 As-Salaam-Alaikum Wa-Alaikum Wa-Alaikum Wa-Alaikum I welcome you to the virtual University of Pakistan. The course is Brand Management, MKT 624. And we are into lecture number 13. In the last lecture number 12, I talked about the concept of brand contract. Which means that we are passing through the second step of the second phase of the strategic brand management process. If you take a look at the screen, you will see that there are three steps in this phase. Starting with creating your brand image, about which we are very clear by now. The second step we are still talking about is developing your brand contract. And the third one is, which I shall be talking in the next lecture perhaps. Creating a customer based brand model. So we are still passing through the second step. And in the hope that our understanding of the brand contract's definition is very clear. Because all the points that I discussed in the previous lecture converged upon a very explicit definition which talks about a brand contract being a set of promises that have to be fulfilled. And these promises or a set of these promises is created internally, meaning within the company. Having everyone together. Coming up with all the attributes and features. Making sure that they become deliverable. And then seeing to it that that set of promises created by the company internally is validated by the consumers in the market. Consumers will endorse the brand contract which they have gotten into, which I will repeat is an economic contract. It's not a legal contract. And it has ethical overtones from the company's point of view and emotional overtones from the consumers or the customer's point of view. What it boils down to is that this contract is to be upheld so that consumers do not lose the levels of associations that they have developed toward your brand. So any promises that the company cannot deliver must not be a part of the contract. A company can get into two different kinds of situations. One is that the company knows that one particular promise is not deliverable in yet in an implicit manner or at times also in explicit manner. The company does talk about that promise and the promise doesn't get delivered bringing the brand a bad name meaning lost sales, tarnished image, so on and so forth. But the consequences could be your guess is as good as mine. The second situation a company might find itself in is that it knows very well that a certain promise cannot be delivered meaning that a certain benefit is not part of the product's attributes. It doesn't stem from the basic features so why talk about that? Such companies are very realistic and prudent companies and they do not talk about those negative promises. To have a clear understanding of promises we must know that there are promises which are implicit and there are promises that are explicit. What are implicit promises? I hope you do understand what is meant by implicit. Implicit means that something is present in the product and yet it is not visible. So in other words when a company chooses not to talk about the implicit promises it takes it for granted that these promises are very much deliverable and our consumers are so loyal to the product that they know that these promises are being delivered day in day out. I'll give you an example of a product, tea. The aroma smell which you get you take it for granted that it has to be good. The color it is again one of those implicit things I mean it goes without saying in the communications that the color should be good. Now these implicit promises also are relative. If we are talking of a brand which is very well established and which has a very loyal following and it is at the pinnacle of the value pyramid then of course these promises are very implicit like I have explained. Let's talk about a company or a new entrant which is trying to enter the market or which has just entered the market and this brand would like to make its presence known and this brand doesn't want to leave anything to customers or consumers imagination. The brand may start talking in very explicit terms about the benefits or about the promises it carries and it is sure about delivering. It may start talking about the same things with which for brand A are very implicit for brand B may become explicit because brand B thinks I would not like to leave anything to customers imagination and therefore I would like them to know that I also carry a beautiful color and a beautiful smell and also good taste. So this brand is being very explicit in terms of its communication of the promises it carries. Another example which is an extension of the same concept which I'm talking about is the taste. Now taste is something which could be a function of so many different variables. The aroma, the color that we've talked about and other variables that come into play could be the source meaning where tea is planted. I mean the source country and then you see the blending which has taken place at the end of packaging or processing whatever you may call it. Therefore brand B may also need the feel to talk about the taste as well and it is because of that reason that you hear companies dealing in these kind of products talking about the source country fresh from the fields of such and such country just to give you one example. Another example could be any technological development taking place in a category which is technology intensive. For example VTI engine. Another one comes into the market with a leaded up engine and they start talking about VVTI. So what I'm saying is there's certain things the certain promises rather which have to be expressed very explicitly and they must become part of the communication not leaving anything to customers imagination and judgment. It has to be the brand managers and marketing managers that have to make sure that any promises that will bring the brand certain benefits in terms of pushing it upwards the value pyramid have to be talked about very explicitly. Now let us talk about the negative promises. I said we should not talk about the negative