CUSTOMER RESPONSE HIERARCHY:Brand-based strategy, Methods of appropriations

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Brand Management (MKT624)

Lesson 32

CUSTOMER RESPONSE HIERARCHY

Introduction

This lecture looks into the importance of understanding the response effects as generated by a

communication campaign. The understanding of these effects in relation to developing a

strategic communication framework is important. What are the principles that come into play

while creating a brand-based communication strategy will be discussed!

Awareness and comprehension basic denominators

Regardless of the model, the starting point of any campaign is creation of awareness followed

by comprehension. Unless awareness is created and comprehension developed, message cannot

be reinforced and, hence, communication objectives cannot be fulfilled.

Customer response effects CRE

As briefly discussed in the previous lecture, communication evokes a hierarchical set of

customer

response

effects.

Building

Figure 40

awareness,

Customer Response Effects

comprehension,

intentions, and actions

are all steps in

Action

ascending order of the

90%

hierarchy . This is

Intention

graphically expressed

70%

here.

What

the

graphic

expression

Comprehend

No action

amply explains is the

10%

80%

fact that all those

Awareness

No intention

aware of the brand

30%

75%

may not translate that

Do not comprehend

awareness into an

20%

action to buy. As you

Not aware

move

along

the

25%

ascending order of the

hierarchy, you see

less and less target customers responding to the hierarchical effects. If the target population

consists of 100 customers, then 75 of them (75%) are aware of the brand. Those who take

action to buy are about 38 or 90% of that 70% who intended to buy.

It is difficult to think of major brands that have done well without communications

advertising in particular. We have to have some level of communications that we can control.

Therefore, we can make three statements about brand communications:

1. Every brand must have some means of communicating with its buyers. The way to talk

has to be direct, if not advertising.

2. There can be many other ways apart from advertising. The message has to be new and

interesting.

3. All the means of communication and the messages transmitted must be coordinated to

make sure they all talk about the same thing.

These fundamentals become the basis of a brand-based strategy for communication.

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Brand Management (MKT624)

Brand-based strategy

With the understanding how important is communication, we now move on to building a

brand-based communication strategy. Four guiding principles to implement the strategy are as

follows2:

1. We have to use a combination of all communication strategies to realize our overall

strategy and brand vision.

2. We have to use the brand picture and positioning as the guiding force to determine our

communication strategies.

3. We have to integrate the communication strategies to use the same message and create

impact all along the successive stages of customer response effects/hierarchy.

4. We have to execute communication strategies all across the organization and create

internal involvement for the success of the strategies.

Must couple the principles with hierarchy

These principles along with the understanding of customer response hierarchy give us leads

into determining the right strategic framework for our communications. It is here that we

decide about the tools in relation to their execution properties.

We, first of all, must be mindful of the stage of the hierarchy that may need our attention. We

must then determine the objectives of communication according to the stage of either

introduction (awareness) or reinforcement to stimulate comprehension and motive the final

action to buy.

Must reach target customers along the hierarchy

If a marketing communication fails to reach its target customers and create awareness, the

successive steps of the hierarchy will not emerge. And, a business will have to target its

customers at each successive stage of the response hierarchy to improve its performance. Each

stage lays the foundation for the next stage. It may call for repositioning or it may demand

more hammering depending on the nature of the campaign.

Two classical examples enhance our understanding of the above3.

Example 1

Ray-Ban Challenge: The sunglasses expert experienced decline as the brand was

perceived outdated and too limiting being too masculine, and hence not very

competitive.

The strategy: The Company challenged consumers' perception by kicking off a

campaign with a renewed brand persona and positioning. The persona was created that

of modern, intelligent, appealing to all, and hence confident products.

The result: The contract was delivered not only to men, but also to women and younger

customers. The company approached its target market of existing users, non-users, and

potential users. Brand resilience brought it back.

Example 2

BMW challenge: 1997 was the first year that the company lost its number 1 position in

the high-performance luxury car market. BMW had no new launches in the pipeline

whereas competitors like Mercedes, Lexus, and Infinity had many.

The strategy: BMW being aware of a strong brand picture decided to

strengthen/reinforce its existing position with an intensive communication campaign.

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Brand Management (MKT624)

The result: BMW' campaign "Ultimate Driving Machine" brought the car back on top

thus solidifying its strategic position.

The first example of Ray-Ban relates brand persona and brand extension. The company

identified a few gaps (needs) that could have been fulfilled. It fulfilled those and created a

renewed awareness about extending its line proving in the process their ability to meet

customers' perception.

The other one relating BMW is sheer reinforcement reminding the targets to act upon

something great they were not paying attention to. It is a case of sheer reinforcement.

Principles of response hierarchy

These two examples beautifully explain the importance of understanding the response effect

hierarchy. With the understanding to make strategic adjustments in view of the stages of the

response effects, we now take a look at the principles one by one.

