Pioneering advertisements would most likely be used during which stage of the product life cycle?

Chapter 3

The Advertising Spiral and Brand Planning

Chapter Objectives

After reading this chapter you will understand:

1. The importance of understanding the product life cycle

2. The relationship of the advertising spiral

3. The birth and basics of branding

4. Brands and integrated marketing

5. Brand equity

6. Strategic planning methods

Chapter Overview

Chief among the critical aspects of advertising decision making is developing a strategic plan. In marketing, as well as other aspects of business, great emphasis is placed on developing sound and effective strategies. One of the fundamental building blocks in marketing strategy development is to understand how products pass through a product life cycle. As a product passes through the life cycle’s distinctive stages, it is noteworthy that advertising plays a different role in each stage of development. The appreciation and understanding of these changes is critical in strategy development.

Similar to the product life cycle is the advertising spiral. Three distinct stages indicate consumer response tendencies and strategic changes. As an example, until consumers appreciate the fact that they need a product, that product is in the pioneering stage. In the competitive stage, an advertiser tries to differentiate its product from that of the competition. Once consumers know about products and use them, the product may become part of the retentive stage, which uses reminder advertising.

The age of the product has little to do with what stage it is in at any given time. Rather, consumer attitude toward the product or perception determines which stage a product is in. This chapter explains the changes in advertising strategy from stage to stage. Note that as consumer perception changes (which advertisers try to manage), the advertising message changes. Understanding this process is critical to advertising success.

The second major thrust of the chapter is to analyze and explain brand planning and resulting brand equity. Advertising’s relationship to branding is historical in nature and provides many interesting insights. A brand, in a modern sense, is created. It is made up of rational and emotional elements. Advertising’s role is to explain and communicate these elements to the consumer. In order to do so effectively, integrated marketing communications recognizes the added value of a comprehensive plan that evaluates the strategic roles to a variety of communication disciplines and combines these disciplines synergistic effect to provide clarity, consistency, and maximum communication impact.

The chapter concludes by examining brand equity. Several contemporary methods for achieving and maintaining equity are presented and evaluated. One useful way of beginning the brand equity quest is to conduct a brand equity audit. The reader will find the various plans presented to be a useful addition to his or her strategic planning portfolio (or bag of tools).

Lecture Outline

1. Introduction

Marketers and advertisers are in accord that corporate brands are a company’s most valuable asset.

1) Today’s consumers control the power because of their ability to turn us off and on easier than ever before; therefore, it is no longer enough for a brand to distinguish itself only through an advertising campaign. Successful brands offer customers relevant and unique experiences.

2) But with such an abundance of brand names, sub-brands and mini-brands, consumers are often confused and brand confidence can be eroded.

3) The management challenge for companies is to clearly differentiate their products and services, based upon achievable advertising objectives and promises.

B. With the multitude of new fragmented media choices available, a new emphasis is being placed on better integrating brand communication efforts, called integrated marketing communication.

1) The goal is to build greater brand equity.

2) Further, marketers need to build better brand strategies for all product categories, consumer or business/industrial.

3) Products have a life cycle, or stages of development. The advertising stage of the product is determined by the degree of acceptance the product has earned with consumers. The life cycle model has three primary stages:

a. Pioneering stage.

b. Competitive stage.

c. Retentive stage.

*****NOTES: Use Exhibit 3.1 Here*****

2. Pioneering Stage

A. Companies like Procter & Gamble have enjoyed success through growth, spear-headed by the introduction of new products or reinvention of existing products.

B. When manufacturers create revolutionary new products they may think consumers will flock to buy them, however, until people appreciate the fact that they need the product, a product is in the pioneering stage.

1) Advertising in this stage must educate the consumer to the new product or service. It:

a. Introduces an idea that makes previous conceptions appear antiquated.

b. Must implant a new custom.

c. Changes habits.

d. Develops new usage.

e. Cultivates new standards of living.

*****NOTES: Use Exhibit 3.2 Here*****

2) The purpose of the pioneering stage of a product’s life cycle, reduced to its simplest terms are:

a. To educate consumers about the new product or service

b. To show that people have a need they did not appreciate before and that the advertised product fulfills that need.

c. To show that a product now exists that is actually capable of meeting a need that already had been recognized but could not have been fulfilled before.

