 As-Salam-Alaikum-Khabaat-e-Nuh-Hazrat, I welcome you to the virtual University of Pakistan, the course is Brand Management, MKT 624, and we are proceeding toward lecture number 14. In the previous lecture number 13, I talked about how to develop a brand's contract, which of course is a set of promises which are a bit delivered at any cost and if those are not delivered, it impacts the brand negatively. Those are the kind of points which I discussed and in the hope that you are very clear about all those, I will start my today's lecture with the underlying principles which I did start talking about yesterday, but I could barely finish the first one when the time ran out. So, let us now talk about the second principle, which is all about creating standardization, meaning all the promises that are delivered to the customers in the marketplace have to be standardized according to some guidelines. The reason, because the amount of activities and actions and tasks that are at hand in order to deliver all the promises are too many and they are complex and they are to be repeated over and over again, day in, day out. So therefore, until the time we standardize the process, there is no way that we can deliver those promises at a consistent level by providing the customers with consistent performance on a daily basis, or in other words, on a consistent, regular basis. How do we go about that and what are those activities? Well, the activities are spread all over the company, starting with operations, meaning the production department, onto logistics and distribution and the marketing, inventory and purchasing and so on and so forth. So the number of tasks that are to be performed are lumped together in doable groups of activities and standards are created for all of you to carry out those tasks on a consistent basis. Now it is obvious that tasks belong to so many different departments and it is not solely the job of the brand manager to develop all those standards. The job of the brand manager is to make sure that all the standards that have been created company-wide come into play while they come into play do not affect the performance of the brand you are responsible for. Having said that, it becomes obvious that all the actions involved from production to delivery of the product to the customer have to be defined according to a set of guidelines, a common set of guidelines with which are to be followed like a religion within the company. And all those standards and all those activities must converge at a point from where the promises can be delivered. Think for a while about translating the promises which you developed in relation to brand XYZ in the fast food area and look at the implications in terms of standards, storage to start with. You have to have a set of standards as to how to store things, standards about cleanliness, standards about the need to have the right level of temperature. If temperature varies what is it that you are supposed to be doing? Because you are supposed to be maintaining quality temperature in order to maintain the right quality of the product. Which is a very important promise. Look at the implication in terms of delivery. You have to have wands, a cold wands which are going to carry all that frozen stuff from the warehouse to the point where sandwiches are going to be made. Now it doesn't end at delivery. It is the way the stuff is going to be taken out of the cold storage put into the van and then defining all those variables which may come into play and affect the quality of the product. So you have to define very explicitly what is it that the company staff is supposed to be doing to make sure that all the ingredients reach their destination by maintaining the same temperature, the same quality temperature which you require. Think of the implication in the area of operations. I did touch upon this in pretty much detail in the last lecture. The standards relating how an order will be entertained, recorded and then delivered and between recording the order and delivering the same your sandwich is going to be made. So what is going to be the procedure which must be standardized? And this is what I talked about industrializing the process. That you make your process so much standardized that everyone knows what is it that he or she is supposed to be doing day in and day out. So that consistency of quality and consistency in relation to all of the aspects can be maintained. You may also look at the implication of this translation of promises into predetermined and predefined standards in terms of delivery. Like no delivery person is going to take more than the prescribed time and in order to achieve that objective, the falling points are to be fulfilled. And you define all the steps. Right from the time the delivery person leaves the place of sandwich making to the place of delivery and then right back to where he left from. So these are a few examples of which explain what is really meant by standardizing the process. What is important is that you have to have a set of common guidelines in relation to all the activities spread all over the company functions just in order to make sure that the converge at one single point from where the promises can be delivered. The reason the brand managers have got to be very sensitive to all these areas meaning the touch points where all of the functions or functional boundaries touch the boundary of brand management is because you are responsible for whatever is happening in the marketplace in terms of image, in terms of levels of associations, in terms of developing the brand contract and in terms of fixing the contract if something has gone wrong. And I did talk about that in the last lecture. That you have to fix all those negative promises which prop up. Having said that, we now move on to the third principle which is that you have to fulfill good promises. Now this might sound like very familiar that I did talk about in the previous lecture as well, but here I'm going to talk about fulfilling the promises as an