The aim of this thesis is to critically examine and empirically test the branding approach Managing the Customer Experience by Smith and Wheeler. A comparison of branding theories, differing in their focus internal or external of the organisation during the brand development and implementation process, is carried out. Smith and Wheeler suggest an external orientation during the brand creation. The evaluation shows however that an additional focus internal of the organisation is indispensable: During brand development the management brand vision and the organisational culture should be considered, as Harris and De Chernatony suggest. Internal acceptance of the brand, avoidance of resistance, and use of internal knowledge can be achieved by this. Furthermore the company vision, mission and values have to be considered as Davis suggests. Misalignment between the brand and company strategy can cause negative consequences like a dilution of strategic focus. After empirically testing the Smith and Wheelers’ brand development process by means of Persona International, the previously identified shortcoming are practically explored. Implementing the brand, Smith and Wheeler suggest to aim at creating an unbeatable customer experience with the help of employees. This idea is shown to be promising as strong customer loyalty can be created, in turn allowing to profit from all the benefits a strong brand embodies. [...]
CONTENTS
List of Abbreviations
List of Figures and Tables
Abstract
Zusammenfassung
1. Introduction
1.1 Defining the Task
1.2 The Aim of the Study
1.3 Thesis Outline
2. Outline of Branding
2.1 Definition of “Branding”
2.2 History of Branding
2.2 The importance of branding
2.3 Definition of further terms
3. Discussion of Theories about Branding
3.1 Branding with an External Focus
3.1.1 The Trend towards Creating a Customer Experience
3.1.2 Introducing the Ideas of Smith and Wheeler
3.1.3 The Customer Experience Management Model
3.2 Branding with an Internal Focus
3.2.1 Developing an Internal Focus
3.2.2 Background of the Model by Harris and De Chernatony
3.2.3 The Brand Identity – Reputation Model
3.3 Branding with a Balanced Internal and External Focus
3.3.1 Introducing the Balanced Focus
3.3.2 Introducing the Underlying Ideas of Davis
3.3.3 The Brand Asset Management Model
3.4 Comparison of the theories
3.4.1 Comparing the Focus during the Brand Development Process
3.4.2 Comparing the Focus when Implementing the Brand
3.5 Critical Evaluation of CEM and Improvement Suggestions
3.5.1 Suggested Focus when Developing the Brand
3.5.2 The Brand Promise and the Differentiation Strategy
3.5.3 Suggested Focus when Implementing the Brand
3.5.4 Illustrating the Balanced Approach
4. Empirical Part – Practical validation of CEM
4.1 Introduction of Persona International
4.1.1 The Company Persona International
4.1.2 The Products of Persona International
4.1.3 Vision, Mission and Values
4.1.4 Objectives of the Branding Initiative
4.2 Methodology of Partner Research
4.2.1 Data collection
4.2.2 Sample Selection
4.2.3 Limitations
4.2.4 Data analysis
4.3 Findings and Discussion of the Research with Partners
4.3.1 Setting up and Evaluating the Expectation Map
4.3.2 The Brand Promise based on Partner Expectations
4.4 Methodology of End-user Research
4.4.1 Data Collection
4.4.2 Sample Selection
4.4.3 Limitations
4.4.4 Data Analysis
4.5 Findings and Discussion of the End-user Research
4.5.1 Findings of the End-user Research
4.5.2 Complementing the Brand Promise
4.5.3 Evaluating the Brand Promise
4.6 Testing the Shortcomings of CEM
4.6.1 Employee Values and Assumptions
4.6.2 Alignment of Persona Vision, Mission, Values and Brand Promise
5. Conclusion
Bibliography
Contents of the Appendix
EIDESSTATTLICHE ERKLÄRUNG
List of Abbreviations
illustration not visible in this excerpt
List of Figures and Tables
List of Figures:
Figure 1: Organizational Chart Persona International
Figure 2: Maslow’s Hierarchy of Needs
Figure 3: Characteristics of the Branded Customer Experience
Figure 4: Coherence between Customer Loyalty and Satisfaction
Figure 5: The Process of Managing Brands by De Chernatony
Figure 6: The Brand Value Pyramid by Davis
Figure 7: Brand development by Smith and Wheeler
Figure 8: Brand development by Harris and De Chernatony
Figure 9: Brand development by Davis
List of Tables:
Table 1: Metrics to Measure the ROBI
Table 2: The five most important Expectations
Abstract
The aim of this thesis is to critically examine and empirically test the branding approach Managing the Customer Experience by Smith and Wheeler.
