brand management and new product development section 4b brand management and the firm brand equity...
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BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT
SECTION 4BBrand Management and the Firm
Brand Equity Models
ALAN L. WHITEBREAD
SEVEN BRAND MANAGEMENT APPROACHES
1. Economic
2. Identity
3. Consumer-based
4. Personality
5. Relational
6. Community
7. Cultural
COMPANY SENDER FOCUS
• THE ECONOMIC APPROACH– – Manages the brand with the traditional marketing mix– Company identity helps shape a brand message– Marketer is in charge of brand value creation– – A consumer is an “economic man” passively receiving
and understanding messages from the sender exactly as intended.
COMPANY SENDER FOCUS
• Economic approach – The economic man– Human behavior is rational– Humans maximize their satisfaction and/or
utility [self-interest is important]– Humans have perfect market information– The exchange is an isolated event and not
related to any other event– Humans have limited income which causes
them to maximize the utility of their income
COMPANY SENDER FOCUS
• THE IDENTITY APPROACH– – Brand is integrated into all organizational
levels– Organizational culture and corporate identity
heavily influence the brand
HUMAN RECEIVER FOCUS
• THE CONSUMER-BASED APPROACH– Brand is linked to customer associations– – Focus shifts to the message receiver– – Marketer can program the consumer through
brand messages
CONSUMER-BASED BRAND EQUITY [CBBE]
• Ensure consumers identify and associate the brand with a specific type of product or solution.
• Establish the brand in the mind of the consumer through associations to certain properties.
• Assure brand identification and brand meaning are accurate.
•
HUMAN RECEIVER FOCUS
• Consumer-based approach– – The brand is a consumer mental construct– – The consumer is the owner of the brand– Marketer can program the consumer through
brand messages
CUSTOMER-BASED BRAND EQUITY PYRAMID
RESONANCE
SALIENCEProjecting the brand
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
4. RELATIONSHIPS4. RELATIONSHIPS
3. RESPONSE3. RESPONSE
2. MEANING2. MEANING
1. IDENTITY1. IDENTITY
BRAND IDENTITY
• Brand salience– How often is the brand recalled?– Is it easy to recall?– What reminders are necessary?– Dimensions of brand awareness
• Depth: the likelihood of recall• Breadth: the range of purchase opportunities
– How effective are the brand elements?• Identify and differentiate each one
RESONANCE
SALIENCEProjecting the brand
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
BRAND MEANING
• Brand performance1. Primary product and supplementary
features
2. Product reliability, durability, and serviceability
3. Style and design
4. Value proposition using emotional and intangible elements [not price]
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
BRAND MEANING
• Brand imagery1. User profiles
– Demographics, psychographics, …
2. Purchase and usage situations– Channel, store, timing, …
3. Personality and values– Sincerity, excitement, competence, …
4. History, heritage, and memorable experiences
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
BRAND RESPONSE
• Brand judgments1. Brand quality
– Value, satisfaction, …
2. Brand credibility– Expertise, trustworthiness, likeability, …
3. Brand consideration– As a relevant solution, …
4. Brand superiority– Differentiation, associations, …
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
BRAND RESPONSE
• Brand feelings1. Warmth
2. Fun or excitement
3. Security
4. Social approval
5. Self-respect
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
BRAND RELATIONSHIPS
• Brand resonance1. Behavioral loyalty
– Frequency of repeat purchases
2. Attitude attachment– Strong affection, pride of ownership, …
3. Sense of community affiliation
4. Active engagement– Regularly involved with some aspect
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
CUSTOMER-BASED BRAND EQUITY PYRAMID
RESONANCEWhat about you & me?
SALIENCEWho are you?
JUDGMENTS What about you?
FEELINGS
PERFORMANCEWhat are you?
IMAGERY
HUMAN RECEIVER FOCUS
• Personality approach– Humans endow the brand with a human
character / personality, thus giving it symbolism
– A prerequisite for the relational approach– Models
• David Aaker’s Brand Equity Model• Brand Personality [more in Section 7] and
Corporate Brand Personality
DAVID AAKER’S BRAND EQUITY MODEL
• Brand equity is composed of distinct categories of brand assets and liabilities.– Brand loyalty– Brand awareness– Perceived quality– Brand associations– Other proprietary brand assets
DAVID AAKER’S BRAND EQUITY MODEL
• BRAND LOYALTY– Reduced [marginal] marketing expenses– Provides trade leverage [with resellers]– The ability to attract new customers and keep
existing ones– Provides time to respond to competitive
threats
DAVID AAKER’S BRAND EQUITY MODEL
• BRAND AWARENESS– It is an anchor to which you can attach other
associations– It is familiar– It is an indicator of commitment to the brand– It indicates the brand should be considered if
not already a customer
DAVID AAKER’S BRAND EQUITY MODEL
• PERCEIVED QUALITY– Provides a reason to buy– Differentiates the brand and its products– Part of the positioning– Provides value– – Provides the opportunity for extensions
DAVID AAKER’S BRAND EQUITY MODEL
• BRAND ASSOCIATIONS– Helps with information retrieval– – – Provides a reason to buy– Creates positive attitude or feelings– Provides the opportunity for extensions
DAVID AAKER’S BRAND EQUITY MODEL
• OTHER PROPRIETARY BRAND ASSETS– Establishes competitive advantage
DAVID AAKER’S BRAND EQUITY MODEL
• BUILDING A BRAND– Have a strong core brand identity that can be
modified for different segments and products.– Have a strong value proposition using
emotional and intangible appeals.– Establish a strong brand positioning that links
to the brand identity.– Great execution
• NPD, launch, product / family life cycle
DAVID AAKER’S BRAND EQUITY MODEL
• BUILDING A BRAND– Be consistent over time
• Coca-Cola vs. RC Cola
– Use the brand leverage that has been developed – only participate in strong co-branding programs
– Measure and track various brand equity elements over time
– Have a strong brand manager– Invest in the brand
PRODUCT BRAND PERSONALITY
• Defined in user imagery– Understand the characteristics of customers– – Customers can express their actual or desired
self-image by association with the product
CORPORATE BRAND PERSONALITY
• Defined in the actions, values, and words of all its employees
• Supersedes any product brand personality
• Core dimensions [traits]– Heart [passionate and compassionate]– Mind [creative and disciplined]– Body [agile and collaborative]
BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT
SECTION 5Brand Management and the Firm
Brand Types and Characteristics
ALAN L. WHITEBREAD
THE FOUR STEPS OF BUILDING A BRAND
• Brand identity– Who are you?
