 As-Salam-Alaikum-Khabat-e-Nuh-Hazrat. Vaseem Ahsan welcomes you to the virtual University of Pakistan. Course Brand Management, MKT 624. We are into lecture number 9 and we discussed in the last lecture how to build a brand vision. We were still in the process of discussing or rather building the brand vision when we found ourselves short of time and that brings us to the same discussion here in this very lecture. Before I proceed further, I would like to give you a recap of the last lecture also in relation to what we have discussed so far in the course. The idea is to maintain your perspective so that so many different concepts that we are discussing one by one do not really bog you down and you don't really find yourself in the middle of something at which you may feel too much for the taking. In the last couple of lectures, I've been talking about developing the strategic management process and the reason I started talking about that was that an understanding and appreciation of that process is a prerequisite to the understanding of strategic brand management process. We are very much into the brand development process and in that relation, we're talking about developing the brand vision. We're also quite clear by now that a brand vision flows out of the overall business vision which must address future movements and future courses of action relating to a brand. Okay, having talked about that, let us now get to the points precisely the way that we were discussing in the last lecture. Talking about building brand vision, I told you there are certain things which brand managers could have to take care of before they really can develop the right vision for the brand and the first one is seek input from the top management. The second one which we were discussing is closing the financial gap, meaning the contribution in financial terms which the company needs in order to bridge the gap, meaning the levels of revenues which you have today with the levels of revenues the company would like to have three years down the line or maybe five years down the line depending upon your long term to the business plan, brand managers have to come forward with their respective profit and loss accounts. It is that way that the company is going to determine as to how to close that gap. Brand X for example gives the company so much contribution, Brand Y gives the company that much contribution and those respective contributions put together give the company overall contribution and that tells the top management whether they are in line whatever they have envisioned or not. We in that regard talked about our ability or inability relating price increase in order to bridge that gap. One way is that we go for the price increase whether or not we can achieve that that is something that we have to determine. We also discussed expanding markets and availability of your products meaning your brands. Do we have the capability of going to additional markets or are there factors which might prevent over going there? So you have got to be very clear about that. I also talked about the factor of improving distribution intensively and also extensively. I also talked about improving communication. You have got to be clear about the level of communication that you would like to have in order to talk with your consumers. Again, the fundamental is to be very clear about our ability or inability to do whatever is at hand. We are talking about the level of communication. That brings us to the next question, a very important question and that is about introducing new offerings for new segments. We had barely started talking about this aspect when the time ran out. So let us talk about this now in detail. It is something that we discussed in relation to one of the previous lectures with the help of the graphic illustration for company XYZ into the fast food market. Let us try to understand how the company can move waywards meaning to the left into segment number 4 and I am sorry into segment number 3 and to right into segment number 5. There is nothing stopping the company in terms of its movement into any segment it wants to be represented. The only fundamental again is whether we can do that or not. We have to be clear about our ability to sell something in the lower segment of the market of the same quality which has become our benchmark and by the same token we have got to be clear about our ability to sell something at a higher price in segment number 5 which is on the right of the segment where we are at the moment. Now this is not to say that from here we are going to move to segment 3 and then segment 5 and that restricts our movement. Now we can go even further down or we can go even further up. Segment number 5 is rupees 100 plus. The circumstances might take the company or might necessitate for the company to start considering another segment which could be hypothetically segment number 6 having a price range of maybe rupees 200 to 250. What are you supposed to be doing then? In coordination with people from the operations department you have to come up with a quality level which is at least the same as you have at the moment or even better. I think you would like to create another benchmark and you would like to go for even higher level of quality because you are increasing the price or price wise you are getting into range which is like twice as much as you have been before. So that is the ability you have to look into whether you can do that and if you are confident which it should be and you have done your homework properly in relation to all the attributes the brand is going to have or the new offering is going to have and in relation to the benefits which you think the product carries and it promises and you are confident that those benefits can be delivered then there should be nothing stopping you. Talking of the segments let us take a once more look at the same slide and we can talk about segments in a little detail. Segments is not something which is restricted to geography. Segment is not something which is restricted to price or any other variable or aspect of the marketplace or marketing. Segmentation is something which has got to be understood a little comprehensively and let me tell you there was a time when marketing people used to look at segments from the standpoint of demography. In other words, the market research which marketing people carried out that rested on demographic basis and demographic characteristics or properties being the basis of the market research presented to you with a portion of population with similar income levels with similar age groups and when I say similar the definition of similarity to the was coined or put forth by the marketing people like this is a segment or this is a group which is between the ages of like 25 to 50 or maybe from 25 to 30 the objective was to determine that the buying habits, the likes and dislikes, the biases and the preferences would be similar because we are dealing with people who have very similar attributes in terms of their lifestyles and those lifestyles emanated basically from the income levels that they