promises but then there are situations where brands do carry negative promises having said that it doesn't mean that we incorporate as part of the brand contract that certain things are negative and therefore therefore the negative part of the contract. It is not that negative promises do crop up during so many different situations. You you're trying to deliver all the positive promises in the hope that they are going to bring you a higher level of sales not only associations because when we talk of associations and different levels and emotional values and so on and so forth we are basically talking about increasing sales that's what the whole thing boils down to. So situations where negative promises crop up could be explained with the help of a couple of examples to give you an example from the auto industry let us assume that a company is talking about the 3S and it is very proud of the fact that it is offering 3S service meaning sales service meaning after sales and SPIRS and of course when company talks about SPIRS I mean the third S it is talking about free availability and maybe also at a price which is very customer friendly. Think about the same company falling short on that promise not being able to provide you with the kind of service which you expect. This is where I'm talking about customers expectations also and this is one of the questions in so many different the marketing research models whether it is the image or development of the brand contract or something else which we're going to discuss and talk about later in the forthcoming lectures. Anyway getting back to the 3S company falling short on the promise what's going to happen it's not in a position to provide you with the right kind of service well I shouldn't say right kind of service maybe the company is providing you with the right kind of service but maybe the problem is of accessibility the service centers the company has are too few and you have to log a long distance to get there and then queues and then waiting in hours and hours what's going to happen it's going to put you off maybe you are a loyal customer or a friendly customer you know who has bought the brand but you may start talking negatively about the service the level of service they're providing to their customers and the word of mouth carries very heavyweight kind of repercussions anyone hearing that may start considering another model about which he or she perceives that that model offers a better service and perception is stronger than reality it is very proverbial in the world of marketing and perception being stronger than reality that potential customer of brand A of your car is going to go to somebody else and buy brand B so this is one of the repercussions the company does not even know that it has lost one of its potential customers the problem may also when i say a problem what i mean is a negative promise a negative promise may also crop up in the area of spares it's a very important area what are the spare parts are not available or even if they are they are available at prices higher or beyond the range which the customer perceives it again is a question of perception so the repercussions of the falling shot on the promise which is a very significant promise in terms of the car industry offer that motorbike industry carries the kind of implications which you as brand managers would like to avoid and you must because you want to uphold the contract let me give you another example to make the concept even more clear let us talk about a cellular phone company talking about a new campaign offering low rates at a certain time of the day or night and motivating you or rather prompting you into using your telephone more and more because what they are selling is time they're selling time so they want you to use that time more and more they have offered discount rates at a certain time of the day and they also say very explicitly that you will enjoy using this service even if they do not talk about that the overall advertising campaign might very implicitly carry this promise that while using this service you're going to be very comfortable take it for granted rest assured so what's going to happen if the company falls short on the promise why because the company may not be in a position to cope with the growing demand which has stemmed from the promotion they have offered the result is people cannot even talk with each other at least they were talking comfortably before at a higher price they were paying but now they are getting frustrated and they're desperate they're talking with other companies into getting new connections and the process goes on meaning bad promises playing their part and dissuading or putting off their existing customers and also potential customers with the help of these examples I think it should become very clear the significance of being able to deliver your promises meaning all the positive promises and anything which you think may go wrong it will as they say as a proverb and you've got to be very sensitive that is a crux of the matter you've got to stay very sensitive to that kind of a possibility that kind of an eventuality and at any cost must try to avoid that however if you have gotten into that kind of a situation then as a good company or as part of good management you must try to fix that fixing the problem is the name of the game in that kind of situation you have to uphold the contract you know that now about fixing the negative promise let me add one point here which might sound kind of diverging from the main topic but i think it is very important to talk about it does have relevance here strong brands meaning which are very valuable and powerful they have a lot of flexibility and resilience to bounce back if negative promises are fixed it is because of that reason that companies try so very hard to hit the pinnacle of the value pyramid because when they are there the emotional connection that's been established between the brand and the customer binds the two for a long time because the brand contract is created it is established