 Peace be upon you. Welcome to the virtual University of Pakistan. We are into lecture number 15 of brand management, MKT 624. In the previous lecture, we were discussing how to build a brand based customer model. And as you can see from the screen, it is the third step of the second phase of the strategic brand management process. The first being how to develop brand image. The second being how to craft a contract, meaning a brand's contract. And number three, which we are discussing right now, is how to build a brand based customer model. A building a brand based customer model is all about understanding beliefs and behaviors of customers. We have created the right image for the brand. We have developed the right contract for the brand. Meaning we have put into place all the promises which the brand carries and we are confident that those are going to be delivered. Now we are all set to develop the overall model which is going to enable us to sell the brand because that's what the whole thing boils down to. So to be able to sell whatever we have created and the hard work that we have done in terms of the image and the contract and so on and so forth, that is now going to be at work while we develop this model. You will recall that I talked about three fundamental questions which this model addresses. The first being how a consumer or a customer chooses one brand over another. The second being how do we compare our brand with competition or in other words how does our brand stand up against the competition. And the third being what are the possibilities of expansion, extension and growing of a business. I was talking about the first part which the model addresses meaning how does a customer choose one brand over another. And you will recall I talked about very briefly though three different factors which have got to be understood before we start understanding how the brand based model addresses the very fundamental question. Those three factors are understanding customers buying criteria. Number two, rating that criteria. The third one is who are the decision makers. In other words we have got to understand who makes the decisions or who are the influencers toward that decision making process. And that is part of the behavior. Going back to factor number one meaning understanding customer buying criteria. We know that we relate a host of attributes that a brand carries or should carry with the brand itself. And the factors I already have pointed out to you like price, quality, customer service etc etc. These are the factors which have been cited in so many research models. Meaning there has been a lot of research regarding trying to understand what is the customer buying criteria and the factors or the points which I talked about are the ones which have been the result of those various models. One attribute which is implicit among all those is trust. I did not talk about that earlier and trust is something which runs across all of the attributes we are talking about. Let us try to understand how unless we are convinced that a brand is offering very good price we shall not start trusting it. Until the time we are convinced that the brand really is reliable or it is offering us consistent performance we may not trust the brand. Unless we assure that the brand does offer a price value relationship meaning we get full value for the price that we pay we are not going to trust the brand. So trust is something which is an essential ingredient of the whole process meaning of the whole criteria. Until the time we trust the brand we shall not buy that brand and therefore there is a dire need for the brand managers to build that trust. And building that trust is delivering all the promises that the product carries. So it is like going back to what we already have learned and it is a process which goes in circle like this. You have to have the right set of promises and promises are translation of features and attributes and the promises have got to be deliverable. But once those are delivered you have got to make sure that you have the right marketing support systems in place. You have to have the right members of trade who are selling with your brand. You have to have the right logistics to support deliveries of your brand so on and so forth. So all the factors they come into play and they converge at one point where you deliver and you build trust. The next factor toward understanding why or how customers choose to the one brand or the other is rating the criteria that you have just discussed. Rating is all about drawing comparisons to the competition. Until the time that we really can compare the strengths and weaknesses of our brand with those of the competition. We are going to be in the dark where our brand really stands. So what we do is while we rate the criteria we mention a few attributes or a few characteristics that we think are very important to be able to understand the strengths of our brand with the competition. We draw a chart and or it is like a grid. You can see from the screen that we have six or seven criteria for buying starting with price and going right down to price value relationship. And then we have three brands. So what you can do is you can compare your brand which maybe is brand A with two for example major players brand B and brand C. And then you assign weights. You assign weights on a scale of like for example one to five. Five being excellent and one being poor to all the attributes that have to be compared in relation to three different brands. And by assigning these weights you can draw certain conclusions with which brand tops the list of attributes and which brand does not or which are the strengths of one brand and which are not the strengths of another brand. If we concentrate on this rating we can see that we can in the first place look at brand A which we can suppose as ours in terms of all the attributes. And we can go right down vertically right down starting with price down to price value relationship. And we can see that we have a weight of three then five or four three five five three different attributes have been given different weights. Now there is an element of bias here. There is no quantitative method with which you're going to imply in order to assign the weight. Well if you have so much the batter but this is just for the sake of understanding that we assign weights to different attributes that we relate with our brand. We relate the same attributes to brand B and then to brand C. And going from top down we can relate these weights with the attributes and then see where all these three brands stand. We can also draw another comparison which is horizontal and we can compare brand A, B and C in terms of pricing. If you take a look at the price line which is the top row the brand A is three B is four and C is again three. What does that mean? Well what