Analysis of Brand Management Strategy for Shoe Company

Analysis of Brand Management Strategy for Shoe Company Chapter 1: Introduction 1. Introduction This dissertation is comprised of brand evolution and sum various steps involved to construct it. The creation and importance of Brand Awareness, Brand Image, and Brand Loyalty is discussed followed by the evaluation of Servis Sales Corporation as how successful Brand they are in Shoe industry of Pakistan. Servis Sales Corporation claims to be the largest retail shoe sellers of Pakistan therefore research is held on the company as what are the various marketing strategies SSC adopted to gain such a large market share. Steps to create brand loyalty amongst their target market and implementing effective brand management are part of this research. Branding is the main ingredient in the process of creating stable reputation, identity and strong image of a company and is always a first requirement to have competitive edge, this create awareness and work as a positive gesture towards customers to be product or brand loyal. As the Chairman of Quaker Oats Ltd, John Stuart said, if this business were to be split up, I would be glad to take the brands, trademark and goodwill and you could have it all the bricks and mortar and I would fare better than you . Leslie De Chernatony(2001 p1) In this era of globalization every company wishes to grow and expand their businesses in order to attain a healthy position in throat cutting world of business . In this effort companies faces many challenges and went through many challenges by their rivals and most of all providing customer’s satisfaction. 1.1 Background Study: The term brand arrived form the ancient Norse word meaning â€Å"to burn† Rita Clifton, John Simmons, Sameena Ahmad (2004 ;13). The original term was developed to signify the source or maker or owner of a product or item. Now a days brand is used to identify service or product’s manufacturer or seller, when we go through we see that many of the many modern concepts of brands and branding were formalised in the United States at a Procter Gamble company in the late 1800s. We get a good example of importance of brand when we talk about â€Å"Virgin† which is currently at the face of hundred business strategies. A brand will be a strong brand if people’s values match the values of brand. Branding’s means adding value to the product Marieke K de Mooij (2005: 96) Brand stands for a reputation, you are always reputed when you are always reputed when you make a promise and fulfil it. Brand is more like a human nature not just a visual, public identity or a picture. Every single who is part of the organization represents the brand of the company and pay its part to construct it. The brand is a performance measured and recorded in interaction of every area involves customers investors, employees business partners and media (www.thebrandconsultancy.com) Its quite clear that every company is conscious about its brand loyalty amongst its customers because they know this if they are successful in managing the brand loyalty of their existing customers which is company’s strategic asset it will automatically add huge value to firm. As Douglas B states that Brand Loyalty is the customer’s willingness to stay with brand when competitor come knocking with offering that would be considered equally attractive had not to the customer and brand shared a history. The degree of customer stickiness is the key to the brand’s market power. Douglas B. Holt (2004 ; p 149) Merlo (2003) mentions that the brand loyalty is rewarded by an increase in profit through repeat business, referral sales, decreased customer maintenance costs and reduced exposure to price competition. When we talk about creating and enhancing brand loyalty we see that there are not-too complex ways of increasing brand loyalty. Companies can learn to recover from mistakes. A good recovery can turn angry, frustrated customers into a loyal ones. â€Å"Companies must handle problems and complaints with Care- Communicate, Acknowledgement, respect and regard and empathy†(Merlo, 2003) 1.2 Statement of Problem: Global challenges today have forced companies not to have their business image within their home land but to spread their identity across the borders by managing brand, securing the product or a service of companies and building loyalty among customers to achieve maximum and lasting competitive edge. The aim of the research is to evaluate the brand management of Servis Sales Corporation by analyzing their marketing strategies. Research covers the analysis that how successful SSC today is in gaining brand loyalty as it is considered to be the biggest footwear seller in Pakistan. 1.3 Aim and Objectives: The main Objective of the research is the finding that to what level SSC is successful in imperialising Brand Management to embrace positive effect on their customer’s perception and has given SSC a competitive edge, as they are Pakistan’s largest shoe company. Core Objectives of Research: To analyze marketing strategies of Servis Shoes Company leading to effective brand management giving SSC a positive brand image amongst their target market. To observe various strategies adapted by SSC to enhance brand loyalty amongst their customers? To find out what steps Servis Shoes Company took to create its Brand awareness amongst it’s target market and what are the areas they still need to focus upon. To identify the involvement of consumers to the brand as in why they prefer a particular brand (Servis) on every other different brands available in the market. 