and it becomes very difficult for competitors to dislodge you if you occupy that position now i'm talking about a hypothetical situation where your brand which is at the pinnacle has run into a certain problem and it has started offering negative promise or promises and you are there to fix the situation the situation might have might have arisen in the operations area in the distribution area or before that logistics area marketing support services area whatever it is the problem has to be identified to be fixed let's talking about the resilience or the flexibility that strong brands have to bounce back the association is so strong that even if you have gotten into that kind of a tough and difficult situation your customers do wait in in many many situations they do wait for you to fix the problem because they have become loyal to the point that they know that the next introduction that you are going to come up with in the market is going to be with improved benefits and with the eradication of the problem that they have been facing or with the eradication of the negative promise which the product started carrying there could be so many examples and together without naming the brands there are examples in the auto industries that a car model ran into certain problems and people that were kind of very surprised and they were disappointed that this company which has had such a tremendous reputation in terms of quality and upholding their contract while consumers do not talk in that terminology that the company is upholding the contract or not this is I talking with you but who are all professionals in the making so customers start talking about in these terms that the company which has had such a tremendous reputation has run into this kind of a problem and this could be one of those odd cases and we are sure that the company will bounce back and they will come up with something which is without this problem people are so brand loyal this is debatable I will talk about this also later but for the time being let's assume that some of the customers are so brand loyal that they get into arguments with other customers who are their peers friends relatives colleagues whoever who are followers of other brands and they make statements like very fancy and fascinating statements like wait until you know this company comes up with the eradicated model and then you will know why my brand is superior to yours the point is that the brand contract has got to be upheld at any cost if a company is not in a position to fix the problem immediately the company must start working on that and must engage all the resources all the colleagues all the peers take into confidence all the stakeholders to let everybody know how the company plans to fix the problem because the contract that's been established has to be fixed suppose it is not a situation where you're fixing the problem you're just wanting to improve you still have to go through all these phases you still have to talk with all these people I've talked about and come up with a contract which is worth considering on part of the customers so until the shortcomings are removed the contract is not complete or in other words the contract is not strong why because it is going to be validated it is going to be endorsed by the customers in the market you and I may say anything about the brand that we have introduced but people in the market until the time they say yeah we understand this benefit and we know this advantage is very weighty and they love it until that time we cannot say that the contract created by us internally is endorsed and is approved having said that let us now take a look at a hypothetical brand contract let us assume that we are building this contract for people within the company with its ultimate destination in the market it is destined for the market because it is destined to be translated into benefits associations and then for endorsement and validation this contract is about the same company x y z that decided to come into the market of fast food now there is a subtle nuance or a subtle difference here because i'm talking about accompanying the witches coming into the market and we also keep talking about brands which are established so whether it is coming into the market or it is established you will know the way to make changes with words when it comes to developing the contract internally first of course so do not get confused by the fact that this company is stepping into the market trying to have a step in the door with another brand which already exists and being maintained by the brand managers and its respective company okay let's take a look at the screen and we talk about the brand contract point by point let us assume that all of us you and i are part of this company and have developed this contract the company is saying we promise to offer you meaning the company is talking with the consumers or the customers it promises to offer you world-class quality of meat and a compatible level of breads companies selling sandwiches the major ingredients are the meats and the breads of course they also have other condiments which also take on a lot of significance but this is a promise which the company is making with its customers that we are offering you world-class meat and compatible levels of breads meaning the meats could be imported because the world-class even if they're not imported they are of very high quality and if we talk of the meats of being so high quality we're also talking in the same breadth of the breads that we're using and we say they're also good don't misunderstand that only meat is a quality product and the bread is not promise number one now let's go on to next promise promise number two we all know that the meats which are used by fast food companies are frozen meats whether they are procured locally or imported from foreign markets they have to be maintained at a certain temperature which is very low temperature and even if the customers are not mindful of that it is the responsibility of the brand managers to let it