channels of distribution.
- Independent of scale which leads to cost disadvantages.
It is moderate because there are few threats of new entrants into the market as the government has restricted entry requirements to discourage more competitors in the market. The snack industry has a monopolistic structure of the market. In the local market, there is no competition since new entrants have moderately succeeded (Porter, 2008).
It is high because there are alternative to the chip that includes flavored chip, low-calorie chip, and crisps. The organization has no costs of switching thus making a threat to be high.
Buyers buying patterns is moderate because since there are many. The organization offers differentiated goods depending on a wide consumer base thus the low volume of purchase. There is no switching cost for substitutes (Ohmae, 1982, p. 123).
Suppliers bargaining power varies from moderate to low since inputs are locally grown in select regions thus reducing switching cost between suppliers and substitutes. The scale and size of Pringles make it dominate its suppliers (Shiffman & Kanuk, 2009, p. 321).
Competitive Pricing Strategy
Rivalry ranges from moderate to high because the organization has a monopolistic market structure being the second largest holder of the market share. Customers have switching costs and can move to other competitors. Pringles has to continue differentiating its products (Thompson, et al., 2010, p. 45).
Core competence Pringles
The core competence is comparing their product with satisfaction once you taste their food. They want to differentiate their product by having good quality snacks. Their brand strategy is based on selling bagged chips and crispy crunch thus giving consumers a unique experience (Egan, 2007, p. 67).
Strengths
It has a strong position in the market and brand recognition globally. It maintains its market share of 2.2 % in the US. It operates in more than 140 countries. It is a recognized brand of potato chip and rated as 2nd largest in the world. It enhances its brand equity in the brand logo, licensing and quality products. It has also enjoyed economies of scale with a good networked channel and relationship with suppliers (Kotler & Armstrong, 2008, p. 89).
They have expensive products due to differentiating products using quality flavors. During the economic decline, customers switch to competitors who sell at low price. Organization cannibalization has led to overcrowding in the market. This is out of rapid expansions and reduces market growth rate (Callon, 1996, p. 66).
First, they have an opportunity to expand into the emerging markets. Cannibalization is a strategy to create a chance and gap to the international markets such as Canada and Ireland. Second, they have an opportunity to advance in technology. They can use mobile applications for making payments, collections, and orders. Third, use new channels of distribution for delivery of products by diversifying the distribution systems in order to increase revenue. Last, they can expand their brand because of the strong brand image and product diversity (Callon, 1996, p. 70).
- There is more completion thus reducing the profits
- Market fluctuations due price fluctuations and high-qualityproducts
- There is market saturation in developed countries thus affecting the revenue.
- There is a challenge of changing customer needs, lifestyle and tastes thus reducing the purchasing power.
Value creation is an important tool to the organization as well as the country. According to Cova & White (2010, p. 246), VCA examines the sequence of activities that are employed to get a product and service from production to procurement via various stages of production, distribution and the final consumer. The process involves distributors, buyers and suppliers. The description of WPL is based on alternative sources to determine different extraction processes. Aggregate inputs involve all cost of funding, cost of depletion, opportunity cost and production cost.
- Pringles should extend their capabilities and competence to other countries and work on profit drivers to help them grow.
- Pringles should change the menu and expand itself in order to give healthy products.
- Pringles has a chance to have substitutes of the product by using different flavors in the same product line
- The growth strategy should be focused ongetting more market penetration into local and international markets.
- Pringles should build a good relationship with suppliers, retailers,and manufacturers into to develop an efficient channel of distribution.
- Pringles do not invest a lot in adverts and strategies of marketing.
- They should retain customers and build a good customer loyalty by delivering quality goods and services.
- Use of improved technology will help Pringles to grow sales and retain customers.
Importance of Strategic Marketing Plan (SMP)
For an organization to be successful, they need to match their strength with customers’ needs to potential and current stakeholders. Marketing is a process used to identify, predict and delivers customer needs. It utilizes the available resources to give a product value proposition to the right market for them to achieve goals (Cova & White, 2010, p. 276). Effective communication has to be employed in order to reach out to the right audience as well as build a good relationship between the company and customers. Strategic planning becomes one of the challenges managers face in trying to reach and maintain customers in order to gain competitive advantage. A marketing plan refers to a statement written by managers indicating objectives of the organization. It includes the statement about the product, market shares, profits, advertising strategies, promotional, pricing policies, target sales and distribution channels (Charkrabortsy, 2010, p. 89).
SMP benefits in marketing can be of value to the organization and individual.
- It assists managers to clarify the objectives, reinforce the policy, and provide direction and the purpose of the activity of the individuals and organization.
- It helps the organizationto have a better prediction of transformation thus making it less vulnerable to what is unexpected.
- They will be able to create long-term proactive responsesand perspectives of changes of the environment.
- It helps managers make informed decisions and reduce implementing wrong choices.
- It leads to fewerconflicts and effective communication between people and organization.
- It helps individuals to develop a sense of ownership and belonging of the company thus creating an individual motivation to be recognized.
- Marketing plan relates to the duties of a marketing manager with skill of delivering the required
- It involves ways of helping employees to set objects and work within them. It is a tool of ensuring security, participation,and implementation
- It presents an overview of the market i.e. market research, sales summary,and analysis.
- It communicates the promotional objectives, plans, budget,and pricing strategies and makes necessary arrangements for distribution (Amit & Schoemaker, 1993, p. 200).
- This shows a statefor possible actions on this that are not in order. This makes it easy to evaluate results of the market.
- It provides market analysis on perception and response on promotional and advertisement tools used.
- It provides consumer satisfaction by offering quality goods.
- It shows responses to price and sales as a result of using price discounts and advertising respectively(Porter, 2008, p. 90).
References
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Callon, J., 1996. Competitive advantagethrough information technology. London.: McGraw-Hill International.
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