extension of standardizing the process. Whatever you have standardized, you have standardized that so that positive promises rather all the good promises could be delivered. And the reason I'm talking about this as with a renewed emphasis that many companies take things for granted for the ones processes have been standardized. It breeds kind of complacency. They think to themselves that since we have all the systems and procedures in place there's no way that things will go wrong. And that is where and when things start going wrong. So systems and procedures being in place are no guarantee that all the good promises are going to be fulfilled. And this is what I precisely mean by fulfilling a good promises with the help of standardized procedures. And I also must act to it that in order to take care of that possible complacency, in order to make sure and to pre-empt that nothing of that sort creeps into the procedures and into the daily activities of yours which may impede the performance, you have to be involved. And when I say you what I mean is all the managers, not only brand managers but all the managers from different departments. It is of utmost importance that they involve themselves to make sure that all the systems and procedures are in place and are being well executed. You will again recall that I did lay a lot of emphasis on the area of execution. And I also told you that there are management experts who feel in the present day's context that execution is even more important than strategies. Supposing for a while that this is an overstatement, the fact remains if we are not in a position to execute things right the way those were envisioned as part of the company vision and then as an extension of the brand vision and then as an extension of that a set of promises that what's going to happen then. The implications can be well imagined. So execution which happens every day and every minute is of paramount importance. You make strategies to the ones in a while and you keep your focus on the strategies in terms of execution that those strategies are being implemented in the right way. Whenever you have a feeling that something has gone wrong with execution, you either have to fix the way you execute or you may have to bring about a change in strategies. The fact remains if you are not right on top of things in terms of execution, you will not know what has gone wrong at what time and what are the implications of that in the area of execution or in the area of strategies and the result may well be drifting from strategy to strategy or from one set of execution to another set of execution and therefore execution is of utmost significance. Having said that, I can state with the confidence that the management may have to drift from strategy to strategy and end up not delivering or not fulfilling the promises and I gave you the one example of why management drifts from strategy to strategy. Another example of shifting strategies, if not drifting, shifting strategies could be that the emphasis of management has changed in relation to, for example, improved distribution or in relation to bringing about some kind of change in the distribution systems or in the execution of information systems, maybe you are trying to improve your systems and the improvement has stolen attention of the management in terms of fulfilling the promises first and then paying attention to whatever improvements the management is envisaging. This could very well be the one possibility and therefore the management must prove that they stay committed to the brand vision and anything which may make them drift their attention has to be taken care of and the commitment to the brand vision must take precedence over anything else. Now, this is not to say that all those improvements which are talked about hypothetically, they must not take place. All I'm saying is that the amount of attention which is to be given to the brand in terms of fulfilling the promises has to be given and that is where the commitment of management in terms of the brand vision comes in. That takes us to principle number four, which says uncover bad promises. Now, it is going to make a lot more sense when I started talking about the bad promises in the previous lecture. You will recall, I told you that bad promises or negative promises are not the ones which are incorporated into the brand contract. And brand contract, of course, is not something which is written and then signed between the company and its customers. It is all here and negative promises come up. They crop up during the process of executing good promises. What I was talking about in relation to management commitment. If something goes wrong with execution, it is going to have its ramifications or its consequences in terms of bad promises. Maybe you cannot deliver on time. Remember the need for you to deliver not only in the requisite quantity, but also quality to all the members of the trade. So that they feel comfortable with the levels of inventories they have and then sell as much as they really can to the fullest potential to your customers. If we have a bad promise. Popping up the scene only because something has gone wrong with deliveries or something has gone wrong with the operation, which is not in a position to cope with the growing demand. It is going to translate into a bad promise. So that is how the bad promises come up. The principle relates to fixing that bad promise. If at all a negative or a bad promise has popped up, then US managers have got to make sure not only brand manager, all the managers anywhere in the company, all the managers have got to make sure after identifying the problem area to fix it. So fixing a negative promise is also one of the fundamental principles of creating your brand contract. Brand contract, in other words, is something which is subject to renewal, is subject to improvement and is subject to fixations. And that is something we have to keep in mind. Now, having talked about that, we are not done with all the four principles, the