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The Concept of & Introduction to Modern Holistic Marketing

An account of evolution of the concepts of Marketing over the years of human existence – from the primitive “Exchange Concept” to the latest “Holistic Marketing Concept”. [This is an improved version of my earlier article of same title.]

Contents

Holistic Marketing Contents   : Introduction Marketing Concepts Integrated Marketing Internal Marketing Relationship Marketing Social Responsibility Marketing

Holistic Marketing

An account of evolution of the concepts of Marketing over the years of human existence – from the primitive “Exchange Concept” to the latest “Holistic Marketing Concept”.

[This is an improved version of my earlier article of same title.]

Contents :

1.    Introduction :

a.    Definitions

b.    What is Marketed

c.     Marketing Concepts

d.    Trends in Marketing Practices

2.    Holistic Marketing Concepts :

a.    Integrated Marketing

b.    Internal Marketing

c.     Relationship Marketing

d.    Social Responsibility Marketing

e.     Holistic Marketing Matrix

3.    Future of Marketing

4.    Conclusion

Introduction

Definitions of Marketing :

The Shortest Definition :

The shortest definition of Marketing Management is “Meeting Needs Profitably”.

1.    Whose Needs ? - The needs of the people, or the customers or consumers,

2.    Who is trying to meet ? - The Producer, Marketer or the Company,

3.    What is the Objective ? - With profit to the company, & satisfaction to the customers.

The American Marketing Association (AMA) Definition :

Marketing is an organisational function and a set of processes for creating, communicating & delivering value to customers and for managing customer relationships in ways that benefit the organisation & its stake holders.

Philip Kotler’s Definition of Marketing Management :

Marketing Management is the art & science of choosing target markets and getting, keeping and growing customers thro’ creating, communicating & delivering superior customer value.

The Social Definition of Marketing :

Marketing is a social process by which individuals & groups obtain what they need, and want thro’ creating, offering & freely exchanging products & services of value with others.

The Managerial Definition of Marketing :

It’s simply “The art of selling products”.

Peter Drucker’s view on Marketing Management :

The aim of marketing is to make “selling” superfluous. It’s to know & understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.

[Source : Marketing Management By Philip Kotler & Kevin Lane Keller – 12e.]

What is Marketed

Marketing people are involved in marketing the following 10 types of entities as explained below :

1.    Goods – Physical products, consumer products, consumer durables, etc.

2.    Services – Transport, repair & maintenance, legal, financial, consultancy, hotel, specialised skills, professionals, etc.

3.    Events – Trade shows, sports, world cups, vintage car rally, fashion shows, artistic performance, annual functions, event management, etc.

4.    Experiences – Theatres, opera, Disney-world, trekking, mountaineering, ocean cruise, cinema, music concerts, etc.

5.    Persons – Celebrity marketing, film stars, politicians, artists, performers, advertisers, and now also CEOs of companies.

6.    Places – Cities, states, countries for tourism, leisure & place for industrialisation, real estate agents & business, etc.

7.    Properties – Ownership of tangible properties like real estate, house, apartment, farm house, precious metals and intangible properties like financial portfolio of various securities, stocks, bonds.

8.    Organisations – Building up identity, image, reputation, and brand value in the minds of consumers.

9.    Information – It can be produced, packaged & marketed as a product – text books, encyclopaedias, magazines & journals on literature, science, technology, medicine info, available thru internet

10.  Ideas – The concept regarding a utility, business opportunity, advertising / marketing ideas, scientific & technical, social, financial, psychological etc.

Marketing Concepts

The Marketing concepts under which organisations have conducted marketing activities have undergone some sort of evolution during the period of human existence. Chronologically they are :

1.    Exchange Concept : This is the primitive & fundamental concept of marketing. Exchange of goods and services between two agencies called buyer and seller, or exchange of goods and services for money or barter system. This involves the process of obtaining a desired product or service from someone else by offering something (money or any other item) in return.

2.    Production Concept : This concept is one of the oldest, and suggests that the consumers will like to buy the products which are available easily, cheaply & widely. So the marketers must have a mass production facility (efficient production) with low price (cost efficiency) and make it available very near to the customers (mass distribution). This concept is normally adopted when the Company wants to expand.

3.    Product Concept - This is the next step of evolution of marketing concepts. It depicts that customers will go for those products which offer quality, utility, features, performance, value, benefits, etc. So the marketers must improve the products in an innovative way & continuously. This is more often accompanied by a suitable pricing, distribution, promotion (all the 4Ps of marketing) programme.

4.    Selling Concept : This concept involves aggressive selling and promotional effort. “The purpose of marketing is to sell more stuff to more people more often for more money in order to make more profit”. This kind of marketing is practised for goods & services which buyers normally don’t like to buy, like insurance, dictionaries, encyclopaedia, etc. The aim of the marketers is to sell what they produce, rather than make what the market wants.

5.    Marketing Concept - This concept was evolved in the 1950s, and for the first time the attention was shifted to Customers. Instead of concentrating on the Products / Production / Selling, the business became "Customer Oriented". The "Make & Sell" philosophy gave way to the "Sense & Respond" philosophy. Instead of finding the right customer for the product, the marketer now has to find the right product for the customer. The perceptive contrast between the selling and marketing concepts – selling focuses on the needs of the seller, marketing on the

needs of the buyer. This concept holds the secret of the company being more effective than its competitors in creating, delivering & communicating superior value to the targeted customers.

6.    Holistic Marketing Concept – In the new marketing environment, companies wonder how to operate & compete. Marketers in the current age are increasingly recognising the need to have a more complete & cohesive approach that goes beyond traditional application of marketing concepts. This concept is based on the development, design and implementation of marketing programs, processes and activities that recognise their breadth and inter-dependencies. Holistic Marketing recognises that “everything matters” with marketing - and that a broad integrated perspective is often necessary. The important components are :

a.    Integrated Marketing,

b.    Internal Marketing,

c.     Relationship Marketing,

d.    Social Responsibility Marketing.

The Holistic Marketing Concept is an approach to marketing that seeks to recognise & reconcile the scope & complexities of various marketing processes. We shall discus each one of these in the following.

Trends in Marketing Practices

The marketplace is not the same as it used to be. It is rapidly changing as a result of major, sometimes interlinking societal forces that have created new behaviours, new opportunities & new challenges, such as :

Changing Technologies Customer EmpowermentCustomisation DeregulationDisintegration GlobalisationHeightened Competition Industry ConvergenceMarket Fragmentation PrivatisationRetail Transformation Retail TransformationTechnological Advances The Internet Revolution

In response to this rapidly changing environments companies have restructured their business & marketing practices in some of the following ways :

1.    Reengineering : Appointing teams to manage customer-value-building processes & break down walls between departments.

2.    Outsourcing : Greater willingness to buy more goods & services from outside domestic or foreign vendors.

3.    Benchmarking : Studying “best practice companies” to improve performance.

4.    Supplier Partnering : Increased partnering with fewer but better value-adding suppliers.

5.    Customer Partnering : Working more closely with customers to add value to their operation.

6.    Merging : Acquiring or merging with firms in the same or complementary industries to gain economy of scale & scope.

7.    Globalising : Increased effort to “Think Global & Act Local”.

8.    Flattening : Reducing the number of organisational levels to get closer to the customers.

9.    Focusing : Determining the most profitable business & customers & focusing on them.

10.  Accelerating :Designing the organisation & setting up processes to respond more quickly to changes in the environment.

11.  Empowering : Encouraging & empowering personnel to produce more ideas & take more initiative.

Accordingly the role of marketing organisation is also changing. Traditionally, the marketers have played the role of middlemen between the customers & the various functional areas of the organisation. In a networked enterprise, every functional area can interact directly with customers. Thus marketing needs to integrate all the customer-facing processes so that customers a single face (Integrated Marketing) & hear a single voice (Integrated Marketing Communications) when they interact with the company.