had or that they have and the age brackets within which they all are in came another concept and that is psychographics. On the basis of psychographics the marketing people carry out research which is quantitative in nature and those quantitative findings deal with personality and attitudes of consumers. It is quite possible that people demographically here may have the same kind of biases which people in another group of income levels meaning a group of demographics have. So there could be similar thinking there could be similar likes and dislikes across demographic lines and that is what psychographics are all about. The marketing people thought that there are people who like to wear jeans for example and who are in demographic group A for example and that group is a low middle class group in terms of economics. Let us suppose for a moment and then there are people who like to wear jeans and drive very expensive cars. So this is one example of psychographics. There could be other examples as well. There are people for one particular demographic area liking to go to fast food restaurants at the same time you have millionaires who also like to go there. So in other words if you restrict your the marketing research only to demographics it may not give you very accurate findings because you are excluding other groups or other areas of demographics that may have the same properties and they may also form your target market or the target audience as we say in marketing. Therefore the need to understand psychography of different demographic groups is important to carry out the marketing research in its true essence. After psychographics in came the concept of need based segmentation. While I was talking about demographics and psychographics just to recall and just to rub in I was talking in relation to segmentation meaning segmentation on the basis of demographics segmentation on the basis of psychographics and now I'm going to talk about segmentation on the basis of need. The concept is or the rationale is if you as marketing people can identify the need correctly the chances are you will go right in terms of all the movements for the brand. It's present movements and it's future movements. If you have identified the need rightly you know the right segment you are trying to have an appeal for and therefore you will create a brand with the right identity and the right identity will lead towards the right image because everything has got to be consumer based and therefore you have to you have to be consumer oriented. Everything has got to be a reflection of the consumer. Having given the right identity and obtained the right image you have done the job and therefore need based segmentation is the latest concept and in a way the accurate most concept so far which is a very important tool to understand for brand managers and marketing people. So this is a question which you have to answer about new offerings and segmentation. To summarize answer to this question I would say that once again new offerings can be lower priced and new offerings can be higher priced. You have to look into your abilities your marketing abilities your operations based abilities whether or not you are in a position to handle all that you are envisioning at the moment. That brings us to the next question which is to be answered and that is are there any possible acquisitions in the marketplace? Are there any brands which are worth consideration in terms of acquiring them? You might think that the brand you have meaning your own brand at the moment has a certain limit to its potential. You may not have hit the potential at the moment but a point will come when it may hit the climax and therefore you would like to go for another brand which is on the market already selling moving very well having loyal customers and you might think that acquiring this brand is going to bring the company added share of the market and hence added revenues and hence added profitability which will lead to so many different things like in a better cash earnings better cash flows and so on and so forth better share value. So you might start considering acquisitions. When I say that it is not that the brand managers start considering that it is the job of top management and like I pointed out earlier business development is one of their fundamental jobs and they also have people sitting at top slots who are responsible for business development but your job is to point out your job is to let them know or to impart the useful or possibly fruitful market knowledge. Here is a brand which is there for not for the taking but for buying. How do you find that out? You are in the marketplace and when I say you I obviously mean your peers from the sales department you also go to the market once in a while just to touch base with people who really matter so that you can have first hand knowledge of all the movements taking place in the market in relation to your brand and also in relation to competition. Until the time that you know your movements up against those of competitors you really cannot compare to your brand or the properties of your brand with those of competitors. Anyway coming back to acquisitions everything starts from the market and having known the possibility that an acquisition can take place to the benefit of the company you may like to bring that to the notice of the top management and that starts the process in motion. You may not be the only one bringing that knowledge to the top management they may also be in the picture already but it is always good if information if every kind of information from various quarters of the market flows to the top management through your offices it's always good. Having talked about six basic questions now this is not to say that we should restrict our study of how to close the financial contribution gap to these six questions only no, these questions are meant to give you an idea about the kinds of questions that must flash into your mind and answers to which must be given by you in a very well structured way so that the top management with your support can make the right most decisions about how to build the vision. The answers to these questions commit all of us meaning all members of the management to move very strategically in relation to all the moves that the company makes to achieve its financial and strategic goals. Having said that let us take a look at a graphic illustration which is very easy to follow and gives you a nice picture of how you really can close the gap and like I said it is an illustration I already have talked about all these factors you see two bars on this slide on the left we have a figure of a piece 100 million and this bar represents year 2006 or year X the next bar shows year Y I don't want to say which year that is it could be three years down the road or it could be five years down the road meaning this is the destination which the company would like to reach at the end of the strategic business plan period going back to the first bar which is the present year year X you can see we have a revenue level of rupees 100 million and then