that means is the weight of three represents pricing on a little higher side and that is why you have not assigned a very heavy weight. In case of brand B you have assigned a weight of four which means the price is a little better. And again in terms of brand C the weight is three which can be translated into similarity of pricing patterns between brand A and brand C. So in other words by assigning these weights you can draw comparisons which are vertical and comparisons which are horizontal. The vertical comparisons mean that you compare your own brand or one brand against its own attributes and horizontal comparisons with the mean that you compare with one attribute in relation to all the brands that you are comparing. This is a very interesting rating. What I may suggest to you all is why don't you come up with this kind of a grid, a rating comparison by considering three different brands of any or within any category. A toothpaste for example, biscuits for another example or maybe any other product category and assign weights to different attributes which you think are very essential in relation to those three brands or in relation to your own beliefs. Because it is all about your needs which are to be fulfilled and if you are the customer you should know what are the elements of the criteria which you bring into play while you make a decision to buy a certain brand. This can be a very very interesting and educative exercise and I am sure you are going to enjoy that. This is one of the techniques that you can bring into play in order to compare your brand with other major competitors in order to gauge the strengths and weaknesses of the brands under comparison. The fact remains that determining how consumers choose is much more difficult than we may think. Now this is not to say that we should not carry out the kind of comparisons which I just talked about. What I am talking about here is that behavior of consumers is a very complex thing. It is much less difficult or rather easy to measure the buying patterns of consumers. Meaning how many times in a week for example the buy, what are the quantities they buy in a week or in a month and so on and so forth. But getting into the minds of consumers in terms of their psychology toward making decisions how they buy is very difficult. This is what marketing researchers and psychologists have concluded. Since it is a question of dealing with the human mind, we do not really have the right answers as to how they buy. Researchers go to the extent of saying that you ask questions, beautifully build questions through respondents. They come up with certain answers and you like those answers because you think the responses are very logical. But they also go on to say that those responses do not mean much. Why does that way is not the topic of discussion today but the fact remains it is quite very difficult to determine the actual behavior of consumers. How they develop preferences, how they become brand loyal. What is important here is that we should be able to sell our brand. And whatever efforts we are exerting must lead us toward attainment of one goal and that is we should be able to sell. And toward that market research plays a very important role and it must carry on. Despite the fact that understanding consumer behavior is very difficult, the research must go on. It still gives us a lot of leads, very interesting insights of enormous richness on the basis of which we make our decisions. And our decisions get a lot of confidence because of the findings which we've had through the research. Having said that, let us now talk about a few factors which researchers have concluded form the brand perception. There seems to be the total consensus among the marketing researchers and all the experts who really matter that consumers have a set of perceptions which I am going to discuss one by one, which really come into play while they behave the way they do. Now when I talk about these perceptions with which marketing experts say they should form the basis of our understanding toward knowing how consumers behave. Let me say it once again that the comparisons that we draw or the market research that we carry out in order to the way strength and weaknesses of our brands in relation to others must go on. I mean the process must never stop and the attributes and the weights that we assign to those attributes and the relationships that we draw ahead and there among all the models that I've been discussing about must go on. These brand perceptions are these perceptions on part of the customers toward their branding decisions are some of the fundamentals which all the marketing people, the brand managers in particular must be aware of before they carry out the kind of market research and the comparisons that I talked about. The things that you are doing, the marketing research and comparisons that you are drawing should not stop at all. Along with this, there are a few fundamental findings which if we have the knowledge we will certainly benefit from in order to understand the comparisons that we draw and in order to carry out all the analysis that we are carrying out with the help of our research models. Let us talk about the perceptions to which I have come to be known as the fundamental perceptions to which brand managers must not lose sight of while they are carrying out their own studies or their own research. The foremost perception is that people perceive the brand as a whole. They do not really form their impressions and beliefs analytically on the basis of separate pieces. What does that mean? What that means is that the attributes which they consider before they make up the mind to go for a certain brand they do not really go through a complicated process of all these single attributes one by one. They form an impression as a whole. Now when they form their impression about the brand as a whole, that in itself is a process. And I would say that even if they arrive at a decision in the mind subconsciously the individual or separate pieces meaning separate attributes they do come into play. They are used to brand and you know it carries a good price and it offers a very good price value relationship. It is consistent in performance and it is a good quality brand. So all those factors when they are sitting at the back of your mind it is those factors which are playing all the time in your subconscious and lead you toward making an impression as a whole. So this is a process which is very holistic in nature, holistic H-O-L-I-S-T-I-C which means that the whole is greater than the sum of its parts. Meaning if you have five parts and you assign one number to each the aggregate is five but the impact of that is much greater than five. That is what the holistic approach means. The whole is greater than the sum of its parts. But what really is important here is that