The Communications Mix

1
The Communications Mix

• Business 9318, Fall 2001
• Dr. Katherine Gallagher

2
Brand Equity

• A brand has equity if consumers have positive,
  unique, and accessible associations
• ?brand equity ? ?desirability
• ? ?marcom costs
• ? ?trade leverage
• ? ?prices
• ? ?brand extensions
• ? ?price competition
• ? ?profits

3
Requirements for Successful Branding

• Consistent quality
• Differentiable advantage
• Communication of the differentiable advantage

4
The Problem Commoditization

• Difficult to make a product that is truly
  different
• Difficult to sustain a differentiable advantage
• widely held technical expertise
• ever faster dissemination
• reverse engineering

5
The Usual Response

• Compete on price
• Shift marcom from advertising to sales promotion

6
The Result

• Increased price sensitivity
• Decreased brand loyalty
• Decreased brand equity

7
But

• Consumers still need the information that brands
  convey
• Consumers may no longer be loyal to one brand,
  but they are loyal to brands
• Successful brand differentiation is still
  possible, through marcoms

8
Research Findings

• Above average price brands (nonprice message)
• Advertising ? ?? differentiation
• ?? price
  competition
• Sales promotion ? ?? differentiation
• ?? price
  competition
• Sales force ? ?? differentiation
• ?? price
  competition

9
Research Findings (2)

• Lowest price brands (price message)
• Advertising ? ?? differentiation
• ?? price
  competition
• Sales promotion ? ? differentiation
• ?? price
  competition
• Sales force ? ?? differentiation
• ?? price
  competition

10
Research Findings (3)

• Avg./lower price brands (non-price/price message)
• Advertising ? ? differentiation
• ? price
  competition
• Sales promotion ? ?? differentiation
• ?? price
  competition
• Sales force ? ? differentiation
• ? price
  competition

11
Implications

• Communicating a unique and valued position leads
  to an increase in brand differentiation.
• Communicating a non-unique position leads to a
  decrease in brand differentiation.
• Non-unique price messages are dangerous.
• Especially for above-average price brands,
  advertising seems more valuable and sales
  promotion seems less valuable than previously
  thought.

12
Summary

• Decrease in brand loyalty is merely a symptom of
  a deeper problem commoditization.
• The response to commoditization has been to focus
  on price.
• However, brands usually do differ on important
  dimensions other than price.
• The role of IMC is to communicate the brands
  position.