on top of that this blank white area and we call that growth gap that gap represents rupees 70 million in other words what it means is that by the end of the plan period we would like to achieve as a company rupees 170 million worth of sales or revenue level now the question is how to achieve that how to bring that additional 70 million take a good look at the next bar which is the period representing the last year of the plan we still can see 100 million and the reason that we are still showing that 100 million is because this is where we started but on top of that we are showing additional rupees 30 million and we call it brand strengthening in other words we envision strengthening of a brand to the extent of bringing to the company another rupees 30 million how we do that I think you are very clear about that you go into better communication you go into more segments you come up with new offerings and you expand your markets you improve your distribution you improve availability all the questions which you answered in relation to closing the financial gap so in other words at the end of the business plan period our brand is going to bring us 130 million now this is hypothetical you might start debating that 30 million is no good then by the top management two people like you we are not really satisfied with this rupees 30 million this should be like maybe 40 or somebody might say 50 and the debate goes on the debate goes on on the basis of certain rationale they have to come up with some very solid arguments or solid reasoning there shouldn't be an argument on the basis of certain historical trends on the basis of whatever is going on in the market in relation to competition somebody might point a finger at you we have seen competition growing from here to there and God knows their sales have risen 200 percent or 300 percent and you are showing an increase of just about 30 percent over the next five years my point here is whatever brand strengthening is going to be presented by you in terms of your projections for the planned period has to be based on certain logic and certain rationale having said that let us talk about the small area which sits right on top of that 30 million and that again is additional business and that is going to come to the company through new products now new products may be your area or it may not be probably it is going to be the area of another brand manager because we are talking about new products it may be the same brand that is a separate issue altogether whether the company is going to maintain the same brand while going across the category or the company is going to have different brand names, standalone brands we talked about that and we shall again talk about that anyway getting back to new products you tell the company whether help of your peers or after having had an understanding from the conversation or the discussion you had with the top management while you were seeking their input that you should go for new products those could be related products like I said and you say or the marketing manager says we shall bring the company additional 20 million rupees through the new products so that elevates the level from 100 to 150 meaning 100 plus 30 plus 20 150 million but that is not the end of it we still have this shortfall of 20 million which we have to have in order to close the gap which is the gap between today and the end of the plan period and naturally the gap is not going to come on the last night of the plan period you will agree with me you have to start working on that now or maybe at a certain time frame which is maybe 6 months down the road 9 months down the road or a year down the road whatever that is we have to pinpoint that so that execution strategies or implementation starts taking place at the right time to enable the company to achieve all the objectives getting back to that gap the remaining 20 million we say that is going to come through acquisitions that is the question that was one of the questions which you answered while you were trying to build up as to how to close that gap acquisition of maybe your not maybe rather the most probably one of your competitors one of the competitors maybe they have the company has a very good brand somehow the company is not in a position to grow the brand with the right kind of support they cannot foster it they are not good foster parents in other words they are short of resources maybe they are short of money they are short of human resource they do not really have the competencies to develop human resource to the level where they would like to see the brand and being realistic they think they can to you make good money out of that and then get into some other business which might be the kind of business they will excel at so you start you initiate the process of acquisition top management comes in the business development people I mean the top manager his associates subordinates everybody jumps in and the process starts and you are supposing that you are going to bring in additional 20 million from that acquisition or acquisitions ever is more than one brand or more than one company that generally is not the case because it's quite a process it takes time, it takes resources and then you have to plan after you have acquired that brand or the company the answer is to all the questions that I have talked about will lead all of you in the company in a very strategic way which in turn means that your moves regarding your business will be very strategic and that's the name of the game the model that brings us to the third major factor or the aspect which has to be addressed before you build your brand vision I will again recall the first was you sought top management's input second you have just wrapped up you looked into how you are going to close in the real contribution gap and now the third one is acquiring additional data relating to industry why do you have to do that we keep talking about things like we need to have the right support we need to have the right basis and we need to have the right strategies and the right strategies will come only if we have the right vision so on and so forth we talk about these things because we just cannot move ahead without these things now in order to build all this we need to have a basis the question is where is that basis where does that come from that basis is the collection of data in relation to the industry you are a part of so in other words you have to go out and have additional data about the industry and when I talk about the industry I will define what industry is you have to collect data about your brand and you have to collect data about competitors brands in order to arrive at the right decisions or in order to arrive at the right understanding for building the brand vision you will agree with me that nothing is going to serve the purpose more than having a very clear understanding of the industry you are a part of the industry analysis consists of so many different variables or so many different aspects each one of those has got to be understood very clearly and in order to have clarity of mind let