the separate pieces which we are talking about and which we talked about earlier do have their own importance. We cannot assume or we cannot state with confidence at all that since consumers have a tendency to develop a concept of the brand as a whole and therefore we should not get into comparisons, we should not look into the attributes one by one and we should not get into weighing the buying criteria. I hope it makes the whole concept very clear now. Because I was talking about on the one hand the importance of carrying out comparisons on the basis of the criteria which you have determined. On the other, I was also talking about with the market researchers or psychologists saying that it is quite very difficult to understand what in actuality is the behavior on part of the customer while they make the decisions to buy certain brands. And toward that they say there are certain fundamental perceptions relating brands which we should understand, whether we must understand. And these put together along with the market research and the comparisons that you have drawn gives you very good leads. We have talked about the first perception. Let us now move on to the second one. Psychologists say that perception is selective. Not all the information that we receive in the marketplace in one way or the other through word of mouth, through advertising, through observation, through talking with people, through any means of communication or observation is not stored in 100%. The process is very selective and when we say selective what it means is that the process goes through a filtering. There are certain elements of information or there are certain informations that we save and there are certain parts of information that we forget and that stands rejected. And if that is the case, the behavior of customers has got to be based on those selections. What those selections are, how those are formed, that is the best part of psychology, but nevertheless we must try to understand what is the marketing part that is absolutely essential for us to understand. And I would divert back to the comparisons and the research models that we have at work because when we put all those together we can draw some very interesting findings and also relate those to the brand perception number two which says perception is selective. I think why I say that we can draw relationships between models I can substantiate this with the help of a concept that you already know. If you try to be at the pinnacle of the value pyramid even if you are not there, you are one of the players who occupy top slot of the value pyramid. I mean there has to be one to seek the which is at the pinnacle and the remaining are around the leader. You all are very important, all major players. I think even if the process is very much subject to selection the chances are those few of you will be retained in the mind of the consumer and those who are not there may be forgotten. So that is the implication. The third perception is or the rule is that consumers perception is the reality. This also has become very very proverbial. Whatever consumers perceive is very important and whatever they perceive is the basis of their beliefs. We cannot say that beliefs of consumers are wrong only because their beliefs do not have a compatibility with what we expect. Meaning if we expect our customers to behave in a certain way or if we expect them to have certain beliefs because we have identified a certain need and we think or we should expect that they must follow a certain behavior in order to satisfy their need that may not be the case. To give you one example we may be selling one of the best quality sandwiches in the world but if the delivery person has a very unhygienic upkeep what is going to be the reaction or what is going to be the perception formed at the customer end the customer is going to think to himself or to herself this is not a good company this is not a quality product and despite the fact that they make very tall claims about being very hygienic in terms of their processes they really are not. So a negative perception is formed which will lead to a negative behavior. So this is what really is meant by consumers perception. We have to have all the elements and all the factors that come into play in delivering all the promises in place unless we have all those in place we may lead our customers into grey areas where negative behavior will be formed on their path. Let us now take a look at the next perception which consumers generally have. It is a variety of factors which come into play while customers gauge different brands and this has a very close relationship with the concept that I discussed earlier relating similarities among different brands. You will recall when I talked about the brand managers and marketing people getting into very similar kind of marketing research models because of the needs which are homogeneous in the marketplace because of the technologies which are very homogeneous because of the marketing setups because of the marketing support systems with all those factors could have so much similarities that all of us carry out marketing research in a way that we all end up with findings which are very similar and based on that we develop products which again are very similar. Look at the cars for example. We tend to say as lay people that since this is the fad or this is the fashion this is something in bold therefore others have to follow. That has some logic to it, no question about that but the fact of the matter is that it is a result of the similarities that we have in the marketplace in relation to all the factors that I talked about. So the customers could have their own ways to judge brands that are similar. So this is the one thing that we have to keep in mind before we move ahead with our own research models meaning a variety of factors come into play while customers judge different brands in the market meaning they weigh one brand against the other and that gives us an understanding of how they behave. Let us now move on to the next perception which psychologists call the magical number 7 plus minus 2, what does that mean? Well that means that human mind has a limited capacity to save information or to store information and they say that we do not really have a capacity higher than storing just about 7 items of similar nature. Let us now refer to two different situations of low involvement and high involvement when it comes to the purchasing process. In terms of low involvement situations in which we buy items of daily use or all items falling under FMCGs, fast moving consumer goods, I told you people or customers do not generally involve themselves in a very complex or in a complex process at all before they make the decision to buy a certain brand and in other situations which are high involvement situations they may