1.4 Report Structure: This report will be organized as follows: Literature Review: The literature review of this report covers understanding and benefit of effective brand management that how people connect to them. Chapter includes importance of creating and enhancing awareness among consumers followed by the concepts and historical perspective of brand loyalty giving a wider view of the perception about brand loyalty and its strategic values. Company Introduction: This chapter consist of the brief introduction to Servis Sales Corporation, giving a wider view of their leading position in shoe line in Pakistan amongst their rivals. This chapter shows company background and demographics with the facts and figures about their expanded business nationwide. Research Methodology: In this chapter different method of research is discussed. It also focuses on research philosophy principle, quantitative and qualitative analysis and secondary and primary data. After studying the methods and techniques different methods are identified which is most suitable to get the reliable and most accurate data? Which is used in research? Finding and Analysis After completing the research, the data gathered through different sources from the company are analysed in this chapter, which is explained with chart and then it is moderated with the findings. Conclusion: This chapter involves conclusion and the result in the light of findings with literature. Analysis of research finding and result are discussed, Recommendation to company and further research is also the part of this chapter. Literature Review Scott Galloway stated a very good definition showing importance of brands in today’s world of marketing that â€Å"Brand is the face of a business strategy† ( Scott Galloway in Alker, 2000 :33) another well appreciated definition of brand given by American Marketing Association cited in (Kotler 2003: 418) â€Å" A brand is name, term, sign, symbol, or services of one seller or a group of seller to differentiate them from those of competitors†. A brand is essentially a marketer’s promise to deliver a specific set of features, benefits and services consistently to buyers. The marketer must think that he is offering a contract to the customer about how the brand will perform ( kotler 2003) Le Pla et ala, (2003: 3) give a more profound and in depth definition of brand: Brand is the interaction between core company ( product or service ) strengths and what is customer value . Company strengths are what company does well. The things that the customers value include the benefits of a products features, as well as what the customer see as the ongoing worth of a relationship with the company. According to Kapferer (1997 : 56), â€Å"Products are mute: the brand is what gives them a meaning and purpose, telling us how a product should be read. A brand is both a prism and a magnifying glass through which products can be decoded†. Renault invites us to perceive its models as cars for living’.. brands guide our perception of products†. Hence it can clearly be seen from the above paragraph that branding goes a long way in giving a distinct identity to a product. Rowley (1997) explains that brand communicates with consumers, according too him when consumers are familiar with a brand, they expect the same qualities, benefits and advantages from products or services which are provided under that specific brand, this easily makes their decision in favour of the brand instead of searching or gathering information regarding products fulfilling their requirements. Therefore, it can be suggested that brand accelerates consumers’ process of decision making as it provides two different ways of communication between suppliers and their consumers (Rowley, 1997) Effective Brand Management The concept of â€Å"brand management† was developed at Procter Gamble in the US in the year 1930 and is also knows as product management .Ambler (2003:82). The main reason behind Brand management is to secure the product’s future and services any company or organization, and this is only possible with the formulation loyalty amongst customers creating emotional as well as rational values. This results sales in market place and stimulating affect on the perception of a company’s products .If brand power is tied together in a proper way organization can easily maximize market share and corporate profitability. Brands if handled and managed sensibly can provide their owners a considerable benefits and rewards. Davis (2002 :6) says that the following benefits accure to the company that manages is brands effectively: Loyalty derives repeat business- A recent study by Bob Pasikoff, president of brand keys, shows that an increase in customer loyalty of only 5% can lift lifetime profit per customer by as much as 100%. Premiums price of brand allow higher margins – Starbucks represents the ultimate