• Brand meaning– What are you?
• Brand response– How do I think or feel about you?
• Brand relationships– What type of a connection do we have?
BUILDING A BRAND
• BRAND IDENTITY FORMS– The company is the only brand name used
• ?
– The company and the brand are together• DuPont, IBM, Philips, Siemens
– The brand by Company X• ?
– The brand with minor mention of Company X• Clairol, Crest, Folgers, Noxzema, Pampers, Puffs, Tide –
Proctor and Gamble
– The brand represented / distributed by X• ?
TYPES OF BRANDS
GENERICPharmaceuticals, Vegetables
GENERICPharmaceuticals, Vegetables
INDIVIDUAL / PRODUCTHuggies, P&G soaps, Crest
INDIVIDUAL / PRODUCTHuggies, P&G soaps, Crest
CO-BRANDINGPost Oreo O’s cereal, Disney SUV
CO-BRANDINGPost Oreo O’s cereal, Disney SUV
CORPORATE / FAMILY Nike, IBM, GE, RCA
CORPORATE / FAMILY Nike, IBM, GE, RCA
PRIVATE LABELKenmore, Craftsman, Die-Hard
Great Value, …
PRIVATE LABELKenmore, Craftsman, Die-Hard
Great Value, …
COMBINATIONHP Deskjet, DuPont Stainmaster
COMBINATIONHP Deskjet, DuPont Stainmaster
BRAND LICENSEDisney
BRAND LICENSEDisney
PRIVATE LABEL BRANDS
• Are generally a threat only to brands that are 1.
The value equation is wrong because the real or perceived benefits are not sufficient.
2. Very small IMC relative to what is needed to build or sustain a
brand.
3. Very poor differentiation [if any] and probably some
combination of bad POP, IMC, …
PRIVATE LABELS: SOME DISHWASHERS
Maytag®
AdmiralJenn-Air®
Jenn-Air Pro-Style®
Magic ChefMaytag Jetclean®IIIMaytag Jetclean®IIMaytag Jetclean®
NorgeHardwick
GE®
GE®
GE ProfileTM
GE SpacemakerTM
Hotpoint®
GE Monogram®
Kenmore
Electrolux®
Electrolux IconGibson
KelvinatorWhite-Westinghouse
FrigidaireFrigidaire Gallery
Frigidaire ProfessionalTappan®
GEKenmore
Whirlpool®
Roper®
Estate®
Whirlpool®
Whirlpool Gold®
KitchenAid®
KitchenAid BRIVA®
[In-sink dishwasher]
KenmoreKenmore Elite
Kenmore UltraWash®
See http://www.ajmadison.com/cgi-bin/ajmadison/item_list/cat00263/Built_In_Dishwashers.html for more.See http://www.appliance.com/dishwashers/list.html for a list of firms.
PRIVATE LABEL BRANDS
• PRIVATE LABEL NOTES– Some people differentiate a private label brand as
one that identifies the source of the product and a generic brand as one that does not identify the source.
– Private labels are called store brands for retailers.
– Private labels for wholesalers and distributors may or may not have detailed specifications and identify the source of the product.
BUILDING A BRAND
• PRIVATE LABEL BRANDS– Manufacturer’s brands [OEM]
• Manufacturer A makes products for Manufacturer B so the market believes Manufacturer B is making the products.
– ?
– Reseller’s brands• B2B
– Nearly all mail order firms
• B2C– Sears Craftsman tools, DieHard batteries, and Kenmore
appliances
BUILDING A BRAND
• PRIVATE LABEL BRANDS– Counter brands or Generic brands
• Usually the same ingredients as the major brand and imitates it in nearly all aspects – same size package, information is identical and in the same place, etc.