involve themselves a little bit in terms of gathering information before they go to the market analyzing that and then going for the purchase. Having had an understanding of that it again becomes very significant that the limited information that customers have in relation to one product category we've got to be a part of that in his mind or her mind. I think it goes without saying that because of that limitation we've got to be one of the players if not the leading player in the category one of the major players that does exist in the minds of the customers. To give you one example from market research studies there are just about 20 to 25% of the customers who go to the supermarket and do not waste any time before they buy a product meaning they do not get involved into any kind of thought process apparently or deliberations before they buy things about 20 to 25%. Now this 25% supposing it is 25 this 25% could be those loyal customers who are in the vicinity of 20% and who are responsible for like 80% of total sales of one brand. You can draw a correlation between these two factors and then there is another finding that there are about 50 to 55% of customers who take about 7 to 8 seconds before they buy a brand that is just about it. So in other words there's a good percentage of the total market meaning about 70, 75%, meaning 3 fourth that is not really involved in a lengthy process of making decisions for buying and it is one of those fundamentals that we have to keep in mind and I think this can be very convincingly related with the models that we've been trying to develop. Again we've got to be one of those few who are the chosen ones or who are the privileged ones in their minds that's the finding of this perception I would say. Another perception which forms this list of fundamentals is that the brand has a personality and that is something all brand managers must keep in mind. This might sound like very familiar and might sound like something which may not be needed for discussion here but this also has to be related to this psychological process that goes on in the minds toward the behavior they show. Consumers can imagine brands that have very distinct personalities with characteristics consumers can describe. We are saying here that consumers conjure up certain images in the minds relating different brands and the images that they have in the minds relate to those brands which have very strong personalities or distinct personalities and it is very obvious that brands that have strong identity are going to be the ones with good personalities. In other words, the stronger the brand identity the stronger is the relationship between the brand and the customer and the customers can also in that case describe various characteristics of that brand. Although this is a universal perception which has to be kept in mind but it does call upon the need for us to have our findings ready and it makes important for us that we do develop features and attributes relating our brands that are very distinct because it is those features and attributes which translate into benefits and are the ones that give brands very strong personalities and strong personalities are remembered. So here again, I am trying to relate these general perceptions with the need to have these sort of comparisons and the small research models that I have been talking about so far. Right back from the images how to develop the brand image and then how to develop a brand's contract and then on to creating a brand based model. So the need to carry out our own research cannot be undermined by the general perceptions that psychologists have presented us with. I would say that these perceptions are the supplements. They are going to supplement our findings. They are going to give us confidence about the findings that we are going to have through our research processes. Therefore, there should be no confusion between whether to keep these perceptions or to go for the research models that we have been discussing in all the lectures that we have had so far. I think that is clear. All right, so we can conclude that consumers have a large amount of information which they get from various sources like a set word of mouth, advertising, their experiences, their observations, advertising, retailers, talking with friends, peers, colleagues, relatives, so on and so forth. The list goes on. There is a lot of information which they receive but there is a limitation to what they can save, what they can store. The remaining information goes out the mind and what is important here is you should not be the one to go out of the mind. You must be the one of those retained in the minds of the customers. That's the implication. Now, having said that, another implication which bears extra significance, I would say, that is in the markets which are so crowded, in the markets which are so complex in terms of all the factors that we have discussed about, because of the competitive nature and because of the selective nature of the process up here, the brand message must be simple and focused. That is another implication that has to be kept in mind in order to be a part of those brands that occupy that limited memory or that limited part of the human mind because we can get there. We have laid the foundation for good positioning of the brand which is a topic of discussion in the next lecture and if you have laid the right foundation for the right positioning of the brand, there is no way that our strategies are not going to be the right ones, they are bound to be the right ones and by keeping the messages simple and focused we keep the beliefs and the behavior of the customers pretty much straightforward. If the message is not simple, the customer is going to be confused. This factor is talked about already. If the message is not focused, it again is going to cause confusion in the customer's mind. The message can be simple, not only through communication but also through the personality of the brand. Communication, like you will recall, is not only verbal, it can also be non-verbal and it is a non-verbal part of communication which you see on the package. You go to the supermarket, you take a look at a brand, it looks into your eyes and tells you to what extent the brand is serious, reliable, appealing, attractive. They will be satisfying also. If you already have some knowledge about that, prior knowledge, the decision is going to be straightforward. That is the implication of all the perceptions that we have discussed. Let us now move on to the third factor which is part of the first question which brand-based model addresses, meaning how do customers choose one brand over the other? We are still talking about that and it is the third factor which addresses that question. That is, who makes the decisions, meaning the buying decisions? This is the factor which is