A comparison of branding theories, differing in their focus internal or external of the organisation during the brand development and implementation process, is carried out. Smith and Wheeler suggest an external orientation during the brand creation. The evaluation shows however that an additional focus internal of the organisation is indispensable:
During brand development the management brand vision and the organisational culture should be considered, as Harris and De Chernatony suggest. Internal acceptance of the brand, avoidance of resistance, and use of internal knowledge can be achieved by this. Furthermore the company vision, mission and values have to be considered as Davis suggests. Misalignment between the brand and company strategy can cause negative consequences like a dilution of strategic focus. After empirically testing the Smith and Wheelers’ brand development process by means of Persona International, the previously identified shortcoming are practically explored.
Implementing the brand, Smith and Wheeler suggest to aim at creating an unbeatable customer experience with the help of employees. This idea is shown to be promising as strong customer loyalty can be created, in turn allowing to profit from all the benefits a strong brand embodies.
Zusammenfassung
Die vorliegende Diplomarbeit hat das Ziel, sich kritisch mit der Theorie Managing the Customer Experience von Smith und Wheeler auseinander zu setzen und diese empirisch zu prüfen.
Zunächst werden Branding-Theorien in Vergleich gestellt, die sich durch ihren unterschiedlichen Fokus innerhalb oder außerhalb der Organisation während der Markenentwicklung und Implementierung differenzieren. Smith und Wheeler schlagen dazu eine externe Orientierung während der Branderschaffung vor. Die Auswertung zeigt jedoch, dass ein zusätzlicher Fokus innerhalb der Organisation unentbehrlich ist.
Wie Harris und De Chernatony vorschlagen, sollten während der Markenentwicklung die Brand-Vision des Managements, sowie die Organisationskultur berücksichtigt werden. Dadurch kann die interne Annahme der Brand, Vermeidung von Widerstand und das Nutzen von internem Wissen erreicht werden.
Des Weiteren sind nach Davis die Vision, Mission und Werte des Unternehmens einzubeziehen. Fehlausrichtungen der Brand- und Firmenstrategie können negative Auswirkungen haben, wie zum Beispiel die Schwächung des strategischen Fokus. Nachdem der Markenentwicklungsprozess von Smith und Wheeler mittels Persona International empirisch getestet wurde, wird auf die identifizierten Schwachstellen der Theorie praktisch eingegangen.
Bei der Markenimplementierung empfehlen Smith und Wheeler das Schaffen einer unvergesslichen Erfahrung für den Kunden durch die Hilfe der Mitarbeiter. Dieser Ansatz wird als viel versprechend empfunden, da auf diese Weise starke Kundenloyalität erzielt werden kann, die wiederum ermöglicht, von allen Vorteilen einer starken Marke zu profitieren.
1. Introduction
1.1 Defining the Task
“I believe there is almost no limit to what a brand can do,
but only if used properly”
Richard Branson[1]
In a highly competitive business world, differentiation is an essential key to success for companies. Branding has been a long discussed method to create such a necessary competitive advantage, however an effective and smart branding approach is necessary to ensure success, as the quote of Richard Branson shows.
The American company Persona International, offering consulting tools and methodologies to their licensees, recognizes the importance of branding to stay ahead of competitors. Thus, it was decided to launch a branding initiative. The branding strategy Managing the Customer Experience by Smith and Wheeler was chosen by Persona, which is also sold in form of a tool designed by Shaun Smith, called “Customer Experience Management CEM+”[2]. The idea behind this theory is to establish and reinforce a brand by offering the customer an unforgettable experience with the product or service of the company. Consequently, the brand promise is developed on basis of the customer expectations.
As for Persona, two kinds of customers exist, one being their direct partners and the other being the clients of the partners, who are the end-users of the tools. It was decided that the branding initiative should be focused on the partners first, as they are mostly also aware of the needs and expectations of their clients.
However, the expectations of some end-users were to be explored by surveys to round up the view on the customer expectations.
Is the Customer Experience Management (CEM) theory an optimized approach to branding or can any issues be identified which could be improved? How could any highlighted shortcomings be overcome? The following work examines these questions closer and analyzes them by means of literature and a critical examination in order to find responses and solutions for the posed questions. The link to the business world is established through the empirical testing of the brand development phase. Hereby a part of the CEM theory is applied and expert interviews and end-user surveys are conducted.
1.2 The Aim of the Study
The aim of the critical evaluation of the branding strategy of Smith and Wheeler is to validate the branding approach and to find suggestions for possible improvements of the CEM theory and by testing one suggestion to facilitate the implementation of an optimized branding strategy for Persona.
