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| Tuesday, 1 March 2005 |
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The need to invest in brand building by Prasanna Perera, Marketing and Management Consultant, Chartered Marketer, CIM, U.K. In the present Sri Lankan context, it is quite easy to forget the basics of business, namely, to keep existing customers loyal by providing them continuous value and building the most valuable asset of a business, i.e., brands. Let us try to understand the customer purchase behaviour, in the present macro economic environment. Customers will spend their limited disposable income on essential products. As such, those marketing non-essential and luxury products, will have to assess the market situation carefully and formulate their strategies. One way is to target specific market niches, that offer great profit potential, although limited in sales volumes. Tried and tested products and services, will be associated with by customers. In times of economic upheaval, customers will be less likely to experiment. As such, marketers would do well to invest in strengthening their existing brands, rather than launching new brands. Existing customer loyalty should be further consolidated. Customers in the present context are also likely to be concerned about the "value proposition", offered by various products and services. It is brands that enhance the value proposition, that will get purchase by customers. Meaningful price based promotions can be utilised effectively, to appeal to customers. Another important purchase criteria, would be "how much of money to pay?" Basically, the invest required to purchase products and services. Customers are less likely to worry about the net weight of contents (kgs, litres) but the monetary factor involved. As such, price points are critical for success. In Sri Lanka, there are "psychological prices points" i.e. Rs. 10, Rs. 5, Rs. 100 etc. Dealer loyalty is also not a major purchasing consideration. Customers are quite happy to "shop around" until they are able to obtain their requirements. The key purchase considerations being convenience, service, retail price and value additions. Dealers and retailers who cannot meet up to these expectations, run the risk of losing valuable customers. Brand building Brands are probably the greatest asset of an organisation. Therefore, organisations will do well to invest in building brands, irrespective of market conditions. The critical question to be answered is whether brand building should be confined to existing brands or new brands? The answer is not straight forward and cannot be generalised. However, in turbulent markets, it is logical to invest scarce resources, in nurturing existing brands, in terms of further consolidating their market position. In terms of investments in new brands, this activity has to be evaluated carefully, in the present context. One way to evaluate is to examine markets, in terms of weather the new brand envisaged, will serve the local market or global market? Obviously, if the new brand appeals to global markets, the decision is easy. Another method of evaluating is to address if the new brand can be forecasted to deliver above average returns, on the investments envisaged. In difficult times, scarce resources have to be allocated not on developing marginal brands, but on clear market winners. Brand building decisions should never be left to non-marketing personnel, specially in difficult market conditions. The reason is that these personnel do not have the right orientation, in terms of markets and brands. Lack of internal investment, at the right time, is one of the most significant drawbacks to the brand development process. Organisations would do well to guard against this aspect. A further facet of brand building in turbulent markets, relates to making the "brand proposition" meaningful to customers at all times. Retaining customer loyalty This requires attention towards keeping tab of customer needs carefully and modifying the brand proposition accordingly. Investment in market research activities are required to keep customer needs under constant review and there is no excuse for not investing in this area. It pays to invest in retaining the loyalty of your existing customers. The logic is simple. It costs six to seven times more to regain a lost customer, as opposed to retaining the same customer. In markets characterised by turbulence, every attempt must be made to retain your core customers. Customer loyalty has to be earned, by providing continuous value through a mutually satisfying exchange process. It is also worthwhile to note that customer loyalty should not be taken for granted. In times of economic upheaval customers may not be too concerned of loyalty but rather to get the maximum value for their money. The name of the game therefore, is "value for money" in both product and service offerings. The present market conditions are complex, uncertain and volatile. Discontinuous change is rampant and market dynamics are altered at an electrifying pace. Therefore, it is important for organisations to stick to the basics in marketing and do it well. Basics in marketing include understanding customer needs, retaining customer loyalty, providing products and brands which offer meaningful value propositions to customers etc. Marketing strategies implemented need to be reviewed carefully, in terms of their effectiveness. Ineffective marketing strategies in depressed markets, is a zero-sum game. |
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