– Wal-Mart Equate
– Fakes or Knock-offs• Illegal versions of usually major brands
– CDs, movies, software, …
B2B BRANDS
• Most are unknown by the average consumer.– Known: Alcoa, Intel, – Unknown: FMC, Lexan, TIVAR
• Important considerations– Company reputation and financial stability– Capacity, flexibility, service level[s] – NPD
POSITIONING: BRAND IDENTITY
• Vision [includes purpose / need fulfillment]• What makes it different?• What makes it recognizable?
– This is a part of but not the same as identity– As seen from sender’s side!– Sight
• Graphic symbol [logo]
– Sound• Name
– Must penetrate the noise.
BRAND IDENTITY TRAPS
• Each of these approaches is too limiting or tactical.
How the brand is currently perceived
[The customer determines who you are]
How we want the brand to be perceived
[Must be a visionary positive projection]
The part of the brand identity and value proposition that is communicated to the target audience.
[focus on attributes [features] restricts the brand identity
POSITIONING: BRAND IMAGE
• Brand image [as seen from receiver’s side]– Perceptions of the product– Must not be distorted by the noise– If you are doing a great communications job,
brand image will be very close to the brand identity.
– Understanding the receiver’s side• Use a Mental map / Mind map
– A graphical technique that takes advantage of the brain associative capability not just is linear capability.
MIND MAP
7-Up
Sweet
Sticky
Children
Bittersweet
Lemon
Adult
Fresh
Thirst quencher
Carbonated
Sparkling
Cool
POSITIONING: MIND MAP TOOL
• To effectively use this technique1. Get a very large sheet of paper.
2. Put the central idea at the center of the paper.
3. Write down every association where it first appears to belong.
4. Draw all known connections between ideas with various arrows, lines, markers, symbols, colors, etc.
5. Go very quickly. 1. NEVER PAUSE, JUDGE, OR EDIT DURING THE MIND
MAP SESSION!
2. This maximizes the number of associations and minimizes the linear thinking aspect of the brain.
REMEMBER THE BENEFITS OF STRONG BRANDS
• Increased customer loyalty
• Increased brand recognition
• Stronger competitive position
• Larger gross and pre-tax margins
• Increased trade cooperation
• Increased IMC effectiveness
REMEMBER – STRONG BRANDS PROVIDE POTENTIAL FOR
• a corporate brand
• brand extensions
• product line extensions
•
POSITIONING: FIRST STEPS
• Four key questions must be answered before you begin to evaluate positioning alternatives.– Why does the brand exist?
•
– Who is the brand for?• Market segmentation; market descriptions
– Why are the benefits meaningful?•
– What are we competing against?• SWOT analysis; competitive analysis; product charts
POSITIONING: FIRST STEPS
• Why does the brand exist?– The brand vision [brand promise for the
consumer].– Brand benefits must be rank ordered by
perceived value for each target market [segment].
• Who is the brand for?– Precise market segmentation and target
marketing are required.
POSITIONING: FIRST STEPS
• Why are the benefits meaningful?– What proof exists?– How are those messages conveyed?
• What are we competing against?– You must understand the nature of
competition.• By level [direct, various indirect]• By product for direct competitors• By company [by probability of competing]
SELECTING BRAND ELEMENTS
• Six criteria should be used to do this.1.
2. Meaningful / descriptive / interesting / rich in visual and verbal imagery
3. Likeable aesthetically and emotionally
4. Transferable within and across product, geographic, or cultural boundaries
5. Adaptable, flexible over time to keep from becoming stale or outdated
6.
A SUCCESSFUL BRAND
• When you have positioned a brand correctly, it has all of the following characteristics.– Recall [physically, imagery, familiarity]– Personality [character]– Culture [group]– Relationship [meaning to the customer]– Customer reflection [perception]– Self-image
BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT
SECTION 6Brand Management and the Firm
New Product Development: Risk Assessment
ALAN L. WHITEBREAD
REASONS FOR NPD
• Capitalize on existing market[s]
• Capitalize on new technology
• Erect competitive barriers• Establish a market
presence• Expand the product
offering• Improve the company’s
image
• Increase market penetration
• Preemptive move in an emerging segment
• Lower cost / higher value product
• Offset a seasonal cycle• Utilize excess capacity• …
NEW PRODUCT DEVELOPMENT [NPD]
• NPD is risky and expensive.– More than 9 out of 10 new products fail in the first
year.• Food Industry 1997 first year failure rate
– Top 20 firms success rate is 76%– Food industry failure rate is nearly 80%– Large firm vs. small firm NPD performance
• Medicines: Of 5,000– Only 5 make it to clinical trials– Only 1 is approved for patient use
• U.S. 2007 Fortune 1000 firms– Spend more than $60 billion in new product failures each year.
– Even if a product survives its first year, it is likely to fail in the second year.
NEW PRODUCT DEVELOPMENT [NPD]
• New product development is cross-functional– Marketing identifies unfilled customer needs– Marketing specifies the type of product that is
needed– R&D develops conceptual alternatives for
marketing to approve – R&D, engineering, and production develop
the product with marketing’s guidance– Finance verifies the estimated cost and
profitability
MITIGATING RISK• Companies are faced with increasing levels of risk in today’s
market.