1.3 Thesis Outline
Having set the aim of this thesis, the second chapter gives an introduction to branding in order to equip the reader with a basic understanding of the matter. It is described how multi-facetted branding can be defined and some historical background of branding is given. Thereafter, numerous benefits of branding are illustrated and finally, additional specific branding terms used in the thesis are explained.
Chapter 3 aims at a critical discussion of the Smith and Wheeler theory and to develop improvement suggestions of any shortcomings highlighted. Therefore different branding theories are introduced at first. The approaches differ in their focus during the brand development process and the brand implementation. The orientation can be on sources external of the organisation such as the customer or on internal sources such as the management and the employees. Smith and Wheeler represent such a rather external focus, Harris and De Chernatony propose an internal focus and Davis suggests a balanced internally and externally oriented approach. Subsequently, the three different approaches are compared concerning their views of brand development and the implementation process.
On basis of the discussed theories, a critical examination of the Customer Experience Management theory is facilitated, supplemented by thoughts of the author.
The empirical part in chapter 4 puts the CEM approach in brand development into practice to validate it. In order to do so, the brand promise for Persona International, an American consulting tools and methodologies provider, is set up as Smith an Wheeler suggest based on their customers expectations. Research is conducted with the Persona licensees by means of interviews and with the licensee clients, the end-users of the tools by conducting surveys. To overcome one identified shortcoming of the theory, which is the necessity to align the brand promise with the company vision, mission and values is the task of the final empirical part. The suggested brand promise of Persona is tested against the Vision, Mission and Values of the company.
Chapter 5 summarizes the findings of the thesis in general and also regarding Persona International. Recommendations for further research and next action steps are given.
2. Outline of Branding
This chapter will explore the context and field in which this thesis was developed.
Initially, the term branding is defined, historical background given and the benefits of branding demonstrated. Thereafter, definitions of further branding specific terms, used in this work, are explained.
2.1 Definition of “Branding”
As the main topic of this thesis is branding, it is important to define and understand the term branding. Branding, the effort of creating a brand, is a long discussed topic between academics, managers and consultants. Thus many and diverse definitions have been used in literature over the years. Kotler noted that
“A brand is a name, term, sign, symbol, or design, or a combination of them intended to identify goods or services of one seller or group of sellers and to differentiate them from those of competitors.”[3]
His definition is considered to be rather narrow in today’s understanding as for example name, sign, design etc. are only part of what a brand is. De Chernatony considers brands as shorthand for all knowledge and experience consumers have acquired.[4] Thus a brand is built through the total experience it offers, not just through effective communications or appealing logos. Smith and Wheeler explain that it represents a pact between supplier and customer where the brand owner promises to deliver a particular experience and the purchaser promises his business in return.[5] This in turn creates customer loyalty.
2.2 History of Branding
With the appearance of packaged goods, brands emerged. Industrialisation moved the fabrication of household goods in the 19th-century from small production processes and local markets[6] to centralized plants. The need to sell the mass-produced products to a wider market required to compete with locally offered, familiar products. Thus the product package had to create the confidence in the customer that this product was as trustworthy as any local product.[7] They had to appear and feel as familiar as locally produced goods. From creating this appearance, the manufactures learnt by the help of advertising to create the association of other values with the products.[8] The practice of branding as it is known today was initiated. In recent developments, the trend has gone from product to corporate branding[9] and the theories discussed in this thesis follow this progress.
2.2 The importance of branding
In the following, numerous advantages and benefits branding facilitates shall be discussed. Appreciating the named effects, it becomes obvious why branding is essential in the modern and highly competitive business world of nowadays.
Loyalty is one of the key advantages of branding. According to Aaker, the worth of a brand to a firm largely depends on the customer loyalty it commands.[10] This statement can be confirmed by a study conducted by Satmetrix Systems. It highlights that companies with above average customer loyalty index scores have a price earning ratio twice as high as the ratio of their competitors.[11]
Another study quoted in Aaker shows that the reduction of defections by just 5 percent created 85 percent more profits in a bank’s branch system, 50 percent more in an insurance brokerage, and 30 percent more in an auto-service chain.[12] According to Smith and Wheeler this effect can only be confirmed if loyalty is turned into advocacy. Then higher price margins can be achieved, as advocates are a lot more interested in product and service quality and considerably less interested in prices. Moreover, Davis adds that loyalty drives repeat business[13]. Due to the described effects, sustained competitive advantage[14] is achieved through branding. Furthermore, new product introductions are given immediate credibility and company mistakes are forgiven more easily.[15] Brand extensions are another area, where branding has positive consequences according to Jobber. He says a “strong brand provides the foundation for leveraging positive perceptions and goodwill from the core brand to brand extensions”[16].
