Framing the Game: How Brands' Relationships with Their Competitors Affect Consumer Preference

Neeru  Paharia; Jill  Avery; Anat   Keinan

Chapter | Strong Brands, Strong Relationships | 2015

Framing the Game: How Brands' Relationships with Their Competitors Affect Consumer Preference

by Neeru Paharia, Jill Avery and Anat Keinan

Abstract

In this chapter, we explore how brands' relationships with their competitors affect consumers' preferences. Through a series of experiments, we show that the competitive context in which a brand operates can affect consumers' purchase interest and purchase frequency. We show that brand positioning statements that communicate that brands are in direct competition with each other elicit size effects: consumers like small brands more when they compete with big brands and like big brands less when they compete with small brands. We further explore the relationships between brand size and competition and show that while large brands are punished for being a competitive aggressor, small brands are rewarded when they compete aggressively. Our findings illuminate how small brands can benefit from the presence of a large competitor and provide a process understanding of how consumers assess and relate to brands not in isolation, but as part of a competitive system.

Keywords: marketing; brands and branding; brand management; CRM; customer relationship management; competition; marketing strategy; Marketing; Brands and Branding; Customer Focus and Relationships; Competition; Consumer Products Industry;

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Citation:

Paharia, Neeru, Jill Avery, and Anat Keinan. "Framing the Game: How Brands' Relationships with Their Competitors Affect Consumer Preference." Chap. 2 in Strong Brands, Strong Relationships, edited by Susan Fournier, Michael Breazeale, and Jill Avery. Abingdon, UK: Routledge, 2015.

Shiseido was in the midst of a six year corporate turnaround, trying to reverse the effects of decades of under-investment in R&D and marketing which had led to a cycle of declining customer support and brand value. Would the CEO’s VISION 2020 plan, centered on four strategies: 1.) increasing R&D spending from 1.8% to 3% of sales, 2.) investing an incremental ¥120 billion in brand-building marketing, 3.) moving to a “think global-act local” matrixed brand management structure, and 4.) rethinking brand portfolio strategy, be enough to achieve aggressive 8% per year sales goals while simultaneously increasing the company’s operating margin from 8% to 10% in the highly competitive and slow growing beauty industry?

On Friday, February 22, 2019, following an unexpected and disappointing earnings report, The Kraft Heinz Company’s stock price fell 27%, wiping out $16 billion in market value. CEO Bernardo Hees had announced that the company had taken a $15.4 billion asset write-down, that the company would be cutting its annual dividend from $2.50 to $1.60 and that it was under SEC investigation for accounting irregularities related to its procurement process. $8.3 billion of the asset write-down was related to a loss in value of the firm’s intangible assets, specifically its Kraft and Oscar Mayer brands. As Kraft Heinz looked ahead to the future, it was time to recalibrate its brand management strategies. With $50 billion in brand assets remaining on its balance sheet, effectively managing its brands going forward was critical to avoiding another brand asset write-down and to regaining the $8 billion brand value the company had just lost. Was Kraft Heinz's brand asset write-down the beginning of the end of the market dominance of "Big Food" brands across the board or was it idiosyncratic and a result of the firm's brand management resources, capabilities, and strategies?

Case | HBS Case Collection | January 2019 (Revised June 2019)

Glossier: Co-Creating a Cult Brand with a Digital Community

Jill Avery

Glossier’s proclaimed strategy was “born from content; fueled by community.” The digital-first, direct-to-consumer beauty brand had experienced rapid growth, with sales up 600% in 2017 and a customer portfolio that grew by threefold. But, its founder, Emily Weiss, was not complacent. Instead, she dreamed of creating the world’s first socially driven brand that inserted its community into the buying experience so that the company was merchandising people, their opinions, and their content, just as much as they were merchandising products. As her team debates marketing strategies for 2018, they recognize the opportunities and challenges associated with managing Glossier’s rapidly scaling brand community. While the community’s support had emerged organically in the past, the team was now debating whether the company’s next phase of growth would need to be fueled by a greater emphasis on paid peer-to-peer sales representatives, professional influencer marketing, paid media, and a physical market presence.

Keywords: Brands; brand management; brand communication; retailing; e-commerce; DTC; influencer; digital marketing; social media; Startup; internet marketing; big data; crowdsourcing; Marketing; Marketing Channels; Marketing Communications; Brands and Branding; Marketing Strategy; Entrepreneurship; Venture Capital; Consumer Behavior; Distribution; Growth and Development Strategy; Consumer Products Industry; Beauty and Cosmetics Industry; Retail Industry; United States; North America;

Citation:

Avery, Jill. "Glossier: Co-Creating a Cult Brand with a Digital Community." Harvard Business School Case 519-022, January 2019. (Revised June 2019.) View Details

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Framing the Game: How Brands' Relationships with Their Competitors Affect Consumer Preference

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