us talk about those one by one we have to define the industry first of all what is the industry second of all we have to look into the growth factor what has been the past history of the industry and you know the industry consists of so many firms you are a part of that meaning all the firms when put together form the industry we have to look at the key growth factors and we also have to look at the seasonality if it is involved and we have got to be very clear about the industry life cycle definition of the industry is the first point of departure toward the analysis and when you pick that off you must consider the description of the industry sector now let us talk about this a little detail what does that mean if you are into for example clothing business you have got to have a complete understanding of the whole textiles sector this is not to say that you have got to know about the kind of machines that are involved at various stages of the textiles and fabrication and so on and so forth what it means is that you as a brand manager should understand the economic ramifications of all the developments that are taking place within the industry starting with the kind of cropping patterns that we have been having for the last few years you should be able to draw certain inferences and you should be able to extrapolate those inferences in terms of your projections or in terms of the projections relating the industry where the industry will go we should talk about a few more things which come into play while we are taking a look at the economic sector or for the overall sector within which the industry operates we have to consider all the products offered by the industry now this means that you are considering not only your brands you are also considering all the brands which are offered which are there on the market by the competitors unless you have an understanding of those your understanding of the complete industry is not complete another thing you must look at is the geographic scope of the industry in order to have a complete understanding relating your industry most of the industries operate on the national basis but there are industries which are very original and maybe you are the part of the industry or part of an industry which is original you have got to be clear about that if it is impacted by some other industries which are beyond the geographic region that is something else and you have to take those factors also into account but it is very important to understand and to know the geographic basis the scope if the industry you are a part of is international and anything that is happening beyond the national borders impacts whatever we are doing here that also has to be considered industry analysis extends also to segmentation you have to take into account while carrying out that analysis different segments if you are like I told you if you are part of the textiles and garments you have to look at different segments you may define segments as cropping ginning and spinning and then garment making a computer manufacturer will segment his market can you guess, can you think okay let me tell you a computer manufacturer may segment his market into products like virtual computers, PCs maybe notebooks, I mean laptops and yet another servers or web hosting segmentation by products from the standpoint of the industry make up is very important what kind of segments laptops or PCs are finding their way or finding the sales into is a separate discussion but from the industry point of view from the point of view of the constitution of the industry we have got to understand segments by different products and by different sectors, sub sectors having all the variables in place and having answers to all the factors I have mentioned you are well on your way to defining the industry I can put it in the following words that you have to define the industry by taking into account anything everything that affects the industry or that is a part of the industry and that may have the potential to affect your business positively or negatively it must be considered the definition in other words has got to be broad enough to take into consideration so many different factors and at the same time it should be narrow enough for you to draw the right comparisons you should not go astray while carrying out those comparisons those have got to be meaningful while you are comparing your brand against competition in terms of maybe qualitative attributes in terms of quantitative things, whatever it is it is the definition of industry which is going to be translated into various ideas which are going to affect the process of planning and we have got to be clear about all those the next one as I pointed out earlier is the industry growth and size we have got to be very clear about the growth patterns that the industry like five years ago was here industry today is here and industry tomorrow which is the end of the planned period that is going to be there how do we fit in how do we fare in relation to the growth of the industry you must know the size of the industry in terms of the total volume if for example you are a manufacturer of televisions and you know that your assembly line can assemble so many televisions on daily basis and therefore so many televisions daily basis daily times 12 so the number of televisions you produce around the year is X and you also know because you are part of the industry or you should know that all other manufacturers your competitors the kinds of production processes the kinds of assembly lines they have their capacities so that you will know the level of volumes meaning all the competitors put together or all the major players if not all the players at least all the major players are producing only then you are in a position to relate yourself to the web competition and only then you can come up with right figures relating your strategic goals I will talk about those like market share how can you work out your market share accurately or realistically unless you know that the total industry is 100 units and you are going to sell 10 only then you will know that your market share is going to be 10% it's not whimsical it has to be worked out on certain basis so the growth factor you know and on the basis of the growth factor you have worked out the size of the industry and on that basis certain figures you should in the same breath I would say figure out the monetary value of the industry meaning if you are selling the 100 televisions every day or whatever the figure is times your selling price you know your revenue you already have figured out the production levels of other players and you know their pricing as well because you are part of the market it is not difficult to work out their revenue levels and therefore you also know the total level of revenues produced by the industry as a whole and only then you can relate yourself with the competition in terms of your share of the market monetarily there may be a case where a company has this level of share of the market in terms of percentage but this level of share of the market in terms of revenues