be known as part of the product makeup or the brand makeup that this is the kind of process which is involved in maintaining the meats which we say are of world quality so we are telling them or we are communicating with them that the company maintains all the critical control points involved in maintaining the minus 20 degree temperature so in other words we're also educating the customers that it is minus 20 degrees Celsius temperature which is required to carry the stuff that we use for the sandwiches and the customers might have this question flashing into the mines if it is that way what if the meats are imported how do you make sure or how does the company make sure that whatever comes their way passes through all the phases about which standards of temperature are fully adhered to this is the responsibility of the company not to get into all the details or not to get into all the phases or stages which are involved from the point of the supplier right down to the point of consumption no what i'm saying is that the company must talk about maintaining certain standards which give the product a certain level of quality and it is toward that that the company is talking about maintaining the minus 20 degree temperature so this shows seriousness on part of the company regarding maintenance of quality levels they're talking of quality temperature which lead to quality product they're not going to get something which is stale and that's the reason that when you go to these fast food joints you don't find sandwiches which taste stale or which smell bad i don't think it ever happens that way and if it happens that way that becomes a negative promise and then you see as a brand manager whereas one of the managers of the company you have to identify what is wrong where another promise which the company xyz has decided to make because they think it carries a lot of weight and it will translate into certain benefits and therefore it is very important for the customers to know what we have to offer the company says all other condiments meaning all other ingredients which go as part of the eatable things have been selected with the sophistication of a world-class chef for your eating pleasure the company is making a statement the company is telling its customers that we going to see to it that you are pleased with the experience of eating and the technical expertise that we employ toward creating all this is from a person who is like an international chef okay another promise which company xyz has decided to make the company says our area of operation meaning the kitchen wherever this company is is so neat that if you were to see that you would like to over indulge into eating and come back to us over and over again this might sound like an overstatement you might start arguing or you might start questioning the ability of the company to be able to do all that it is creating kind of a challenge for the customers that something they have the process they have at work which they're very proud to have maintained with full planliness is so world-class and is so good that any one of you if had seen that would come back to the company and buy sandwich over and over again so the significance of this promises that the company must carry this promise and the company must do all that it takes to maintain what the company is promising it must be very clean in terms of its operations because there could be a strong possibility someone calling you and requesting you to walk into your kitchen just to see or just to reassure that whatever you're claiming is right now you might start questioning is it that we publicize this contract wait until i'm done with the contract and then i will start talking about that point as well another promise which the company might make is we undertake to deliver the order within 30 minutes this is a very strong commitment now the company is talking about part of the company's vision when it envisioned the product in this category and thought to itself that delivering sandwiches directly to customers right at their doorstep is not a bad idea because it is going to provide customers with a new experience it is going to revolutionize the service not that nobody else is doing this kind of business not that nobody else is offering this kind of service it is that the sum of all the variables that some of all the promises that your brand carries is going to be so attractive for the customer that when you provide the customer with your sandwich within 30 minutes it is going to revolutionize the service the implication here again is does the company have the operational ability to do that has it really trained its people to be that quick and that efficient has it taken into account the extraneous factors meaning the traffic jams and so on and so forth it boils down to the area of operational efficiencies can the company achieve all that well if the company can the promise is delivered and if this kind of a promise is delivered along with the ones I've talked about earlier then I think the company is on its way to developing very strong associations with its customers and going to give the competition hard time but then it is through this process of delivering promises that negative promises crop up like I told you earlier negative promises are not something which you deliberately incorporate as part of the contract they crop up because of certain inabilities because of certain basic competencies going wrong going going going going straight you know here and there not leaving the company total room for being able to deliver all the company ambitions to deliver not only a sandwich in 30 minutes meaning all the promises the next promise the company is making with its customers is our staff the company saying our staff is efficient skillful and courteous who deliver on time with a smile what if that is not the case not everybody is courteous but then it is the objective of the company to make sure that staff members who are part of the delivery team really are very courteous and also those who are entertaining