3) A true pioneering product offers more than a minor improvement. It is important for the advertisers to remember that what determines the stage of the advertising is consumer perception of the product.

4) Often copy focuses on the generic aspect of the product category in an attempt to educate or inform the consumer.

5) Consumer acceptance may take a long period of time.

6) Producers often convince consumers they can accomplish something they could not accomplish before (by using a new product).

7) Because heavy promotional expenditures occur in this stage to create product benefit awareness (among other reasons), the product in this stage is usually not profitable.

a. If success occurs, competitors are often quick to jump into the market.

b. One of the reasons for being a pioneer is that the company often gets a substantial head start over competitors.

3. The Competitive Stage

A. When a pioneering product becomes accepted by consumers, there is going to be competition. The consumer asks, “What brand shall I buy?” When this happens, the product has entered the competitive stage of its life cycle and competitive advertising follows.

B. In the short term, the pioneer usually has an advantage of leadership that can give dominance in the market. If the pioneer can maintain market share in this category during the initial period of competitors’ growth, it can make up for the earlier expense associated with its pioneering efforts.

C. The purpose of advertising in this stage is to:

1) Communicate the product’s position.

2) Differentiate it to the consumer.

3) Feature differences in the product.

*****NOTES: Use Exhibit 3.4 Here*****

4. The Retentive Stage

A. The product in this stage has reached maturity and has wide-scale acceptance.

B. Reminder advertising attempts to retain customers by keeping the brand name in front of them, so as not to be forgotten.

C. Few products are entirely in the reminder stage. There usually are other products in the pioneering and competitive stages challenging their leadership position.

D. The advertiser’s goal in this stage is to maintain market share and ward off consumer trial of other products.

E. Advertisers do not necessarily cut back on advertising at this stage; however, they may adopt different marketing and promotional strategies.

F. Generally, products in the retentive stage are at their most profitable level because developmental costs have been amortized, distribution channels established, and sales contacts made.

G. Companies would like to maintain their products in the retentive stage as long as possible.

5. The Advertising Spiral

A. The advertising spiral is an expanded version of the advertising stages of products. It provides a point of reference for determining which stage or stages a product has reached at a given time in a given market and what the thrust of the advertising message should be.

1) It parallels the life cycle of the product.

*****NOTES: Use Exhibit 3.5 Here*****

B. Comparison of stages.

1) Most advertising is for products in the competitive stage.

2) In using the advertising spiral, we deal with one group of consumers at a time. The advertising depends upon an attitude of that group toward the product.

3) A product can be in more than one stage at a time depending on the attitude of the consumer.

4) Products in the retentive stage usually get the least amount of advertising. Effective advertising at this stage is important, because this is a critical moment in the life cycle of a product.

C. Product in competitive stage, improvement in pioneering stage.

1) When new products enter an established market category, they immediately enter the competitive stage and must hit the road running to differentiate themselves from the competition.

2) Typically, new brands entering an existing category experience a 50 percent failure rate and, an 84 percent failure rate among brand extensions. The reason for this failure is a fundamental lack of competitive differentiation.

*****NOTES: Use Exhibit 3.6 Here*****

3) Change is a continuum.

a. As long as competitive products do not change, the product continues to be in the competitive stage. Product changes or modifications, however, move a product into the pioneering stage.

D. The retentive stage.

1) Product is at height of popularity and enjoying profitability.

2) But all good things come to an end and two strategies can result:

a. Deciding to let the product die. Quit advertising it and withdraw other types of support.

b. Seeking to expand the market into a new pioneering stage (e.g., expand into the international market).

3) When approaching the retentive stage, management must make some important decisions:

a. Can it make some significant improvements in the present product so that it virtually represents a new type of product or category (e.g., Clorox Cleaner)?

b. Is there a possibility for line extensions (e.g., Diet Coke)?

4) If the product is to continue to be marketed, its own advertising stage should be identified before its advertising goals are set.

5) The three basic stages of the spiral (pioneering, competitive, and retentive) are straightforward and easy to understand. However, the stages in the bottom half (newer pioneering, newer competitive, and newer retentive) are trickier and require creative marketing.

a. The newer pioneering stage attempts to get more people to use the product. There are two ways to enter this new stage:

i. Making a product change.

ii. Completely overhauling a product.