going to facilitate our understanding toward buying behavior. When something is sold in the market, it is not always that the decision that was taken by the customer to buy that particular brand was his or her sold decision. There could be other influencers within the family. I can give you the example of edible oil. When the housewife buys one particular brand of edible oil, it could very well be the decision, the joint decision of the family, taking into account so many different variables. The health factor being the prime factor. And you know what I mean. To talk about the consumer-durable electronics, for example, it could very well be that a couple of the house may have to listen to the wishes of their children before they buy that. The examples in this regard could be endless and I will leave that to your thinking. What is important here is the brand managers must make all those influencers part of the marketing decisions that they make about the brand. In order to qualify the statement that I've made, I will give you the example of a commercial for edible oil or maybe for tea, for example, that shows the whole family. The use of that particular brand makes the whole family happy. And it presents the family with a very pleasing experience. That is why brand managers choose to show all the family members in that kind of a commercial and they know that the decision is not taken by one of the family members. The decision could be a joint decision and therefore the influencers have got to be approached and appealed. Having talked about this factor, our discussion regarding the three factors that address the fundamental question how do consumers buy one brand over the other is complete and that now takes us on to the next question. How does your brand stand up against the competition? This again sounds familiar. Now here we're not going to carry out the kind of comparisons that I've been talking about earlier. It is not a reputation. This is a situation in which you've got to understand from the customer's perspective of course the strengths and weaknesses as understood by the customers and strengths and weaknesses relating not only to your brand but to all the competitive brands. And this in a way is an extension of the comparison that you carried out while you were rating the buying criteria but what is different here is that you've got to refer to all the players of the industry and you've got to take a very hard look at the whole category in which different players are playing their part in so many different meaningful ways. In order to explain this concept in a little detail let me give you the example of the Kola industry. One of the Kola manufacturers followed through with the market research that the immediate competition the company was facing was not from the immediate rival meaning another Kola manufacturer rather it was from plain water. So plain water that you buy in the market and you see in terms of so many different brands also offers stiff competition to Kola drinks in other words. So this is what a meant by comparing traditional and non-traditional competitors with the brands that you have. So you have to look at the whole market meaning the whole category from the customer's point of view the way customers can look at your competitors the way customers perceive with who your competitors are this Kola company they found out through the help of customers by initiating marketing research that it was the plain water which was giving them stiff competition and the fact of the matter is that they devised their strategy not toward their immediate Kola rival they devised a marketing strategy which was meant to win over those customers who preferred water to the Kola drinks. Not caring that the overall business which is going to be generated or which is going to be won over from the other category meaning across the category lines is going to come not only to this Kola drink but may also go to other Kola drinks the company still did go ahead. Now this is the discussion of expanding the category comes in and at the moment it is not the objective to discuss that but the sense of trust upon that let me tell you there are certain situations in which leading in the players get into campaigns which are beneficial for the whole category and all the players of the category benefit and when that happens the leading player who initiated that kind of a campaign does not mind that as long as the leading players business gets to the major part of the incremental business it does happen. Another example which I can give you is that you have to look at the category from the customer's point of view in terms of strengths and weaknesses and in terms of knowing who your real competitors are safety matches versus disposable lighters. The company that is manufacturing matches may not think that they are facing competition from disposable lighters also because they may be thinking all the time that that is a different category or maybe that is an extension of this category but you know those are different kind of customers with different kinds of behavior. When you carry out market research which is focused on those who are the users of matches they might give you certain insights through the answers responses with start link revelations and you might start thinking to yourselves that we have been making a mistake and disposable lighters is not only an extension of this category this is very much part of this category and we just cannot ignore that while we think of different marketing strategies as to how to create more sales because they may be making dent with the sales of safety matches. So these are the two examples which really explain the concept how you compare your brand against competition or how you look at your brand the way it stacks up or stands up against competition from customers perspective as to how does a customer think who your competitors are it is not what you think you have to look at it from the customer's perspective who your competitors are and what are the strengths and weaknesses as understood and envisioned by the customers and for that like I said earlier you have to have very good industry analysis which was part of the overall business management long term plan you will recall that and once you have that kind of insight into the industry of course it goes without saying it gives you another lead to position your brand better into the minds of the customers. The next question which the model addresses is the opportunities for brand growth and expansion the third question which the model addresses is about the market opportunities and further growth how we can identify those opportunities so that we can further grow we can expand within the category or we can expand across the category that is going to be the topic of discussion in the next lecture and Allah Hafiz until then