The discussion of competition-based and goal-based positioning makes evident that these approaches differ primarily in their focus. The integration of these approaches is often captured in the analysis of brand value. As a starting point in illustrating how this is the case, we assess the notion of brand value as it existed in the 1980s:

This is a conceptual definition rather than a mathematical one. Quality is evaluated in terms of average or mean performance as well as in terms of variance about that mean. A Toyota Camry is viewed as being of high quality because it receives favorable scores in terms of styling, comfort, and engine performance, and because the car is perceived to deviate very little in its performance on these dimensions. The dominant way to provide value in the '80s was to offer superior quality at a competitive price.

When the substantial economic downturn occurred in 1987, consumers’ notion of value began to change. While product or service quality remained an important factor in determining value, psychic quality was given increased attention. This refers to the feelings or emotions and other abstract benefits related to using the product or service. Psychic benefits can thus be viewed as those that we defined in terms of brand essence.

As with the value equation of the 1980s, in the 1990s, the price charged for goods and services was an important consideration in the determination of value. Indeed, by the early 1990s, price was often the single most important consideration. Value involved providing the same quality at a lower price. Private-label brands emerged as leaders in many categories because of their reasonable quality and significantly lower price in relation to the leading brands. The response of leading brands has been to reduce the price disparity with private labels and thereby enhance the value of their offerings.

While it is well known that the price of the product or service is a cost, it has only recently been realized that time related to a purchase transaction and product use are also important costs. In the U.S., there has been a contraction of leisure time and an expansion of work time. Between 1980 and 1990, the average American increased his or her work hours from 40 to 48 and reduced leisure time from 21 to 16 hours. With downsizing in the 1990s, the average worker has added about another 45 minutes per day or one additional month per year of work time. The consequence is that many people now experience time famine, or lack of time to accomplish the tasks they feel need to be managed, and time has become an increasingly important factor in customers’ assessments of value.

The predominant strategy used to cope with time famine is multi-tasking. This typically involves accomplishing some goal while engaging in some obligatory activity. People make phone calls while driving in their cars, they eat while driving, they exercise while walking to work and the like. There has also been an adjustment in the choices that are made. The population of dogs in this country has reached an asymptote, while the population of cats has increased, in part because cats require less time than do dogs. The purchase of nutritional pet foods such as Science Diet has grown dramatically, in part reflecting consumers’ efforts to reduce the incidence of a pet’s digestive distress that might require time-consuming visits to the veterinarian. The purchase of push lawn mowers has increased 150% during 1996 on sales of 250,000 units, in part because these devices enable the user to exercise while accomplishing the grass-cutting chore. The value equation that reflects these considerations can be represented as:

Goodyear’s Value

The value equation offers a means of linking a brand’s position to the marketing mix. Consider for example, Goodyear’s strategy in marketing tires during the mid-1990s. Goodyear is the largest producer of tires in the U.S. with over 13% share of market. However, because sales and share were stagnant for several years, research was conducted to aid in developing business-building ideas. These data indicated that a variety of criteria guided the choice of tires.

While a tire that offered an advance in tread life would be highly attractive to customers, there had not been a major innovation on this attribute since the steel belted tire was developed in the 1960s. Michelin supported its brand with advertising that focused on safety. The typical ad showed a baby sitting inside a Michelin tire rolling safely down a road.

Research also indicated a dramatic change in consumer tire purchase behavior. Whereas the decision to purchase a replacement tire typically was made over a period of about a month during the sixties, in the mid-1990s, over 50% of consumers made a tire purchase within two days of recognizing the need. Almost all consumers made the tire purchase decision within a week of problem recognition.

Value: The Infiniti Case

In 1985, the Nissan Motor Corporation sent a group of its engineers to live in the US. The idea was for them to learn about how the affluent American consumer lived and what sort of automobile features might fit with this lifestyle.

