Strategically Branding A Destination

1
Strategically Branding A Destination

• William D. Neal
• Senior Executive Officer
• SDR, Inc.

2
What Values Come to Mind?

• Coca Cola

3
What Values Come to Mind?

• Hewlett Packard

4
What Values Come to Mind?

• Honda

5
What Values Come to Mind?

• Disney

6
What Values Come to Mind?

• Las Vegas

7
Branding is a Strategy

• Great brands are built strategically
• Great Brands are a central element of strategic
  business planning.
• Great Brands dominate the market planning process.

8

• Strategy - integrated actions in the pursuit of
  competitive advantage
• George Day

9
Strategic Market Planning

• A planning process to develop or improve
  sustainable competitive advantage.

10
If it moves, we sponsor it, if it doesnt
move, we paint it red. Roberto C. Goizueta,
Coca Cola
11
Can we adopt strategic business planning models
to the Travel Tourism Industry?
Yes ! But we must change our thinking a bit
12
Think in terms of BUSINESS

• The location can be thought of as the ENTERPRISE.
• ORLANDO
• Individual destinations can be thought of as
  STRATEGIC BUSINESS UNITS dominated by Brands.
• Disney World
• Universal Studios
• Sea World
• Specific activities can be thought of as CUSTOMER
  REQUIREMENTS.
• Rides Attractions - History Education
• Culture/Heritage - Nature
• Night Life - Educational Programs

13
Think in terms of BRANDS

• The destination area can be thought as an
  AUTHORITY BRAND.
• ORLANDO
• Individual destinations can be thought of as
  STRATEGIC BRANDS.
• Disney World
• Universal Studios
• Sea World
• Specific activities can be thought of as
  INDIVIDUAL BRANDS to meet customer needs.
• Indiana Jones Theme Park - Theme Hotels
• Old Town Orlando - Nature Island

14
The Brand Hierarchy
Orlando
Authority Brand
Universal
Disney
Sea World
Strategic Brand
Strategic Brand
Strategic Brand
Sub- Brand
Sub- Brand
Sub- Brand
Theme Hotels
Indiv. Rides
Attractions
15
What Master Brands come to mind for this
Authority Brand?

• San Antonio

The Riverwalk The Alamo The Five Missions Texas
Museum of History The Spurs
16
What Master Brands come to mind for this
Authority Brand?

• Atlanta

The Braves Turner Field Stone Mountain
Park Buckhead Emory Medical Center Lake Lanier
17
What Master Brands come to mind for this
Authority Brand?

• Ocracoke Island?

Where is Ocracoke?
18
The Marketing Concept
External Environment
Other Co. Activities
Marketing Activities
CONSUMER
Marketing Mix
Finance, Production, Legal
Economic, Political, Technological, Social,
Demographic
19
The Marketing Concept

• The purpose of business is satisfied customers
• Drucker, Levitt, McKitterick
• The purpose of business is to deliver value
• Porter, Reichheld, Berry

20
Brand Value Concept
Satisfaction simply keeps you in the
Consideration Set
All Products Services in the Category
The rational buyer purchases the brand with the
highest value to them
21
The Marketing Concept

• REALITY
• Marketing Concept must also address the
  competition
• The purpose of business is to deliver higher
  relative value.
• To survive and grow, you must provide
  SUSTAINABLE COMPETITIVE ADVANTAGE

22
Goal of Marketing Strategy
Develop Sustainable Competitive Advantage
23
Strategic Market Planning

• A planning process to develop or improve
  sustainable competitive advantage. (Neal,
  Introduction to Marketing Strategy)

24
The Kotler Model
25
The Major Elements of the Strategic Planning
Process at the Enterprise Level

• Mission
• Goals Objectives
• Growth Strategy
• Business Portfolio Plan

26
Mission

• Short statement of the business you are in
• Used to focus and limit your purview
• Often the hardest step in the process
• Often accompanied with a VISION STATEMENT - what
  do I want to be in the future.