example of a strong brand driving a premium price resulting in greater profit. Strong Brands lend immediate credibility to new one in product introductions. A well established brands can provide instant credibility for a new product. Gillette’s Marc 3 became number one personal shaver within a month of its launch. Strong brand allow for greater shareholder and stakeholder returns. One can see a good example is Yahoo and GE are big brands with even bigger shareholder returns. Strong Brand embody a clear, valued, and sustainable point of differentiation relative to competition – No one can FedEx’s claim of overnight delivery. Loyal customer base and strong brand make customer forgiving for the the mistakes made by the company, if a company makes a mistake for instance, the strike at the Saturn car plant had little impact on Saturn’s loyalty or sales. The lever for attracting best employees along with keeping satisfied customers is Brand Strength – Companies like coca-cola, Microsoft, Intel, Disney etc. are almost always in the top bracket of survey which measures employee satisfaction. It is obvious that it’s a difficult thing to build and maintain a brand reputation like Coke, Microsoft, Nike, General Electric, etc and as David D’ Alessandro, President of John Hancock Mutual Life insurance, in Klein (2000: 145), â€Å"it can take 100 years too build up a good brand and 30 days to knock it down†. Effect of Brand on People ( How People connect to them) Scott Davis( 2002) says that, Brands are at least in part a set of promises made to consumer. The leading brand travel a particular PATH in the human mind. This PATH is an acronym for promise, acceptance, trust and hope. Certainly this PATH is intangible and cannot be co modified†. But he then mentions that these very intangibles make a customer choose Sony over JVC and Nike over Reebok. The following are the customers perceptions vis-à  -vis a strong brand (Davis, 2002) 72% of customer sat that they will pay a 20% premium for their brand of choice, relative to the closest competitive brand. 25% of customer state that price matter if they are buying a brand that owns their loyalty. Over 50% of purchases are brand driven. Peer recommendation influences almost 30% of all purchases made today. More than 50% of consumers believe a strong brand allows for more successful new product introductions and they are more willing to try a new product from a preferred brand because of the implied endorsement. The view of Le Pla et al, (2002 ; 3) is that a strong brand is much more than an image or a logo. People emotionally identify with a strong brand and relationship with such a brand makes them feel more secure and comfortable. This is completely in sync with Kotler’s ( 2003) example of a consumer buying a Mercedes because the car ( which is also a strong brand) makes him feel more important and admired’. Aaker (1991) suggests that anything which a consumer realises about a brand can be defined as brand association it according to him it create positive consumer attitudes towards brands, thus influence consumer buying decision process. Kapferer (1997) says that brand is like a living memory. The memory factor explains why individuals preferences endure and why within a given generation people continue to prefer the brands they liked between the ages of seven and eighteen ( Guest 1964, Fry et al., 1973, Jacoby et al., 1978 in Kapferer 1997). This is proof, if it was ever needed, that strong brands do have a long-term effect on people. It is imperative now to take a more focussed look on the three constructs that constitute the basis of this study. The first to be analysed will be brand awareness followed by brand loyalty and brand image. Brand Awareness a number of the definition if the term â€Å" Brand Awareness† abound, a fundamental definition of the term is given by Aaker(1991: 61) â€Å" Brand Awareness is the ability of a potential buyer to recognize or recall that a brand is a member of certain product category†. David Aaker’s (1991) ground braking work â€Å"managing brand equity† details with the concept of brand awareness comprehensively. Hence, it has been use here as a main reference, although it has been complimented with other readings. Aaker says that brand awareness involves a link between the product class and the brand. For example, the use of the large balloon with the word Levi’s on it may make the name more salient, but it will not may necessarily help improve brand awareness. However if the balloon is shaped to resemble a pair of Levi’s 301 jeans , the link to the product is provided, the balloon’s effectiveness at creating awareness is enhanced. Aaker (1991). By using the brand, perceiving it and being confronted with it through advertising, consumers learn about its meanings. All this information is connected associatively to the brand name. the richer this associative network is, and the stronger the associations the greater the chance of consumers thinking. Levels of Brand Awareness â€Å"Brand Awareness involves the continuum ranging from an uncertain feeling that the brand is recognised, to a belief that it is the only one in the product class. This continuum is presented in the ‘ Awareness Pyramids’’’ ( Aaker 19991 : 62) Levels