Products Services

and Brands Customer Value


Now that you've had a good look at customer-driven marketing strategy, we'll take a deeper look at the marketing mix—the tactical tools that marketers use to implement their strategies and deliver superior customer value. In this and the next chapter, we'll study how companies develop and manage products and brands. Then, in the chapters that follow, we'll look at pricing, distribution, and marketing communication tools.

The product is usually the first and most basic marketing consideration. We'll start with a seemingly simple question: What is a product? As it turns out, however, the answer is not so simple.

Before starting the chapter, let's look at an interesting branding story. Brands may be the most important tools for creating customer value and profitable customer relationships. Marketing is all about building brands that connect deeply with customers. So, when you think of top brands, which ones pop up first? Here's a tale about one strong brand you may not have considered.

Aviva is an international investment, savings, and insurance group. It was formed in 2000 with the merger of Norwich Union and CGU Insurance. Initially, the group operated under 40 trading brands around the world until the Aviva brand was adopted in 2002.

In terms of gross worldwide premiums for the year ending December 31, 2007, Aviva is the fifth largest insurance group in the world. It focuses on life and pension products, fund management, general insurance, and long-term savings. At the end of 2007, the funds under its management totalled a massive $718 billion, and its total worldwide sales were nearly $98.4 billion.

In April 2008, Aviva announced the final phase of its move towards creating a worldwide brand. The intention was to create the brand in order to ensure continued growth and transform the business so that it could compete more effectively across the world. The group announced that the customer brand for the Aviva Group worldwide would now be Aviva. The group also announced that its Norwich Union, Commercial Union Poland, and Hibernian brands would all be known as Aviva. This was an integral part of "One Aviva, twice the value," Chief Executive Andrew Moss's vision for the transformation of the business. Between 2008 and 2010, it is the group's intention to complete the transition to a global brand, thereby bringing together several autonomous business units.

The company's international savings, investments, and insurance group was already trading as Aviva in over 20 markets across Europe, North America and the Asia Pacific region. Some 40 percent of this group's business is based in Britain, but recent acquisitions will make this market less significant in terms of the company's overall business value. Group Chief Executive Andrew Moss said: "This is an exciting time for us as we build a world-class business with strong growth potential. For Aviva to continue to thrive, we have to compete effectively on the world stage alongside our international peers. Creating a brand that is known across the globe is an important step in being recognized as a worldwide force in financial services and an important milestone in delivering our "One Aviva, twice the value" vision. In today's world, people are becoming more mobile and are targeted by international brands competing for their business across borders through the global media. For our customers, the Aviva name will be recognizable and will represent the same quality, financial strength, and security wherever they do business with us. By integrating our operations more closely, we can take best in breed products and services from around the world and bring innovation to new and existing customers. By investing in a single name, we will amplify the global impact of our advertising and sponsorship spending. Being a well-known international brand also opens doors when [we are] entering new markets and establishing partnerships with other global players, as we already do in bancassurance [the selling of insurance products through banks]."

Moss went on to explain the importance of the brand name: "For our 57,000 staff, it's about bringing them together as one team under a common identity, and enabling us to attract and retain the best. As we've seen in our newer businesses in Asia Pacific and the U.S., people want to work for global companies that stand out on the world stage. I firmly believe that growing and thriving businesses generate the best career opportunities for their people over the long term. For our shareholders, a clear

Aviva is the fifth largest insurance group in the world and the largest in Britain.


Branding Aviva

focus on delivering our "One Aviva, twice the value" vision will drive further dividend growth and value. Today Aviva can look to the future with confidence, largely because of its strong heritage with its roots in Norwich Union, Commercial Union, and General Accident. These great companies succeeded because they took decisive action to develop their businesses and helped their customers to thrive and prosper. We will continue to build our global business upon this strong foundation. We will manage this process with care over the next two years, involving all our stakeholders to ensure a smooth transition and that we maximize the opportunities this change will bring."

Aviva maintained that the cost of rebranding would be balanced by the increased effectiveness of its marketing spending. In effect, it would be promoting just one brand instead of several brands.

The move, however, would mean the end of a brand name that had been created in 1797 when the original business was set up in IS Norwich Union has some 28,000 employees in Britain.

Mindful of the challenges surrounding such a rebrand, Aviva have recognized that it is key to manage the migration in a manner that retains all the positive heritage and values associated with the brand, and commit to putting customers at the heart of the process.

Aviva's decision is not without risk. Many businesses have tried rebranding and failed miserably. For example, PricewaterhouseCoopers' accountancy business was originally supposed to be renamed Monday, but it was ridiculed by the industry. Mitsubishi launched a new range of cars with the brand name Pajero. However, in Spanish, Pajero has another unfortunate meaning. Similarly, when British Airways decided to drop the Union flag from its tailfins, it attracted the anger of then-British Prime Minister Margaret Thatcher, and the decision was reversed. Back in 1985, Coca-Cola made perhaps the worse rebranding decision of all time. After realizing that Diet Coke did not taste anything like regular

By 2010, Aviva aims to complete the transition set out in its "One Aviva, Twice the Value" vision and become a global brand. This would bring together several of the company's autonomous business units.

Aviva is in the final phases of creating a worldwide brand. The company's executives believe that the creation of a global brand will ensure Aviva's continued growth and transform the business so that it can compete more effectively around the world. "Creating a brand that is known across the globe is an important step in being recognized as a worldwide force in financial services," says Aviva Group Chief Executive Andrew Moss.

recipe of regular Coke to match it. Consumers hated the product, and the sales of it plummeted. Coca-Cola was then forced into a humiliating reversal and rebranded the old Coke recipe, Classic Coke.

Peter Walshe, the global brands director of the consulting group Millward Brown, warned that Aviva might not necessarily be making the right decision. Whilst he recognized that there were opportunities and potential in creating one brand, it would require Aviva to establish that brand name and make it mean something. In the initial stages the brand name Aviva would mean nothing and would be unknown to the consumer. If Aviva was not careful then Walshe believed it ran the risk of losing the trust, heritage and prestige that it had worked so hard to achieve.1

As the Aviva example shows, in their quest to create customer relationships, marketers must build and manage products and brands that connect with customers. This chapter begins with a deceptively simple question: What is a product? After addressing this question, we look at ways to classify products in consumer and business markets. Then we discuss the important decisions that marketers make regarding individual products, product lines, and product mixes. Next, we look into the critically important issue of how marketers build and manage brands. Finally, we examine the characteristics and marketing requirements of a special form of product—services.

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