Achieving Performance And Building Brand Equity: A Critical Analysis

Porter’s suggestion for achieving long-term superior performance

1. Porter (1985) suggests that there are two essential routes to achieving long term superior performance: to be the lowest cost producer, or to differentiate products/services in such a way as to offer consumers greater added value in comparison with competitors. Discuss and evaluate this contention, and the role of marketing in creating added value?

2. Kotler and Armstrong (2012, p. 267) describe brand equity as “the differential effect that knowing the brand name has on customer response to the product and its marketing”. With reference to Apple Inc. critically analyse the strategies that have been employed to create brand equity?

1. As mentioned in the given statement, Porter was of the belief that there exist two ways of achieving consistently high performance; one is by lowering cost producer and another is by differentiating products as well as services in a manner so as to add value to customers as compared to its rivals. This requires much analysis and discussion to reveal out the true marketing phenomenon.

Porter has emphasized greatly upon the need to provide value to customer products and services. His analysis on value chain seeks to understand the organizational activities and relating them to competitive positioning (Raizada and Pall, n.d.). Value chain analysis depicts all organizational activities and corresponding competitive potentials of an organization. It seeks to evaluate what value is associated with products and services by each set of activities. Porter had based this idea upon the perception that a firm is much more than a mere compilation of equipment, machineries, finance and labor. When these factors are arranged in proper systematic manner, then it would enable production of such goods or services that customers would be highly motivated to pay more for something valuable (Ouzrout et al., 2009). He argued that being able to conduct specific activities as well as to manage associations amidst all the activities is itself a major source of competitive advantage. He has distinguished primary activities as well as support activities, whereby primary activities relate with the delivery of products or services. These may be grouped into areas such as operations, inbound logistics, outbound logistics, sales, marketing and services (Roll, 2006). Each such activity is related to support activities that enhance effectiveness. Support activities involve technological advancement, procurement, infrastructure, human resource management, etc.

Sources:  (Kusno, Radityani and Kristanti, 2007)

Some thinks about the relation between activities – the relations are keys to achieve collaborated success. The links are flowing of goods and services, information, and even systems as well as processes to accommodate activities. The significances may be best understood with instances (Uggla, 2004). If only marketing and sales department generates sales forecasts for henceforth period to various other departments at proper time and with increased accuracy, then procurement would capably order required material within correct date (Leiser, 2004). Also, only if the procurement does effective job as well as forwards information towards inbound logistics, then only operations would schedule production process effectively to guarantee delivering products timely and safely as designed by marketing. As a result, links relate to cooperation as well as flowing of information amidst activities of value chain system.

The role of marketing in creating added value

In almost every industry, it is in fact unusual that a firm performs all activities simultaneously to deliver services or products to end customers. Often, firms refer to elements of a value system or that of supply chain. So, analyzing value chain need to cover the entire system of value in operations. Within this system, only a certain level of profit margin is existent. It refers to the distinction amidst the final cost the customer would pay as well as that of the sum of incurred costs aligned to production (Lieven et al., 2014). It relies upon the structure of value system, in what manner the profit margin gets distributed across producers, suppliers, customers, distributors, and others involved in the system. Each of the members would utilize market position as well as power of negotiation for acquiring increased proportion of profit margin (Srivastava, 2009). However, elements of value system may cooperate for enhancing efficiency as well as reducing costs for achieving increased margin to benefit most.

Porter’s Value Chain Analysis for McDonalds’s

Sources:  (Madhavaram, Badrinarayanan and McDonald, 2005)

2.  As mentioned, above discussion on Porter’s suggestion regarding adding of values to organizational activities may be compared and contrasted with that of principles laid by Kotler and Armstrong. They have referred to the concept of brand equity as the differentiated factor of knowing customer responses of brand name towards product as well as their marketing.

Brand equity refers to depicting value carried in a brand name, depending upon the notion that owner of a reputed brand name may generate increased profit margins from products having recognized brand name as compared to that having less-known brand name  (Bala and Gupta, 2012). It is because customers of the present century go with all the pomp and reputation of companies. They prefer consuming those products more that have increased market reputation or recognition. Brand name conveys much information about the products or services. It is convenient to remember as well as recall by customers. It even suggests product offerings by the company (Vereshchagin, 2006). For instance, KFC or Kentucky Fried Chicken conveys information about its products.

Sources: (Dwivedi and Merrilees, 2011)

One such instance can be that of the brand Apple. Apple is not just a Company but it is perceived as the most prestigious brand. It is directly related with the personality factor of customers. Apple is believed to possess an innovative strategy of brand equity which emphasizes upon human emotions. The very basic feeling is that how Apple products make customers feel and what is experienced by them (Fearne, Garcia Martinez and Dent, 2012). The brand personality is largely about lifestyle, liberty, imagination, innovation, hopes, dreams, aspirations and passion. All these are achieved with the help of technology and its advancements. The brand focuses upon simplicity with no complex element involved into its processes and create sustainable connection with its customers.

Strategies used by Apple Inc. to create brand equity

The brand of Apple is not only close with its clients; it is widely loved along with a strong communal sense amidst customers using its main products. Customer franchise as well as brand equity that the Company embodies is quite strong. The increasing popularity of the brand amidst its customers is due to the preferences of customers (Jones, 2005). It even enabled the brand to sustainably maintain effective pricing as compared to its competitors. Although the brand has premium price, yet it would never lose its market grip since its products maintain high quality. This keeps the brand equity intact.

The brand thoroughly understands every aspect of marketing and that of customer experience which is reinforced time and again. It has significantly expanded as well as enhanced its abilities to distribute by opening numerous retail stores across important cities around the globe. These stores provide prospective customers with direct experience of brand values (Kim et al., 2011). The visitors of Apple stores experience a null-pressured, stimulating environment to discover more about Apple, trying out various products, get trained and informed about products, etc. The retails are highly cooperative, informative, enthusiastic, and helpful towards every customer or visitor (Shamma and Hassan, 2011). Hence, the overall experience refers to the inclusiveness of community which understands about effective technology and how it may benefit lives of customers.

So the contrasting between Porter’s value chain and that of brand equity by Kotler and Armstrong would state that in value chain analysis, Porter had based this idea upon the perception that a firm is much more than a mere compilation of equipment, machineries, finance and labor. When these factors are arranged in proper systematic manner, then it would enable production of such goods or services that customers would be highly motivated to pay more for something valuable (Kim et al., 2012). He argued that being able to conduct specific activities as well as to manage associations amidst all the activities is itself a major source of competitive advantage. This concept deals with the internal operations and activities of an organization. On the other hand brand equity highlights more upon the recognition of brand names and utilities. The basic underlying principle is that customers increasingly prefer those products and services that possess high brand equity due to their quality and competitive advantages (Severi and Ling, 2013). Brand equity refers to depicting value carried in a brand name, depending upon the notion that owner of a reputed brand name may generate increased profit margins from products having recognized brand name as compared to that having less-known brand name. For instance, Apple is believed to possess an innovative strategy of brand equity which emphasizes upon human emotions (Kumar and Hansted Blomqvist, 2004). The very basic feeling is that how Apple products make customers feel and what is experienced by them. The brand personality is largely about lifestyle, liberty, imagination, innovation, hopes, dreams, aspirations and passion. All these are achieved with the help of technology and its advancements.

References

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