1. Use all communication strategies to achieve corporate strategy and brand vision

All possible tools or a combination of communication tools are to be used to achieve the

corporate strategy and brand vision. Since the overall strategy, the vision, and the brand

vision are all established already, they give rise to compatible communication

strategies.

Brand managers must have the management's commitment to exercise strategic

execution. Having had that, they should be clear about when to implement the

strategies.

The amount of time needed to see results depends on the type of the market and the

amount of resources employed.

The important point here is not to forget that we have to set ourselves realistic time limit

for creating awareness, comprehension, and action. Also, that it is brand vision that

dictates the strategy.

2. Brand picture and brand positioning help determine the right strategies

The image defines the actual associations customers have with the brand and the

persona suggests the personality traits customers think your brand has. This tells you

where the brand stands.

If the brand has not been able to evoke the right associations and customers do not

rightly understand the persona then there is a gap. You must see where that gap is. Only

that will help you achieve the intended position. You must fill the gap in order to fill

brand's picture, fulfill its vision, and achieve the intended position.

The gap is a reflection of not being at the position that you want occupied in customers'

mind. BMW's example reflects the significance of this principle. Another example that

illustrates this principle is HP printers4.

Despite being at the forefront of introducing variety of products, HP lost its compatible

position in the minds of the customers due to decentralization of the organization and

fragmentation of communication strategies relating the brand.

Getting convinced (through sales less than the goals) that the brand was underutilized;

the company through research reassured itself of the positive associations customers

had with the brand describing its persona as innovative, reliable, and scientific etc. It

kicked off a campaign emphasizing the inventiveness on part of HP. Campaign was a

huge success.

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Brand Management (MKT624)

The gap between where the brand was and where the company wanted it was closed and

intended position achieved. It looks like a problem of not talking the same thing through

all communications. This was due to decentralization of the organization and

fragmentation of communication. Centralizing the campaign in view of the

homogeneous profile of its customers, HP centralized the campaign and gave them a

reminder of the persona they always had in their mind. This again is a classic example

of reminding customers of good products and reinforcing their intention to buy those.

3. Use an integrated marketing communications strategy

Experience has shown that advertising and promotions when used together create a

compound impact. The reasons are common sense-based. A mix of all communications

has a better chance of achieving synergy. If synergy is to be achieved, then advertising

and promotions have to be mutually consistent, so that they can complement each

other's effect.

Having the two tools complement each other leads to a cumulative impact in the minds

of customers in a coherent way. Fragmented messages at unrelated times do not create

as much of an impact as consolidated messages through all the possible vehicles of

communications. The integration therefore calls for certain methods to be followed. The

generally followed principles are:

Principle of IMC (Integrated Marketing Communication)

1. Always look for opportunities to blend various possibilities of communication.

2. Ensure that all of them convey the same message, consistently.

3. Track all expenditure by product, promotional tools, and relate the observed effects with

improvements in future applications.

4. Create a philosophy of capabilities and cost effectiveness of each tool.

It forces you to consider all the possible tools at your disposal to communicate brand's

positioning directly with your customers by making sure nothing is left uncovered.

The question of budgeting

It involves a very sensitive question of budgets here. Before budgets could be allocated, you

have to carry out situation analysis - where we are and why? This analysis has to be related

with objectives - what the brand is aiming for in sales and share?

On the basis of these two elements, the communication strategy is crafted, which means you

have to determine what role advertising and promotions will play? Long term brand building is

of utmost importance.

The appropriations are made in a few different ways.

Methods of appropriations

You allocate resources as percent of sales. Some argue this is not good. This gives the

impression that sales drive communications. In reality it is the other way around. But, this

remains the most popular method of appropriations. Once you have the budget, you must break

that into allocations to different tools advertising, promotions, and any other.

Whatever the budgets and further subdivisions are, those have to be allocated to the brand in

light of the response effects and in relation to all the tools of communication. The tools must fit

well into the brand-based strategies.

Summary

Understanding of the response effect hierarchy is of paramount importance. Without that

understanding, brand managers will not know which stage needs emphasis in terms of

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Brand Management (MKT624)

communication at a given point in time. With this limitation present, they will not be able to

formulate the right communication strategy. While making a strategy, managers have to be

mindful of keeping in sharp focus corporate strategy and vision, brand positioning, and the

need to kick off an integrated campaign with a competitive bite.

Bibliography:

1. Roger J. Best: "Market-Based Management Strategies for Growing Customer Value

and Profitability"; Prentice Hall (300-303)

2. Scot M. Davis: "Brand Asset Management Driving Profitable Growth through Your

Brands"; Jossey-Bas, a Wiley Imprint (157-177)

3. Scot M. Davis: "Brand Asset Management Driving Profitable Growth through Your

Brands"; Jossey-Bas, a Wiley Imprint (156)

4. Scot M. Davis: "Brand Asset Management Driving Profitable Growth through Your

Brands"; Jossey-Bas, a Wiley Imprint (159)

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