• – You must develop and introduce products faster!– Competitors have speeded up their NPD cycles.
• – Product life cycles are shortening, increasing risk because:
• more new products must continually be in development, and• there is less time to capture development costs and generate profits.
• – New product development is expensive.– A large percentage of all quality problems stem from poor design.– Most of a new product's cost is determined during the design
stage.
KEYS TO NEW PRODUCT SUCCESS“THE DIMENSIONS OF INDUSTRIAL NEW PRODUCT SUCCESS AND FAILURE”, R.
G. Cooper, Journal of Marketing, Vol. 43 (Summer 1979), pp. 100-101.
• Product uniqueness and [perceived] superiority
• Market knowledge and marketing proficiency
• Technical and production synergy and proficiency
CRITICAL GENERAL SUCCESS FACTORS FOR NEW PRODUCTS •
• Exceptional product quality – Quality leader
• Superior to competitors perceived ability to meet a need or solve a problem
• Unique benefits that are highly visible, easily understood, and
•
CRITICAL SUCCESS FACTORS:PROJECT LEVEL
• Unique [perceived] superior products• • Market research• Clear, early, and stable project and product
definitions• Planning and resourcing the launch• Excellent execution from idea forward•
CRITICAL SUCCESS FACTORS:PEOPLE AND THE ENVIRONMENT• Organizing the right project team
• Strong team chemistry
• Outstanding leadership
QUALITIES PROMOTING CREATIVITY“A MODEL OF CREATIVITY AND INNOVATION IN ORGANIZATIONS”, Teresa M. Amabile,
Research in Organizational Behavior, Vol. 10, pp. 128-129. 1988.
• Personality traits– Persistence, curiosity, energy, and intellectual
honesty
• Self-motivation [3M intrapreneurship]
– Self-driven and committed to the idea
• Cognitive abilities– General problem-solving, tactics for creative
thinking
QUALITIES PROMOTING CREATIVITY“A MODEL OF CREATIVITY AND INNOVATION IN ORGANIZATIONS”, Teresa M. Amabile,
Research in Organizational Behavior, Vol. 10, pp. 128-129.
• Risk-orientation [Norm Dion, Dysan Corp.]
– Unconventional, attracted to challenge, do things differently
• Expertise in the area [Al Shugart, Finis Conner]
– Talent, experience, and knowledge in a field
• Qualities of the group– Synergy of intellectual, personal and social
qualities of the group
QUALITIES INHIBITING CREATIVITY“A MODEL OF CREATIVITY AND INNOVATION IN ORGANIZATIONS”, Teresa M. Amabile,
Research in Organizational Behavior, Vol. 10, p. 129.
• Unmotivated– Not challenged by the problem, pessimistic,
complacent, lazy, do not believe in the idea
• Unskilled– Lack of ability or experience in the problem
area
• Inflexible– Opinionated, unwilling to do things differently
ENVIRONMENTS FOR CREATIVITY“A MODEL OF CREATIVITY AND INNOVATION IN ORGANIZATIONS”, Teresa M. Amabile,
Research in Organizational Behavior, Vol. 10, pp. 146-147.
• Freedom of what to do or how to do– #2 for inhibiting creativity
• Good project management
• Sufficient resources
• Organizational characteristics– Cooperation and collaboration– Failure is not fatal
• #1 for inhibiting creativity
THE POWER OF VISUALIZATION
• On the internet find any or all of the following to appreciate visualization.
CRITICAL SUCCESS FACTORS:PEOPLE AND THE ENVIRONMENT• Organizing the right project team
• Strong team chemistry
• Outstanding leadership
• Provide a supportive corporate environment– Climate– Culture
• Top management support
B2C TARGET MARKET SEGMENT CRITERIA
1. Measurable - Is it quantifiable ?
2. Substantial- Is it the right size for my firm?
3. Accessible - Does it use our existing channels of distribution?
4. Heterogeneous- Is it differentiable? Are there obvious customer benefits?
5. Actionable- Does my firm have a committed long-term desire to succeed?
B2B TARGET MARKET SEGMENT CRITERIA
1. Measurable– The degree to which you can measure buyer
characteristics
2. Accessible– The ability to focus on target market
segments
3. Substantial– The degree to which target market segments
are large enough and potentially profitable enough to pursue
B2B TARGET MARKET SEGMENT CRITERIA
4. Compatible -The extent to which marketing and business
strengths compare to current and expected competitive and technology states
5. Responsive-The extent to which target market segments
respond to elements of the marketing mix
WHAT IS A NEW PRODUCT?
• Product improvements and modifications.– A different
• Size• Color• Style• Specifications• Package
• A new product family or product line• A new SBU• Products that require a new technology• …
FIVE TYPES OF DEVELOPMENT PROJECTS
R&D ADVANCED DEVELOPMENT
PROJECTS: GENETIC
ENGINEERING
NEW CORE PRODUCT
NEXT GENERATION PRODUCT
ADDITION TO PRODUCT FAMILY
DERIVATIVES AND EXTENSIONS
ALLIANCES PARTNERSHIPS
PROJECTS
NEW CORE PROCESS
BREAKTHROUGHPROJECT:
NEW FAMILY OF DRUGS
R&D JOINT VENTURE
NEXT GENERATION PROCESS
SINGLE
DEPARTMENT UPGRADE
PLATFORM PROJECT:
APPLE iMAC: TRANSLUCENT
PLASTIC COLORATION TECHNOLOGY
INCREMENTAL
CHANGE
DERIVATIVE PROJECT:
SIMPLE SIZE CHANGE
MORE PRODUCT CHANGE LESSP
R
O
C
E
S
S
C
H
A
N
G
E
For more information see Creating Project Plans to Focus Product Development, Harvard Business Review, Vol. 70, No. 2, p.74.