27
Goals Objectives

• Goals - longer term, broader outcomes you are
  seeking (e.g. lead the industry in sales and
  service)
• Objectives - shorter term, totally measurable
  outcomes (e.g. sustain a 10 increase in annual
  profitability for each of the next three years)
• Each goal should have multiple, time-phased
  objectives crafted so that their accomplishment
  will fulfill the goal.

28
Growth Strategy

• To grow by how much over what time period.
• How will we measure growth - sales, profits,
  share, operating ratios, etc.
• How will we grow?
• Higher Demand
• New products
• Market expansion
• New market penetration
• Production efficiency
• Acquisition
• etc.

29
Business Portfolio Plan

• What elements of my business will I put under the
  same management group?
• By brand family
• By product line
• By geographic/country location
• By channel
• By buyer benefits delivered
• etc.

30
Developing The Strategic Marketing Plan
31
Step 1 - Assessment

• Areas to Address
• Internal Opns
• Competitors
• Markets
• Marketing
• Environment
• Core knowledge
• Experience

• SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats

32
The Kotler Strategic Planning Model
The Company
TheEnvironment
Corporate Divisional Levels Strategic Planning
Process
Company
Objectives
Growth
Business
Macro-environment
and
Strategy
Portfolio
Mission
Goals
Plan
Publics
Competitors
Marketing Channels
Markets
Product Market Levels The Marketing Process
Target Markets
Marketing
Target
Marketing
Marketing
Market
Mix
Systems
Opportunity
Selection
Strategy
Development
Analysis
Customers
Information
Execution
Market Segmentation
Product Positioning
Product Optimization
Philip Kotler
Market Forecasting
Business Magazine
May-June, 1980, pg..3
Customer Feedback
Brand Value
33
Step 2 - Marketing Opportunity Analysis

• Segment the market - What bases?
• Needs/preferences
• Values/benefits sought
• Occasions
• Demographics
• Align your strengths against competitions
  weaknesses - BY SEGMENT
• Share of market, Share of preference,
• Channel control, Price advantage, Brand strength,
  
• Price/value perception, Production capability, etc

34
Market Segmentation

• Firms that properly segment their market and
  focus their resources on deep penetration of
  targeted segments almost always exhibit higher
  profitability.

35
Why is Market Segmentation usually successful?

• Focuses the resources of the firm on a specific
  target of similar customers.
• Limits competitive pressure.
• Allows the firm to develop a deep marketing-mix
  experience with the segment.
• Provides a platform for expansion into contiguous
  segments.

36
The Multi-Dimensional Segmentation Model
Activities
Occasions
Demographics (Life Stage)
37
The Kotler Strategic Planning Model
The Company
TheEnvironment
Corporate Divisional Levels Strategic Planning
Process
Company
Objectives
Growth
Business
Macro-environment
and
Strategy
Portfolio
Mission
Goals
Plan
Publics
Competitors
Marketing Channels
Markets
Product Market Levels The Marketing Process
Target Markets
Marketing
Target
Marketing
Marketing
Market
Mix
Systems
Opportunity
Selection
Strategy
Development
Analysis
Customers
Information
Execution
Market Segmentation
Product Positioning
Product Optimization
Philip Kotler
Market Forecasting
Business Magazine
May-June, 1980, pg..3
Customer Feedback
Brand Value
38
Step 3 - Target Market Selection

• Evaluate segments in terms of your perceived
  strengths and weaknesses vs competitions
  -develop perceptual maps for segment groups
• First, select segments you currently dominate and
  determine how to defend and improve your position
• Next, select segments that you could dominate and
  prioritize by cost of domination.

39
Step 3 - Target Market Selection (cont.)

• Finally, find any remaining segments that
  represent high growth potential and look at ways
  you could successfully enter those segments.
• New product introduction
• New brand platform
• Power promotion
• Order segments by financial attractiveness and
  prioritize investments

40
The Kotler Strategic Planning Model
The Company
TheEnvironment
Corporate Divisional Levels Strategic Planning
Process
Company
Objectives
Growth
Business
Macro-environment
and
Strategy
Portfolio
Mission
Goals
Plan
Publics
Competitors
Marketing Channels
Markets
Product Market Levels The Marketing Process
Target Markets
Marketing
Target
Marketing
Marketing
Market
Mix
Systems
Opportunity
Selection
Strategy
Development
Analysis
Customers
Information
Execution
Market Segmentation
Product Positioning
Product Optimization
Philip Kotler
Market Forecasting
Business Magazine
May-June, 1980, pg..3
Customer Feedback
Brand Value
41
Step 4 - Marketing Mix Strategy

