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Showing posts with label services marketing. Show all posts
Showing posts with label services marketing. Show all posts
Social media is a pretty big deal in 2020. It was a pretty big deal back in 2010! But now, even more so.
Literally billions of people spend hours a week, sometimes hours a day, scrolling through their social media feeds, engaging in content that interests them.
Businesses came to realise pretty quickly that social media is a pretty useful tool to reach their potential customers.
Social selling was born as a way to communicate with potential customers through social media, in a less obtrusive way than traditional marketing.
So how do we do this?
What is Social Selling?
Social selling is the use of social media to research, find, and understand sales prospects, to network and engage in conversations in online communities with them, to build and strengthen relationships.
“Social selling is taking out the pitching component of sales. You’re creating conversations about your product and services which organically can produce sales conversations.” (LinkedIn)
The aim is to provide value to prospective customers through answering questions, responding to comments and sharing content related to your area of expertise.
Prospect cans are anywhere throughout the buying process — from awareness to consideration. The idea is to consistently provide value, so you are the first person or brand a prospect thinks of when they are ready to buy.
Digital marketing principles can implement at an individual salesperson level or a firm level, but social selling requires an investment of time, effort, money and technology. It can be done on a shoestring budget, but to create quality content, we need to invest in our social selling strategy.
The popularity of social media makes it a perfect platform to build relationships with prospects. Through an emphasis on social interaction and content creation via digital platforms, social selling could be considered sales 2.0. The image below illustrates how it differs from the traditional sales model.
“Social selling is the identification, targeting and reaching out to prospective and existing customers through social media channels and social communities in an effort to engage them in conversations that result in a potentially mutually beneficial relationship.” (Belew, 2014)
According to Statista, around 3.6 million people are using social media in 2020. By 2016, approximately 71% of all sales professionals were social selling in some way or form, even if they did not know it.
Having a business page on Facebook or commenting on posts in groups on LinkedIn for example are social selling tactics. It is not about bombarding strangers with private messages selling something after you connect on LinkedIn.
That is spam and the opposite of what you should do.
Sales strategy has always revolved around building and strengthening relationships to establish rapport and credibility with prospects and customers, so you are the one they think about when they require a solution to their problem, that you provide.
Social selling uses this same methodology but does it online with social media instead of requiring cold or warm calling or sales demos.
It might not be a surprise to you to hear that not many people enjoy doing cold calling and that many people do not like to receive cold calls. According to the Harvard Business Review, 90 percent of decision-makers say they never respond to cold calls. This means it can take numerous cold calls to reach a potential client if you can reach them at all.
“The approach is not simply another sales channel for making sales pitches but a way to engage the informed, empowered, and social buyers during their purchasing journeys using digital and social channels.” (Ancillai, Terho, Cardinali, & Pascucci, 2019)
If we’re the same as everybody else, nobody will remember us. If we’re a brand, we want to be memorable, right?
We want people to think of us when they are thinking about purchasing a product or service that we offer.
If we have a point of difference to our competitors, we are more likely to be remembered. We also want to offer a unique benefit that our competition does not offer.
This week’s marketing blog, this article explores differentiation as a business strategy.
Customer service is a vital component of the consumption experience to any firm who wants to retain customers and grow their business.
Great customer service means customers are likely to come back, but a subpar experience means they are unlikely to come back.
What Is Customer Service?
Customer service is the support provided by a firm or brand to the customers or potential customers of their product or service. It can happen before, during or after customers purchase or use a product or service. Firms aim to meet the needs, desires and requirements of these customers through delivering professional and supportive and assistance, to ensure an easy and pleasant consumption experience.
Customer service can be face to face in a store, over the phone, through digital activities such as text, social media messaging or email, or by automated means such as an ATM. This interaction between a service organisation and its customers or clients is referred to as a service encounter and a firm has the opportunity to form an impression with customers every time they come into contact.
“Interpersonal interaction between an organisation’s employees and its customers… have a high “impact” on the consumer and the quality of the service encounter… thus a vital ingredient in the overall quality of service experienced by the customer.” (Lewis & Mitchell, 1990)
Why is customer service important?
Customer service is part of the promise brands give customers. There is now an expectation from customers that businesses provide a certain quality of customer service. This is especially true in the services industry. Even the local mechanic now needs to step up their game. Businesses need the ability to learn, identify and adapt to the needs and wants of consumers. Customer-oriented firms have a higher ability to anticipate the developing needs of consumers and respond with goods and services.
Customer service that is at least on par with competitors is critical to competing effectively. If it is better, it can give you a competitive advantage. Customers do not shop based on price as often as they used to. Instead, their overall experience is often the motivator.
“89% of companies now expect to compete mostly on the basis of customer experience.” (Gartner Research, 2014)
It is cheaper to keep existing customers than to acquire new ones. But it is not as simple as just having great products to retain them — your customer service needs to be on point. Bad customer service is enough for previously loyal customers to choose a competitor — if customers are not happy with the service, chances are they will leave.
The benefits of great customer service
Providing customers with an elevated level of service quality has a positive relationship with brand performance and customer satisfaction. Service quality is how well the delivery of that service matches customers’ expectations. Satisfaction has a positive relationship with repeat purchase, and this is particularly true for service industries. Customers are satisfied when a firm performs better than they expected.
Prioritising customer service support might increase the costs of a firm through needing extra staff or tools/technologies, but there are a few benefits that should outweigh the investment. Studies have indicated that over 80 per cent of people would pay more for better customer service.
Some other benefits of providing great customer service include:
customers are more satisfied with their experience
enhanced perceptions of the firm’s overall market strategies
increased positive word of mouth and referrals attracting new customers
increased ability to upsell or cross-sell relevant services
customers can be willing to pay higher prices for a better experience
customers perceive products and services as having better quality
customers perceive the servicescape as being of higher quality
The customer service of a firm or brand can ‘make’ or ‘break’ their reputation.