EASIEST
HARDEST
SMALL
LARGE
NPD
• New product development begins with the recognition of – an unmet customer need or want and – a potential market [segment] that is large enough to
justify exploration.
• NPD proceeds either in a sequential or concurrent fashion.– Sequential [completing one step before proceeding to
the next] NPD is the traditional method.• It is time consuming, thus slow.• The lack of speed to market results in either not as much of a
lead over competitors or it trails them further in the market. Either way, the firm does not realize as much profit from NPD as it could.
NPD: A STAGE-GATE PROCESS
1. -Conduct necessary research [discovery]-Determine the type of project [scoping]
2. Gain project approval3. Development activities4. Testing and validating5.
WHERE DO IDEAS COME FROM?
• MARKET RESEARCH / CUSTOMERS / PROSPECTS / EMPLOYEES
• SUPPLIERS• ACQUISITIONS• UNDERSTANDING TRENDS / ISSUES / …
– Demographics– Problems– Competition– Market research– Technology
NEW PRODUCT IDEA STRATEGIES
Original Products
Original Products
ProductImprovements
ProductImprovements
ProductModifications
ProductModifications
NewBrands
NewBrands
AcquireCompanies
AcquireCompanies
Acquire Patents
Acquire Patents
AcquireLicenses
AcquireLicenses
METHODS OF IDEA GENERATION
• METAPHOR BUILDING• FREE ASSOCIATION
– Fruit → Banana → Yellow → ? + – Fruit → Banana → Orange → ? +
• BRAINSTORMING • CATALOG TECHNIQUE• ATTRIBUTE LISTING• THINKING OUT OF THE BOX• Techniques for creative thinking
– http://members.optusnet.com.au/~charles57/Creative/Techniques/
4. Diversification3. MarketDevelopment
Newmarkets
1. MarketPenetration / Saturation
Existingmarkets
Existingproducts
2. ProductDevelopment
Newproducts
ANSOFF’S PRODUCT / MARKETEXPANSION GRID
PRODUCT GENERATION MAP: HP
DeskJet
DeskJet Plus
DeskJet 500C
DeskJet 550C
DeskJet 300
DeskJet 560C
Cost reduction
Quality improvement
Swap color and black cartridges
One color and one black cartridge
Portable with small footprint
Cost reduction
TIME
TECHNOLOGY ROADMAP
Technology
area
Last year
This year
+1 year
+2 years
Vision
Weight/size 16-bit chip Micro controller
Integrated unit
Single chip Soft radio
Ease of use 4 line screen
10 line screen
VGA Touch screen
Voice interface
Longevity
Audio quality
Video quality
CONCEPT SCREENING
• Sort and classify by type of project• Concept Screening: Does it fit with the
portfolio?– Form, function, design, aesthetics– ?
• Risk analysis– Technological
• Technology demands, engineering, operations, and quality
– Business
• Business analysis
THREE KEY QUESTIONS
1. Who?
What?
Where?
Why?
When?
How?
How is it differentiated?
Ø
THREE KEY QUESTIONS
2. Utilizing which core competency[ies]?
Utilizing which key success factor[s]?
What operating model?
How will it be made?
What are the key hurdles?
Ø
THREE KEY QUESTIONS
3. Projected unitsProjected net revenue [including elasticity]Projected cost schedulesProjected profitabilityRisk assessment – the potential to make
considerably more or less than the projection[s]
Ø
BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT
SECTION 7ABrand Management and the Firm
Market Research - 1
ALAN L. WHITEBREAD
MARKET RESEARCH OVERVIEW
Market Research
The collection and analysis ofdata for market decisions about
COMPETITORSMARKETS
PRODUCTSRESPONDENTS
STRATEGY OPTIONS
Strategic Marketing for Evaluation data for
-Strategy analysis -New business
analysis Market Planning for
Market segmentation Market potential / shareCompetitive analysis
Product Management forNew or enhanced products 4 P's decisions
Product Development for Product concept testingSales techniques Price testing
FRAMING AN ISSUE
McKinsey & Company
• “Breakthrough Thinking from Inside the Box”, HBR, December, 2007, pp.71-78.– Create new boxes to think inside– Bound the range of acceptable ideas– Tailor the questions accordingly– Select participants capable of original insight– “21 Great Questions for Developing New
Products”
ELEMENTS OF A GOOD QUESTIONNAIRE
• Most are short, simple, and quick – but some can be quite long
• Precise wording of questions and answers• Avoids leading questions• Does not ask unreasonable questions• Does not alienate the respondent
– Sensitive topics = ?