of Brand Awareness ( Aaker, 1991) Aaker stated that â€Å"the minimal level of brand is recognition which is based upon aided recall test where respondents are given a set of brand in a product category and asked to identify those that they had heard of before. Thus, although there needs to be link between the brand and the product class, it needs not to be strong. Brand Recognition is particularly important when a buyer chooses a brand at the point of purchases† (Aaker 1991 ;62). Franzen et al, ( 2001) stated that the situations in which none of the choice alternatives is well represented in or memory, brand familiarity ( recognition) will be the determinant in the choice process. The purchases in which consumers regularly choose and re-choose because of the awareness stored in his memory, aided brand awareness i.e. brand recognition has hardly any significance. If we see further we see that brand recall is the further level dependent on asking a person to name brand in a product class. This is â€Å"Unaided recall† because , unlike in the recognition task, the responded is not aided by having names provide. Unaided recall is a substantially more difficult task then recognition, and is associated with a stronger brand position. The first named brand in an unaided recall task has achieved top-of-mind awareness. (Aaker 1991) Strategic Value of Brand Awareness Brand Awareness provides a sustainable competitive advantage and can be a key strategic asset for the company ( Aaker 1998) The following are the banifits of creating a higher brand awareness ( Aaker 1991: 63) ( Figure 3); Anchor to which other association can be attached : Brand Recognition is the first basic step in the communication task. It usually is wasteful to attempt to communicate brand attributes until a name is established with which to associate the attributes. Familiarity/Liking: Awareness provides the brand with fimilarity and people like the familiar. They are prepared to ascribe all sorts of good attitudes to items that are familiar to them ( Aaker et al., 2000). Especially for low involvement products like soap, chewing gum, sugar , facial tissues etc., familiarity can some times drive the buying decision. Substance/ Commitment: Name awareness can be a signal of presence, commitment and substance, an attribute very important to consumer buyers of durables. The logic is that if a name is recognised, there must be a reason like: The firm is widely distributed. The firm has advertised extensively. The brand is successful-others use it. Even if the person has not been exposed to advertising and knows little about, brand awareness could lead to the assumptions that the firm is substantial and backs the brand with advertising. Brands to consider: The role of brand recall (discussed earlier) is crucial for frequently purchased products like coffee, detergent, serials et. Several studies have demonstrated the relationship between top of mind recall and attitude/purchase behaviour. One such study, of six brands in the three product classes (Fast food, Soda and banking), showed large differences in preferences and purchase likely hood, depending on weather the brand was first, second or third mentioned in an unaided recall task (Woodside and Wilson, 1985 in Aaker, 1991). Sometimes it is possible that people recall brands that they dislike strongly. Benefits of Brand Awareness (Aaker 1991) A number of researchers besides Aaker have also demonstrated that brand awareness is a particularly important concept relative to brand evaluation in predicting and explaining consumer choice behaviour. For instance, Arch G (1996 :38) refered to Axelrod (1968 , 1986) demonstrated that top-of-mind awareness (TOMA) of a brand is a sensitive and stable measure than can serve as an intermediate criterion for predicting brand-choice behaviour and brand-switching behaviour. Axelrod (1968) in Aech G(1996 ; 38) emphasized the needs for developing valid and reliable intermediate survey indicators of whether marketing and advertising influence product and brand choice behaviour because of the greater expense and time necessary for experiments to measure the impact of marketing and advertising actions on such behaviour. Haley et al, (1979 in Holden et al., 1992) postulated that brand awareness is more important than attitude. This nation was supported by Hauser (1978 in Holden et al ., 1992) who, using an information theoretic approach, reported that the probability of inclusion of the brand in the evoke ( recalled ) set accounts for more variation in brand choice thus brand attitude (Holden et al., 1992) Similar to Aaker ( 1991), Holden et al, (1992) also say that in the case of low involvement purchase, Brand recall may be reason enough to buy the brand ( that has been recalled Also a high degree of brand awareness is linked to higher sales due to the factor of â€Å" Social desirability† . Most people tend to behave according to the expectations of their social environment, even when it goes against their own opinion. If they are aware of the brand, they will have a tendency to buy it because it is the socially desirably thing to do ( Franzen et al., 2001). Copeland (1923: 287) talked about the benefits of brand awareness as follows â€Å" if