Integrated Marketing

One of the major tasks of marketers is to “integrate” all the marketing activities & programmes like “creating”, “communicating” & “delivering” value to the customers. The marketing programme consists of various decisions on value-enhancing marketing activities that can be used. The Famous Marketing Mix – the Four Ps, as devised by McCarthy constitute the traditional marketing activities in four broad groups as given below in details :

1.    Products – Design, Features, Brand Name, Models, Style, Appearance, Quality, Warranty, Package (design, type, material, size, appearance & labelling), Service ( pre-sale, after sale, service standards, service charges), Returns.

2.    Price – Pricing Policies, List Price, Margins, Discounts, Rebates, Terms of Delivery, Payment Terms, Credit Terms, Instalment Purchase Facility, Resale Price, Maintenance prices.

3.    Place – Channels of Distribution (channel design, types of intermediaries, location of outlets, channel remuneration, dealer-principle relation, etc.), Physical Distribution (transportation, warehousing, inventory levels, order processing, etc.)

4.    Promotion – Personal Selling, Selling Expertise, Size of Sales Force, Quality of Sales Force, and Marketing Communications - Advertising (media-mix, media vehicles, and programmes), sales promotions, publicity & public relations, direct & interactive marketing).

Now, these traditional concepts of Four Ps represent the sellers’ view of the marketing tools available to influence buyers. In holistic marketing one has to see also the buyers’ point of view, where each of these tools will deliver the customers’ benefit or value. Robert Lauterborn suggested the buyers’ Four Cs as follows :

Product = Customer Solution Price = Customer CostPlace = Convenience Promotion = Communication

Thus the successful companies are those who can meet (1) customer needs (2) economically, (3) conveniently & (4) with effective communication. Two broad concepts of integrated marketing are as follows :

1.    Several different marketing activities are used to create, communicate & deliver customer value,

2.    All marketing activities coordinated to maximise their joint efforts.

Or in other words, the design & implementation of one activity is done with all other activities in mind. The business of running a successful organisation is to integrate the system for management of demand, resources & network. Integrated marketing communication is a case in point.

Internal Marketing

Internal marketing ensures that everyone in the organisation adopts appropriate marketing principles and the top management should see it happen. This is the management task of hiring, training & motivating the employees to serve the customers well. Smart & successful companies understand that there is as much activity outside the company as inside. For it makes no sense to promise excellent services before the company’s service staff is ready to provide. Internal marketing must happen in two levels as follows :

1.    At the first level, all the marketing functions like, sales force, market research, customer service, product management, advertising, etc. must go together, i.e., all the personnel should work in tandem or unison for  common goal.

2.    At the second level, “marketing” must be embraced by other departments for a common goal of the organisation. All the relevant functional departments like Finance, HR, Operations, Logistics, Systems, etc. must coordinate each other to have a marketing orientation. Only trying to meet individual department’s target & norms and not supporting the marketing objectives will take the company nowhere. One has to bear in mind that it’s marketing that earns revenue.

Internal marketing requires that everyone in the organisation buy into the concepts & goals of marketing, and engage themselves in selecting, creating, communicating & delivering customer value. Only when all the employees realise that their jobs are to create, serve & satisfy the customers does the company become an effective marketer.

Relationship Marketing

The development of deep, enduring relationships with all the people or firms involved directly or indirectly in the firm’s marketing activities is appearing as a key goal; of marketing. This is the concept of Relationship marketing – it aims at building mutually satisfying long-term relationships with key parties like customers, financiers, suppliers, distributors & of course the stakeholders, in order to earn & retain their business. It also builds strong economic, technical & social binding amongst the parties. There are four key constituents of marketing are :

1.    Customers

2.    Employees

3.    Marketing Partners : Channels, Suppliers, Distributors, Dealers, Retailers, Agencies, etc.

4.    Financial Community : Shareholders, Stakeholders, Financiers, Investors, Analysts, etc.

5.    Another key constituent is the Society : well-wishers, scientists, professors, environmentalists.

The ultimate goal of relationship marketing is the building of a unique company asset called a marketing network, which consists of the company & its supporting stakeholders as listed above with whom it has built manual profit relationships. Interestingly, today, the competition is not between companies as such, but between the carefully built marketing networks – whoever has a better network wins. So the principle is simple – build an effective network, & the profits will follow. But the practice is not so. The development & building of a strong relationship requires a deep understanding of the capabilities & resources of different groups as well as their needs, goals & desires. Relationship marketing involves the right kind of relationships with right constituent groups, like Customer Relationship Management (CRM) with customers, Partner Relationship Management (PRM) with other partners. Since these being separate subjects themselves, are beyond the scope of this article.

Social Responsibility Marketing

Holistic marketing incorporates social responsibility marketing. This involves broader concerns of the society at large, like social, legal, ethical & environmental in the context of marketing activities. Companies operate in a society, and so do their customers and hence they should never forget its contribution to the company. It requires that marketers carefully consider the role they are playing in terms of social welfare. Companies need to evaluate whether they are truly practicing ethical & socially responsible marketing. Several factors are driving the companies to practice higher level of corporate social responsibility, such as :

1.    Rising customer expectations,

2.    Changing employees expectations,

3.    Govt. Legislation & pressure,

4.    Investor interest in social criteria,

5.    Changing business procurement criteria.

Business success and continually satisfying the customers & other stakeholders are closely linked to adoption & implementation of high standard of business & marketing conduct. The most admired companies in the world adhere to a code of serving people’s interests, not only there own. The following are the most important factors of socially responsible marketing :

1.    Legal Behaviour : Companies operate within the law of the land, and they must impart the employees with adequate knowledge of law & how to practice them. We have Govt. laws, Society laws, and the organisations must ensure the employees know & observe relevant law, and restrain themselves from practicing illegal, antisocial, corruptive, anticompetitive practices.

2.    Ethical Behaviour : Companies must evolve & adopt a properly written code of conduct based on the social & cultural ethics, decency, tradition & legal practices, and ensure that all concerned are responsible in observing these guidelines. Today customers are well aware of the social, cultural, ecological & environmental affairs in their day-to-day lives.

3.    Social Responsibility Behaviour : As said above, the customers also want to know what the firm’s contribution to the society is, or what the company’s social conscience is while dealing with customers & the stakeholders.

4.    Cause Related Marketing : Contribution to the society can be enormous, and hence companies choose a particular area of society for a particular cause. The examples are :

a.    Health awareness - Heart Diseases, AIDS, Cancer, Diabetic, Obesity, Old age, etc.

b.    Running children’s home, old age home, rehabilitation centre, women’s home, etc.

c.     Infrastructure - rural housing, hospitals, preserving archaeological places, maintaining roads & parks, homes for endangered species;

d.    Educational scholarship for the poor & needy, higher education facility, Institutes;

e.     Treatment for destitute, food for the starving;

f.      Information legal & technical help during the hour of need;

g.     Volunteerism & Philanthropy.

The list can be endless. Reputed companies even have their own charitable trusts, and also have special cause related marketing plans. Cause-related marketing is the concept where the specific cause is directly or indirectly linked to the particular revenue transaction. The company has at least one non-economic social objective and uses the revenue generated from the designated sales. This concept is also known as Corporate Societal Marketing (CSM). The CSM can include other activities like traditional & strategic philanthropy & volunteerism.

5.    Social Marketing : Some marketing is conducted to directly address a social problem or cause. Social marketing is done mainly by NGOs, Non-Profit or Govt. organisations to further a cause, such as “No smoking”, “Say NO to Drugs”, etc.