orders or the ordering system and those who deliver they must deliver with a smile on their face even if they've had an accident on their way this also is part of service marketing and I think we shall recall that talking about company XYZ or brand XYZ we are talking about two different parts or two very important pillars of the area of marketing meaning product marketing and also service marketing this is a very interesting case this hypothetical case that I'm talking with you for the last so many lectures because it takes into account not only the product meaning the tangible product but also the intangible part which is provision of service and hence service marketing so the company has got to make sure that service marketing part is well taken care of and to be able to do that they have to do some internal marketing and internal marketing is all about training is all about motivating people is all about educating them about the significance of being courteous delivery under such circumstances either makes the brand or breaks the brand that's the one tough thing about service marketing like a tangible product it cannot have a very uniform level of quality you and I are buying a package a package of biscuits for example and we know it's it's a very high quality one pack that we buy today is like the one that we bought yesterday for example so the tangible products which are a result of an assembly line process are very different from those products which are delivered as a service because humans are involved and humans being the most complex thing on this planet are difficult to understand they behave difficult in a difficult way at many occasions so it is the one of the prime objectives of the brand management team to take it up with their counterparts on the operations side who really can train their people in a way that curtsy becomes the hallmark of the company I said it is here that brand managers because they must take up the matter with their counterparts on the operations side I'm talking about the touch points I'm talking about the interfaces that brand management has with other functions and I think it goes without saying that all functions because they're within a company are interfaced they all have touch points or contact points with the touch each other and it is at those boundaries or it is at those borders that we have to see that the transition or going across the function lines is smooth and without any disturbances otherwise those will cause distortions of brand character further explaining of this concept what if the brand manager is crying his head out for god's sake do something about the service which is not good and our brand is getting a tarnished image and the person on the operations side not being able to fix the problem it will lead to a tussle which can go on and if it goes on for a long time or for a longer time implications can be well imagined another promise which the company might make with its customers is we claim to have revolutionized the lunch service by offering a unique product that couples efficient service and hence offer you a unique experience now this is a promise which takes into its fold all the points that i already have talked about so you can look upon this as kind of a summary of all the points or the implications that i've talked about in relation to all the points while taking a look at this promise another promise that the company might make or rather the company is making because it's part of the contract with its customers is the value for money that we offer is second to none now here the company is making a claim it's a tall claim but then you know that the strategy to the which emanated from segmentation and differentiation very well supports this claim you started with a segment and you started with a price quality index if you recall that illustration you started with the premise that the price is going to be very consumer friendly it is going to be competitive whereas the quality of the sandwich is going to be at the highest level which is the benchmark of the market at the moment now if the company is in a position to do all that meaning is in a position to deliver all those promises then i would say the company is doing a wonderful job and i would say the company is well on its way to achieving a good level of or a decent level of market share by attracting customers who are going to talk about the brand in positive terms and by word of mouth the word is going to spread and so on and so forth having talked about the promises which form the contract or rather which have formed the brand contract of brand x y c in the fast food area we now must understand what are the principles or what are the fundamentals that should be at work in order to develop this kind of a contract well the principles are pretty straightforward principle number one is that you've got to look at the promises from the customer's perspective and this is something which i keep talking about whether i'm talking about the image building or i'm talking about the the brand contract or i'm talking about things which precede the development of image and all that it is the perspective of the customer that we must never lose sight of we must understand the expectations that the customer has because we are entering the market and we are going to win our customers who have been used to our competitor's products and we would like them to switch to our brand whether those customers are going to come from segment five which is the top segment of the market at the moment going back to the illustration or that they're going to come to our brand from segment three or maybe segment two because they think the value for money this brand offers is absolutely exceptional because the price they're offering is like very low in relation to the quality it should have been like maybe you know hundred and fifty in the whereas they're selling at rupees 80 only so when the consumers start talking so positively about a brand you can well imagine the level of validation and endorsement your brand is generating