There are more positive effects of branding for the organisation internally, such as to be able to attract and recruit top candidates and to enhance employee loyalty.
Summarizing the various advantages of branding creates the following listing:
- Enhanced customer loyalty
- Premium prices
- Higher profit margins
- Sustainable competitive advantage
- Repeat business
- Credibility to new product introductions
- Mistakes forgiven easier by the customer
- Base for brand extensions
- Attract best employees and keep satisfied employees
2.3 Definition of further terms
Apart of the key terms explained in this paragraph, most branding specific terms used in this thesis are clarified when they occur.
Brand promise is used many times and plays an important role in the theory of Smith and Wheeler and therefore shall be defined separately. Brand Promise is the “spoken or unspoken expression of the continuing, important and specific benefits clients connect with a firm, service or product.”[17]
Brand equity also appears in the text. It refers to the goodwill associated with a brand name. Goodwill adds tangible value to a company as sales and profits increase.[18]
3. Discussion of Theories about Branding
The aim of Chapter 3 is to explore the CEM theory in greater detail and to give an overview of other branding approaches. Numerous branding theories based on different ideas exist. Thus, the differentiating criterion chosen in this thesis is the category of focus of the organisation during the brand development process and implementation. The options are to be focused internally or externally or to combine the two. Internal orientation implies a focus on people inside of the organisation and an external orientation implies a customer-centred approach.
One author respectively is introduced in detail for each focus tendency, complemented by authors with a similar train of thoughts. After a comparison of the theories, the CEM theory is critically examined.
3.1 Branding with an External Focus
Recent theories on branding take a strongly customer-centred approach. To deliver an unbeatable experience to the customer and thereby create strong loyalty is at the centre of attention. Focusing on the creation of a customer experience as the goal of branding results in an external focus. Smith and Wheeler stress the importance of external input when the brand promise is created, by basing it on customer expectations. However, they also admit that for the implementation of the branding concept a strong involvement of sources internal of the organisation is necessary.
3.1.1 The Trend towards Creating a Customer Experience
Already in 1991, Aaker refers to brand loyalty as the core of a brand’s equity[19] because it is the measure of how likely a customer will switch to another brand. Hence, he recommends in his “Managing Brand Equity” model to create and maintain loyalty by satisfying customer expectations.
This can be achieved through close contact with the customer by creating a customer culture, measuring and managing customer satisfaction and providing some unexpected extra service[20].
In accordance, Gregory and Sellers see the brand as a collective of perceptions of a company based on customer experience[21] and Keller centres the brand experience and learning of the customer at the heart of brand equity[22]. This does not contradict Aaker, who considers brand loyalty to be at the heart of brand equity, as loyalty is created through positive experiences.
Boston Consulting also recognized the trend towards a branded experience in order to deepen the relationship with the customers in 1997. Branding is considered to be about the total experience a customer has with the products or services[23] hence all actions of the company have to be orchestrated to deliver such a highly differentiated and consistently positive experience[24].
Zeithaml explores this idea of a strong customer focus deeper and encourages to develop all strategies with an eye on the customer and to carry out all implementations understanding the impact they have on the customer[25].
3.1.2 Introducing the Ideas of Smith and Wheeler
Smith and Wheeler present the previous ideas in their Customer Experience Management approach, which is described closer in the next part. Based on the idea of focusing on the customer experience, they also suggest an approach to the branding development process and the brand implementation. In the implementation phase they emphasize the importance of internal resources, which Gregory, Seller and Keller do not emphasize.
Nowadays, the creation of a customer experience, which becomes synonymous with the companies’ brand, is one of the keys to corporate performance, according to Smith and Wheeler. “Consumers are looking for experiences that enable them to realise their dreams and achieve their desired lifestyle“[26].
The underlying rationale of this statement is supported by Maslow’s hierarchy of needs. Maslow proposes five stages of motivation humans go through, shown in Figure 1.
illustration not visible in this excerpt
Figure 1: Maslow’s Hierarchy of Needs[27]
The lowest needs in the hierarchy are physical and safety needs, followed by social needs and ego or esteem needs with self-actualisation on the highest level. It can be observed that once the lower needs of humans are satisfied, higher ego needs become dominant.
As in our time the basic needs are usually fulfilled, social and mostly ego needs are dominant. The ego needs in turn drive our aspiration for “self-actualisation”, the desire to fulfil one’s potential. In modern economy the strive for self-actualisation is fulfilled by pursuing the desired lifestyle.