The Holistic Marketing Matrix

HOLISTIC MARKETINGINTEGRATED MARKETING

INTERNAL MARKETING RELATIOSHIP MARKETING

SOCIAL RESPONSIBITITY MARKETING

Products & Services Top Management Customers CommunityCommunications Marketing Department Partners Legal, EthicsChannels Other Department Channels Environment 

The Future of Marketing

The top management is slowly recognising that the marketing in the older method is getting wasteful and is demanding more accountability. There are a number of imperatives (must do) to achieve marketing excellence, as presented below : Marketers must -

1.    Be “Holistic” and not in bits & parts, i.e., not sectional or departmental.

2.    Achieve larger influence in the company if they are to be the main architect of business strategies.

3.    Continuously create new ideas if the company is to prosper in a hyper-competitive economy.

4.    Strive for customer insight & treat customers differently, but appropriately.

5.    Build their brands thru performance, more than thru promotion.

6.    Go electronic & win thru building superior information & communication systems.

In these ways, modern marketing will continue to evolve & confront new challenges & opportunities. As a result, the coming years will see the demise of  - - - & the rise of :

  

No The Demise of The Rise of1 The marketing department Holistic marketing2 Free-spending marketing ROI (return on investment) marketing3 Marketing intuition Marketing science4 Manual marketing Automated marketing

To become truly holistic in marketing & achieve these changes, what the marketers need are a new set of skills, competencies in the following areas of expertise.

1.    Customer Relationship management

2.    Partner Relationship management

3.    Database Marketing & Data-mining

4.    Contact Centre Marketing & Telemarketing

5.    Public Relation Marketing including Event & Sponsorship Marketing

6.    Brand-building & Brand-asset Management

7.    Integrated Marketing Communications

8.    Profitability Analysis by Segment, Customer, Channel

9.    Experiential Marketing

The Marketing Excellence Review : The Best practices :

POOR GOOD EXCELLENTProduct Driven Market Driven Market DrivingMass Market Oriented Segment Oriented Niche Oriented & Customer OrientedProduct Offer Augmented Product Offer Customer Solution OfferAverage Product Quality Better Than Average LegendaryAverage Service Quality Better Than Average LegendaryEnd-Product Oriented Core Product Oriented Core Competency OrientedFunction Oriented Process oriented Outcome OrientedReacting to Competitors Benchmarking Competitors Leapfrogging CompetitorsSupplier Exploitations Supplier Preference Supplier PartnershipDealer Exploitations Dealer Support Dealer PartnershipPrice Driven Quality Driven Value DrivenAverage Speed Better Than Average LegendaryHierarchy Network TeamworkVertically Integrated Flattened Organisation Strategic AlliancesStock Holder Driven Stake Holder Driven Societally Driven

CONCLUSION

The Nineteenth century American author Ralph Waldo Emerson had said, “This time like all times is a good one, if we but know what to do with it”. Thus, the exciting time for marketing has arrived now. And also, in the relentless pursuit of marketing superiority & dominance, new concepts, new rules, new tools & practices are ever emerging. There are a number of benefits of successful twenty-first-century marketing. All we need are hard work, insight, right application of mind & tools, inspiration, perseverance & of course a willingness to achieve greater heights.

 

Reference : For the preparation of this seminar article the following text book was referred. Readers may refer to this book for further study :

“Marketing Management”, 12th. Edition (2006), By Philip Kotler and Kevin Lane Keller. Chapters - 1 & 22.

© Himansu S M  

Written - 09-Jun-2007. Published on KNOL 12-Sep-2008, Revised 18-Aug-2009Suggestions & improvements are welcome.

7.1 What is the 'price' of a product?

The setting of a price range that supports the long-term marketing strategy of the product or service is an issue compounded by inflation, consumerism, government controls and consumption trends. Unfortunately, prices are often set independently of the rest of the marketing mix with detrimental effect, for example, when there is an ad hoc reaction to the competition's efforts.

Summers et al. (2003) define price quite simply as the amount of money exchanged for a good or service. They also explain that it is difficult to grasp the meaning of price. For example, is the item being sold just a product or is it a combination of product and services?

Consider this

One freight company may quote a lower price than another to ship cargo between two ports. Would you necessarily use the cheaper of the two? What other factors will help make your decision?

In general a number of textbooks have defined price as something of value that is exchanged for something else. This means that we can replace 'price' with many other terms and remain correct within the definition of price. Table 7.1 presents many of these other terms, but remember it is the meaning contained within the definition and not just the label that is important.

Table 7.1 Price is what you pay for what you get

Price is what you pay for what you get 'That which we call a rose by any other name would smell as sweet.' Romeo and Juliet, Act II, Scene 2

Tuition-education Interest-use of money Rent-use of living quarters or a piece of equipment for a period of time Fare-taxi or bus ride Fee-services of a doctor or a solicitor Retainer-solicitor's services over a period of time Toll-long distance phone call or travel on some bridges

Salary-services of an executive or other white-collar worker Wage-services of a blue-collar worker Commission-salesperson's services Dues-membership in a union or a club And in socially undesirable situations, there are prices called blackmail, ransom or bribery.

Source: Miller and Layton (2000, p. 349)

Another basic point with regard to pricing is to remember that a price is not only the amount at which we are prepared to sell a product. Nor is it only the price at which someone is prepared to buy a product. As you would expect, it is a match between the two. However, the match we achieve is subject to a lot of influences, not least of which are other components of the marketing mix. Figure 7.1 summarises these influences for you.

Figure 7.1 Factors that affect pricing decisions Source: adapted from Armstrong and Kotler (2005, pp. 296-301)

Now turn to the following reading to understand your text's definition of price and an additional article that provides insights into the importance of understanding pricing.

In your text

Kotler et al. (2004) Chapter 13, pp. 478-482, 'Pricing considerations and approaches'.

Reading 7.1

Jasper, C. 2004, 'Understanding how to price your product', Business Focus Newsletter , Issue 3, pp. 3-4.

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New product development

From Wikipedia, the free encyclopedia

In business and engineering, new product development (NPD) is the term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief). There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.

The process

1. Idea Generation is often called the "fuzzy front end" of the NPD process o Ideas for new products can be obtained from basic research using a SWOT analysis

(Strengths, Weaknesses, Opportunities & Threats), Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.

o Lots of ideas are being generated about the new product. Out of these ideas many ideas are being implemented. The ideas use to generate in many forms and their generating places are also various. Many reasons are responsible for generation of an idea.

o Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step).

2. Idea Screening o The object is to eliminate unsound concepts prior to devoting resources to them.o The screeners should ask several questions:

Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment/target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the

target price?3. Concept Development and Testing

o Develop the marketing and engineering details Investigate intellectual property issues and search patent data bases Who is the target market and who is the decision maker in the purchasing process?

What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively? Prove feasibility through virtual computer aided rendering, and rapid prototyping What will it cost to produce it?

o Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice Modelling.

4. Business Analysis o Estimate likely selling price based upon competition and customer feedbacko Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock

equationo Estimate profitability and break-even point

5. Beta Testing and Market Testing o Produce a physical prototype or mock-upo Test the product (and its packaging) in typical usage situationso Conduct focus group customer interviews or introduce at trade showo Make adjustments where necessaryo Produce an initial run of the product and sell it in a test market area to determine customer

acceptance6. Technical Implementation

o New program initiationo Finalize Quality management systemo Resource estimationo Requirement publicationo Publish technical communications such as data sheetso Engineering operations planningo Department schedulingo Supplier collaborationo Logistics plano Resource plan publicationo Program review and monitoringo Contingencies - what-if planning

7. Commercialization (often considered post-NPD) o Launch the producto Produce and place advertisements and other promotionso Fill the distribution pipeline with producto Critical path analysis is most useful at this stage

8. New Product Pricing o Impact of new product on the entire product portfolioo Value Analysis (internal & external)o Competition and alternative competitive technologieso Differing value segments (price, value, and need)o Product Costs (fixed & variable)o Forecast of unit volumes, revenue, and profit

These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities.

