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Module 1: Branding et communication

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Brands and Channel Management

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Welcome to this class. Now, let us look at what is the advantage of having a strong
brand. So, we are looking at organizations having strong Brands, what is the type of
advantage they derive having a strong brand. These are the types of advantages,
organizations derive by having a strong brand. If you are an organization coming out
with a product from a strong brand, you get this improved performance of product
perform perceptions of product performance.
Take for the example the TVS. Any vehicle coming out from TVS which is quality
certified. They put a small sticker there saying that ok, certified ok, it means a lot; it
means they are become the product has gone through almost all the stages of inspection
and has been certified to be roadworthy. And the customer attaches a lot of importance to
that type of product coming from a strong brand. If you are having a very strong brand, it
is very likely that you can have greater loyalty in a market place.
The same TVS, initially he may be a customer for TVS champ, then he may become a
customer for your for TVS X Super-XL, then maybe TVS Astra, then maybe the scooty

like that it goes on. So, many people would like to try all the products which are coming
from TVS, whether it is with respect to the scooty or whether it is with respect to the
bikes, the result is they have a well-satisfied customer base built up because of this
greater loyalty. This well satisfied customer base always gives them a strength in the
marketing environment, they become less vulnerable to competitive marketing actions.
Even if the competitor were to ride roughshod, they can take that particular onslaught.
So, you have a strong brand name in the market, the strong brand name in the market
gets you good customer loyalty, this customer loyalty intern makes you to get this
become less vulnerable to competitive actions. The result of this competitive marketing
actions becoming less vulnerable, also makes the organization less vulnerable to crisis.
So, if you are not a strong brand any time due to this intense marketing pressure which is
coming in, you may have to wind up shop that type of a situation will not be there for
strong brands usually.
A strong brand commands a greater brand equity, the result is larger margins are
possible. When larger margins are possible, you will get any inelastic consumer response
that is whatever might be the turbulence in the market your demand is not going to be
greatly affected. You will also get a good trade corporation not only from your channel
members, but also from other industry bodies as well. So, the result of all this strong
brand is that you have any increased marketing communications effectiveness. So, your
communication with the market, it will be more effective and it will be more rewarding;
it may get you possible licensing opportunities.
So, it is in other words to build up a strong brand you have to put in lot of efforts
initially. Once this brand is brand name gets established, then you can reap the advantage
of being a strong brand. In fact, when their TVS bus service was started in Madurai,
many people use to set their watches when the bus used to come to 8 o'clock, because
that bus has to come at 8 o'clock in the morning on that particular route. So, when the
TVS bus use to come there, immediately they would set it at 8 o'clock; so even if the
watch earlier was set further beyond 8 or below 8, he would set it 8 that type of customer
response this brand enjoyed right from the early stages only.
So, this you can see in many of the metro station rail metro stations also. So, they give
you this train to come at this period when and the train comes exactly on dot at that

particular time that particular minute. So, in fact if Bombay is surviving in spite of being
so populated, it is because of the sub sub-urban train services. So, surviving and also
thriving in the market being the financial capital of the country ok.
(Refer Slide Time: 07:36)

So, this is the advantage of being a strong brand and all this is brought out here by this
brand resonance pyramid. What is this brand resonance pyramid? In the center you have
the pyramid, in the sides you have some explanations given ok. So, go to the left if you
see, the first one is it gives you the identity who are you, it also tells what has the
meaning that is what are you.
So, starting from the salience you go towards performance and in imagery, the second
stage you are there. Then the third is response that is you have put up a product what is a
response, what about you that is a customer gives his judgments and about your product.
Then the fourth one is a relationships that is the type of feedback he is giving, this we
call it the resonance.
So, what about you and me this resonance has to coming. So, salience is when you I am
going to the right side of salience creates a deep broadband awareness, when it comes to
imagery it gives a strong favorable unique brand association; when it comes to feelings,
it gives a positive accessible reactions and when it comes to this level you are going to
get an intense, active loyalty. So, a very nice method of projecting the brand effect is this
brand resonance pyramid.

So, you got you go from salience to performance, to judgments, to resonance, then
imagery, to feelings, to resonance on the right side. So, on the left side you have
performance, judgments, split this middle portion of this pyramid is split into 4
compartments; performance, judgments, imagery and feelings all this represented very
nicely on the left and the right side by what is a type of this thing which it is going to
create.
So, creates an gives you an identity, gives you a meaning, gives you a response and gives
you the relationship in the marketplace. So, identities with respect to the customer what
who are you and what are you, what about you; and what about you and me. Now, when
you do that when you come to the right side, it gives a deep brand aware broadband
awareness, then comes to strong favorable and unique brand associations, then positive
and accessible reactions resulting in an intense, active loyalty. So, what a wonderful
method of presenting the brands strengths of the organization.
(Refer Slide Time: 11:15)

So, all these many times are made possible by having good channel good channels. So,
as I mentioned earlier the middle men are the people who really contribute to the
channel. So, if you are a merchant middleman, they buy take title to and resell the
product ok. So, this is a Voltas Vee-line group of products which they do and which is
considered a very strong merchant middleman in the Indian context.