the consumer’s previous acquaintance with the brand has been favourable, or if the manufacturer’s and dealer’s advertising has made favourable impression, other things being equal, the recognised brand will be selected from among other unrecognised brands†. Creating and Enhancing Brand Awareness Because consumers are bombarded everyday by more and more marketing messages, the challenge of creating awareness is considerable ( Aaker, 1996). The best approach for every brand to create and maintain brand awareness depends upon the context but the following do server as good points ( Aaker, 1991: 72) ; Be Different, Memorable: An Awareness message should provide a reason to be noticed and it should be memorable. There are many tacks that work but one key is to simply be different and unusual. Involve a slogan or jingle: A Slogan or a Jingle can make a big difference. Slogans like â€Å" it floats† or â€Å"Just do it† can help recall. For a product class like soap, it might be easier to come up with â€Å" it floats† and then Ivory, rather than to name Ivory directly. The link to the slogan might be stronger because it involves a product characterstic that can be visualised. Similarly, a jingle also is vey powerful awareness device. Symbol exposure: A symbol can play a major role in creating and maintaining awareness because it involves a visual image which is much easier to learn and to recall than a word or a phrase. Event Sponsorship: The primary role of most event sponsorship is to crate or maintain awareness. For example, the Benson and Hedges Cricket world cup, the Mercedes super 9- tennis tournament etc. It must be noted that the strongest brand are managed not for strategic awareness. It is one thing to be remembered ; it is quite another to be remembered for the right reason ( Aaker, 1996). Brand Loyalty Every company’s endeavour is to increase its brand loyalty in order to retain as many consumers as possible and it can be well assumed when we see that in 2000, the NDP Group, an international market research company in New York, conducted a survey that half of 20,000 respondents who described themselves as loyal to a company one year were no longer loyal the next. According to Frederic Rechheld, founder of Boston-based consulting firm Bain and Company, the average American company loses half of its customers every five years The next economy  By Elliott Ettenberg, NetLibrary, Inc (2001 ;34) The Brand Loyalty concept from Historical Perspective Contrary to what some people believe brand loyalty has existed for a long time in the realm of marketing. Copeland (1923) first introduced this concept around 80 years ago. He talks about three ascending stages of brand loyalty-consumer reorganisation ( when the product is recognised and bought from among a host of unrecognised products), consumer preference ( when pervious use or advertising has created a favourable preference in the consumer’s mind) and consumer insistence. The third stage is the pinnacle of brand loyalty where the consumer approaches the purchase of an article with the attitude that he will accept no substitute ( Copeland, 1923). Different Perceptions of Brand Loyalty â€Å" Brand Loyalty is the biased behavioural response expressed over time by some decision making unit with respect to one or more alternative brands out of a set of such brands†. More recently, the concept of loyalty have evolved further, encompassing a rich diversity of dimensions underlying the relationship that a customer may entertain with a brand. Martin et al.,(2004:217) referred Oliver’s statement in his book â€Å"Loyalty involves a favourable attitude towards the brand or organisation and positive re-purchase intentions. This can be further understood by investigating the element of loyalty. Cognitive Loyalty, in which the brand is cognitively compared with alternatives ( generally on functional grounds); Affective loyalty, in which the customer likes the brand or organisation as a result of previous satisfying experiences; Conative Loyalty, which reflects an intention to re-purchase; action loyalty, which relates to a deeply held commitment to rebuy or repatronise a preferred product/services consistently in future†¦ despite situational influences and marketing effort having the potential to cause switching behaviour’ ( Oliver 1999 cited in Martin et al.,(2004:217) In (2001) Chaudhuri and Holbroo stated couple of characteristic of brand loyalty â€Å"purchase loyalty and attitudinal loyalty mentioned by mentioned by Marion Maguire(2007), â€Å"Behavioural, or purchase loyalty consist of repeated purchase of the brand, whereas attitudinal brand loyalty includes a degree to the authors, purchase loyalty leads to greater market share because of higher levels of repeat purchase among their users†. It is found in the research that consumer’s perception about price of brands is not linked to brand loyalty. Another suggestion given by Dick and Basu (1994) says that â€Å"loyalty related marketing advantages, such as favourable word of mouth, which, in turn might increase market share†. But the findings of Dall’Olmo Riley et al. (1997) discerned that the attitudinal loyalty of many individual consumers appears to be fickle, According to them, various