For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist, which makes it difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable.

Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management (often to a vice president or Program Manager). In those industries where products are technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process.

Also, notice that because engineering and marketing expertise are usually both critical to the process, choosing an appropriate blend of the two is important. Observe (for example, by looking at the See also or References sections below) that this article is slanted more toward the marketing side. For more of an engineering slant, see the Ulrich and Eppinger, Ullman references below.[1][2]

People respond to new products in different ways. The adoption of a new technology can be analyzed using a variety of diffusion theories such as the Diffusion of innovations theory.

A new product pricing process is important to reduce risk and increase confidence in the pricing and marketing decisions to be made. Bernstein and Macias describe an integrated process that breaks down the complex task of new product pricing into manageable elements.[3]

The Path to Developing Successful New Products[4] points out three key processes that can play critical role in product development: Talk to the customer, Nurture a project culture,and Keep it focused.

Fuzzy Front End

The Fuzzy Front End is the messy "getting started" period of new product engineering development processes. It is in the front end where the organization formulates a concept of the product to be developed and decides whether or not to invest resources in the further development of an idea. It is the phase between first consideration of an opportunity and when it is judged ready to enter the structured development process (Kim and Wilemon , 2002;[5] Koen et al., 2001).[6] It includes all activities from the search for new opportunities through the formation

of a germ of an idea to the development of a precise concept. The Fuzzy Front End ends when an organization approves and begins formal development of the concept.

Although the Fuzzy Front End may not be an expensive part of product development, it can consume 50% of development time (see Chapter 3 of the Smith and Reinertsen reference below),[7] and it is where major commitments are typically made involving time, money, and the product’s nature, thus setting the course for the entire project and final end product. Consequently, this phase should be considered as an essential part of development rather than something that happens “before development,” and its cycle time should be included in the total development cycle time.

Koen et al. (2001, pp. 47–51)[6] distinguish five different front-end elements (not necessarily in a particular order):

1. Opportunity Identification2. Opportunity Analysis3. Idea Genesis4. Idea Selection5. Concept and Technology Development

The first element is the opportunity identification. In this element, large or incremental business and technological chances are identified in a more or less structured way. Using the guidelines established here, resources will eventually be allocated to new projects.... which then lead to a structured NPPD (New Product & Process Development)strategy. The second element is the opportunity analysis. It is done to translate the identified opportunities into implications for the business and technology specific context of the company. Here extensive efforts may be made to align ideas to target customer groups and do market studies and/or technical trials and research. The third element is the idea genesis, which is described as evolutionary and iterative process progressing from birth to maturation of the opportunity into a tangible idea. The process of the idea genesis can be made internally or come from outside inputs, e.g. a supplier offering a new material/technology, or from a customer with an unusual request. The fourth element is the idea selection. Its purpose is to choose whether to pursue an idea by analyzing its potential business value. The fifth element is the concept and technology development. During this part of the front-end, the business case is developed based on estimates of the total available market, customer needs, investment requirements, competition analysis and project uncertainty. Some organizations consider this to be the first stage of the NPPD process (i.e., Stage 0).

The Fuzzy Front End is also described in literature as "Front End of Innovation", "Phase 0", "Stage 0" or "Pre-Project-Activities".

A universally acceptable definition for Fuzzy Front End or a dominant framework has not been developed so far.[8] In a glossary of PDMA,[9] it is mentioned that the Fuzzy Front End generally consists of three tasks: strategic planning, concept generation, and, especially, pre-technical evaluation. These activities are often chaotic, unpredictable, and unstructured. In comparison, the subsequent new product development process is typically structured, predictable, and formal. The term Fuzzy Front End was first popularized by Smith and Reinertsen (1991)[10] R.G.Cooper

(1988)[11] describes the early stages of NPPD as a four step process in which ideas are generated (I),subjected to a preliminary technical and market assessment(II) and merged to coherent product concepts(III) which are finally judged for their fit with existing product strategies and portfolios (IV). In a more recent paper, Cooper and Edgett (2008)[12] affirm that vital predevelopment activities include:

1. Preliminary market assessment.2. Technical assessment.3. Source-of-supply-assessment:suppliers and partners or alliances.4. Market research : market size and segmentation analysis,VoC (voice of the customer) research.5. Product concept testing6. Value-to-the customer assessment7. Product definition8. Business and financial analysis.

These activities yield vital information to make a Go/No-Go to Development decision.

In the in-depth study by Khurana and Rosenthal[13] front-end activities include:

product strategy formulation and communication, opportunity identification and assessment, idea generation, product definition, project planning, and executive reviews.

Economical analysis, benchmarking of competitive products,and modeling and prototyping are also important activities during the front-end activities.

The outcomes of FFE are the

mission statement customer needs details of the selected concept product definition and specifications economic analysis of the product the development schedule project staffing and the budget, and a business plan aligned with corporate strategy.

In a paper by Husig, Kohn and Huskela (2005)[14] was proposed a conceptual model of Front-End Process which includes early Phases of Innovation Process. This model is structured in three phases and three gates:

Phase 1: Environmental screening or opportunity identification stage in which external changes will be analysed and translated into potential business opportunities.

Phase 2: Preliminary definition of an idea or concept.

Phase 3: Detailed product, project or concept definition, and Business planning.

The gates are:

Opportunity screening; Idea evaluation; Go/No-Go for development.

The final gate leads to a dedicated new product development project. Many professionals and academics consider that the general features of Fuzzy Front End (fuzziness, ambiguity, and uncertainty) make it difficult to see the FFE as a structured process,but rather as a set of interdependent activities ( e.g. Kim and Wilemon, 2002).[15] However, Husig et al., 2005 [10] argue that front-end not need to be fuzzy, but can be handled in a structured manner. Peter Koen[16] argues that in the FFE for incremental,platform and radical projects,three separate strategies and processes are typically involved.[16] The traditional Stage Gate (TM) process was designed for incremental product development,namely for a single product.The FFE for developing a new platform must start out with a strategic vision of where the company wants to develop products and this will lead to a family of products. Projects for breakthrough products start out with a similar strategic vision, but are associated with technologies which require new discoveries. It is worth mentioning what are incremental, platform and breakthrough products. Incremental products are considered to be cost reductions, improvements to existing product lines, additions to existing platforms and repositioning of existing products introduced in markets. Breakthrough products are new to the company or new to the world and offer a 5-10 times or greater improvement in performance combined with a 30-50% or greater reduction in costs. Platform products establish a basic architecture for a next generation product or process and are substantially larger in scope and resources than incremental projects.[16]

NPD organizations

Product Development and Management Association (PDMA) Association of International Product Marketing & Management

NPD strategies

Design for six sigma Stage-Gate model Quality function deployment Flexible product development New concept development model User-centered design

Related fields

Marketing Engineering Brand management

Product management Industrial design [[humandesign]

See also

Product Conceptual economy Product lifecycle Choice Modelling Time to market (TTM) Social design Requirements management Pro-innovation bias

References

1. ̂ Ulrich, Karl T. and Eppinger, Steven D (2004) Product Design and Development, 3rd Edition, McGraw-Hill, New York, 2004

2. ̂ Ullman, David G. (2009) The Mechanical Design Process, Mc Graw-Hill, 4th edition3. ̂ Bernstein, Jerry and Macias, David (2001) "Engineering New Product Success: the New Product

Pricing Process at Emerson Electric"4. ̂ Mike Gordon, Chris Musso, Eric Rebentisch and Nisheeth Gupta (Nov 2009). The Path to

Developing Successful New Products. MIT Sloan Management Review Press.5. ̂ Kim, J. and Wilemon, D. (2002), Sources and assessment of complexity in NPD projects. R&D

Management, 33 (1), pp. 16-30.6. ^ a b Koen et al. (2001), Providing clarity and a common language to the ‘fuzzy front end’.