“…Organisational culture that stresses the customer as the focal point of strategic planning and execution… Employees consistently exhibit customer-oriented behaviours, and consumers thereby become accustomed to this philosophy.” (Brady & Cronin Jr, 2001)
Having somebody yell through the phone line is nothing new to customer service representatives
Bad customer service
In the world of mobile phones and social media, it is hard to hide a bad customer experience. People can quickly share a negative experience online, which can reach a large audience. With many people using Google search to check out a business, a couple of bad reviews can make a significant difference. People are more likely to share a negative experience on social media or talk about it with their friends than they are with a positive experience.
How can firms improve their customer service?
Improving customer service means making every touchpoint great and not letting any interaction fall between the cracks. There must be consistency across the organisation in providing a great customer experience.
In 2020, it is not enough for firms to only use the traditional means of customer support such as over the telephone for customer support. Customers expect to be able to reach organisations by whatever means they find convenient, whether it is email or social media. Therefore, firms must have a comprehensive approach and provide a range of customer service options to customers.
Businesses can also provide self-service support to customers so they can find the answers they require without needing to deal with customer support staff.
A customer orientation
Marketing has progressively moved towards a customer orientation since Leonard Berry’s seminal writing on Relationship Marketing (1983), now considered a fundamental principle of marketing. To be customer-oriented implies that a firm focuses on the customer as the centre point of their strategic planning and execution. They aim to identify and adapt to consumers’ needs and wants as a competitive strategy through learning from customer perceptions of their experience.
“Having a customer orientation has a positive influence on customer perceptions and, ultimately, the performance of firms.” (Brady & Cronin Jr, 2001)
A customer’s evaluation of the overall service quality is determined by three factors: employee service performance, physical goods/service quality, and servicescape (place of business) quality. Firms must be proactive in collecting and analysing customer data for a better picture of how they are performing and the needs and wants of customers, and to act on this information.
Digital tools for customer service
In the digital age, consumers now have several methods available to communicate with customer service representatives.
Over the past few years, social media has become increasingly popular to request and receive customer service. It is an expectation now to be able to send a message via a major brand’s Facebook page with any questions or problems you may have related to their products or services and receive a prompt response. Around half of the internet users now turn to social media for help. Accordingly, many large organisations implemented dedicated customer service teams to respond to social media messages. Studies (see Xu, Liu, Guo, Sinha & Akkiraju, 2017) have indicated that users who message a brand’s Twitter account expect a response within an hour.
This consumer demand for an instant response and the time-consuming nature of manually addressing these requests lead to the rise of AI for customer service on social media. This led to the creation of chatbots to automatically generate responses for user requests on social media and now on websites. These chatbots provide an opportunity for brands to provide individualised attention to consumers.
“Marketing is concerned with exchange relationships between the organisation and its customers. Quality and customer service are key linkages in this relationship.” (Christopher, Payne & Ballantyne, 91)
A genuine smile goes a long way in customer service
Key customer service skills
As much as a firm can have a customer orientated strategy, much of the responsibility for great customer service falls on the staff members. Luckily, customer service is a skill that people can learn and develop, rather than a personality trait you either have or you do not.
Here are ten customer service skills that are key to providing great customer service.
1. Patience
Patience is vital for anybody with customer service in their role. From real estate sales to a check out operator at a supermarket. Customers who reach out to support are often frustrated and at their wit’s end. Sometimes they want to vent. There could be a simple solution, but let the customer get it out of their system. For example, a study found that 40% of user requests on Twitter are emotional and not intended to seek specific information. Empathy goes hand in hand with patience, which is a person’s ability to understand another person’s feelings. A staff members ability to see an issue from the customer’s point of view is a huge advantage and customers appreciate it.
2. Listening
The ability to truly listen is not only a key skill for customer service but life in general. Listening allows you to fully understand the customer’s point of view and solve their problem. When you do not listen, it is easy to get it wrong and create a frustrating experience for the customer. Customer service reps can often jump to conclusions about a solution, which can come across as rude and brash. Take time to listen and understand customer issues, it will show you value their needs.
3. Communication
It might sound obvious, but how you communicate with customers is key to their experience. You do not want to come across as condescending, grumpy or rude — this will translate into a negative experience. It is important to be mindful of how staff communication comes across. As well as attitude, the clarity of the communication during customer service is key providing the right outcome. The last thing you want is more confusion on the part of the customer because they do not understand what they are supposed to do or what the solution is.
4. Learning
By learning about the issues and concerns of their customers, so they can provide a solution. How do we learn from our customers? By asking questions and listening when interacting. The more your customer service staff know about your customers’ needs, the more of an asset they are to both the organisation and the customers.
If the same customer issues come up consistently, chances are you have not learnt from this to provide an adequate solution. Staff must communicate these issues to management so they can plan to resolve the problem. If your customer service team is working like a well-oiled machine and learning from the feedback, you will start anticipating problems instead of just solving them.
5. Time management
Customers often expect a resolution as quickly as possible. They hate to wait — especially over the phone, so long waiting times can negatively affect customer experience. So, whilst patience and taking time with customers is important, there is a limit to how long you should commit to each customer. Firms should provide customer service employees with the information and tools to support their customers are as quick as possible. Staff training can help improve resolution times.
6. Composure
Customer service staff must have the ability to stay consistently calm under pressure, even if they are experiencing difficulties with an upset customer. This cool demeanour can help calm down the customer and keep the conversation as objective as possible to find a resolution to their issue. Emotion triggers many of the interaction customers have with customer service, so it is key for staff to remain level-headed — even when customers are being insulting to them or their firm. The staff that can think on their feet are a huge advantage — not every interaction will be in the training manual. Expect the unexpected.
7. Negotiation
Often staff members will need to negotiate with customers to find a resolution. Conversations need to end with a solution and/or with the customer feeling that the firm have (or will) taken care of their needs. Negotiation is not arguing — it is important to remain calm and have a constructive conversation. There will always be one party who feels like they have come out better off than the other party — make sure that is the customer! Do not just give in to the customer demands, there must be some give and take. Customer service staff require good persuasion skills when there is no obvious solution, this reasoning can help convince the customer of a suitable outcome.