• Readily lends itself to statistical analysis
THE QUESTION MUST BE VERY CAREFULLY WORDED
AND STRUCTURED!
THE STRUCTURE OF THE ANSWER IS JUST AS
IMPORTANT AS THAT OF THE QUESTION!
TYPES OF QUESTIONS
DICHOTOMOS QUESTION
THE RESPONDENT MUST ANSWER ONE OF JUST TWO CHOICES
DO YOU THINK TIDE GET CLOTHES CLEAN WITHOUT INJURING THE FABRIC? YES NO
TYPES OF QUESTIONS
OPEN-END or COMPLETELY UNSTRUCTURED QUESTION
OBTAINS INFORMATION WITHOUT BIAS
IT IS LIKE AN ESSAY EXAM
IT IS VERY HARD TO ANALYZE
FREE RESPONSE QUESTION
ANSWERS ARE LIMITED TO A WORD OR A PHRASE
TYPES OF QUESTIONS
SENTENCE COMPLETION QUESTION
THE ______ IS OBTAINED BY DIVIDING ______ BY ______.
GOOD FOR ROTE MEMORY MEASUREMENT
THE RISK IS THAT IS ALL THEY MEASURE!
TYPES OF QUESTIONS
MULTIPLE CHOICE QUESTION – you must know everything about an issue to properly write these structured questions.
1-VERY EASY ANSWER SET
ONE CORRECT ANSWER
2-TO MEDIUM HARD ANSWER SET
SEVERAL ANSWERS ARE ONLY SLIGHTLY DIFFERENT
3-TO HARD ANSWER SET
COMBINATION ANSWERS ONLY SLIGHTLY DIFFERENT
TYPES OF QUESTIONS
RANKING, RATING, and CONTINUUM QUESTIONS
FORCE A MORE PRECISE SCALE OF MEASUREMENT
SCALE DETERMINES TYPE OF STATISTICAL ANALYSIS
PROBLEM IS THE MEANING OF THE SCALE OF MEASUREMENT
CHECK QUESTIONS
QUALITATIVE RESEARCH
• Words and images
• “Soft” or subjective data
• Exploratory in nature
• Understand unmet needs
• Heuristic analysis: search for themes and deeper meanings
COMPETITIVE ANALYSIS
Traditional competitors
Evolving competitors
New competitors to the industry
The growing role of strategic alliances
COMPETITIVE ANALYSIS
Company #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 4 User $
OUR COMPANY Y Y Y N N Y Y Y GUI Win 5,000
MCS Y Y Y ? ? ? Y ? CLI Unix ?
DMCS Y Y Y Y PROP Y Y Y CLI Unix 12,000
AS Y Y Y Y PROP ? Y ? GUI Unix ?
API Y Y N N Y ? N ? GUI Win 5,080
PCSS Y Y Y Y PROP Y Y Y GUI Win 7,460
MAC Y Y N N N N N N GUI Win ?
FMSI Y Y N N PROP Y Y ? GUI Win ?
HTC Y Y N N Y N Y N GUI Win 3,980
LEGEND: Y=yes N=no GUI=graphic user interface CLI=command line interface PROP=proprietary
PRODUCT LINE EXPLOSION
MEN’S SHIRTS
BRAND
TYPEDress, casual,
sport, work
SIZES, M, L, XL
Pluslong and short
Button down or not---
Colors---
Fabrics
PRODUCT LINE EXPLOSION
• Look at what happens with only a little changes to the previous slide.
– Brands*types*sizes*collars*colors
• 1*4*8*2*4 = 256
• 3*4*8*2*6 = 1,152
CONTEXTUAL RESEARCH
CONTEXT
-Activities-Environment-Interactions
-Other products-People
-Processes-Relationships
CONTEXTUAL RESEARCH:PRINCIPLES
• Empathy for understanding
• Rapport for true behavior and values
• Subjects lead the session and identify what is important
• Focus on what subjects do more than their opinions
• General patterns should emerge
CONTEXTUAL RESEARCH:THE PROCESS
Defining theproblem and
researchobjectives
Defining theproblem and
researchobjectives
Developingthe research
plan
Developingthe research
planCollect the informationCollect the information
Analyze theinformationAnalyze theinformation
Present thefindings
Present thefindings
MarketingDecisionsMarketingDecisions
QUALITATIVE TECHNIQUES
• INTERVIEW USERS
• FREE ASSOCIATION– What does _________ mean to you?
QUALITATIVE TECHNIQUES
• FOCUS GROUPS– How do they work?
• PROJECTIVE TECHNIQUES– Completion and interpretation tasks– Comparison tasks– To try and uncover true opinions and feelings– Example: Rorschach Test [inkblot]
http://www.stupidstuff.org/main/rorschach.htm
CONCEPT TESTING:What ideas should we pursue?
• The unmet need or want– “The universal carryall”
• What is it?• How should it work?• Feature[s] = ?• Advantage[s] = ?• Benefit[s] = ?
“The universal carryall”
CONCEPT TESTING:What ideas should we pursue?