studies (by Achenbaum, 1982 repeat responses ranging about 50% in individual attitudinal answers (e.g. Taste Nice†) at two subsequent times, independent of the attitude scales used and from the length of the interval between interviews. Overall their interpretation was that specific attitudinal beliefs do not seem to be very strongly held but vary stochastically ( in random manner) (Dall’Olmo Riley et al., 1997) Rothschild (1987) at the university of Wisconsin, evaluated brand loyalty as encompassing only the behavioural aspect. He suggests that a psychological process that may explain brand loyalty is the one of behaviourism. The central concept of behavioural learning theory is that behaviour that is positively reinforced is likely to reoccur while that which is not reinforced, or punished, will be extinguished. Consumers become loyal to brands that are reinforcing to them: good decision are reinforces while poor decisions are not ( Rothschild, 1987). Dekimpe et al, (1997) also share Rothschild’s (1987) view and say that the approach is justified as behaviour is observable and hence easier to measure. Richard Elliott and Larry Precy quoted Franzen (1999) saying that loyalty brand users have a high degree of bonding with the brand and do not show much of an urge to switch. Its basically the bonding here meant was part of brand equity but it necessarily doesn’t need to be a function of brand equity. also if its contribution is there. Loyalty of a brand may be not habitual or it can be the high cost of switching to another brand. But when there is a genuine preferences involved it really contribute to brad equity. Quester et al, (2003) say that the behavioural approach to Brand Loyalty (taken by Rothschild, 1987 ; Dekimpe et al., 1997) many present an over simplistic view of the construct. Behavioural definitions are insufficient to explain how and why brand loyalty is developed and modified in consumers ( Dick and Basu, 1994 in Quester et al., 2003). Repeatedly buying a brand (behavioural approach) may reflect only the convenience inherent in the repetitive and habitual behaviour rather than any real commitment to the brand purchased (Quester et al., 2003). Habituals’ as termed by (Knox 1997) in Quester and Lim., 2003) display only behavipural loyalty and are very likely to switch brands if there routine purchases cycle is disturbed. â€Å"For ‘habituals’ and /or spurious loyals’. The brand is not closely tied to the consumers belief system, so they can be easily attracted by a competing brand that offers a better deal, a coupon etc. Behavioural definitions, therefore, essentially fail to distinguish between habitual or spurious loyalty and true ( or international) loyalty and it may be misleading to infer brand loyalty from merely overt purchase behaviour† (Quester et al.,2003 : 27). Fournier et al, (1997) have analysed the concept of brand loyalty in new light and have come up with some very interesting insight regarding the same. According to them, (1997) a major assumption while reaching the concept of Brand Loyalty is that loyalty process is a Black and white quality. This tendency towards dichotomy not only precludes attention to loyalty levels and type, but also blinds the researcher to the value that may exist in relationship classified as Disloyal ( Fournier et al. 1997) The research of eight brand loyal coffee drinkers by Fournier et al, (1997) revealed three intriguing loyal consumer-brand relationships namely martial commitment, falling in love consumers brand relationships namely martial commitment, falling in love and best friendship. Each of the above relationships share a strong and meaningful life theme connection that adds significant value in the consumer’s mind. On the other side, Fournier et al ., (1997) also found some rather piquant Non-Loyal Relationships. One of the interviewees shared meaningful relationships with not one, rather three coffee brands. Financial limitations prevented him from bonding exclusively to one brand. â€Å"By connecting at the level of kinship, a portfolio of brand candidates that at first glance appears as a set of interchangeable substitutes is revealed as a family of meaningful partners in the consumer-brand environment† (Fournier et al., 1997 :463). Fournier at al, (1997) say that the existing brand loyalty measurement process emphasizes share-of-use over the strength and character of brand relationship form. This approach is flawed in their opinion because â€Å"As with people expressions of loyalty need not be associated with exclusivity, but with emotional tenor and sincerity of intentions over time. Also, like normal human relationship, brand loyalty may sour overtime and subsequently change. In accepting the power of both Brand and Consumer to affect the relationship, loyalty is better appreciated as a dynamic phenomenon† (Fournier et al., 1997 :467). A consumer-based conception of loyalty that recognizes multi-brand relationlity and the delicacy of even a strongest of consumer-brand bonds seems more aligned with the realities of today’s variety-filled marketplace. (Firat and Venkatesh, 1995 in Fournier et al., 1997) The biggest criticism of the work of Fournier et al, (1997) is actually acknowledged by their own selves when