8. Teamwork
Teamwork and customer service go hand in hand; both staff and customers will benefit when customer teams work together as resolutions to the customer issues are faster. One customer service representative will never have all the answers, so there must be open communication lines across teams to find a solution to each unique issue. Large firms often have several dedicated customer service teams for different requirements. There might be one team for technical support, another team for accounts and billing, and another team for general inquires. In smaller firms, provide all employees with some customer service training so they can help when required.
9. Positivity
It can be a challenge for customer service staff to spend their days dealing with customer complaints and negativity that comes along with the role. However, it is a key customer service skill to remain upbeat and positive. If staff meet customers with a smile and a cheerful attitude, it makes customers feel a lot better. This can put staff on the front foot when trying to find a resolution. It also creates a better work environment. If staff are happy and they can feel other staff are happy, they enjoy their jobs more and become more productive.
10. Product & brand knowledge
The more your sales staff know about your product or service, the better they are at selling them. Similarly, with customer service, the better staff become at providing a solution. Training should be a key part of customer support. Many large companies onboard every new employee to ensure they know their products inside and out. Onboarding is the process of integrating new employees into an organisation, familiarising them with the products and/or services. The best customer service staff have intimate knowledge of how their products work or order to find each customer an adequate solution to their problems.
In summary, this article has explored how great customer service can positively influence the performance of a firm and 10 key skills for customer service staff.
I hope you enjoyed this week’s content and learnt some new tips and strategies for improving your firm’s customer experience.
Positioning is one of the fundamental elements of marketing, both for consumer products and B2B (Business to Business). Positioning is a brand’s unique way of providing value to its customers. Where does a brand sit in the hearts and minds of customers? These associations that consumers hold with a brand reflect their positioning.
This week’s blog topic explores positioning as a marketing strategy and how it relates to other marketing strategies. Five common positioning strategies are also discussed.
“A position that takes into consideration not only a company’s own strengths and weaknesses, but those of its competitors as well.” (Ries & Trout, 2001)
What Is Positioning?
Firms use positioning to create an image of a brand’s product or service in the mind of a target customer. Positioning defines how the brand’s offering is unique, how it provides a distinct benefit to customers. Businesses use marketing to communicate their market position to customers and influence their perception of the brand’s products or services. Marketing establishes the brand identity, influencing consumer perceptions of its position in the market relative to the alternatives available from competitors.
“Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect.” (Ries & Trout, 2001)
Before determining its position in the market, a firm should decide on a segment of the market that they want to target. This segment of the market should be profitable — either there are many customers, or it is a niche in the market that presents an opportunity due to a lack of competition. This is where positioning comes in. A business must decide how to make their brand as attractive as possible to this group of customers they want to target. This target market defined by demographics such as gender, location and age as well as criteria based on their consumer behaviour.
Unique Selling Proposition
Effectively positioning a product or service gives it a USP (Unique selling proposition). A USP is an attractive feature or characteristic of a brand that differentiates it from similar alternatives. In a modern marketplace cluttered with so many choices with similar benefits, you want your brand to stand out from the rest. It becomes more memorable and can have a competitive advantage over alternatives. Your USP is your unique benefit to entice customers to purchase your brand over another. Brands must communicate This USP with their target audience. This is where positioning comes in.
McDonald’s is a notable example of using a USP to help position their brand. They are the world’s most widely known fast-food brand and compete with hundreds of other fast food outlets. They do not try and position themselves as the fastest, cheapest or best tasting. Instead, their USP is that they are a family-friendly restaurant. The children’s menu items, the free toy with a kid’s meal, the playgrounds. They position themselves to target families.
Positioning statement
A USP and positioning statement is similar. The biggest difference is that a USP is product or service-centric and focuses on what sets your product or service apart from competitors; where a business creates their positioning statement after the USP, focusing on the primary benefit of the product or services for their target market. Businesses need to ask themselves, “How do I want our brand to be perceived?”
A positioning statement should be no longer than a paragraph, and should discuss the following:
· Define what category your product or service belongs to and how it meets the needs of consumers. Customers need a reference point to provide context to evaluate a brand’s offering.
· What differentiates your product or service from the alternatives? One point of differentiation is best, stating your difference from the customer’s perspective. How does your differentiator will help solve the customer’s problem or help them achieve their goals?
· Explain why consumers in your target market should believe your brand’s claims. Consumers must see credibility in your positioning, so provide evidence to justify the claim of your brand in your positioning. Do not just say you are the fastest or best quality, state HOW you are.
“There is a positive relationship between company performance (profitability/efficiency) and well-formulated and clearly-defined positioning activities.” (Kalafatis, Tsogas & Blankson, 2000)
Determining a Positioning Strategy
A successful positioning strategy relies on a deep understanding of the marketplace you want to compete in. It identifies how your company is different from the competitors and the conditions and opportunities in the marketplace. A big mistake that many businesses make is assuming that positioning is just a marketing strategy. It should be one of the foundations of the business strategy. After all, you cannot position a product as a high-quality offering in your marketing if the product itself cannot back up those claims.
Customers can recognise a clear positioning strategy — they understand whether a brand is competing on price or quality. Positioning must be a cohesive effort between the business strategy and sales and marketing tactics. It is far more than just a communication strategy. This is the only way the product or service will deliver on customer expectation and the promises of its positioning. Organisations must clearly define their positioning across the value chain, otherwise, communication loses focus and can become confusing.
There are five main strategies upon which businesses can base their positioning.
1. Positioning based on product characteristics
Using product characteristics or benefits as a positioning strategy associates your brand with a certain characteristic that is beneficial to customers. For example, in the automobile industry, Toyota’s position in the market is reliability, Porsche’s position is performance and Volvo’s position is safety. Brands consistently communicate the most unique benefit or characteristic of the product with consumers.
“Volvo owns ‘safety.’ BMW owns ‘driving’…” (Ries & Trout, 2001)
2. Positioning based on price
Positioning your products or services based on price is associating your brand with competitive pricing. Usually, with pricing positioning strategy, a brand aims to be the cheapest or one of the cheapest in the market, and value becomes their position. For example, Supermarket chains often have a house brand with very low-price products in many product categories. Their lower logistical and distribution costs allow them to price their products lower than the competitors, so price-sensitive buyers will often purchase them without knowing the price because they know it is often the cheapest option.