If you look at the agent middleman, they also buy and resell the product, but they do not
take titled your product. So, your product come goes to the market by your own name,
suppose it is a product coming from the house of Kirloskars, let us it goes by the name of
Kirloskars only; whether it is a motor or alternate or whatever it is.
The channel decisions which you take with respect to an organization, they exercise
powerful influence on the rest of the marketing mix. So, what is required is clarity with
respect to channel decisions you must have absolute clarity, when you take a particular
channel so and if take him up as your distributions specialist, because he can influence
the rest of the marketing mix with respect to pricing.
Example, whether you are going in for mass distribution or high markup (Refer Time:
13:19) dealers. So, suppose you are going in for mass distribution, you may not going for
high markup; suppose you are going in for high markup, then mass distribution you may
not going. So, this channel member whom you select they have to give you a judicious
direction, whether they going for mass distribution or whether they going for high mark
up. So, this then advertising becomes very important this channel members are the one
who should corporate with the other areas in the organization, to provide you that
advertising effect.
When you come to sales force, the question you have to address is sale direct to retailers
or through manufacturer’s representatives? So, if the sale is direct to retailers, then the
method of channel communication is different; if it is through manufacturer’s
representatives, you adopt a different channel communication process. Kindly note that
this channel members stay with you for a long time, it is not easy to dispense them.
So, when you have this channel members it is a long-term commitments to other firms.
So, these people will take care of all the distribution aspects, whether it is drug
distribution through retailers or shift, they were suppose you are doing that drug
distribution through retailers; shift to change stores is not easy, so because the channel
member will not allow you to do that easily.

(Refer Slide Time: 15:36)

So, this is how selecting this channel member becomes very important, when you select
him he should fulfill some of the forms objectives if not all, depending on that you can
go to and the way your firm is operating you can think of zero-level; when you say no, I

do not want a channel I will go directly to the consumer or you can say I will have a one-
level where I say I am the manufacturer, I will go to the retailer, retailer will go to the

consumer.
Or it can be a two-level where you say the manufacturer-wholesaler-retailer and the
consumer or it can be a three-level when you go from manufacturer to wholesaler, then
the jobber sometimes it is called the semi-wholesaler or then to the retailer, then to the
consumer. So, you this wholesaler jobber can be a wholesaler or a semi-wholesaler, then
goes to the retailer, then to the consumer.
Depending on the size of the organization you may take, different levels of the marketing
channel. By all this you can see how complex marketing is in the present day setup; it is
not an easy cup of tea. So, you produce something it will be sold in the market, no longer
all this is true; because you are being evaluated not only by the consumer, but also by the
market very intensely. When you are being in evaluated in such a rigorous manner,
survival becomes thicky and in order to survive and also to prosper this channel
members could be a valuable contributor.

Now, when you come to flows with respect to channel you have these types of flows.
You have the physical flow, you have the title flow, you have the payment flow, you
have the information flow and then you have the promotion flow. Promotion standing for
advertising, personal selling, sales promotion and publicity.
(Refer Slide Time: 18:33)

You can look at all this in a different context also, why should we have a middle man? If
you look at large organizations, a middle man is required are required for the following
reasons. One is large resources financial resources are required for direct marketing. So,
this was the case of General Motors itself. So, it was (Refer Time: 19:08) with the idea of
removing the middlemen, but they found it very very difficult to do that.
So, even such a big company like general motors uses makes use of this middleman, they
say yes they are required for effective marketing. Direct marketing requires producers to
become middleman for complementary products or other producers of other producers.
For example, let us say you are a gum producer, a gum producer he may have to become
the direct marketer for a company which is producing a which is making let us say a
erasers or pencils. So, along with that gums you are becoming the direct marketer for the
other producers also.
Now, the other important consideration which organizations give, before they say we
will dispense with the middlemen is suppose I get into this middlemen’s activity, what is
a return on investment? Suppose I concentrate on the other aspects of the organization

business, then what is the return on investment which I am going to get, organizations
have found that return on investment may be higher in other aspects of business. The
fourth reason which organizations give is all said and done this middleman or superior in
execution, compared to themselves. So, it is a superior efficiency of middlemen which is
coming into play which organizations would like to take advantage of.
Traditional marketing system if you look at it, it can be a vertical marketing system;
where you have the producers, wholesaler, retailers as a unified system. It can be looked
upon as a corporate system, in administered system or a contractual system. What is the
difference between this corporate system? In the corporate system most of these are
regular members of the organization even in the administered system, but in the
contractual system may not be regular members of the organization.
(Refer Slide Time: 22:13)