By 1988 a clear picture seemed to emerge. There was a relatively young upscale segment that composed about 7% of the American population. In the early 1980s, members of this segment were significant purchasers of expensive watches, designer suits, antique furniture and European luxury cars. The stock market crash of 1987 and the expected recession significantly dampened this segment’s enthusiasm for expensive product offerings. The fact that over 60% of the young upscale segment was married with kids prompted them to adopt a value orientation. And as described earlier, these consumers were time famished

The Launch Strategy. In response to these trends, it seemed that a luxury car that provided good value was needed. This implied a car that had the same high quality and invariant performance as was available in Mercedes Benz, BMW and other European luxury cars, but at a significantly lower price. In addition, it appeared that it would be advantageous to develop a car that acknowledged time famine by requiring infrequent service. When servicing was needed, it should be structured in such a way so as to minimize customers’ inconvenience. Along these lines, a facility that catered only to the luxury segment and that provided loaner cars when service was needed seemed appropriate.

As Nissan approached the 1989 launch date, Toyota aimed to preempt them with their new Lexus luxury car. Lexus was to be launched in August 1989 at the beginning of the 1990 new car season. It was positioned as a European luxury car that was $20,000 less than a comparable Mercedes Benz. There was a rumor circulating at the time suggesting that Lexus 400 was given this designation to highlight the fact that it was $20,000 less than the Mercedes 420 with which it competed. Lexus was to be sold at exclusive Lexus dealers that offered free loaner cars when the customer’s car was in for service.

Nissan’s introduction of its new entry into the American car market, the Infiniti was planned for November 8, 1989. The line was to include the Q45, a large sedan that was priced at about $38,000, which was competitive with the Lexus and was $20,000 less than Mercedes Benz. Infiniti also produced an M30 performance coupe, priced at under $30,000.

As the second entry into the luxury market from Japan, Infiniti believed that it was important to stand apart from both Lexus and the European luxury cars. Infiniti was positioned as the luxury car that provided exceptional value because of its ergonomic design. The car was aerodynamically superior to its competitors with special attention to human engineering. In part, this was achieved by eliminating the grill. The door handles were huge and inviting, like the front door to one’s house. The leather-covered seats were constructed to provide firm support rather than softness to the touch. The Infiniti’s buttons for the radio and power windows provided a pleasurable experience when touched.

To ensure excellent service, Nissan put its sales and service representatives through extensive training. The rigor of this training was such that relatively few dealers could be staffed in time for the Infiniti’s launch. As a result, Infiniti had about 20% of the dealers that Lexus had when the doors were opened to the public.

Infiniti dealerships were stand-alone facilities that sold and serviced only Infiniti cars. The plan called for Infiniti dealers to provide free loaners to customers who brought their car in for service. At launch, however, Infiniti dealers set themselves apart from the competition by offering a service whereby they picked up cars at the customers’ homes and left a loaner until the car was returned after service.

When consumers were asked at the end of November 1989 to think back to ads they had seen recently and to indicate which was the most memorable, Infiniti received the most mentions. Apparently the uniqueness of the copy as well as the heavy introductory spending on advertising made Infiniti’s advertising campaign highly memorable. By December, Infiniti was the third most memorable advertising campaign, and by April 1990, it had fallen to number 10.

Second Generation Strategy. The initial Infiniti campaign stirred substantial consumer interest. By the end of 1989, Infiniti had received 60,000 phone inquiries, 35,000 people had visited Infiniti showrooms. But only 1,773 cars had been sold. It was clear that people knew the brand name Infiniti, and that they were curious about what it was, but few people were willing to spend $30 or $40 thousand on a rather plain looking car with no grill and hard seats. As David Hubbard, Infiniti’s national ad manager acknowledged at the time: "We all would like to stick with the nature campaign, to do more with it, but when research comes in and says you’ve got tremendous awareness out there but you’ve got a problem in the sense that nobody knows where your product fits in…then you’ve got to adjust to meet that need. That’s marketing."

In April 1990, Infiniti hired Dan Mountain, a highly successful creative director, and they increased the ad budget to $100 million. Mountain developed more conventional shots of the car and its features. Sales remained sluggish. For the first year of operation, Infiniti had sold 12,000 cars.

In 1991 a low end G20 was added to the Infiniti line. This car had the mechanical features of the more expensive M30 and Q45. However, it was smaller than other Infinitis and lacked the luxurious interior. The G20 sold for $17,500.