Research Technology Management, 44 (2), pp.46-557. ̂ Smith, Preston G. and Reinertsen, Donald G. (1998) Developing Products in Half the Time, 2nd

Edition, John Wiley and Sons, New York, 1998.8. ̂ Husig and Kohn (2003), Factors influencing the Front End of the Innovation Process: A

comprehensive Review of Selected empirical NPD and explorative FFE Studies ,Brusell,Juni 2003,p.14.

9. ̂ "The PDMA Glossary for New Product Development". Product Development & Management Association. 2006. http://www.pdma.org/npd_glossary.cfm.

10. ̂ Smith,Preston G., Reinertsen Donald G.(1991) Developing products in half the time, Van Nostrand Reinhold,New York

11. ̂ Cooper,R.G. Predevelopment activities determine new product success, in: Industrial Marketing Management,Vol.17 (1988), No 2,pp. 237-248

12. ̂ Cooper R.G., Edgett, S.J.(2008), Maximizing productivity in product innovation, in: Research Technology Management,March 1, 2008

13. ̂ Khurana, A; Rosenthal, S.R. (1998). "Towards Holistic "Front Ends" in New Product Development". Journal of Product Innovation Management 15 (1): 57–75.

14. ̂ Husig, S; Kohn, S; Poskela, J (2005). "The Role of Process Formalisation in the early Phases of the Innovation Process". 12th Int. Prod. Development Conf. Copenhagen.

15. ̂ Kim, J., Wilemon, D.(2002) : Accelerating the Front End Phase in New Product Development [1]

16. ^ a b c Koen, Peter A. (2004), "The Fuzzy Front End for Incremental,Platform,and Breakthrough Products", PDMA Handbook of New Product Development, 2nd Ed.: 81–91

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Product life-cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) changes over time and must be managed as it moves through its succession of stages.

Product life-cycle (PLC) Like human beings, products also have a life-cycle. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things:

Products have a limited life, Product sales pass through distinct stages, each posing different challenges, opportunities, and

problems to the seller, Products require different marketing, financing, manufacturing, purchasing, and human resource

strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying characteristics are:

Stage Characteristics

1. Market introduction stage

1. costs are very high2. slow sales volumes to start3. little or no competition4. demand has to be created5. customers have to be prompted to try the product6. makes no money at this stage

2. Growth stage

1. costs reduced due to economies of scale2. sales volume increases significantly3. profitability begins to rise4. public awareness increases5. competition begins to increase with a few new players in establishing market6. increased competition leads to price decreases

3. Maturity stage

1. costs are lowered as a result of production volumes increasing and experience curve effects2. sales volume peaks and market saturation is reached3. increase in competitors entering the market4. prices tend to drop due to the proliferation of competing products5. brand differentiation and feature diversification is emphasized to maintain or increase

market share6. Industrial profits go down

4. Saturation and decline stage

1. costs become counter-optimal2. sales volume decline3. prices, profitability diminish4. profit becomes more a challenge of production/distribution efficiency than increased sales

Contents

1 Request for deviation 2 Market identification 3 Lessons of the PLC 4 Limitations 5 See also 6 References 7 External links

Request for deviation

In the process of building a product following defined procedure, an RFD is a request for authorization, granted prior to the manufacture of an item, to depart from a particular performance

Market identification

Termination is not always the end of the cycle; it can be the end of a micro-entrant within the grander scope of a macro-environment. The auto industry, fast-food industry, petro-chemical industry, are just a few that demonstrate a macro-environment that overall has not terminated even while micro-entrants over time have come and gone. Products need to be recognised in the market based upon the characteristics it has.

Lessons of the PLC

It is claimed that every product has a life period, it is launched, it grows, and at some point, may die. A fair comment is that – at least in the short term – not all products or services die. Jeans may die, but clothes probably will not. Legal services or medical services may die, but depending on the social and political climate, probably will not.

Limitations

The PLC model offers some degree of usefulness to marketing managers, in that it is based on factual assumptions. Nevertheless, it is difficult for marketing management to gauge accurately where a product is on its PLC graph. A rise in sales per se is not necessarily evidence of growth. A fall in sales per se does not typify decline. Furthermore, some products do not (or to date, at the least, have not) experience a decline. Coca Cola and Pepsi are examples of two products that have existed for many decades, but are still popular products all over the world. Both modes of cola have been in maturity for some years.

Another factor is that differing products would possess different PLC "shapes". A fad product would hold a steep sloped growth stage, a short maturity stage, and a steep sloped decline stage. A product such as Coca Cola and Pepsi would experience growth, but also a constant level of sales over a number of decades. It can probably be said that a given product (or products collectively within an industry) may hold a unique PLC shape, and the typical PLC model can only be used as a rough guide for marketing management. This is why its called the product life cycle. The duration of PLC stages is unpredictable. It is not possible to predict when maturity or decline will begin. Strict adherence to PLC can lead a company to misleading objectives and strategy prescriptions.

p r o d u c t s - p r o d u c t l i f e c y c l e

We define a product as "anything that is capable of satisfying customer needs. This definition includes both physical products (e.g. cars, washing machines, DVD players) as well as services (e.g. insurance, banking, private health care).

Businesses should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. The process of managing groups of brands and product lines is called portfolio planning.

The stages through which individual products develop over time is called commonly known as the "Product Life Cycle".

The classic product life cycle has four stages (illustrated in the diagram below): introduction; growth; maturity and decline

Introduction Stage

At the Introduction (or development) Stage market size and growth is slight. it is possible that substantial research and development costs have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. It is highly unlikely that companies will make profits on products at the Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product.

Growth Stage

The Growth Stage is characterised by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale)and possibly better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage.

Maturity Stage

The Maturity Stage is, perhaps, the most common stage for all markets. it is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to be restricted to product modification and improvement and perhaps to improve production efficiency and quality.

Decline Stage

In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Care should be taken to control the amount of stocks of the product. Ultimately, depending on whether the product remains profitable, a company may decide to end the product.

Examples

Set out below are some suggested examples of products that are currently at different stages of the product life-cycle:

INTRODUCTION GROWTH MATURITY DECLINEThird generation mobile phones

Portable DVD Players Personal Computers Typewriters

E-conferencing Email Faxes Handwritten letters

All-in-one racing skin-suits Breathable synthetic fabrics

Cotton t-shirts Shell Suits

iris-based personal identity cards

Smart cards Credit cards Cheque books

Brand

The Coca-Cola logo is an example of a widely-recognized trademark representing a global brand.

The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers." [1]

A brand can take many forms, including a name, sign, symbol, color combination or slogan. For example, Coca Cola is the name of a brand make by a particular company. [2]The word branding began simply as a way to tell one person's cattle from another by means of a hot iron stamp. The word brand has continued to evolve to encompass identity — it affects the personality of a product, company or service. It is defined by a perception, good or bad, that your customers or prospects have about you. [3]

In the automotive industry, the terms marque[4] or make[5] are often used to denote a brand of motor vehicle.

A concept brand is a brand that is associated with an abstract concept, like breast cancer awareness or environmentalism, rather than a specific product, service, or business. A commodity brand is a brand associated with a commodity. Got milk? is an example of a commodity brand.