• FOR EACH TARGETED MARKET
• Determine how you will optimize VALUE for each
  target market, now and in the future
• Plan the product/service attributes you will
  emphasize
• Plan your advertising/promotional support program
• Plan your channel/delivery strategy - avoid
  channel conflict
• Plan your pricing strategy

42
Step 4 - Marketing Mix Strategy (cont.)

• FOR EACH TARGETED MARKET
• Develop contingency plans for likely competitor
  counter-attacks
• For each segment, determine how you will enhance
  your brand equity
• Use market simulation (preference or choice
  models) to test likely market response to your
  initiatives and to test competitive responses
• Check for incompatible brand and product
  positions across targeted segments

43
The Kotler Strategic Planning Model
The Company
TheEnvironment
Corporate Divisional Levels Strategic Planning
Process
Company
Objectives
Growth
Business
Macro-environment
and
Strategy
Portfolio
Mission
Goals
Plan
Publics
Competitors
Marketing Channels
Markets
Product Market Levels The Marketing Process
Target Markets
Marketing
Target
Marketing
Marketing
Market
Mix
Systems
Opportunity
Selection
Strategy
Analysis
Customers
Development
Information
Execution
Market Segmentation
Product Positioning
Product Optimization
Philip Kotler
Market Forecasting
Business Magazine
May-June, 1980, pg..3
Customer Feedback
Brand Value
44
Step 5 - Marketing Systems

• Forecast the growth in each targeted segment
• Develop selling and delivery systems that will
  support the current market and can handle the
  forecasted growth.
• Market information systems
• Customer service operations
• Communications programs
• Develop a customer feedback system that measures
  plan vs. actual

45
The Kotler Strategic Planning Model
The Company
TheEnvironment
Corporate Divisional Levels Strategic Planning
Process
Company
Objectives
Growth
Business
Macro-environment
and
Strategy
Portfolio
Mission
Goals
Plan
Publics
Competitors
Marketing Channels
Markets
Product Market Levels The Marketing Process
Target Markets
Marketing
Target
Marketing
Marketing
Market
Mix
Systems
Opportunity
Selection
Strategy
Analysis
Customers
Development
Information
Execution
Market Segmentation
Product Positioning
Product Optimization
Philip Kotler
Market Forecasting
Business Magazine
May-June, 1980, pg..3
Customer Feedback
Brand Value
46
Strategic Planning

• Strategic market planning is non-linear and
  recursive (and sometimes chaotic)
• The interface between the overall business
  strategy and the strategic marketing plan is
  critical - they must be fully integrated
• Ultimately, the strategic business plan dictates
  the amount of investment you can afford in your
  marketing plan
• Develop a plan to measure costs, effectiveness,
  and progress to objectives - ROMI

47
Winning Strategy - Maximize value which
maximizes loyalty for each target market

• The KEY to customer LOYALTY and growth is to
• Get into the consideration set
• Then, consistently deliver the BEST VALUE to the
  targeted customers.
• VALUE is the KEY DRIVER of choice, thus LOYALTY!
• Brand Equity should be a major element of the
  VALUE PROPOSITION.

48
Why is Brand Equity Important?

• Prevents commoditization of the category.
• Communicates added value beyond the tangible
  product performance characteristics, improving
  selling price and margins.
• Provides a strong defense against low price
  generic brands.
• Provides a platform for new product
  introductions.
• Gives more channel control to the
  manufacturer/producer.
• Improves stockholder value and stock price.