underlying principles, which must guide us while we prepare a brand's contract. After talking about all that, I can summarize the whole discussion in the following words. We can say that we have to understand the good promises. We have to make sure that good promises are deliverable. We also have to make sure that good promises are communicated to the right people, meaning the target audience at the right time. And we must also understand what negative promises are. And we must be prepared to fix those negative promises so that we can renew and rejuvenate our brand's contract. The result will be that your brand's contract is customer driven and operationally achievable. These are two terminologies which are to be underlined, customer driven and operationally achievable. If we really can focus on these two areas, meaning we do not lose sight of what the customer wants and we make sure that whatever the customer wants can be handled in terms of our operations. All the operations, starting from production right down to the delivery, then we have created a contract which is a good contract, which is worth considering, which is worth delivering and which is worth a lot of value. Having said that, we are now done with the second step of developing your brand's picture. I talked about brand's image and now I have completed the discussion on brand's contract. And these two steps, which are part of the second phase of the overall brand management process, meaning brand picture, lay the foundation for the third and the last step of the second phase, which is we have to develop a brand-based customer model. And I think it goes without saying that a brand-based customer model is going to be kind of a capstone, meaning it is going to cap the two fundamental areas that I have talked about so far, brand's image and brand's contract and then lead to developing something which is customer driven. How do we develop that model? Let us talk about that now. The intention of developing a brand-based model is to understand the beliefs and behaviors of customers. And when I say customers, I mean your customers and your competitors' customers. The total body of customers has got to be taken into account while you study their beliefs and behaviors. And you study their beliefs and behaviors in relation to their buying patterns, their buying behavior. Again, buying in terms of your brand and buying in terms of competitors' brands. You've got to study all that. And when I say you've got to study all that, you've got to study all that, making sure at the same time that you are responding to the evolving behavior because behaviors of your customers are changing. And whenever the change, you've got to respond to those. And only that is how you stay contemporary. You will recall that. You'll stay up to date. If you do not stay up to date, competition will take over. And competition will take away your customers. If not all of them, some of them, to your detriment. So what is the answer? The answer is that you try to keep your customers as loyal as you really can. And it is toward that objective that you always try to prove to your customers that their interests, their beliefs and their behaviors are paramount as far as you are concerned. And therefore, you are providing them with the point of difference, the added attributes, the advantages and the benefits which they perceive as added. If you succeed in that, well, you have done the job. But do not lose sight of the fact that everybody else is also doing that. If you are doing that, sitting in your company, somebody else, another brand manager, or the team of managers, they are doing the same job for their company, what is the result? This leads to the problem in the area of differentiation. The differentiation that you have or one brand has, that gets erased. And when there is no differentiation between different brands, I think it should become difficult for the one brand to excel in relation to the other. Where does the answer lie? Well, the answer lies in keeping your brand as up to date as possible because that's all you can do. And keep occupying the pinnacle at the value pyramid. Staying at the pinnacle of the pyramid involves the process of continuously renewing the brand difference. But I will revert back to the same problem which occurs in relation to similarities which are created because of similar actions on part of all the players within the marketplace. This is something we must talk about because this has taken on added significance in present days for the marketing setup because of the developments that are taking place technologically, because of the developments that are taking place in terms of knowledge in so many different areas. And therefore it becomes very important for us to keep occupying the pinnacle at the value pyramid and not only occupy that and keep occupying that, rather to be the first one to reach there. And this is where the concept of positioning comes in of which I will talk about in detail later. But the need for us is to get to the pinnacle as soon as possible so that others who are following when they reach there, we have a better emotional relationship with our customers. The renewal of differences or the point of difference is something which really rejuvenates the brand. And that renewal is not something which must all the time come through some kind of added benefit in relation to the tangible nature of the product, meaning adding benefits. If you already occupy the position which I was talking about, meaning the pinnacle, you can get into things like improved distribution systems. You can make sure that the product is available to your customers in ways which are improvised and which are better than before. This is one example. Or else, you can do something internally in order to have a competitive advantage. You can do something with the costs, not compromising your quality at all, and then be prepared to go for further communications and keep your customers loyal and keep your customers hooked onto your