Contents

1 Concepts o 1.1 Brand awareness o 1.2 Brand elements o 1.3 Global brand

2 Benefits of global branding

3 Global brand variables o 3.1 Local brand o 3.2 Brand name

3.2.1 Types of brand names

o 3.3 Brand identity

o 3.4 Visual brand identity

o 3.5 Brand parity 4 Expanding role of

brand 5 Branding approaches

o 5.1 Company name o 5.2 Individual

brandingo 5.3 Attitude

branding and iconic brands

o 5.4 "No-brand" branding

o 5.5 Derived brands o 5.6 Brand extension

and brand dilutiono 5.7 Multi-brands o 5.8 Private labels o 5.9 Individual and

organizational brands

o 5.10 Crowdsourcing Branding

o 5.11 Nation Branding (Place Branding & Public diplomacy)

6 History 7 See also 8 References

Concepts

Brand is the personality that identifies a product, service or company (name, term, sign, symbol, or design, or combination of them) and how it relates to key constituencies: customers, staff, partners, investors etc.

Some people distinguish the psychological aspect, brand associations like thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand, of a brand from the experiential aspect.

The experiential aspect consists of the sum of all points of contact with the brand and is known as the brand experience. The brand experience is a brand's action perceived by a person. The psychological aspect, sometimes referred to as the brand image, is a symbolic construct created within the minds of people, consisting of all the information and expectations associated with a product, service or the company(ies) providing them.

People engaged in branding seek to develop or align the expectations behind the brand experience, creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique. A brand is therefore one of the most valuable elements in an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace. The art of creating and maintaining a brand is called brand management. Orientation of the whole organization towards its brand is called brand orientation. The brand orientation is developed in responsiveness to market intelligence.

Careful brand management seeks to make the product or services relevant to the target audience. Brands should be seen as more than the difference between the actual cost of a product and its selling price - they represent the sum of all valuable qualities of a product to the consumer.

A brand which is widely known in the marketplace acquires brand recognition. When brand recognition builds up to a point where a brand enjoys a critical mass of positive sentiment in the marketplace, it is said to have achieved brand franchise. Brand recognition is most successful when people can state a brand without being explicitly exposed to the company's name, but rather through visual signifiers like logos, slogan's, and colors.[6] For example, Disney has been successful at branding with their particular script font (originally created for Walt Disney's "signature" logo), which it used in the logo for go.com.

Consumers may look on branding as an aspect of products or services, as it often serves to denote a certain attractive quality or characteristic (see also brand promise). From the perspective of brand owners, branded products or services also command higher prices. Where two products resemble each other, but one of the products has no associated branding (such as a generic, store-branded product), people may often select the more expensive branded product on the basis of the quality of the brand or the reputation of the brand owner.

[edit] Brand awareness

Brand awareness refers to customers' ability to recall and recognize the brand under different conditions and link to the brand name, logo, jingles and so on to certain associations in memory. It consists of both brand recognition and brand recall. It helps the customers to understand to which product or service category the particular brand belongs and what products and services are sold under the brand name. It also ensures that customers know which of their needs are satisfied by the brand through its products (Keller). Brand awareness is of critical importance since customers will not consider your brand if they are not aware of it.[7]

There are various levels of brand awareness that require different levels and combinations of brand recognition and recall. Top-of-Mind is the goal of most companies. Top-of-Mind Awareness occurs when your brand is what pops into a consumers mind when asked to name brands in a product category. For example, when someone is asked to name a type of facial tissue, the common answer is “Kleenex,” which is a top-of-mind brand. Aided Awareness occurs when a consumer is shown or read a list of brands, and expresses familiarity with your brand only after they hear or see it as a type of memory aide. Strategic Awareness occurs when your brand is not only top-of-mind to consumers, but also has distinctive qualities that stick out to consumers as making it better than the other brands in your market. The distinctions that set your product apart from the competition is also known as the Unique Selling Point or USP.

[edit] Brand elements

Brands are spreadthrough various elements[8]:

Name: The word or words used to identify the company, product, service, concept Logo: The visual trademark that identifies the brand Tagline or Catchphrase: "The Quicker Picker Upper" is associated with Bounty; "Can you hear me

now" is an important part of the Verizon brand. Shapes: The distinctive shape of the Coca-Cola bottle or the Volkswagen Beetle are trademarked

elements of those brands. Graphics: The dynamic ribbon is also a trademarked part of Coca-Cola's brand. Color: Owens-Corning is the only brand of fiberglass insulation that can be pink. Sounds: A unique tune or set of notes can "denote" a brand: NBC's chimes are one of the most

famous examples. Movement: Lamborghini has trademarked the upward motion of its car doors. Smells: Scents, such as the rose-jasmine-musk of Chanel No. 5 is trademarked. Taste: KFC has trademarked its special recipe of 11 herbs and spices for fried chicken.

[edit] Global brand

A global brand is one which is perceived to reflect the same set of values around the world. Global brands transcend their origins and create strong enduring relationships with consumers across countries and cultures. They are brands sold in international markets. Examples of global brands include Facebook, Apple, Pepsi, McDonald's, Mastercard, Gap, Sony and Nike. These brands are used to sell the same product across multiple markets and could be considered

successful to the extent that the associated products are easily recognizable by the diverse set of consumers.

[edit] Benefits of global branding

In addition to taking advantage of the outstanding growth opportunities, the following drives the increasing interest in taking brands global:

Economies of scale (production and distribution) Lower marketing costs Laying the groundwork for future extensions worldwide Maintaining consistent brand imagery Quicker identification and integration of innovations (discovered worldwide) Preempting international competitors from entering domestic markets or locking you out of other

geographic markets Increasing international media reach (especially with the explosion of the Internet) is an enabler Increases in international business and tourism are also enablers

[edit] Global brand variables

The following elements may differ from country to country:

Corporate slogan Products and services Product names Product features Positionings Marketing mixes (including pricing, distribution, media and advertising execution)

These differences will depend upon:

Language differences Different styles of communication Other cultural differences Differences in category and brand development Different consumption patterns Different competitive sets and marketplace conditions Different legal and regulatory environments Different national approaches to marketing (media, pricing, distribution, etc.)

[edit] Local brand

A brand that is sold and marketed (distributed and promoted) in a relatively small and restricted geographical area. A local brand is a brand that can be found in only one country or region. It may be called a regional brand if the area encompasses more than one metropolitan market. It may also be a brand that is developed for a specific national market, however an interesting thing

about local brand is that the local branding is more often done by consumers than by the producers. Examples of local brands in Sweden are Stomatol, Skånemejerier, etc.[9] [10]

[edit] Brand name

Relationship between trade marks and brand

The brand name is quite often used interchangeably with "brand", although it is more correctly used to specifically denote written or spoken linguistic elements of any product. In this context a "brand name" constitutes a type of trademark, if the brand name exclusively identifies the brand owner as the commercial source of products or services. A brand owner may seek to protect proprietary rights in relation to a brand name through trademark registration and such trademarks are called "Registered Trademarks". Advertising spokespersons have also become part of some brands, for example: Mr. Whipple of Charmin toilet tissue and Tony the Tiger of Kellogg's Frosted Flakes. Local branding is usually done by the consumers rather than the producers.

[edit] Types of brand names

Brand names come in many styles.[11] A few include:Acronym: A name made of initials such as UPS or IBMDescriptive: Names that describe a product benefit or function like Whole Foods or AirbusAlliteration and rhyme: Names that are fun to say and stick in the mind like Reese's Pieces or Dunkin' DonutsEvocative: Names that evoke a relevant vivid image like Amazon or CrestNeologisms: Completely made-up words like Wii or KodakForeign word: Adoption of a word from another language like Volvo or SamsungFounders' names: Using the names of real people,and founder's name like Hewlett-Packard or Disney

Geography: Many brands are named for regions and landmarks like Cisco and Fuji FilmPersonification: Many brands take their names from myth like Nike or from the minds of ad execs like Betty Crocker

The act of associating a product or service with a brand has become part of pop culture. Most products have some kind of brand identity, from common table salt to designer jeans. A brandnomer is a brand name that has colloquially become a generic term for a product or service, such as Band-Aid or Kleenex, which are often used to describe any brand of adhesive bandage or any brand of facial tissue respectively.