Brands can also position based on price if they find a gap in the market at a certain price point. Being the only option in a certain price range becomes your market position. Often brands extend their product lines to fill a gap in the market.
3. Positioning based on quality or luxury
Often the price and quality of a product align, certainly in the mind of the consumer, as the high price is often associated with high quality. But positioning a product based on its high quality or ‘luxury’ is different from positioning based on price. Often these brands do not communicate their price point, but instead high quality or prestige is the focal point of communication, to create a desire so customers want the product regardless of the price.
Note that luxury does not always mean better quality, but customers still believe it is better because of the reputation of the brand due to their long-term brand positioning strategies. For example, a $200,000 Rolls Royce car, the epitome of luxury, is likely to have a lower build quality than a $30,000 Hyundai.
4. Positioning based on product use or application
Associating your product with a particular use is another way to position your brand in the market. For example, meal replacement supplements can be of use to anyone lacking time or wanting a quick convenient meal. There are also meal replacements designed specifically for people who want performance in the gym, so high in calories and added vitamins and minerals. Other meal replacements are for people on a diet, so they are low in calories and would not provide much energy for somebody’s workout.
Often the former meal replacement target males and the diet low-calorie option target females. Both are meal replacements, but different positioning.
5. Positioning based on competition
Competitor based positioning focuses on using the competition as a reference point for differentiation. Brands highlight a key difference their product/service offers in their marketing to make it seem favourable and unique compared to other options in the marketplace. The product or services becomes unique.
Brands can also use the competition as a reference point to follow a similar strategy. If a particular brand has a large market share, their positioning strategy must be attractive to a large group of customers, so you try and convert some of their customers by offering a similar product with similar benefits at the same price point.
Positioning Perceptual Maps
Businesses can create a perceptual map of the positioning of the dominant brands in a marketplace to identify any gaps and opportunities in that market.
Positioning perceptual map example
The positioning map compares brands competing in a marketplace by illustrating consumer perceptions of those brands by using two key variables.
For example, businesses can apply price and quality for most markets; but the map should focus on the primary consumer needs or product benefits you want to understand, which will vary depending on the market. See below for an example of a positioning map.
In conclusion, your positioning in the market determines where your brand sits relative to competitors. It is important for brands to have a point of difference and to emphasise it in their marketing.
I hope you enjoyed this week’s content about positioning.
The power of branding in the twentieth century is obvious. Brands such as Google, Apple, Nike and McDonalds are globally recognisable and powerful, the only thing that sets them apart from their competitors is the unique connection and loyalty that consumers hold with them.
Interest in the theory of brand equity increased in the late 1980s with a concern that a shifting trend from businesses towards a short-term focus on finances could have a harmful long-term effect on their brand and marketing tactics. There was a realisation that brands are assets to a business, driving business performance over time.
What Is Brand Equity?
Brand equity is the added or subtracted value given to a current or potential product or service, influenced by the brand. It is “the differential effect of brand knowledge on consumer response to the marketing of the brand”(Keller, 1993). Consumers have a perception and desire that a brand will meet their promise of benefits. The higher the perception of value, the higher the premium customers are willing to pay.
Most people don’t think twice before purchasing Coca Cola
An elevated level of positive brand equity requires cooperation between the tangible and intangible aspects of a product or service. The intangible aspects come from a customer’s
subjective experiences with a brand, the brand’s uniqueness and personality and
ability to stay relevant and build a relationship with loyal customers.
“Brands, in their ability to create choice, build trust and loyalty and drive a premium price.” (Interbrand, 2010)
Customers are willing to pay more
Consumers gravitate toward products with great reputations. Brands with strong positive brand equity can generate a premium when compared to a generic equivalent. Customers are more willing to pay a higher price — even if they can get a comparable product or service from a competitor for less.
This is how Apple can charge so much for an iPhone when a comparable alternative can cost less than half the price, yet Apple’s legions of loyal fans will queue outside the store to buy the latest phone on release. If a customer attaches elevated levels of quality or status to a brand, they perceive it as being worth more than alternatives.
This price premium is not limited to consumer products; a study on industrial products (See Bendixena, Bukasaa, & Abratt, 2003) found that the leading industrial brand name could command a price premium of 6.8% over the average industrial brand and 14% over a new and unknown brand. Technical specialists were willing to pay a price premium of up to 26%.
Other benefits of positive brand equity
Besides the benefits of being able to charge a premium price, there are numerous other benefits to having a brand with strong positive equity. Some of the benefits are as follows:
Higher profit margins because businesses with high brand equity can charge more, but do not incur a higher expense to produce the product or service.
The brand is more recognisable and trusted, therefore there is increased demand by customers which results in higher sales volumes. Brands are more easily extendable, which means the parent brand can develop a preference and favourable impressions towards their new products or services with their customers.
Your target market more readily accepts marketing communications due to your existing positive reputation.
A reduction in new product failure rates and launching costs are lower due to a higher level of brand awareness and trust with their target market.
Due to the brand reputation of delivering a certain level of quality, customer retention and loyalty is high as consumers like to reduce their risk and simplify their choice.
A reduction in marketing costs to achieve the same volume as it costs more to acquire new customers than it does to retain existing customers.
Higher resilience to competitors’actions as customers is loyal and unlikely to switch. This creates entry barriers to the marketplace for competitors as it is not a profitable market segment for their brand to target.
A strong brand provides strategic support to a business strategy that will add long-term value to the organization.
Brands with high equity can have higher marketing budgets to invest back into marketing through their higher profit margins. This helps ensure brand equity remains strong.
Brands are everywhere you look in big cities
Customer-based brand equity
Over the years, there has been confusion and disagreement on how to best define measure brand equity. There have been multiple definitions, but they predominantly fit into two distinct categories: customer-based and financial.
“Customer-based brand equity is defined as the differential effect of brand knowledge on consumer response to the marketing of the brand.” (Keller, 1993)
Customer-based brand equity is the most popular conceptualisation of brand equity, introduced by prominent marketing academic Kevin Keller. He defined brand equity as attracting (or repulsing) consumers to (from) a product, generated by the ‘non-objective’ part of the product. It is the added value of a product in a customer’s mind. It is the influence brand knowledge has on consumer response to the marketing of the brand.