brand. Now talking about the brand loyalty, I would like to talk about one factor which is very interesting and fascinating and that is not to divert your attention from the fact or facts I've been talking about so far, meaning developing brand loyalty, developing very high levels of associations so that customers could become so brand loyal that they do not go elsewhere. There is another viewpoint to all this discussion. But before we talk about that viewpoint, it was imperative that we have a very clear understanding of what brand loyalty is and what are the different levels of associations which lead to brand loyalty and which really trigger the final action on part of the consumers to the value of brand. Anyway, the point I really want to come to is the brand loyalty is not 100%. And I would say it again, this is a very exciting kind of discussion. It is not 100%. There is total agreement among all marketing experts that the number of brand loyal customers, maybe in the vicinity of like in a 20% of the total market, meaning if the total audience is 100, out of those 100, plenty are those who really are very brand loyal and account for 80% of your sales, or in other words, 80% of total purchases. It is said that most of the customers have different levels of preferences and they bring into play those preferences in relation to buying different brands at different times. Again, I would point out not all of them, 80% of them. It is also said that the process of buying which you learned during your basic marketing course, drawing attention and then creating interest and then developing a desire on part of the consumer to buy your brand and then making sure that the consumer takes the action which means that the consumer buys is rather cumbersome. It's a long process and customers may not be going through such a complex process while a customer is just about to buy something. So there are authors who say that there basically are two different kinds of situations. The one is a low involvement situation and the other is a high involvement situation. The low involvement situation is the one in which you go to a supermarket and you have to buy something which can be classified as a convenience item. A toothpaste, for example, or a shave cream, for example, or maybe a bath soap, for example, a pack of biscuits, for example. You do not go through a very complex process of position making which leads you to arrive at a position of buying a certain brand. Since you have gone to the supermarket with certain preferences, you may buy something in which you either had not thought about earlier or you may buy something in which you already have in your mind. The process is what the marketing experts call a low involvement process. The other is the high involvement process which means there are situations where you do not really involve yourself too much and your involvement is low. This is a situation relating to consumer items of daily use or what you call FMCGs, fast-moving consumer goods. You have gone to supermarket to buy a bath soap, a shave cream, a toothpaste, something of that sort. You do not really involve yourself very, very deeply before you make the final decision. You have gone to the supermarket either with predetermined notions and you know which brand you're gonna buy or you go there with a set of preferences and depending on this spot of the moment you pick one of those. Whatever variables or factors come into play that is a separate issue but the fact remains that you do not really involve yourself too much before you make that decision. The other situation is in which you like to generate and add so much information to your knowledge which you already have about the brand you're gonna buy and this may be true in relation to consumer durables like whether you are wanting to buy a car or a motorbike or some electronics. You talk with people you know, you collect information, you go to the market, talk with the salespeople and after developing a certain level of knowledge about that product or that brand, then you buy it. So that is a situation in which you may call a situation that where you, a situation of high involvement. The fact remains that where I started talking about these two situations and where I started talking about the viewpoint which many marketing experts have is that I was talking about consumer preferences. I was talking about renewing or continuously renewing the point of difference in order to keep staying at the pinnacle of the value pyramid and I also asked a question, how do you do that? The answer is that you keep occupying that position and you can keep occupying that position only if you keep renewing that point of difference and you renew that point of difference not only by adding certain tangible attributes but by bringing about certain improvements which stem from your total marketing support systems and I already have given you examples. This couples with the fact that 80% of the consumers have different preferences. They're not very brand loyal and they do not go to the market with the mind fully made up even if they run into a situation of very high involvement. High involvement comes in relation to having more information about products and then selecting a brand out of those. So preferences along with your defining the point of difference on a continual basis make things workable for you all brand managers working for different companies to go for the kind of market share that you're wanting to have. In order to make it simple, I will rephrase the whole concept. You have loyal customers who account for 80% of your sales. So whatever communication that you have is primarily directed toward those people because you do not really want to lose them and they are so loyal. It is very difficult to dislodge those customers and it is very difficult for competition to win them over and vice versa. Equally difficult for you to win over loyal customers of your competition. The other situation is that you have 80% of the customers who are not brand loyal but