[edit] Brand identity

The outward expression of a brand, including its name, trademark, communications, and visual appearance.[12] Because the identity is assembled by the brand owner, it reflects how the owner wants the consumer to perceive the brand - and by extension the branded company, organization, product or service. This is in contrast to the brand image, which is a customer's mental picture of a brand.[12] The brand owner will seek to bridge the gap between the brand image and the brand identity.

Effective brand names build a connection between the brand personality as it is perceived by the target audience and the actual product/service. The brand name should be conceptually on target with the product/service (what the company stands for). Furthermore, the brand name should be on target with the brand demographic.[13] Typically, sustainable brand names are easy to remember, transcend trends and have positive connotations. Brand identity is fundamental to consumer recognition and symbolizes the brand's differentiation from competitors.

Brand identity is what the owner wants to communicate to its potential consumers. However, over time, a product's brand identity may acquire (evolve), gaining new attributes from consumer perspective but not necessarily from the marketing communications an owner percolates to targeted consumers. Therefore, brand associations become handy to check the consumer's perception of the brand.[14]

Brand identity needs to focus on authentic qualities - real characteristics of the value and brand promise being provided and sustained by organizational and/or production characteristics.[15][16]

[edit] Visual brand identity

The visual brand identity manual for Mobil Oil (developed by Chermayeff & Geismar), one of the first visual identities to integrate logotype, icon, alphabet, color palette, and station architecture to create a comprehensive consumer brand experience.

The recognition and perception of a brand is highly influenced by its visual presentation. A brand’s visual identity is the overall look of its communications. Effective visual brand identity is achieved by the consistent use of particular visual elements to create distinction, such as specific fonts, colors, and graphic elements. At the core of every brand identity is a brand mark, or logo. In the United States, brand identity and logo design naturally grew out of the Modernist movement in the 1950s and greatly drew on the principles of that movement – simplicity (Mies van der Rohe’s principle of "Less is more") and geometric abstraction. These principles can be observed in the work of the pioneers of the practice of visual brand identity design, such as Paul Rand, Chermayeff & Geismar and Saul Bass.

[edit] Brand parity

Brand parity is the perception of the customers that some brands are equivalent.[17] This means that shoppers will purchase within a group of accepted brands rather than choosing one specific brand. When brand parity is present, quality is often not a major concern because consumers believe that only minor quality differences exist.

[edit] Expanding role of brand

it was meant to make identifying and differentiating a product easier. Over time, brands came to embrace a performance or benefit promise, for the product, certainly, but eventually also for the

company behind the brand. Today, brand plays a much bigger role. Brands have been co-opted as powerful symbols in larger debates about economics, social issues, and politics. The power of brands to communicate a complex message quickly and with emotional impact and the ability of brands to attract media attention, make them ideal tools in the hands of activists.[18]

[edit] Branding approaches

[edit] Company name

Often, especially in the ine of the most powerful statements of branding: saying just before the company's downgrading, "No one ever got fired for buying IBM"). This approach has not worked as well for General Motors, which recently overhauled how its corporate brand relates to the product brands.[19] Exactly how the company name relates to product and services names is known as brand architecture. Decisions about company names and product names and their relationship depends on more than a dozen strategic considerations.[20]

In this case a strong brand name (or company name) is made the vehicle for a range of products (for example, Mercedes-Benz or Black & Decker) or a range of subsidiary brands (such as Cadbury Dairy Milk, Cadbury Flake or Cadbury Fingers in the United States).

[edit] Individual branding

Main article: Individual branding

Each brand has a separate name (such as Seven-Up, Kool-Aid or Nivea Sun (Beiersdorf)), which may compete against other brands from the same company (for example, Persil, Omo, Surf and Lynx are all owned by Unilever).

[edit] Attitude branding and iconic brands

Attitude branding is the choice to represent a larger feeling, which is not necessarily connected with the product or consumption of the product at all. Marketing labeled as attitude branding include that of Nike, Starbucks, The Body Shop, Safeway, and Apple Inc.. In the 2000 book No Logo,[21] Naomi Klein describes attitude branding as a "fetish strategy".

"A great brand raises the bar -- it adds a greater sense of purpose to the experience, whether it's the challenge to do your best in sports and fitness, or the affirmation that the cup of coffee you're drinking really matters." - Howard Schultz (president, CEO, and chairman of Starbucks)

The color, letter font and style of the Coca-Cola and Diet Coca-Cola logos in English were copied into matching Hebrew logos to maintain brand identity in Israel.

Iconic brands are defined as having aspects that contribute to consumer's self-expression and personal identity. Brands whose value to consumers comes primarily from having identity value are said to be "identity brands". Some of these brands have such a strong identity that they become more or less cultural icons which makes them "iconic brands". Examples are: Apple, Nike and Harley Davidson. Many iconic brands include almost ritual-like behaviour in purchasing or consuming the products.

There are four key elements to creating iconic brands (Holt 2004):

1. "Necessary conditions" - The performance of the product must at least be acceptable, preferably with a reputation of having good quality.

2. "Myth-making" - A meaningful storytelling fabricated by cultural insiders. These must be seen as legitimate and respected by consumers for stories to be accepted.

3. "Cultural contradictions" - Some kind of mismatch between prevailing ideology and emergent undercurrents in society. In other words a difference with the way consumers are and how they wish they were.

4. "The cultural brand management process" - Actively engaging in the myth-making process in making sure the brand maintains its position as an icon.

[edit] "No-brand" branding

Recently a number of companies have successfully pursued "no-brand" strategies by creating packaging that imitates generic brand simplicity. Examples include the Japanese company Muji, which means "No label" in English (from 無印良品 – "Mujirushi Ryohin" – literally, "No brand quality goods"), and the Florida company No-Ad Sunscreen. Although there is a distinct Muji brand, Muji products are not branded. This no-brand strategy means that little is spent on advertisement or classical marketing and Muji's success is attributed to the word-of-mouth, a simple shopping experience and the anti-brand movement.[22][23][24] "No brand" branding may be construed as a type of branding as the product is made conspicuous through the absence of a brand name. "Tapa Amarilla" or "Yellow Cap" in Venezuela during the 80s is another good

example of no-brand strategy. It was simply recognized by the color of the cap of this cleaning products company.

[edit] Derived brands

In this case the supplier of a key component, used by a number of suppliers of the end-product, may wish to guarantee its own position by promoting that component as a brand in its own right. The most frequently quoted example is Intel, which positions itself in the PC market with the slogan (and sticker) "Intel Inside".

[edit] Brand extension and brand dilution

The existing strong brand name can be used as a vehicle for new or modified products; for example, many fashion and designer companies extended brands into fragrances, shoes and accessories, home textile, home decor, luggage, (sun-) glasses, furniture, hotels, etc.

Mars extended its brand to ice cream, Caterpillar to shoes and watches, Michelin to a restaurant guide, Adidas and Puma to personal hygiene. Dunlop extended its brand from tires to other rubber products such as shoes, golf balls, tennis racquets and adhesives.

There is a difference between brand extension and line extension. A line extension is when a current brand name is used to enter a new market segment in the existing product class, with new varieties or flavors or sizes. When Coca-Cola launched "Diet Coke" and "Cherry Coke" they stayed within the originating product category: non-alcoholic carbonated beverages. Procter & Gamble (P&G) did likewise extending its strong lines (such as Fairy Soap) into neighboring products (Fairy Liquid and Fairy Automatic) within the same category, dish washing detergents.