6) Smart advertisers will look for ways to initiate a change of advertising direction when their product is enjoying great success, showing new ways of using the product or giving reasons to use it more often.

E. New pioneering stage and beyond.

1) A product entering the new pioneering stage is actually in different stages in different markets.

2) The advertising spiral will have entered still another cycle called the newest pioneering stage. The focus here is on getting more people to use this type of product.

3) The product in this stage is faced with new problems and opportunities. You have to understand why consumers were not interested in the product earlier.

4) New pioneering can be the result of reworking the original product or a line extension – with a new formula and name – that is related to the original version of the product.

5) Creating product innovation does not always translate into brand share. Advertising must be managed effectively and communication with customers must be effective.

6) Once an established product in the competitive stage begins to innovate successfully in a newer pioneering stage, competition will not be far behind.

7) The advertising focus in newer pioneering must be on getting consumers to understand what the product is about.

8) Advertising in the newer competitive stage aims at getting more people to buy the brand.

9) Moving through these three stages (newer pioneering, newer competitive and newer retentive) is not easy.

a. Manufacturers must develop either product innovations or advertising positioning strategies that make the product different in consumers’ eyes.

b. There are usually fewer prospects for the product as it moves it moves to the newer stages of the spiral. A company must become more efficient at targeting smaller groups of prospects.

F. The advertising spiral as a management decision tool.

1) Products do not move through the stages at the same speed.

2) The advertising spiral indicates direction; it does not dictate management decisions.

3) Before attempting to create new ideas for advertising a product, the advertiser should use the spiral to answer the following questions:

a. In which stage is the product?

b. Should we use pioneering advertising to attract new users to this type of product?

c. Should we work harder at competitive advertising to obtain a larger share of the existing market?

d. What portion of our advertising should be pioneering? What portion competitive?

e. Are we simply coasting in the retentive stage? If so, should we be more aggressive?

6. Building Strong Brands and Equity

A. Building strong brands and equity.

1) Brands are the most valuable assets a marketer has.

2) The product is manufactured, the brand is “created.” The product may change over time, but the brand remains.

3) The brand is reflected in the image held in the consumer’s mind. The consumer’s familiarity with, and perception of the brand is where the real value of a brand resides.

4) Every product, service, or company with a recognized brand is distinctly different from anything else in its category. If this differentiation is recognized by the consumer, the brand will be a category leader. A perceptual difference in branding is essential for survival.

B. The origin of branding began in mid-1880s.

1) Because powerful wholesalers of the day squeezed the profits of the manufacturers, these companies decided to differentiate their products from their competitors. In order to do this, they:

a. Gave their products names (concept of branding born).

b. Obtained patents to protect their exclusivity.

c. Used advertising to take the news about themselves to customers (over the heads of wholesalers and retailers).

2) Among the oldest brands are Levi’s (1873), Maxwell House Coffee (1873), Budweiser (1876), and Ivory (1879).

C. Brand connections.

1) Since brands started advertising in newspapers, mass-media advertising has been about making connections.

2) Thanks to all the digital changes and the Internet, advertising is going through its first true paradigm shift since the advent of television.

3) Although the media tools change, brands remain about connecting.

D. Branding as a financial decision.

1) Branding isn’t an advertising decision; it is a financial decision. Branding is about risk management.

2) Advertising’s most important role is to assist clients and build brand value with consumers.

E. Consumer environment, a new era for brands.

1) Consumers set the terms of their marketplace relationships because they have more access to information than ever before (via the Internet and databases), and marketers seek to meet the terms set by consumers.

2) Habit is the marketer’s biggest challenge. Most people will buy the same brand over and over again if it continues to satisfy their needs.

3) For marketers to succeed, they must answer three questions:

a. Who buys the brand?

b. What do they want from it?

c. Why do they keep coming back?

4) Not everyone is brand conscious, and not all brand-conscious people are truly brand driven.

5) Marketers must continuously stay tuned to changing consumer needs, as induced by technology and changes in life stages.