they have different preferences. Good and lucky for all the marketing people because the total market share that you're going to have is going to come to you from the brand loyal customers and from those customers who have different preferences. So you have to play with those preferences. You have to make sure that whatever communication that you have may be primarily directed toward your brand loyal customers but also must work for those who have different preferences. And these preferences have got to be related with two fundamental mechanics of marketing which are awareness and trial. You create awareness with the help of communication and those who were not aware earlier or communication has worked in one way or the other in a positive way and they want to try your brand. And you hope that their trial will lead to repeat purchase and that's where the trick is to mark your brand and that has added to the sales which already are taking place in the market on part of the brand loyal customers. So in other words, the total market share that you have is a function of sales which are coming to your brand or which are coming to your company through your brand loyal customers and those who have different preferences. And all your marketing effort is toward winning our customers who have different preferences. I think it is very obvious if 100% of customers were brand loyal it would create difficulties for all of us because those who are buying our brand they will not go elsewhere and we have a certain level of volume it will not grow further and same is the case with competition. I hope it is clear. Now, the reason I gave you this example and kind of diverged into this area in the first place I really wanted you to have a viewpoint which is shared by so many marketing experts and you must also share that lest you are focused on one particular set of thinking, one particular set of conceptual thinking. You should also have the other point of view for your analytical benefit. Just to substantiate what I've said, let me show you a very fascinating kind of screen with which is based on research findings and this research was carried out for the back in 1989 in the United States and whatever the findings are I would presume those are applicable to all the markets anywhere in the world. Let's take a look at this screen. It is very obvious that we have 12 different categories or 12 different products falling into 12 different categories in this illustration. Starting with jeans to televisions to soft drinks to shampoos to perfumes to cars onto detergents to bath soap to coffee to toothpaste to mayonnaise and cigarettes. It is very interesting to notice that jeans have the lowest level of brand loyal customers. This illustration is about the level of users who are loyal to one brand. And when I say or when you see the figure of 33 inside that small bar which represents jeans, it means that all the people who buy jeans, 33 out of those are loyal to one brand. Who are the others? The others have different preferences. I mean, next time get the one customer who has bought brand X of jeans may again buy the same brand but technically he's not brand loyal because that's what he has said and that is the research finding and the finding is based on certain logic, of course. Look at television, 35% soft drinks, 44 and the scale goes on in accession. Look at soft drinks, it is 44%. The scale goes on and on and all the categories are products that you see as the scale moves rightwards. You see a higher level of loyal customers and it is very interesting to note that the highest level of loyal customers relates to cigarettes and maybe this is because of the fact that many smokers do not really have too many different preferences. They are very, very brand loyal. If you go backwards, you will see the Mione's is the second has the second highest level of loyal customers and toothpaste has the third highest. The intention of showing you this screen is to let you know that not 100% of the customers are brand loyal and I think it also leads us to a very interesting conclusion that if all of the customers, meaning all 100% of the customers were brand loyal, it would be very hard to win over customers from each other and therefore you must understand the concept of preferences and therefore I said that the point of difference that you have created and the point of difference that you must keep on creating on an iterative basis is the one that brings you additional customers. Even if the sales volumes stay static, what is happening is some customers are new to your brand because some of your customers have gone to some other brand and this is one of the prime reasons when you carry out marketing research, you study not only your own brand but you also study brands of your competitors and this is why you like to know how your brand stands up against competition and this also explains the concept of so many similarities among so many different brands because of the similarities of the marketplace and because of the similarities of the knowledge that we all have and because of the similarities in our approach toward carrying out the market research and because of the similarities of the findings which are the results of all the designs that different marketing teams have at work. Still, you have to have a point of difference somewhere. Like I said, if not in a very tangible way, maybe in some other ways, in providing the service, for example, having said that, we now move on to the model. What is it that addresses? Meaning the brand-based customer model. The brand-based customer model basically deals with how and what. It addresses three primary questions. One is, how does a customer choose one brand over the other? How does a customer measure your brand against the other? Or this can be rephrased like, how does your brand stand up against competition? So these two questions which the model addresses relate to the how part. The third question which the model addresses is the what part. What are the opportunities