BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT

SECTION 2BBrand Management and the Firm

Corporate Strategy and Customer Orientation:Understanding Wants, Needs, and the Competitive Environment

ALAN L. WHITEBREAD

PORTER’S FIVE FORCES MODEL:Industry Analysis

See Michael E. Porter, Competitive Strategy, New York Free Press, 1980, for more information.

What is the amount of rivalry among existing competitors?

What is the bargaining power

of your key customers?

What is the threat of

substitute products and/or

services?

What is the bargaining power

of your key suppliers?

What is the threat of

significant new entrants?

You should spend some time looking at competitive analysis models and reports on the internet for suggestions for your business.

COMMON FIRM-SPECIFIC ADVANTAGES

• INTELLECTUAL PROPERTY• KNOWLEDGE MANAGEMENT

– Databases, systems, processes, …

• BRANDS [other than IP]• CONTROL OF MATERIALS / COMPONENTS• DISTRIBUTION CONTROL [selective +]• CAPACITY / CAPACITY FLEXIBILITY• TECHNOLOGY• HUMAN RESOURCES• ?

COMPETITIVE ADVANTAGE OF THE FIRM [Basic competitive strategy*]

DIFFERENTIATIONPerceived value

[Coke vs. Pepsi]

OVERALL COST LEADERSHIP[Commodities,

Dell]

NICHEUnderstanding and focus

No direct battles with major competitors!

INDUSTRY

WIDE

MARKET

SEGMENT

ONLY

Customer Perceived Uniqueness Low Cost Position

COMPETIVE

SCOPE

COMPETITIVE ADVANTAGE

LOW COST STRATEGIES MAY BE ACHIEVED THROUGH

• Location – Distribution centers near major roads

• Low-cost suppliers– Total systems cost approach

• Process technologies• Product design [clothing brands example]

• Scale economies – Volume; timing; speed to market

• Supply [value] chain consolidation• ?

DIFFERENTIATION STRATEGIES MAY BE ACHIEVED THROUGH

• Improved performance [Intel]

• Mass customization [Dell]

• New functional capabilities [cell phones, TVs]

• Product tailoring

• ?

LEGAL BOUNDS OF COMPETITION

• Federal protection– Sherman Act– Clayton Act– Robinson-Patman Act [resellers]– many more

• Agencies– FTC– FDA– CPSC

ATTACKING COMPETITORS:GAP ANALYSIS*

CHANNELS OF DISTRIBUTION

PRODUCTS

SERVICES

APPLICATIONS

13

2

2

MARKETS / SEGMENTS

GAPS - INCREASE INDUSTRY MARKET POTENTIAL

Demographic changes The baby boom meant more baby food

An aging population means more medical services, …

New uses or user segments Clorox® expands with color safe bleach, and …

Innovative product differentiation

Function / price many levels of features / benefits for DVD players

Go see a store selection.

Add new product lines Crayola® crayons, then bags, tablets, shirts, …

GAPS – PRODUCT LINE GAP

Fill out existing lines Automobiles, trucks AND SUV’s

Create new elements / extend current lines

Miller beer + Miller Lite + Miller Ice

GAPS - DISTRIBUTION

Expand coverage New product introduction

Begins regional and expands nationwide

Increase intensity TOTAL® toothpaste tries to maximize the number of toothpaste outlets

Increase exposure Kellogg’sTM obtains more shelf space for their cereals

GAPS - USEAGE

Stimulate non-users Look at the wine industry program.

Increase consumption by light users

“Did you have your Wheaties® this morning?”

Increase consumption per use

2 Alka-Seltzer® per package

GAPS - COMPETITIVE

Penetrate substitute’s position

Felt tip pen vs. ball point pen

Take share from competition

Gel pens from …

GAPS – DEFEND THE FIRM’S POSITION

Increase firm’s sales New generation of computers

PRODUCT LINE PLANNINGTHE APPLICATION OF GAP ANALYSISPRODUCT PLACE PROMO-

TIONPRICE COMPETI-

TION

Features Expand channels

Stimulate light users

How to compete

Brands Intensify coverage

Attract non-users

Penetrate / Substitute

Market segments

Demographic changes

Use more each time

Model number

Services added

Price is the last competitive weapon you should use. Someone can always have a lower price!

A Determinant Gap Map

http://www.northpark.edu/sbnm/documents/BSE3640-McMathWeek8.ppt#282,8,A Determinant Gap Map

A Determinant Gap Map

http://www.northpark.edu/sbnm/documents/BSE3640-McMathWeek8.ppt#282,8,A Determinant Gap Map

THE PRODUCT CONCEPT

BrandName

QualityLevel

Packaging

Design

Features

Delivery& Credit

Installation

Warranty

After-Sale

Service

CoreProduct

orService

CoreProduct

orService

Actual / BrandedProduct

Actual / BrandedProduct

CoreProduct

CoreProduct

AugmentedProduct

AugmentedProduct

THE PRODUCT CONCEPT:APPLIED TO THE AIRLINE INDUSTRY

AUGMENTEDPRODUCT

AUGMENTEDPRODUCT

ACTUAL / BRANDEDPRODUCT

ProfessionalPilots

Meals /Snacks

Baggage Checkingand Handling

CourteousFlight

Attendants

Frequent FlyerProgram

Ample andeasily

availableparking

Skycap services On-site or veryclose hotels

Mass transitto / fromairport

COREMovement from

point A to point B

COREMovement from

point A to point B

Convenientairport

Airportsecurity

POTENTIAL PRODUCT = ?

HOW MARKETING SATISFIESCONSUMER NEEDS

LO3

The 4 P’s: Controllable Marketing Mix Factors

1-20

PRODUCT

-PRODUCTS-SERVICES

-Product / Service Combos

PRICEPROMOTION

Integrated

Marketing

Communications

PLACE

THE MARKETING MIX - 4 P’s

PRODUCT PRICEPROMOTIONPLACE

Creates the ValueCommunicates

the valueProves the value

with benefits

In rank order, what are the three most important benefits?

In rank order, where do consumers prefer to purchase the item?

What are the most effective ways for consumers to recognize the benefits?

What are the most effective ways for consumers to recognize the value of the benefits?

STRATEGIC GROWTH OPTIONS

• NPD• M&A• JV or other types of venturing• Licensing• Franchising• Acquire external technology• Six Sigma

– Major accounts

• Strategic alliances– Tom Byers [SYMANTEC] video