Keller’s brand knowledge construct drives brand equity and is made up of three dimensions — brand awareness, brand image, and brand associations. Brand image is a customer’s perception of a product, service or brand. Brand awareness is a consumer’s ability to recognise a brand and recall how they have that knowledge. As you can see above, an individual’s brand knowledge is the combination of their subjective brand awareness and brand image. Brand image should not be confused with brand identity, which is controlled by the firm. Brand image is the customer’s perception of this identity.
See Keller’s brand awareness framework below.
Kevin Keller’s brand awareness model
David Aaker is another notable marketing academic who modelled brand equity from the point of view of the customer. He believes recognition is the important driver of brand equity and identified four contributors to brand equity: perceived quality, brand loyalty, brand awareness and brand associations.
Variations of the dimensions the drivers of customer-based brand equity discussed in the literature include reputation, identity, personality, attitude, familiarity, commitment, trustworthiness, loyalty, and performance.
A common characteristic of both Keller’s and Aaker’s model of brand equity is brand associations. Brand associations are anything that creates a positive or negative feeling toward a brand. Marketing aims to create strong, favourable, and unique brand perceptions and associations with a brand that customers remember. It can be based on functional benefits of the product, but often focuses on connecting on an emotional level through a unique brand personality that reflects positive organisational values and social benefits. An individual’s usage experience also influences their brand associations, which is why tangible and intangible aspects of a brand’s products or services must align.
David Aaker’s brand equity model
“High brand equity implies that customers have a lot of positive and strong associations related to the brand, perceive the brand is of high quality, and are loyal to the brand.” (Yoo, Donthu, & Lee, 2000)
Relationships build equity
One of the underlying functions of marketing in the 21st century is to form a relationship with customers. Creating a successful relationship contributes to the positive equity existing in a brand, as these customers like and trust you. Brand trust and loyalty strengthen consumers’ investment into the brand by reducing their uncertainty and vulnerability.
A strong brand “increases customers’ trust of invisible products, while helping them to better understand and visualise what they are buying.” (Berry, 2000)
Brand trust is the willingness of a customer to rely on a brand to meet their expectations of function utility. This requires time and experience between the two parties, but trust plays an important mediating role in the creation of equity and value in a brand.
Brand loyalty is a commitment from a customer to consume a preferred product or service consistently and repeatedly into the future, despite situational influences and the marketing efforts of competitors having the potential to cause switching behaviour. Customers that believe in the value of a brand often will not spend time appraising cheaper options with lower prices.
Marketing’s role in creating equity
Companies can create brand equity by making products and services memorable, easily recognisable, and superior in quality and reliability. Marketing is a major driver of brand equity through differentiating products from competing brands. Marketing builds strong brand equity through influencing the brand associations held in a consumer’s mind. Enhance the strength of your brand by investing in advertising and resist often discounting products; as this has been shown to create negative brand equity for businesses, as customers are less willing to pay a premium price if they know it is often sold much cheaper.
“Brand equity is developed through enhanced perceived quality, brand loyalty, and brand awareness/associations; which cannot be either built or destroyed in the short run but can be created only in the long run through carefully designed marketing investments.” (Yoo, Donthu & Lee, 2000)
Create a personality for your brand expressed through your marketing mix. The connection a consumer feels with your brand’s personality can define your relationship with customers.Creativity helps develop a unique brand differentiated from competitors. Marketing communications should also be consistent in the long-term, from messages to the visual identity. The marketing mix should also always be relevant to the target customer and your brand image. Stay true to the brand.
The brand equity model below from Yoo, Donthu & Lee (2000) is a good illustration of how marketing contributes to the brand equity process.
Brand equity as the financial value
The second popular definition of brand equity is based on measuring the financial value of a brand. The value added to a product or service by its brand name compared to an unbranded alternative.
Marketers in the 1980s started to realise that certain brands offered considerable added value to products. They saw brand equity as a durable and sustainable asset to a business and wanted a way to estimate the unique value of each brand. One of the formulas introduced to estimate a brands value is by taking the value of the firm and subtracting the tangible assets and “measurable” intangible assets. The remaining value is the firm’s financial brand equity. This measure used at the macro (market) level, to put a monetary value on a brand for resale purposes. There are also measures for brand equity at a micro or product level, which allowed firms to observe the value of individual brands by isolating changes in brand equity by measuring its response after major marketing decisions.
As the financial method offered limited use to helping set marketing strategies to grow strong brands, researchers preferred the customer-based approach. The brand value was starting to be explored as a concept at around the same time, and researchers began to realise that taking a financial viewpoint to brand equity was confused the topic with brand value, and the two should be kept separate.
Brand equity can be measured as the financial value of a brand
Brand value or brand equity?
An uncomplicated way to separate the two is that brand equity what a brand does for a customer, while the brand value is what it does for the business. Brand value is the financial worth of the brand. Many marketing academics consider Interbrand to be the world’s most reputable brand valuator (see Chu & Keh, 2006), and each year they publish a list of the world’s most valuable brands.
There are three key components to Interbrand’s methodology for brand valuations:
· Analysing the financial performance of the products or services — the economic profit measured as “the after-tax operating profit of the brand, minus a charge for the capital used to generate the brand’s revenue and margins.”
· The role the brand plays in purchase decisions — the portion of the purchase decision attributable to the brand as opposed to other factors.
· The brand’s competitive strength — the ability of the brand to create loyalty and, therefore, sustainable demand and profit into the future
That is it for this week's blog. I hope you enjoyed this week’s content about brand equity. Make sure you keep creating quality marketing content around your brand to increase your brand equity!
Market research plays a key role in helping businesses to better understand their customers and marketplace, to help them make more strategic decisions.
This week’s blog explores the topic of market research.
Marketing team discussing a marketing strategy
What is Market Research?
Market research is the organized effort of planning, gathering, recording and analysing information to better understand a target market. This includes factors such as market size, the competition and customer types.