in the marketplace so this is what you have to understand from consumers perspective meaning what are the expectations and what is it that he or she is expecting from the competition and what is it that they will expect from your brand if they decide to switch over all the attributes and all the features that you have built into the product have got to be fully related with the characteristics of the segment you're going to operate in and it goes without saying when you started by having that illustration with which described all the price quality indexes that you were quite very clear about the market segment you were going to operate and getting to the point of the developing with your brand contract that you are now very well aware of the first fundamental principle which is at work understand the consumers perspective without that nothing will move this is something you know one can talk volumes because what I think we are quite very clear by now what consumers perspective is in relation to development of brands and we should keep talking about this in relation to all the concepts that we discuss one by one and don't lose the perspective we cannot I will repeat we cannot talk about all these concepts out of a separate box these are all related they're all intertwined like this and they've got to be talked in relation to each other and therefore wherever I think I can develop a touch point in relation to some other concept within the ambit of brand management I will always talk about that and relate the two for your benefit and better understanding okay having talked about the first principle let us now look at the implications which this principle may have for the brand contract that we just discussed meaning brand XYZ you would like to talk with your customers asking questions like what are the expectations that you had from our brand and does our brand fulfill your expectations what are the kind of expectations that you have from the competition and you name competitive brands you think that you think that the benefits our brand provided to you with exceed the ones you get from those of the competition so these are the kind of questions that you ask your customers you can also ask them things like what is there thinking about the filling of the sandwich because that's the the major part of the product it is just like talking about the engine performance of a car model of a model of the motorbike similarly you talk about the sandwiches about their fillings so you may like to be very very direct and very straightforward in asking them about their feelings and about their experience with the size of the filling that you have and the taste profile of your sandwich in comparison with the competition and in particular you must ask them a question which really can the answer to which can testify that your product is well positioned meaning it is different from the rest of the crowd because that was one of the promises because when you started your development of the brand you said it is going to be it is going to have a health appeal the meaning it is going to be different now when you say that or when the company says that maybe what the company means is it is not going to have any fried items for example which lead to the high cholesterol levels and so on and so forth so when you say the health sandwiches so naturally you've got to do something about that and if you have done that and the promise is the well delivered and the well taken at the consumer end you must ask this question so that you can reassure yourself about the delivery of the promise if it is delivered it is validated if it is not you have a problem better fix that another question that might come to your mind in relation to this principle number one meaning never lose perspective of the consumer could be what are the further improvements which you think we can bring about in our brand now there might be certain respondents who get kind of disturbed and feel put off by having asked questions leading to lengthy answers and that is why I suggested you have a multiple answer listing ready so that those who are short of time can answer your question but also keeping one open-ended choice to yourself and to them because you never know a customer might come up or a respondent might come up with a very fancy picturesque and fascinating kind of a quote that might lead to future developments you never know that or it might be so fanciful and so fascinating that it cannot be translated into reality so that's upon you to see that what is it that you really can do few more questions you know that you can ask yourselves is what are the kind of real differences that you feel you know our brand has in comparison with the competition and what is it that we can do in order to improve our service and so on and so forth and I think in having talked about all these questions because of which you can relate to the fundamental principle number one I leave the rest to your imagination I have set your juices flowing and you will know a few more questions that you must ask yourselves and the answers which you must get before proceeding with the development of the brand contract the crux of the matter is that anything that you do in relation to the brand contract meaning in relation to its development has got to be customer driven because it's got to be validated outside the crux of the whole discussion is that your effort toward development of the brand contract has got to be customer driven because it is going to be validated in the marketplace and having said so you must take into account the opinions of all the influencers they're not only your customers I mean your ultimate customers they're also members of the trade who influence the brand contract we shall discuss about that kind of how they do that but it is very important to take into account opinions of all those who really matter and be ready to face a few negative promises as well and then be ready to fix those I shall continue my lecture with this discussion in the next lecture until then Allah Hafiz