F. Brands and integrated communication.

1) Integrated marketing communications (IMC) refers to all the messages directed to a consumer on behalf of the brand: media advertising, promotion, public relations, direct response, events, packaging, the Web, and so forth.

a. Integrated marketing communications projects a single, cohesive brand image into the marketplace and into the consumer’s mind because all communications work from a single strategy.

b. Each message must be integrated or dovetailed in order to support all other messages or impressions about the brand.

c. Successful integrated marketing communications builds a brand’s equity by communicating the same brand message to consumers.

d. Some say integration has been around for decades, but it wasn’t as important or formal an issues as it is today.

2) Today marketers realize the brand is their most important asset.

a. The most important factor in determining the actual value of a brand is its equity in the market.

b. Brand equity is the value of how people such as consumers, distributors, and salespeople think and feel about a brand relative to its competition.

G. Young & Rubicam’s brand asset valuator.

1) Brand Asset Valuator is a diagnostic tool for determining how a brand is performing relative to all other brands. It explains the strengths and weaknesses of brands on measures of stature and vitality.

2) It demonstrates that brands are built in a very specific progression of four primary consumer perceptions: differentiation, relevance, esteem, and knowledge.

3) Brand vitality is a combination of differentiation and relevance.

a. A brand must be distinct (i.e., differentiated).

b. Differentiation isn’t sufficient; the product must also be relevant and fit consumer needs.

4) Brand stature is based on esteem and familiarity.

a. Esteem is how much consumers like your brand.

b. Familiarity is how much they know and understand it.

5) Brand Asset Valuator looks at brands from a logical perspective. The key challenge a brand has is how to increase its dominance.

6) One of the keys to understanding brand equity is to recognize that there are differences between product categories.

7) The development of advertising requires understanding all the ramifications in the market and the consumer’s mind, so we can integrate communication and build brand equity better.

H. Brand equity and developing integrated marketing communications strategic plans.

1) A strategic plan should precede creating advertisements for brands.

2) Before you can develop a strategy, you need an understanding of the marketing situation and a clear understanding of the brand’s equity. There are four logical steps in this process :

a. Brand equity audit analysis.

b. Strategic options and recommendations.

c. Brand equity research.

d. Creative brief.

I. Brand equity audit analysis.

1) In the market context we are looking for clues and factors that positively or negatively affect brand equity. The purpose is to set the scene.

2) Questions to ask to help us understand the status and role of brands in a given market include the following:

a. What is our market and with whom do we compete?

b. What are other brands and product categories?

c. What makes the market tick?

d. How is the market structured?

e. Is the market segmented? If so, how? What segment are we in?

f. What is the status of store and generic brands?

g. Are products highly differentiated?

h. What kind of person buys products in this category?

i. In the minds of these consumers, what drives the market or holds it back (needs, obstacles, and so forth)? What are the key motivators?

j. Do consumers perceive the brands as very much alike or different?

k. Is the product bought on impulse?

l. How interested are consumers in the product?

m. Do consumers tend to be brand loyal?

J. Brand equity weaknesses and strengths.

1) Use the following indicators to examine the current brand equity – how strong or weak consumer bias is toward our brand relative to other brands:

a. Brand awareness—top of mind is best.

b. Market share, price elasticity, share of voice, and similar factors.

c. Brand sensitivity—the relative importance of the brand to other factors involved in the purchase, such as price, pack size, and model.

d. Consistency of the brand’s communication over time.

e. Image attribute ratings, or ranking attributes.

f. Distribution, pricing, product quality, and product information.

g. Brand loyalty—the strength of a brand lies in the customers who buy it as a brand rather than just as a product.

K. Brand equity descriptions.

1) The personal relationship between the consumer and the brand helps to identify the consumers’ thoughts and feelings resulting in brand bias. This provides the most meaningful description of brand equity.

2) Two points of view may be used to assess brand equity descriptions:

a. Review all the available research to get as close a feeling as possible on how consumers view the brand and how they feel about it.

b. Analyze in depth our brand’s and its competitors’ communications over a period of time.

c. Consumer’s view of a brand is rooted in rational (logical) and emotional (feelings) elements.

L.

M. Competitive strategies and tactics.

1) This area is designed to provide a clear summary of the current communication strategies and tactics of our brand and of key competitors.

2) Key questions are:

a. Is the strategy designed to reinforce current brand equity?

b. Who is the target audience?

c. Are there different target audiences?

d. What are the themes and executional approach?

e. How are the marketing funds being spent (consumer pull versus trade push, advertising, promotions, direct marketing, others)?