“Information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues…” (American Marketing Association, 2004)
Research is a key component to guide businesses with important strategy decisions, such as changing elements of their marketing mix and how this is likely to impact customer behaviours.
The research process first identifies and formulates the problem, then determines the research design such as the research method and collection of data and the final stage is the analysis and providing recommendations based on the research findings.
Why is market research so valuable?
There are many strategic and tactical decisions that businesses make in the process of identifying satisfying customer needs. There are many uncontrollable environmental factors such as economic conditions, politics, and social changes that complicate marketplaces. Analytics can show a business what is happening, but you can only learn so much. Market Research helps a business discover the ‘why’.
Research provides relevant, accurate and up to date information to understand a marketplace at a current point in time. This new knowledge of relevant information informs decision-making by reducing uncertainty. Often bad decisions in business are the result of guessing instead of putting any time and effort into researching what the customer would think or how the market would react.
You will never think on behalf of your customers or experience a product or service in the same way. Testing your assumptions means you will not waste time and money on a bad idea.
Research helps businesses improve decision making to create better products, improve the customer experience and improve their marketing to attract and convert more leads. This leads to three broad goals for market research. First is to better understand the marketplace; second, to better understand your customers; third, to monitor performance.
Gain a better understanding of your market
Without understanding a market, a business is just throwing something out there, hoping it will work. Do not learn from mistakes, look for the opportunities first and then tailor your products to suit.
A market analysis is a powerful tool to study the dynamics of a specific market, whether it is online, or localised. This analysis helps a business understand market trends to discover opportunities and guide strategy. A business needs to identify internal strengths and weaknesses, as well as external opportunities and threats. This is a SWOT analysis.
Part of understanding a market is knowing what your competition is doing better than you, to improve. A similar analysis a business can use through research is a PESTEL analysis, which investigates Political, Economic, Social, Technological, Environmental and Legal factors in a marketplace.
Some of the broad goals business have for market research are:
• planning and implementing marketing strategies
• a competitor analysis
• risk analysis
• identifying market trends and opportunities
• learning the potential for a market
• target market selection and market segmentation
• product testing and refinement
• business planning
• understanding social, technical, and political aspects of a market
Young woman shopping at a hardware store
Getting to know your customers better
Research helps businesses understand their customers wants, needs, desires, beliefs and actions. Only then, a business can recognise whether their offerings meet those needs.
When you understand your customers better, you learn to learn how they think. You learn what they value, how they make a purchase decision, and what they think of your competitors.Once the behaviours and preferences of your target customers are better understood, you can modify your offering and accordingly the marketing to better meet their needs. This is crucial for planning a marketing strategy that aligns with not only who you are, but also what the customer is looking for.
Define your buyer persona
If your business does not already have buyer personas or understand your market segment and target customers well, this is a good place for your research to start.
Buyer Personas are fictional and generalised representations of ideal customers, created by a business to better understand them and therefore more effectively target marketing to communicate with them. Personas include characteristics such as age, gender, family, location, income and challenges.
Your research participants should then match the characteristics of your buyer personas. If you have more than one persona, focus your research on your most important personas and recruit a separate sample group for each.
Sales forecast
Monitoring performance
Market research can also help a business to monitor and evaluate their marketing or product’s performance. Large companies invest millions of dollars into product development, to ensure all that effort is worth it. Provide the right solution for a customer’s problem, at the right price, with the right marketing. There is a lot to get right… or wrong.
Ways you can test consumer opinions of new products or products in development is through focus groups and beta-testing. Companies can also analyse their existing data, such as analytics, to better understand the demand for their current products and services, to then make tweaks and improvements.
Research methods
Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyses the results, and communicates the findings and their implications.
There are two major types of market research: primary research and secondary research. Primary research is sub-divided into two research methodologies, quantitative and qualitative research; although it can be a combination of the two, called mixed methods.
One general research question guides the research; for example: How should we segment our market for product x. Or, who is the most profitable region for product y. More specific research questions follow to guide the research process and what information to gather.
Primary Research
Primary research is the design, collection and analysis of your personal data through methods such as talking to customers or observing behaviours. Primary research can be exploratory or specific. Exploratory is when research is trying to understand a certain scenario and is better suited to qualitative research such as open-ended questions with a small sample.
Specific research usually follows exploratory research and delves into more specific research queries a company may have. It is more direct towards asking certain customer segment-specific questions.
Two methodologies guide the design of primary research — qualitative and quantitative research techniques.
Qualitative research
Qualitative research aims to explore feelings, behaviours and experiences — things we cannot measure with numbers and statistics. Common qualitative research methods include in-depth interviews, focus groups, and observation. The idea is to gain deeper knowledge about your customers and/or target market, to find out the why behind their decision-making process.
“Qualitative research encompasses a family of approaches, methods and techniques for understanding and thoroughly documenting attitudes a behaviour… Qualitative research seeks the meanings and motivations behind behaviour as well as a thorough account of behavioural facts and implications via a researcher’s encounter will people’s own actions, words and ideas.” (Mariampolski, 2001)
Instead of asking specific questions to get an objective answer, qualitative research does not follow a scripted approach. The researcher is facilitating a conversation rather than trying to lead it. Do not ask yes/any questions, as this style of questioning can bias the outcome, through unintentionally swaying participants’ thoughts.
There should be a general focus for the session, outlining the topics you want to explore, but it should be natural and conversational with open-ended questions. You might include one scripted question such as “take me back to the day when you first decided that you needed to solve this x problem”
From this point, you guide the participants which “can you tell more about that?”, and “how…?”, “who…?”, “where…”, “what…?” Just delve deeper into topics that the participant thinks are important to discuss. Get them to go deeper into their experiences.
Qualitative research goes deeper than quantitative to explore the ‘why’ instead of just the ‘what’. The general demographic information is not as important in qualitative research, as we want to understand the consumption experience itself rather than customer characteristics. Just find out a little bit of background information to give context to the participant, such as their career and family life.
Market research team
Quantitative research
Quantitative research aims to describe and explain a situation or problem (attitudes, opinions, behaviours), through generating numerical data or data that can be easily transformed into statistical data. The aim is to be as objective as possible to be able to generalise the results for a larger population.