• Test as many ideas as possible
• Test before any feasibility analysis
• Do not mix innovative and very futuristic ideas in the same test set
BRAND ATTRIBUTES AND BENEFITS
PRODUCTOR
SERVICE
Functionalbenefits
Experientialbenefits
Symbolicbenefits
Product-relatedattributes
Brandpersonality
Userimagery
Usageimagery
TTU DELOITTE PROJECT, FALL 2008
SCALES OF MEASUREMENT
SCALE STRUCTURE EXAMPLE(S)
1:1 correspondenceSubjective data
Football numbersLottery drawing numbers
A scale existsNo distance relation is known (e.g. 3-2 <> 4-3)
Military rankQuality of lumber, beansUpper-middle-lower class
Ordinal scales are often used to evaluate consumer satisfaction. [Likert scale]
How satisfied are you with PRODUCT X?
1. Not satisfied
2. Neither satisfied or dissatisfied
3. Satisfied
4. Very satisfied
5. Extremely satisfied
SCALES OF MEASUREMENTSCALE STRUCTURE EXAMPLE(S)
Equal distances between items (e.g. 4-2=4-3)
Calendar daysTemperature
A continuous scale of measurementDefinite relationshipsA true zero point
MeasurementLoudness scale
Equal distances between items (e.g. 3-2=4-3)
Calendar daysTemperature
Interval scales are often used to rank items.Which products do you prefer the most? Assign #1 to the most
preferred and #5 to the least preferred product. PRODUCT A _____ PRODUCT B _____ PRODUCT C _____ PRODUCT D _____ PRODUCT E _____
BRAND PERSONALITY
IF PRODUCT __________ WAS YOUR FRIEND,
HOW WOULD IT TALK TO YOU?
THE BRAND PERSONALITY APPROACH
SUPPORTING THEME:Brand-self congruence
SUPPORTING THEME:
Personality
SUPPORTING THEME:
Consumer self
BRAND PERSONALITY
BRAND PERSONALITY:Supporting theme: personality
Recessive personality
Personality dimensions
Dominant personality
Quiet, reserved, shy, silent, withdrawn
EXTROVERSION Talkative, active, energetic, outgoing
Fault-finding, cold, unfriendly, quarrelsome, hardhearted
AGREEABLE Sympathetic, kind, appreciative, affectionate, softhearted
Careless, disorderly, frivolous, irresponsible, slipshod
CONSCIOUSNESS Organized, thorough, efficient, responsible
Tense, anxious, nervous, moody, worrying
EMOTIONAL STABILITY Stable, calm, contented, unemotional
Commonplace, narrow interests, simple, shallow, unintelligent
OPENNESS / CULTURED Wide interests, imaginative, intelligent, original, insightful
BRAND PERSONALITY
Brand PersonalityCentral Theme
RuggednessSophisticationCompetenceExcitementSincerity
•Hallmark•Coke
•Pepsi •HP•Wall Street Journal
•BMW•Lexus•Grey Poupon
•Nike•Wells Fargo
THE POWER OF PASSIONS
• The brand is what makes a product more than just a product – it makes it unique.
• The brand goal is to be more than brand preference – a passionate brand insistence!
• This is done through engagement and fulfilling self-concept and image to others.
•
CONNECTING WITH CONSUMERS
• B2C– Needs and wants– Emotions and self-actualization– Hopes [dream realizations]– Fears [risk reduction, safety]– Familiarity and trust [brand loyalty]– Understanding demographic trends
CONNECTING WITH CONSUMERS
• B2B connections– Performance and reward [best solution]– Fears [risk reduction, improve safety]– Familiarity and trust [consistency → brand
loyalty]– Understanding trends
BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT
SECTION 7BBrand Management and the Firm
Market Research - 2
ALAN L. WHITEBREAD
QUANTITATIVE RESEARCH
• Numbers based
• “Hard” data
• More confirmatory in nature
• Optimize the appeal of new products
• Statistical analysis
QUANTITATIVE TECHNIQUES
• ANALYSIS OF VARIANCE [ANOVA]– Closely related to multiple regression– Can examine multiple variables and their influence on some
response • Analysis of - 1:A, 2:B, 1: [A & B], [1 & 2]: [A & B], etc.
• CONJOINT ANALYSIS– Many tools including variance and regression analysis– Allows many variables and aspects to be analyzed simultaneously– Human perceptions and preferences
• to single attributes and interactions such as price point, sales likelihood, and cannibalization
• CORRESPONDENCE MAPPING– Graphically represent the relationship between brands or products
and other variables such as psychographics, media, etc..– Can be a preliminary step to cluster analysis, used in determining
the most discriminatory psychographic statements
QUANTITATIVE TECHNIQUES
• FACTOR ANALYSIS– A data reduction technique to explain variability of factors– Finds commonality in sets of variables– Used to identify consumer lifestyle and personality types
• PRINCIPAL COMPONENT ANALYSIS [PCA]– A type of factor analysis– Used to identify
• the most independent variables • and relative strength/position of a set of linear variables
• MULTIDIMENSIONAL SCALING– Similar to factor analysis– Human perceptions and preferences in relative perceptual space
[e.g. perceptual map]
FACTOR ANALYSIS AND PCADeloitte study 2009
Rotated Factor Analysis [PCA] Rotated Common Factor Analysis
Factor 1 by Sex; Single Factor 1 by Sex; Single
MALE FEMALE MALE FEMALE
Exterior design 0.7829 0.5233 0.5833
GPS system 0.4914
Fuel efficiency 0.6915 0.4410
Horsepower 0.7468 0.6816
iPod link 0.5497
Leg room 0.5856 0.6206 0.4816
Newest model 0.5113
Performance 0.8633 0.5986 0.7602
Quietness inside 0.8159
Responsiveness / handling 0.8902 0.6436 0.7513
Sound system 0.5224 0.6015 0.4585
Steering wheel controls 0.4122 0.5275
Tells you when it needs service 0.7664 0.4054
Type of transmission 0.4497 0.4244
See what happens when you force the results to only one attribute!