In contrast to this you can look at a horizontal marketing system, where two or more
companies join together to exploit a common marketing opportunities. So, this is what is
what you are seeing in the present day Indian market many companies join, even a
company like Reliance tying up with so many other companies. So, when Reliance in the
80s came out with his brand name of Vimal with respect to their garments, they are
almost trounced all the middle and small size textile mills operating from Gujarat. They
where they I almost went out of business, a large number of them.

So, in order to survive what did they do, they joined hands together to provide
competition to Vimal. The result was a very strong competition brand to Vimal in the
name of Gordan. So, the Gordan garments where as good as Vimal, but coming to the
market at a lower price. So, the Gordan gave this smaller and middle sized textile units
particularly in Gujarat the visibility which they thought they had lost due to Vimal
coming into the marketplace.
So, Vimal when it came in the marketplace it said, I am going to provide you the men’s
garments the women’s garments and also the children’s garments all under one roof. So,
where as many of these Gordan, many of these other miles threatening into individual
segment; some of them wearing sarees, some of them wear children’s garments.
So, when it came under the brand umbrella of Gordan; Gordan provided different
product lines also look at sarees and also garments for younger segments of the market
with especially with respect to girls and females. So, all these types of things sustained
Gordan in the marketplace and a very strong advertising not making use of the big names
which Vimal used.
So, used common folks in Gordan advertising, but the Gordan advertisement route to be
very catchy compared to the Vimal’s one. So, the result is this trouncing of the small and
medium-sized units the textile units, it got a stop because of all these units coming
together. Many times when you are having a channel, there can be conflict, there can
also be competition. When does it coming? It comes when you do not have goal
compatibility, so goal in com in compatibility can create channel conflict.
When rules are not clear, so you should clearly specify the rules with respect to each
channel member; if it is not clear, then you are getting into conflict with the member.
Similarly, the differences in perception and the greater interdependence, if you have
greater interdependence between the channel members again there will be a problem. So,
this greater interdependence should be reduced as far as possible.
When you are taking a decision on a channel, you should look at some of the
characteristics which are essential. One is the customer characteristic, second is the
product characteristic, third is the middleman characteristics, fourth is the competitors
characteristics, fifth is the company characteristics, sixth is the environmental
characteristics.

In other words, when you are designing a channel you should look at all these aspects
that is customer, product, middleman, competitor, company characteristics and
environmental characteristics before saying that I will go in for this particular channel.
(Refer Slide Time: 27:34)

Now, the efficiency of a middleman can be brought out in a simple diagram which is
given which is produced here, where you I am what I am giving here is 3 producers. So,
how this middleman affects an economy of effort if you seen.
Let us say, there are the number of there are 3 producing units attached to each P here.
So, there are 3 consuming units what is going to happen, the number of contacts which
you are going to make with this 3 will be 3 into 3, 9. Note that there are 3 producing
units and 3 consuming units and each producing unit has 3 units producing under them,
they contact the consumer. So, the number of contacts which are made to the market that
is consumer representing the market, it will be P into C that is 3 into 3.
Now, into this thing you throw a middleman you introduce a middleman, what happens?
All the 3 of each P becomes 1, because all of them will contact the middleman; so one P
will be at 1, one P will be at 2, one P will be at 3. So, what you are trying to do is instead
of 3 producing producers are products coming making contact with this thing. You are
the consumer, what you are trying to do is all the 3 of P bracketed under 1, bracketed
under 2, bracketed under 3, they are directly going to the middleman saying that these
are the products from the this units which are coming in.

What is the middleman do? He establishes contact with the consumer he goes to 4, 5 and
6. Now, what is the type of contacts is going to give? He is going to give P plus C, 3 plus
3 which is 6. So, what did you achieve by putting a middleman into this whole system?
Instead of this multiplicative number of contacts, you made the system to get into
additive number of contacts.
So, instead of 9 it became 3 plus 3, the middleman virtually taking control of the market.
All the distribution site for you and saying I will approach the consumer you do not
bother, you do not individually keep on approaching. So, it gives an economy of effort
and it also speaks to you on the efficacy of the middleman. We will stop here; will
continue in the next class.