Smith and Wheeler link Maslow’s ideas to the history of branding and discover interesting developments, also based on Pine and Gilmore’s argument about the history of the economic progress[28], that each generation of consumers has enhanced the buying experience. Namely - in the beginning of the twentieth century brands were a way to identify goods. Then, over time, brands became synonyms for quality and reliability due to our need of safety and security. Nowadays, being wealthy and driven by ego needs the consumers are looking for service experiences complementing their lifestyle and brands that make a statement about their aspirations[29].
If this service experience is consistent, intentional, differentiated and valuable[30] to the customer, loyalty is being created as shown in Figure 2.
illustration not visible in this excerpt
Figure 2: Characteristics of the Branded Customer Experience[31]
However Smith and Wheeler stress, that attention has to be paid to the fact that loyal customers are more than satisfied customers. A research by Forum Corporation has shown that “80 percent of customers who switch their suppliers actually expressed satisfaction with their previous supplier.”[32] Thus, customer satisfaction is not much about classical loyalty and retention but rather about advocacy, which is genuine, truly felt, loyalty[33]. The coherence between customer loyalty and satisfaction is shown in Figure 3.
illustration not visible in this excerpt
Figure 3: Coherence between Customer Loyalty and Satisfaction[34]
Advocates buy more, are prepared to pay higher prices which results in increased margins and they stay with the company. Brand advocates refer friends, family and colleagues; they act as the best salespeople of the company and are prepared to argue in favour of it.
Reichheld describes these interdependencies in his article “Loyalty-Based Management”[35], and Heskett et al. develop these ideas further into a service-profit chain. It is shown how profitability, customer loyalty, employee satisfaction, loyalty and productivity are interdependent by means of a service-profit chain. Profit and growth are stimulated by customer loyalty, which is a result of continuous customer satisfaction. This satisfaction in turn is mainly influenced by the value of services offered. Value is generated by satisfied, loyal, and productive employees. Employee satisfaction, again, is created as results from high-quality support services and policies, enabling the employees to deliver results.[36]. On basis of the service-profit chain dynamics, Smith and Wheeler developed their four step concept, the Branded Customer Experience Management Model.
3.1.3 The Customer Experience Management Model
According to Smith and Wheeler the model consists of four interlinked main stages illustrated below.
[...]
[1] Branson, R. in Smith, S. & Wheeler, J. (2002) p.xiii
[2] Trademark by Shaun Smith
[3] Kotler, P. (1997) p.44
[4] See De Chernatony, L. (1997) p.45
[5] See Smith, S. (2002) pp.6
[6] See Palmer, A. (2004) p.214
[7] See Wikipedia http://en.wilipedia.org/wiki/Brand
[8] See Wikipedia http://en.wilipedia.org/wiki/Brand
[9] See Hatch, M. & Schultz, M. (2003) p.1041
[10] See Aaker, D. (1996) p.21
[11] See Smith, S. & Wheeler, J. (April 2002) p.1
[12] See Aaker, D. (1996) p.22
[13] See Davis, S. (2000) p.6
[14] See Kowalczyk, S. & Pawlish, M. (2002) p.162
[15] See Rich, M. (2001) p.70
[16] Jobber, D. (2004) p.265
[17] Jaffe Associates Branding Glossary www.jaffeassociates.com/JaffeNews/00BrandGlossary.html
[18] See Jobber, D. (2004) p.299
[19] See Aaker, D. (1991) p.39
[20] See Aaker, D. (1991) p.50-51
[21] See Gregory, J. & Sellers, L. (2002) p.44
[22] See Keller , K. (2000) p.157
[23] See Stalk, G. (1997) p.2
[24] See Rhodes, D. et al. (1999) p.2
[25] See Zeithaml, V. (2003) p.27
[26] Smith, S. & Wheeler, J. (2002) p.1
[27] See Chapman, A. (2002) Based on Maslow’s Hierarchy of needs http://www.businessballs.com/maslowhierarchyofneeds5.pdf
[28] See Pine, J. & Gilmore, J. (1998) p.97
[29] See Smith, S. & Wheeler, J. (2002) p.5
[30] See Smith, S. & Wheeler, J. (2002) p.1
[31] See Smith, S. (February 2001) p.3
[32] Smith, S. (February 2001) p.3
[33] See Smith, S. & Wheeler, J. (2002) p.35
[34] Adapted from Heskett, J. et al. (1994) p.167
[35] See Reichheld, F. (1993) p.72
[36] See Heskett, J. et al. (1994) p.165
- Quote paper
- Antje Walliser (Author), 2005, Successful Branding - A critical examination of Customer Experience Management for Persona International, Munich, GRIN Verlag, https://www.grin.com/document/48501
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