“Quantitative research… explaining phenomena by collecting numerical data that are analysed using mathematically based methods (in particular statistics).” (Creswell, 1994)
Common methods of quantitative research are customer surveys, polls, questionnaires, and analysing digital analytics or secondary data. With the rise of digital technologies, mobile surveys have become increasingly popular making it far cheaper and easier to compile this kind of research.
Quantitative research typically begins with asking demographic questions to form an accurate picture of who the participants or ‘sample’ for the study are. Demographic questions are those such as gender, age and education. For example, a male under the age of 20 is going to have many differences to a woman over the age of 65. Because quantitative research focuses on numbers and statistics, a larger sample increases the validity of the results whereas qualitative research has a much smaller sample.
A substantial portion of the questions is closed-ended, meaning participants have set responses to choose from that best fit their situation. This makes large datasets fast and easy to analyse, but the data is generalised and cannot delve into the nuances that qualitative research can.
Some examples of quantitative survey questions are:
• How often do you use the product: Every day, once a week, once a month, very rarely
• What price do you think is fair for the product: $80, $100, $120, $150
How to find research participants
Once you have decided to conduct market research and choose a suitable method, you need to find participants. Research participants should be a representative sample of your target customers, as well as some of your actual customers. This will help you to understand their characteristics, challenges, and buying habits.
Ideally, your sample will also include people that researched your business but decided not to purchase. If they have chosen a competitor, you want to know why.
Finding customers is the easy part. Anybody who made a recent purchase should be in your CRM. You want to ask recent customers, as their experience will still be fresh in their minds. If you do not have a CRM, ask people when they purchase if they would like to do a brief survey.
CRM will hold information such as an email for potential customers who enquired or evaluated your services but did not make a purchase. You can also find participants through social media or online forums and other communities. Find out where your target audience spends time together. You can even create a Facebook group specifically for the study. Use your network to find participants, but they must be relevant. Stay away from friends and family, but they might know somebody. A post on Facebook and LinkedIn can be fruitful.
It might help to offer an incentive for participants to be involved in the study. You could offer something like a $50 or $100 voucher to spend 30–60 minutes to be a part of a focus group or complete a survey.
Secondary research
Also known as desk research, secondary research is a research method that uses pre-existing data. No fieldwork (e.g. no observations or surveys required), hence the term desk research. This existing data is summarised to strengthen the findings of primary research. If your data matches the findings of previous studies, it is solid evidence.
Secondary research is far quicker to compile and cost-effective than primary research as data collection is not first-hand. The kind of data you can find helps paint the ‘big picture’, such as industry trends or geographic factors.
Common sources of secondary research include:
Academic journals, market research, industry reports or trade publications
Online sources — websites, databases, publications, government data
In-house company data and analytics — e.g. CRM, social media
That is this week’s blog.
I hope you enjoyed this week’s content about market research.
The ‘servicescape’ has become a little-discussed marketing topic in the digital age; yet has quite a considerable influence on customers if you are a service business with a physical location.
First, the servicescape forms a perception in the mind of customers. Then, it contributes to their service experience.
“Physical environments, also termed servicescapes, play an important role, both positive and negative, in customers’ impression formation (Bitner, 1992).”
Welcome to week eighteen of 50 weeks of marketing. This week, we will explore the servicescape and how services can provide a better experience for customers.
The servicecape of a modern office
What is the servicescape?
The servicescape is the physical environment where a service transaction takes place. It facilitates the customers’ experience, but it also influences their first impressions before they even enter the store or interact with a staff member. This first impression helps customers ease any discomfort of the unknown, then guides their perception and expectations of the service.
In a service encounter, customers interact with the service continuously. For example, at a restaurant. You might have numerous interactions with staff and use the restroom. Service providers need to create a pleasant, convenient, and satisfying experience for customers.
“The design of the physical environment and service staff qualities that characterise the context which houses the service encounter, which elicits internal reactions from customers leading to the display of approach or avoidance behaviours.” (Bitner, 1992)
Bitner (1992) introduced the term servicescape to define the context for a service encounter. It is the physical setting where customers consume a service and/or product and the company and customer interacts with each other. Businesses can (and should) modify their servicescape to match customer expectations and influence customer perceptions. This perception will engage customers to act in a certain way.
If it does not expect and is negatively perceived, chances are the customer will not come back. So, there is a relationship the servicescape and customer loyalty. It is something businesses need to get right. Investing in your servicescape can improve customer relationships and facilitate more sales.
Other definitions for the servicescape has included:
The physical aspects of the service environment are organisationally controllable, objective and measurable. This includes the exterior and the interior of the “brick and mortar” physical environment and the ambience of the service encounter, such as background music and cleanliness, the overall design and furnishings, and the staff’s competence and presentation. The physical components of a servicescape include:
Exterior
• Landscape
• Exterior design
• Surrounding environment
• Parking
• Signage
Facility Interior
• Music
• Layout
• Equipment
• Air quality temperature
• Interior design
Others
• Virtual servicescape
• Web pages
• Employee uniforms
• Stationary
• Business cards
These make up three dimensions of environmental stimuli according to Bitner’s original framework: ambient conditions, spatial layout and functionality and signs, symbols, and artefacts.
There is now a fourth element identified as contributing to the experience: the social dimension.
Ambience or atmosphere adds to the experience at cafes
Ambient conditions
The ambience of a business can be the deciding factor of whether or not a customer comes back. Especially in a café, bar or restaurant. The customer wants to feel as relaxed and as comfortable as possible. If it is too hot, or too cold for example, this will not help the customer enjoy their experience.
The ambience was too often overlooked by services, but as we have moved from a product-based to a service-based economy, it is a common expectation from customers to have a certain level of ambience. Aspects such as colour, music, noise, smell and lighting all contribute to the ambience of an environment. These affect our senses and influence our experience.
Ambience fills most Cafés. Background music and the noise of people talking, the scent of coffee beans, big bright menu displays. This provides a pleasant service encounter for the customer.
Compare going to your favourite café to sitting in a quiet empty room drinking a coffee alone.