CORRESPONDENCE MAPPING0 Degree Angle: 100% Correlation
MONEY IS THE BEST MEASURE OF SUCCESS
LITTLE I CAN DO TO CHANGE MY LIFE
WIN LOTTERY WOULD NEVER WORK AGAIN
I AM A WORKAHOLICON WHOLE PEOPLE GET WHAT THEY DESERVEE
PAY ANYTHING WHEN IT CONCERNS MY HEALTH
MAKE SURE I TAKE EXERCISE REGULAR
MAGAZINES MAIN SOURCE OF ENTERTAINMENT
MOST MAGAZINES ARE WORTH THE MONEY
AWKWARD ABSENTMINDED FORGETFULUL
READ INFO ON LABEL
ADV GIVES TRUE PICTURE
MAXWELL HOUSE REG GRND
MAXWELL HOUSE INST
JOB SECURITY IS MORE IMPORTANT
• Maxwell House Regular Ground & Maxwell House Instant have a nearly 100% positive correlation, meaning if you buy more of one, you buy more of the other (the brands are perceived very similar in the marketplace).
CORRESPONDENCE MAPPING90 Degree Angle: 0% Correlation
• Chips Ahoy Chunky and Oscar Mayer Hot Dogs form near a 90 degree angle and therefore have no correlation.
I ENJOY TAKING RISKS
MUCH INFO AS POSS BEFOR BUY ELECT ITEMCOMPUTERS CONFUSE ME WILL NEVER GET USEE
NO GOOD AT SAVING MONEY
LISTEN TO RADIO FOR QUICK NEWS UPDATE
CABLE TV HAS TOO MANY CHANN; NEVER KNOW
SPANISH ADS RESPECT MY HERITAGE
LOYAL TO COMPANIES WITH ADS IN SPANISH
BUY PRODS USE RECYCLE
SHOP FOR SPECIALS
PLAN AHEAD FOR EXP PURCHASES
OSCAR MAYER HOT DOGS
CHIPS AHOY CHUNKY
CORRRESPONDENCE MAPPING180 Degree Angle: 100% Negative Correlation
• Maxwell House Regular Ground and Starbucks are opposite, meaning they have a negative correlation. If you buy more of one brand, you buy less of another (brands are perceived as opposites in the market). This is particularly helpful when looking at competitors in a market.
MONEY IS THE BEST MEASURE OF SUCCESS
LITTLE I CAN DO TO CHANGE MY LIFE
WIN LOTTERY WOULD NEVER WORK AGAIN
I AM A WORKAHOLICON WHOLE PEOPLE GET WHAT THEY DESERVEE
PAY ANYTHING WHEN IT CONCERNS MY HEALTH
MAKE SURE I TAKE EXERCISE REGULAR
MAGAZINES MAIN SOURCE OF ENTERTAINMENT
MOST MAGAZINES ARE WORTH THE MONEY
AWKWARD ABSENTMINDED FORGETFULUL
READ INFO ON LABEL
ADV GIVES TRUE PICTURE
MAXWELL HOUSE REG GRND
JOB SECURITY IS MORE IMPORTANT
STARBUCKS
CLUSTER ANALYSIS
• USED FOR SEGMENTING MARKETS BY GROUPING INDIVIDUALS WITH SIMILAR RESPONSES INTO DISCRETE GROUPS.– Respondents will be more like their group than outside
their group, e.g., no overlap.
– There is a greater probability of being in one group than any other.
• A POWERFUL STATISTICAL TOOL FOR UNDERSTANDING CHARACTERISTICS AND RELATIONSHIPS.
CLUSTER 3: TOP MAGAZINES
100 110 120 130 140 150 160
CONSUMER REPORTS
NEWSWEEK
NAT GEO
MARTHA STEWART LIVING
U.S. NEWS & WORLD RPT
TIME
SOUTHERN LIV.
MODERN MATURITY
PEOPLE WKLY
BETTER HOMES AND GRDNS
SPORTS ILLUSTRATED
PARADE MAG
COSMO
Expected Frequency of Interest
EXPECTED BUYER BEHAVIORTry doing this for a product you like and one you know little about.
• Describe the expected buyer behavior profile of the market.
– CONSUMER - use key items like demographics, psychographics, POP behavior, the marketing mix, classification of your product, and other relevant items to generally describe how buyers would purchase this item.
– B2B – use industry [NAICS], application, quantity, purchasing patterns, the marketing mix, classification of your product, and other relevant items to generally describe how buyers would purchase this item.