49
Competing Theories of Brand Equity

• Financial Orientation
• Interbrand - Premium over category avg.
• Accepted Accounting Procedures
• Farquar - New Accounting Procedure
• Market Orientation
• Total Research - Equitrend
• Landor Associates
• Aaker
• Young Rubican
• CDB Research
• Vanderbilt/SDR (Srinivasan, Russell, Kamakura)

50
MARKETPLACE APPROACHTOBRAND EQUITY
51
Competing Market Theories of Brand Equity

• Aaker-Building Strong Brands. Views brand equity
  as the total value of a brand, including price
  premium, satisfaction, product attributes, image
  attributes, public opinion, and so forth.
• Vanderbilt Model - (MSI Series on Brand Equity.)
  (Srinivasan, Russell, Kamakura) Views brand
  equity as just the imagery that surrounds the
  brand name by buyers in the product category.
  Brand equity is separate from price and product
  performance attributes and may be measured as a
  price differential.

52
Aakers 10 Measures

• Loyalty Measures
• Price Premium
• Satisfaction/Loyalty
• Perceived Quality/Leadership Measures
• Perceived Quality
• Leadership/Popularity
• Associations/Differentiation Measures
• Perceived value
• Brand Personality
• Organizational Associations

53
Aakers 10 Measures (cont.)

• Awareness Measures
• Brand Awareness
• Market Behavior Measures
• Market Share
• Market Price Distribution Coverage
• The price premium may be the best single measure
  of brand equity available, because it directly
  captures the loyalty of customers in a most
  relevant way. Aaker, pg 321.

54
Aakers 10 Measures (cont.)

• Aaker model uses very disparate measures for each
  of the 10 criteria.
• Uses judgement to weight measures, depending on
  the product category, in order to construct a
  single summary measure.
• Does not work cross-culturally because of
  measurement and scaling issues.
• Gives no examples
• Ultimately, it is totally judgmental.

55
BRAND VALUEVanderbilt/SDR Model
(Combines market orientation and financial
orientation)
56
The Brand Value Model

• Idea developed from literature of Srinivasan,
  Russell Kamakura
• Very similar model described by Srinivasan
  Park (JMR, May 94) (used expectancy-value
  measurement model)
• SDRs approach uses tradeoff exercises combined
  with other measurements.

57
Brand Value Concept

• 1. Buyers who are considering a purchase, scan
  their product/service options and develop a
  consideration set.
• 2. Within the consideration set, they develop a
  hierarchy of brands/products based on their
  assessment of VALUE.
• 3. Typically, they choose the brand or product at
  the top of their value hierarchy, if available.
• THIS MAY BE A CONSCIENCE COGNITIVE PROCESS, OR A
  SUB-CONSCIENCE PROCESS WITH SOME EMOTIONAL
  ELEMENTS

58
Brand Value Concept
The
All Products/services in the Category
Consideration Set Brand Hierarchy Brand V
Brand X Brand Z
The rational buyer purchases the brand with the
highest value
59
How Brands Get Into the Consideration Set

• Awareness
• Satisfaction in previous experience, or
  reputation for high satisfaction of customers
• Trusted
• Compatible image with purchaser
• Perceived acceptable price range
• Not socially irresponsible
• Acceptable country of origin

60
Brand Value Concept

• Elements of Brand Value
• - A BUNDLE of tangible attributes delivered by
  the product/service or its channel.
• - A BUNDLE of intangible attributes delivered by
  the name of the brand or producer (brand image
  or brand equity.)
• - The price of those combined bundles.

61
Brand Value Concept

• Customers determine brand value
• Varies by customer and customer segment
• Varies by product/service category
• Any one Customer may have a different value set
  for different product categories

62
Brand Value Model

Value
What Drives Value ?
63
Brand Value Model

Value
Price is one element Price includes - Initial
Costs - Operating Costs
Price
Initial Price Operating Cost
64
Brand Value Model

The bundle of tangible product/ service
attributes is another.
Value
Product/Service Deliverables
Price
Attribute 1 Attribute 2 Attribute 3 etc..
Product Performance
Service/Channel Performance
65
Brand Value Model

Brand equity is the third element.
Value
Product/Service Deliverables
Co./Brand Equity
Price
Image Driver 1 Image Driver 2 Image Driver 3 etc..
Attribute 1 Attribute 2 Attribute 3 etc..
Attribute 1 Attribute 2
66
Brand Value Model