“Ambient conditions represent background environmental stimuli, or atmospherics that affect human sensations. These stimuli comprise visual (e.g. lighting, colours, brightness, shapes, aesthetic cleanliness, olfactory (scent, air quality, fragrance) ambient (e.g. temperature) and auditory (e.g. music, noises) elements.” (Rosenbaum & Massiah, 2011)
Spatial layout and functionality
The physical attributes of a store should be the starting point for businesses as they can observe and measure how effectively the layout and functionality enhance employee and customer activity. It is objective and controllable.
Spatial layout refers to the arrangement of furnishings and equipment, their design and what they look like, and the general spatial relationship between these objects in the store. Consider comfort, layout, and accessibility as this can influence consumer approach or avoidance decision-making. Will they turn around and walk back out?
Functionality is the extent to which the business can facilitate the service and provide customer support. This will be dependent on how much help the customers require.
Hotel lobbies and office buildings need functional layouts and style
Signs, Symbols and artefacts
The signage of a business is the first and most obvious places to communicate with customers at your place of business. A big sign in the exterior of the building to communicate your brand to people driving past and signage in the interior of your store. As well as your branding, signs can communicate how to behave in store such as where the toilets are, where to pay, where in-store certain items are.
Symbols and artefacts help contribute to the vibe and atmosphere of a servicescape. Examples of this are the artwork on the wall, and décor design — is it themed or inspired by another culture? People usually interpret these similarly, as the store design will have a certain symbolic meaning and purpose. However, an individual’s ethnicity, for example, can be a moderator for how they perceive a servicescape dependent on how authentic it is to their expectation. This can influence a consumer’s response.
“Bagozzi (1975) noted that most marketplace exchanges are mixed exchanges, in which consumers fulfil not only their utilitarian needs but also their social and psychological needs. Thus, customer approach/avoidance decisions are influenced not only by physical stimuli but also by social, humanistic stimuli.” (Rosenbaum & Massiah, 2011)
The social dimension
The social aspect of a service encounter is dependent on the staff and the environment creating a positive consumption experience for customers. Components of this include the placement of customers, their involvement and interaction with employees. How much are customers able to contribute to the feeling of the atmosphere?
Service providers can be an outlet to remedy loneliness, through consumption communities. Often locally owned and independent, owners and employees at these businesses ‘know’ all about the neighbourhood and the people living there, and often have several ‘regulars’ — customers often spend time there as a home away from home. It becomes a community where people have a sense of belonging and can engage in social encounters free from any constraints and judgement based on their socio-economic status for example.
People subconsciously seek connections with ‘the rest of life, which Wilson (1984) called biophilia. Commercial services such as local bars can encourage these natural encounters, providing value to customers on a personal, psychological level. Oldenburg (1999) called these “third places”.
These service experiences can be restorative to consumers and enhance their wellbeing, through feelings of ‘being away’ and ‘compatibility’. Being away does not require distance but gives people a feeling of ‘escape’, beyond the realms of home and work Temporarily, the experience exports people to a different place. Natural settings are popular destinations for restoration, such as the topical beaches, botanical gardens, and mountain ranges.
“The sense of being away does not require distance; however, it does require that a person feel as though he or she is momentarily in another world.” (Rosenbaum & Massiah, 2011)
The outdoor servicescape
The roles of the servicescape
If your business has a physical store, your servicescape plays four key roles in the success of your business. I will separate these into two categories: Facilitation and socialising, and brand image and differentiation.
Facilitation is keeping the purchasing and service delivery process as convenient and efficient as possible, whilst socialising facilitates interactions between both customers and employees and between the customers themselves. Brand image is the impression customers get from your servicescape and differentiation set your business apart from your competitors.
“The physical environment influences sales, time spent in the store, perceptions of the service experience, satisfaction, dissatisfaction, product choice and customer retention. The physical elements directly influence purchasing behaviour and as such can either aid or hinder a service organisation from achieving its marketing goals.” (Tombs, McColl-Kennedy, 2003)
Facilitation and socialising
The design and fit-out of a service help facilitate two main goals: first to be as efficient as possible to maximise how productive staff are at their job, and also ensuring the customer has the experience they want. Ineffective designs can be frustrating to staff and customers alike. The design of the servicescape can also illustrate to customers where they can and cannot go.
We do not want to hinder the performance of staff or their enjoyment of their jobs, and equally, we do not want to focus on maximising the performance of staff if that reduces the quality customer experience. In services such as restaurants or cafés, the servicescape design helps both customers and employees socialise, to help facilitate a pleasurable experience with friends, family or business clients.
Overcrowding in retail stores in shopping centres can hurt atmospherics. However, in some contexts such as live sport and concerts, crowding is positive for consumers as it adds to peoples’ enjoyment. Social contagion spreads the happiness or ‘atmosphere’ throughout the crowd. Cafes, bars and nightclubs can have a similar feeling, where part of the attraction is because people like to socialise.
The ideal social density changes between service encounters, and because it affects the customer experiences and their intent for future consumption, it is something business owners need to understand. Find out whether a social experience is important to your consumers and create a spatial layout that facilitates greater social interaction. Other business customers might want to avoid each other as much as possible, such as a bank, doctor or solicitor.
Brand image and differentiation
The servicescape for a business is much like the packaging for a product or a website. It conveys a certain expectation to customers, and they perceive it in their unique way. It will attract some people and others will not like it. One person will feel comfortable in a place and not so much in another.
Such Hell’s Pizza here in New Zealand. The took a slice of the pizza market away from Pizza Hut and Dominoes with their unique branding. Your servicescape helps differentiate your brand from the next. For example, McDonald’s versus Burger King. The food is remarkably similar, but the restaurants are vastly different and there is no way you would confuse the two. The unique ‘Golden Arches’ at McDonald’s as you drive in the first dead giveaway, then there’s Ronald McDonald and the playgrounds…
All of this creates an image in the mind of consumers of what to expect. It helps position your brand in the market to attract your target customers. The playgrounds at McDonald’s targeted at families and unashamedly so. Your servicescape communicates your unique value proposition for customers and it will help attract attention to your business.
That is week eighteen of 50 weeks of marketing! I hope you enjoyed this week’s content about Servicescape.