of expansion and growth? I think it becomes obvious once we have the answers to the first two questions which relate the how part we would know about the areas where there are opportunities to grow the brand, to expand. Let us discuss these questions one by one. First of all, how does a customer choose one brand over the other? In order to understand that, we have to understand one more fundamental, I would say, and that is we must know what basically is the buying criteria. How that buying criteria can be rated? It is upon the brand managers or the marketing people to rate that buying criteria. I will talk about these factors one by one. And the third one is we must know who makes buying decisions. I will repeat, I'm talking about free criteria. First criterion being what in actuality is the buying criteria? Or let's put it this way, there are three factors. The first factor is what is the buying criteria? The second factor is how to rate that criteria? And the third one is who makes the buying decisions? And these three factors put together lead to the answer which I raised earlier. How does a customer buy one brand over another? Let us take a look at the buying criteria. The buying criteria relates different attributes which a brand carries with it. And those attributes are the things which you have learned already. So many different basic factors and attributes and features that we have been talking about all along the course so far. And those could be in a good price and good quality and reliability and so on and so forth. But let us try to take a look at those one by one in relation to a research finding. Again, I'm going to talk about those attributes which a research has shown us are the main attributes that form a customer buying criteria. The meaning, different products across categories that went bought by different customers. These are the factors or these are the attributes which come into play before you make the decision to buy one certain brand. And those are high quality and reliability, consistent performance. I think it is very important for a product to offer you consistent performance. If it does not, you may not buy that the next time. So this is an attribute which makes products as subject of the brand loyalty. And this is an area which makes products subject of the high brand preference. The third one is familiarity. Customers have got to be familiar with the product and this is a function of availability of a product and the communication that you kick off from time to time. And that is how the people become familiar. They start using the brand and that leads to familiarity. The other one is availability and convenience. There's no way that a brand can make its place in the market and it plays in the heart of the customers if it is not freely available and it does not really address the problem of convenience or the problem of absence of convenience. The other one is the price value relationship. Most customers try to develop a relationship between the price they pay for the brand and the value they get out of that. And that is why so many campaigns are focused on you get the best value for your money. Not only very formal campaigns, but you walk into a very informal kind of a family restaurant. They also have these kind of banners placed inside and you may also see these kind of banners at so many different places selling different items or different products and brands. The other one is the fit of the brand with customer personality. And this is where these psychographics comes in. And this may relate to things like the motorbikes and cars and other consumer doodables. Maybe wrist watch for example. The other one is the ability to solve a customer problem. Like I said earlier, if a customer has a problem that he needs a certain kind of a product. I'm not talking of brand. A certain kind of a product which is not really available very close to where the customer is and your brand reaches there, it solves the one particular problem. There could be other problems and I leave those to your imagination. Because by now I think you are, if not half, one quarter of the brand managers. I would assume so. The other one is customer service. This is extremely important in relation to those brands which also involve service as part of the total the sales process. Like company XYZ, the selling sandwiches or any fast food setup. Not only they are selling a tangible product they're also selling service and service maybe takes precedence over product at times. Anyway, the other one is the advertising. The advertising we all know that plays a very significant role in the lives of brands and also in our lives. It is a vehicle which brings brands close to us and vice versa. Even a lay person can really understand the significance of this factor. But we shall talk about this in more detail so that when we are in the process of developing a brand plan just like we develop a brand contract. But so far so good. The number of factors that I've talked about have been determined as the basic attributes of the forming customer criteria toward buying one particular brand and the brand may fall in any category. Keep that in mind. Now this is the first point or the first factor toward understanding the very first question which the brand based model addresses. And the question is don't lose sight of that. The question is how does a customer buy one brand over another? Meaning why is it that he has or he develops a certain preferential attitude toward buying one particular brand and not the other? And toward answer to that question I started talking about three criteria or three different factors. The first being buying criteria and toward that criteria I've talked about a number of attributes to which are the constituents of that with the buying criteria. And don't forget this is a research finding meaning it is serious and this can be applied to any category of products. Having said that, I will continue with my lecture with this discussion in the next one. Allah Hafiz, until then.