meaning the market share in rupees terms is lower than the market share in volume terms why does that happen or you have the answer to that maybe you are selling at a lower price and probably you are or even if you are selling at the same price maybe your costs are higher I mean your direct costs in relation to distribution and market development and so on and so forth that discussion is there for some other time but this is just to give you an example the difference between two types of market shares the one is in terms of units meaning volume the other is in terms of revenue, rupees these things give us very good leads into the right questions which must be answered while we are collecting data additional data why well we keep talking about that this is another graphic presentation which shows you market shares are three different players and let us assume that these shares represent volumes the company you belong to is the blue one and we are showing the market shares in relation to a planned period which is three years we have the first year we have year two and we have year three you are gaining all this at the expense of company MNP which is 38% in year one and ends up for your planned period the way you look at the industry where 23% it is quite a dip now whether the company is really going down or not that is your projection and that is your vision if it happens the way that you project you really have your finger at the market poles and you really understand your competition if it does not happen that way it is going to be a sort of state of affairs but the point is that you have got to be prepared exactly according to the way you are building up your vision of the industry let us take a brief look at the company ABC it is 29% in year one and it is going to increase its business the way you look at it from 29 to 33% and then at the end of the planned period it stays static it is still sitting with the same market share whether it happens the same way or not again remains to be seen but this is a hypothetical case where the market has a particular size and you are increasing within that market and you are cutting into another company by snatching share from that company only because you happen to be a smarter player than that company how is that happening look at all the variables that I have talked about so far now talking about the overall size the market size sorry not the market size the size of the industry which comprises these three players may not remain the same I mean this was just to show you a hypothetical case and the size of the industry will remain the same only with the share you will recall that we discussed this thing as one of the factors which leads or which has led to brand proliferation we have so many brands on the marketplace because people just don't know how to grow their business and they think by bringing in more brands they can cut into other players market shares maybe this is that kind of a situation but we are talking very hypothetically since it is not the case in most of the cases let us talk about an industry which is growing and that again I explain with the help of another graphic illustration here you see three pies year one, year two and the third one representing year three and you can see as I do the pie relating to year one small the other one bigger and the third one the biggest what is happening is that the market is growing look at the implications you being blue 33% in year one moving to 37% in year two and 44 to year three is one thing but implication is another in terms of revenues and also in terms of units because you are 33% in relation to a certain size of the industry meaning a certain size of the market the next year you have gained another 4% which has brought you to 37% and now this 37% is not out of the number of units which the industry or the market as a whole sold in year one you are into year two so this 37% becomes even more significant for you in other words this might be less harmful for company MNP whose share of the market is decreasing but that share is decreasing in relation to a market which is growing so the share of this company in terms of number of rupees you may not see the size of dip or the downfall which it would have had if the industry overall was not increasing I think with this example we are quite very clear about how should we relate ourselves or how should we stack ourselves up against the competition when it comes to comparisons which should be very meaningful because you are right now in the process of building up your brand vision and the brand vision cannot be correctly translated into financials and into strategic objectives unless you have built your vision very accurately that brings us to the next factor which we call key growth factors now these growth factors are the ones which we have to take into account so that we can answer all the questions which we must answer relating additional data from the industry and let me tell you that these factors are external factors and these are beyond the control of the company at the same time these are the factors which really give an impetus to the market growth and the level of demand is can you think of an example envisioned yourself working for a company that is affected by these growth factors car industry or any other industry that sells consumer durables look at the situations of banks in this country they all have grown they all have improved their services they have offered so many different products so many different financial instruments and products that a common man or a common consumer is in a very good position to afford what he or she could not afford in the years I mean the number of cars that we see on the roads of this country is tremendous it really has grown the number of televisions in our homes this, that and that everything has multiplied this is one of the external factors which is a classic example for the market of Pakistan how industry or how different industries have grown so the question is when you are affected by an external growth factor you have to come up with the right insight you have to have the right insight to be able to have the right vision in order to have the right translation of that vision into the most realistic financial and strategic objectives having done that you are all set to prepare your findings in the form of a report and you take that report back to the top management and you start the process and you tell them that this is the vision that I have developed and on the basis of these findings this is the way we see the brand moving in future years and that sets the process in motion your brand development process is into motion and that automatically will become part of management process having talked about this let me wrap up today's lecture by recapping that we basically talked about how to develop a brand vision which is a part of the overall business decision and after we have had this clear brand vision the stage is all set to developing the brand picture which is the next step toward building the brand management model thank you very much and Allah Hafiz