Week 8 - Applied Brand Management

Importance of Customer-Brand Relationship

  • Behavioral Loyalty:

    • Frequency and amount of repeat purchases.

  • Attitudinal Attachment:

    • "Love brand" concept, where consumers feel proud and cherish the brand as a possession.

  • Sense of Community:

    • Kinship and affiliation with the brand that creates a community feeling.

  • Active Engagement:

    • Seeking information, joining clubs, and interacting with the brand on social media.

Factors Affecting Consumer-Brand Relationship Quality

  • Key Variables:

    • Consumption value, consumer commitment, personality and life stage, marketing knowledge, situational factors.

  • Outcomes of Strong Relationship:

    • Biased brand image, attribution biases, devaluation of competing brands, purchase loyalty, advocacy, accommodation, and tolerance/forgiveness (Fournier, 1998).

Building and Sustaining Consumer-Brand Relationships

  • Focus on delivering on brand promise and enhancing consumer experience through:

    • Perceived Value.

    • Loyalty Programs.

    • Personalized Marketing.

    • Value of Co-Creation.

    • Community Engagement.

    • Gifting Strategies.

    • Permission Marketing.

Perceived Quality

  • Definition:

    • Customers' perception of the quality/superiority of a product or service relative to alternatives.

  • Determinants:

    • Primary ingredients, supplementary features, reliability, durability, and serviceability.

    • Broader performance considerations: speed, accuracy, customer service quality, and training.

Luxury Brands Overview

  • Global Wealth Pyramid (2020):

    • Distinction of wealth across different classes: 1.1% are high-net-worth individuals, 39.1% are middle-class, and 55% are lower-middle to poor.

  • Characteristics of Luxury Brands:

    1. Demand increases as income rises (high income elasticity).

    2. Low functional utility to price ratio compared to high intangible value.

    3. High price justification compared to similar products (Berry 1994; Kemp 1998; Dijk, 2009; McKinsey 1990).

    4. Perception of luxury as an identity, philosophy, or culture rather than just a product (Okonkwo 2009).

Understanding Luxury

  • Etymology and Characteristics:

    • Latin "Luxus" meaning excess and extravagance.

    • Needs vs. wants, functionality vs. hedonism.

    • Associated proxies: product quality, price, exclusivity.

  • Luxury as Differentiation:

    • Brands as objects of desire, embodying luxury.

    • Veblen's theory of social differentiation through luxury consumption.

Trends in Luxury Consumption

  • Generational Shift (2018 vs 2025):

    • Market share changes among Baby Boomers, Gen X, Millennials, and Gen Z.

    • Tendency towards luxury experiences over possessions.

Managing Luxury Brands

  • Branding Strategies:

    • Lower volume, high margins strategy for luxury brands.

    • Ensure exclusivity, control distribution, limit product supply.

    • Commitment to Brand DNA: Unchanging brand values inherited from founders.

Subsistence Markets and Brand Strategy

  • Characteristics of Subsistence Markets:

    • Over 3 billion people living on less than $2.50 a day; many face hunger and political instability.

    • Heterogeneous markets with irregular incomes presenting unique challenges.

  • Opportunities in Subsistence Markets:

    • Poor consumers have similar desires for quality as affluent consumers given proper information and accessibility.

  • Marketing Innovations:

    • Utilize bottom-up approaches for product innovation, packaging, pricing, and consider local cultures and relationships in brand strategies.

Key Takeaways

  1. Business incentive to serve the poor through culturally sensitive approaches.

  2. Brands working in these markets must emphasize local understanding and build relationships.

  3. Collaboration with local consumers can enhance brand strategy and reach.

Youtube Go

1. Key Issues that Forced YouTube to Introduce YouTube Go:

  • Data Consumption Concerns: YouTube was seen as a "data-eater" by rural Indonesians, making it unattractive to users with limited data plans.

  • Low Rural User Penetration: Despite Indonesia’s affordable internet rates, less than 10% of the 112 million rural Indonesians used YouTube daily.

  • Income Inequality: Rural populations had far lower incomes than urban populations, making consistent video streaming unaffordable.

  • Technical Barriers: Many users in rural areas only owned basic smartphones ($100–$200 range) with small data allowances (500MB–2GB monthly).

  • Negative Brand Perception: YouTube needed to overcome the fear of high data consumption while retaining its brand love.

2. Strategies Used to Successfully Market YouTube Go:

  • Created a Separate App: YouTube Go allowed users to control video quality and size before watching, addressing data fears directly.

  • Localized Messaging: Introduced the concept of the "Data Shaman" (Pawang Data), empowering users to feel in control of their data usage.

  • Celebrity Endorsement: Collaborated with Dangdut singer Siti Badriah, creating a music video to explain YouTube Go in a fun, relatable way.

  • Mass Media Strategy:

    • Heavy TV advertising (96% rural reach).

    • Billboards, public transport ads, and posters with popular, local YouTube content.

  • Digital Targeting:

    • Focused on users with low-end smartphones and those who installed other data-light apps.

    • Used platforms like AdMob, GDN, Facebook, and Instagram.

  • A/B Testing: Optimized ad creatives and messaging through continuous testing.