3) An assessment of problems and opportunities is also done.

N. Strategic options and recommendations.

1) Draw on the conclusions from the analysis to develop a viable recommendation plan.

2) Strategic options include:

a. Communication objectives: What is the primary goal the message aims to achieve?

b. Audience: To whom are we speaking?

c. Source of business: Where are the customers going to come from—brand(s) or product categories?

d. Brand positioning and benefits: How are we to position the brand, and what are the benefits that will build brand equity?

e. Marketing mix: What is the recommended mix of advertising, public relations, promotion, direct response, and so on?

f. Rationale: How does the recommended strategy relate to, and what effect is it expected to have on, brand equity?

O. Brand equity research.

1) Here the proprietary, qualitative research is done.

2) It is exploratory and task oriented.

3) This exploration results in a revised list of rational and emotional elements that describe how we want consumers to think and feel about our brand in the future.

P. Creative brief.

1) The final step is a written creative brief (or work plan) for all communi​cations.

2) The creative strategy (brief or work plan) is a short statement that clearly defines our audience; how consumers think or feel and behave; what communication is intended to achieve; and the promise that will create a bond between the consumer and the brand.

3) A typical strategy would include:

a. Key observations—the most important market/consumer factor that dictates the strategy.

b. Communication objective—the primary goal that advertising and communication aims to achieve.

c. Consumer insight—the consumer “hot button” our communication will trigger.

d. Promise—what the brand should represent in the consumer’s mind; what the brand is promising the consumer.

e. Support—the reason the promise is true.

f. Audience—to whom we are speaking and how they feel about the brand.

4) An additional item can be mandatories—items used as compulsory constraints.

Q. Other examples of strategic planning.

1) Avrett, Free, and Ginsberg’s Planning Cycle.

a. A seven-step brand planning process using the discipline of account planning at each stage. Stages include:

*****NOTES: Use Exhibit 3.14 Here*****

1. Brand/market status.

2. Brand mission.

3. Strategic development.

*****NOTES: Use Exhibit 3.15 Here*****

4. Strategy.

5. Creative exploration.

6. Brand valuation.

7. Brand vision.

2) Another view of the planning process. Typical steps used by agencies in the planning process.

a. Current brand status. Brands are evaluated for their overall appeal in the context of its marketplace, in its consumers’ view, and in relation to its competitors. It answers:

1. Where do we stand in the marketplace?

2. What are our real competitors?

3. What is the consumer attitude toward our brand?

4. What is the consumer attitude toward the category?

5. Who are the consumers?

b. Brand insights. The agency uses a series of tools designed to help it develop insights to better understand the consumer’s view. This is the step where strengths, weaknesses, opportunities, and threats (SWOT) are determined.

c. Brand vision. Identify the most powerful connection between the brand and the consumer.

d. Big idea. Identify the big idea, the creative expression of brand vision. This becomes the foundation for all creative briefs.

e. Evaluation. Accountability is an essential aspect of communication planning. How well have the objectives been met and how can communication be improved the next time?

3) Every agency has its own version of strategic brand building and understanding the consumer.

a. TBWA uses disruption to define brands for clients.

b. Euro RSCG Worldwide looks at the marketer’s need for ideas that apply to its business strategy.

c. Ogilvy & Mather takes a holistic look at communications and uses 360 Degree Branding.

R. What great brands do.

1) Scott Bedbury’s (former senior vice president of marketing at Starbucks Coffee) brand building principles include the following:

a. A great brand is in it for the long haul.

b. A great brand can be anything.

c. A great brand knows itself.

d. A great brand invents or reinvents an entire category.

e. A great brand taps into emotions.

f. A great brand is a story that’s never completely told.

g. A great brand is relevant.

*****NOTES: Use Exhibit 3.3 Here*****

*****NOTES: Use Exhibit 3.7 Here*****

*****NOTES: Use Exhibit 3.8 and compare to Exhibit 3.5 used previously*****

*****NOTES: Use Exhibits 3.9 and 3.10 Here*****

*****NOTES: Use Exhibit 3.11 Here*****

****NOTES: Use Exhibit 3.12 Here*****

*****NOTES: Use Exhibit 3.13 *****

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