Each element of the brand value model has a weight
Value
WPrice
Wbrand
WiAttributes
Product/Service Deliverables
Co./Brand Equity
Price
Wi
Image Driver 1 Image Driver 2 Image Driver 3 etc..
Attribute 1 Attribute 2 Attribute 3 etc..
Wi
Attribute 1 Attribute 2 etc..
Wi
Wi
Wi
Wi
Wi
Wi
Wi
Wi
67
Brand Value Model

Each buyer has a different weight structure
Value
WPrice
Wbrand
WiAttributes
Product/Service Deliverables
Co./Brand Equity
Price
Wi
Image Driver 1 Image Driver 2 Image Driver 3 etc..
Attribute 1 Attribute 2 Attribute 3 etc..
Wi
Attribute 1 Attribute 2 etc..
Wi
Wi
Wi
Wi
Wi
Wi
Wi
Wi
68
Brand Value Model

The buyers weight structure is their Value
Equation
Value
WPrice
Wbrand
WiAttributes
Product/Service Deliverables
Co./Brand Equity
Price
Wi
Image Driver 1 Image Driver 2 Image Driver 3 etc..
Attribute 1 Attribute 2 Attribute 3 etc..
Wi
Attribute 1 Attribute 2 etc..
Wi
Wi
Wi
Wi
Wi
Wi
Wi
Wi
69
Brand Value Model

• Each buyer has a unique Value Equation
• The Value Equation provides the buyer with a
  preference structure for making a CHOICE among a
  competing set of products or services in a
  category.
• Rational buyers choose the best VALUE.
• Thus VALUE drives CHOICE.

70
Brand Value Model

Value
Choice
WPrice
Wbrand
WiAttributes
Product/Service Deliverables
Co./Brand Equity
Price
Wi
Image Driver 1 Image Driver 2 Image Driver 3 etc..
Attribute 1 Attribute 2 Attribute 3 etc..
Wi
Attribute 1 Attribute 2 etc..
Wi
Wi
Wi
Wi
Wi
Wi
Wi
Wi
71
Brand Value Management

• BRAND VALUE
• Varies by product/service category.
• Price and performance features can often be met
  by competitors.
• Brand equity is more difficult to change - long
  term strategy - Both offensive and defensive.
• When there is weak brand equity and product/
  channel parity in a category, price is the only
  remaining marketing variable.

72
Brand Equity Characteristics

• BRAND EQUITY
• Intangible, varies by category
• Not easily duplicated, thus provides long- term
  defense against competition
• Underlying drivers are perceptual
• Image imparted to the purchaser
• Trust
• Longevity in the marketplace
• Reputation for quality
• Community involvement
• Built and improved by effective advertising

73
Brand Value/Equity Measurement

• ASSUMPTIONS
• Buyers optimize value within a product or
  service category.
• Buyers therefore assign utilities (weights) to
  price, performance attributes, and brand equity.
• Buyers trade off performance attributes and
  brand equity against price in order to optimize
  value.
• The utilities (weights) of price, performance
  attributes and brand equity is summative and
  equal to total brand value.

74
Brand Value/Equity Measurement

• First, we use conjoint models to estimate
  utilities.
• Respondent goes through two tradeoff tasks
• TASK 1 - Brand-Price tradeoff
• TASK 2 - Brand-Features-Price tradeoff
• Merge results of both tasks at the respondent
  subgroup level and re-scale to be comparable.
• Purpose is to get accurate estimate of price
  utility

75
Measurement Model
Total Value (Ut)

First stage conjoint
Price (Upr)
Product (Upt)
X
Attribute 1 (u1)
Attribute 2 (u2)
Attribute J (uj)

Brand (Ub)
Price
Second stage conjoint
76
Task 3 - Choice Task

• Respondent then goes through a CHOICE TASK that
  is based on their conjoint results.
• Respondent is asked if they would switch to, or
  purchase next, their highest rated conjoint
  profile.
• IF YES, we ask about another (lower) profile, and
  so on until they would not purchase or switch.
• PURPOSE measure barriers to switching and
  confirm conjoint results

77
Task 4 - Brand Image Ratings

• Each brand in the competitive set is also rated
  (0-10 scale) on its imagery, for example
• A brand I can trust
• A brand that I want seen in my home
• A company that will fix any problems I may have
  with their product
• etc.
• Ratings are then (ridge) regressed against
  derived brand equity from the conjoint to get the
  relative weight of each image driver.

78
Task 4 - Brand Image Ratings

• The beta coefficients from the ridge regression
  (or similar models) reveal the key drivers that
  are most associated with each brands utility
  (derived brand equity)
• Thus, you can reveal the key drivers of brand
  equity, improve your imagery on those attributes
  and improve brand equity

79
Brand Equity DRIVERS Service Co.

• Honest in its dealings with customers
• Concerned about my familys needs
• Progressive and innovative
• Respects me as a customer
• Is well managed
• Efficient in coordinating the service activities
  of different departments
• Keeps me informed of energy matters that are
  important to my familys health
• Easy to do business with
• Contributes to the community

80
Average Importance of the Elements of Brand Value
81
Brand Valuation RESULTS

• With this type of model, you can build a market
  response simulator to determine how each
  marketing mix variable effects share of choice.
• Changes in BRAND EQUITY can be tracked over time.
• Changes are relative to other products/ brands in
  the category.

82
Brand Value Model

Value
Choice
WPrice
Wbrand
WiAttributes
Product/Service Deliverables
Co./Brand Equity
Price
Wi
Image Driver 1 Image Driver 2 Image Driver 3 etc..
Attribute 1 Attribute 2 Attribute 3 etc..
Wi
Attribute 1 Attribute 2 etc..
Wi
Wi
Wi
Wi
Wi
Wi
Wi
Wi
83
Winning Strategy - Maximize value which
maximizes loyalty for each target market

• The KEY to customer LOYALTY and growth is to
  consistently deliver the BEST VALUE to the
  customer.
• VALUE is the KEY DRIVER of choice, thus LOYALTY!
• Brand Equity can be a major element of the VALUE
  PROPOSITION.

84
Market Segmentation Based on the Value Model

• Derive the value equation for each respondent in
  the survey.
• Each buyers value equation can be used as the
  basis for segmenting the market.
• Form groups of respondents who have similar value
  structures (e.g. price sensitives, service
  sensitive groups, product performance sensitive
  groups, etc.)

85
Brand Value Model

• Each buyer has a unique value equation.
• We use modified conjoint/choice exercises to
  determine that value equation for each
  respondent.
• From the derived utilities and choice
  information, we can determine each respondents
  switching behavior under different competitive
  scenarios.

86
From the Brand Value Model

• We can determined who switched.
• We can determine why they switched.
• We can describe the switchers.
• We can describe the non-switchers.
• FOR EACH COMPETITIVE SCENARIO

87
This led us to a discovery!

• There are different kinds of loyalty!
• Some people are loyal because they are committed
  to a brand or company.
• Some are loyal because a particular brand offers
  some unique benefits or performance
  characteristics.
• Some are loyal because they wont spend the time
  or effort to make an evaluation.
• Some are loyal because they have little choice.
• And some are just disloyal, buying on price or
  convenience alone.

88
Some Parting Thoughts

• A label is not a Brand!
• Advertising and Promotion costs to support a
  brand is an investment, not an expense.
• The starting point, and the KEY to building Brand
  Equity, is to define what you want your brand to
  stand for - the implied contract you have with
  the consumer.
• Then, support that brand image in every way - in
  all selling materials, with distributors
  retailers, in advertising, promotion, and PR.

89
Some Parting Thoughts

• You can stake out a brand promise in many ways
• The highest quality in the category
• Good Economical
• Available everywhere - systems, parts and repair
• The best designs in the business
• Extreme versatility/diversity
• Make sure your performance (and your channels
  performance) backs up your promise - walk the
  talk!

90
Some Parting Thoughts

• Strong brands mitigate channel dominance and
  product commoditization.
• Strong brands pull product through the channel.
• Strong brands improve profit margins.
• Strong brands build stockholder equity.
• If you do not build strong brands in your
  category, someone will do it to you!

91
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