The risk of over-extension is brand dilution where the brand loses its brand associations with a market segment, product area, or quality, price or cachet.

[edit] Multi-brands

Alternatively, in a market that is fragmented amongst a number of brands a supplier can choose deliberately to launch totally new brands in apparent competition with its own existing strong brand (and often with identical product characteristics); simply to soak up some of the share of the market which will in any case go to minor brands. The rationale is that having 3 out of 12 brands in such a market will give a greater overall share than having 1 out of 10 (even if much of the share of these new brands is taken from the existing one). In its most extreme manifestation, a supplier pioneering a new market which it believes will be particularly attractive may choose immediately to launch a second brand in competition with its first, in order to pre-empt others entering the market.

Individual brand names naturally allow greater flexibility by permitting a variety of different products, of differing quality, to be sold without confusing the consumer's perception of what business the company is in or diluting higher quality products.

Once again, Procter & Gamble is a leading exponent of this philosophy, running as many as ten detergent brands in the US market. This also increases the total number of "facings" it receives on supermarket shelves. Sara Lee, on the other hand, uses it to keep the very different parts of the business separate — from Sara Lee cakes through Kiwi polishes to L'Eggs pantyhose. In the hotel business, Marriott uses the name Fairfield Inns for its budget chain (and Ramada uses Rodeway for its own cheaper hotels).

Cannibalization is a particular problem of a "multibrand" approach, in which the new brand takes business away from an established one which the organization also owns. This may be acceptable (indeed to be expected) if there is a net gain overall. Alternatively, it may be the price the organization is willing to pay for shifting its position in the market; the new product being one stage in this process.

[edit] Private labels

With the emergence of strong retailers, private label brands, also called own brands, or store brands, also emerged as a major factor in the marketplace. Where the retailer has a particularly strong identity (such as Marks & Spencer in the UK clothing sector) this "own brand" may be able to compete against even the strongest brand leaders, and may outperform those products that are not otherwise strongly branded.

[edit] Individual and organizational brands

There are kinds of branding that treat individuals and organizations as the products to be branded. Personal branding treats persons and their careers as brands. The term is thought to have been first used in a 1997 article by Tom Peters.[25] Faith branding treats religious figures and organizations as brands. Religious media expert Phil Cooke has written that faith branding handles the question of how to express faith in a media-dominated culture.[26] Nation branding works with the perception and reputation of countries as brands.

[edit] Crowdsourcing Branding

These are brands that are created by the people for the business, which is opposite to the traditional method where the business create a brand. This type of method minimizes the risk of brand failure, since the people that might reject the brand in the traditional method are the ones who are participating in the branding process.

[edit] Nation Branding (Place Branding & Public diplomacy)

Nation branding is a field of theory and practice which aims to measure, build and manage the reputation of countries (closely related to place branding). Some approaches applied, such as an increasing importance on the symbolic value of products, have led countries to emphasise their distinctive characteristics. The branding and image of a nation-state "and the successful transference of this image to its exports - is just as important as what they actually produce and sell."[27]

[edit] History

The word "brand" is derived from the Old Norse brandr meaning "to burn." It refers to the practice of producers burning their mark (or brand) onto their products.[28]

The Italians were among the first to use brands, in the form of watermarks on paper in the 1200s.[29]

Although connected with the history of trademarks [30] and including earlier examples which could be deemed "protobrands" (such as the marketing puns of the "Vesuvinum" wine jars found at Pompeii),[31] brands in the field of mass-marketing originated in the 19th century with the advent of packaged goods. Industrialization moved the production of many household items, such as soap, from local communities to centralized factories. When shipping their items, the factories would literally brand their logo or insignia on the barrels used, extending the meaning of "brand" to that of trademark.

Bass & Company, the British brewery, claims their red triangle brand was the world's first trademark. Lyle’s Golden Syrup makes a similar claim, having been named as Britain's oldest brand, with its green and gold packaging having remained almost unchanged since 1885. Another example comes from Antiche Fornaci Giorgi in Italy, whose bricks are stamped or carved with the same proto-logo since 1731, as found in Saint Peter's Basilica in Vatican City.

Cattle were branded long before this. The term "maverick," originally meaning an unbranded calf, comes from Texas rancher Samuel Augustus Maverick who, following the American Civil War, decided that since all other cattle were branded, his would be identified by having no markings at all. Even the signatures on paintings of famous artists like Leonardo Da Vinci can be viewed as an early branding tool.

Factories established during the Industrial Revolution introduced mass-produced goods and needed to sell their products to a wider market, to customers previously familiar only with locally-produced goods. It quickly became apparent that a generic package of soap had difficulty competing with familiar, local products. The packaged goods manufacturers needed to convince the market that the public could place just as much trust in the non-local product. Campbell soup, Coca-Cola, Juicy Fruit gum, Aunt Jemima, and Quaker Oats were among the first products to be 'branded', in an effort to increase the consumer's familiarity with their products. Many brands of that era, such as Uncle Ben's rice and Kellogg's breakfast cereal furnish illustrations of the problem.

Around 1900, James Walter Thompson published a house ad explaining trademark advertising. This was an early commercial explanation of what we now know as branding. Companies soon adopted slogans, mascots, and jingles that began to appear on radio and early television. By the 1940s,[32] manufacturers began to recognize the way in which consumers were developing relationships with their brands in a social/psychological/anthropological sense.

From there, manufacturers quickly learned to build their brand's identity and personality (see brand identity and brand personality), such as youthfulness, fun or luxury. This began the

practice we now know as "branding" today, where the consumers buy "the brand" instead of the product. This trend continued to the 1980s, and is now quantified in concepts such as brand value and brand equity. Naomi Klein has described this development as "brand equity mania".[21] In 1988, for example, Philip Morris purchased Kraft for six times what the company was worth on paper; it was felt that what they really purchased was its brand name.[33]

Marlboro Friday: April 2, 1993 - marked by some as the death of the brand[21] - the day Philip Morris declared that they were cutting the price of Marlboro cigarettes by 20% in order to compete with bargain cigarettes. Marlboro cigarettes were noted at the time for their heavy advertising campaigns and well-nuanced brand image. In response to the announcement Wall street stocks nose-dived[21] for a large number of branded companies: Heinz, Coca Cola, Quaker Oats, PepsiCo. Many thought the event signalled the beginning of a trend towards "brand blindness" (Klein 13), questioning the power of "brand value."

[edit] See also

Brand architecture Brand engagement Brand equity Brand loyalty Brand tribalism Branding agency Co-branding Content marketing Green brands Integrated marketing communications Visual brand language

[edit] References

1. ̂ American Marketing Association sbDictionary. Retrieved 2011-06-29. The Marketing Accountability Standards Board (MASB) endorses this definition as part of its ongoing Common Language: Marketing Activities and Metrics Project.

2. ̂ http://www.oxfordlanguagedictionaries.com.ezp1.lib.umn.edu/language_web/Language_web.html?3. ̂ http://chiefmarketer.com/disciplines/branding/brand_experience_03042007/4. ̂ "Marque" at Merriam-Webster5. ̂ "Make" at Merriam-Webster6. ̂ http://www.investopedia.com/terms/b/brand-recognition.asp#axzz1ZU3vlT4j7. ̂ Tan, Donald (2010). "Success Factors In Establishing Your Brand" Franchising and Licensing Association.

Retrieved from http://www.flasingapore.org/info_branding.php8. ̂ http://merriamassociates.com/2011/09/beyond-name-and-logo-other-elements-of-your-brand/9. ̂ Marketingpower.com10. ̂ A study to indicate the importance of brand Awareness in Brand Choice- A Cultural Perspective By

Hanna Bornmark, Asa Goransson, Christina Svensson. Department of Business Studies, Kristianstad University, Sweden

11. ̂ MerriamAssociates.com12. ^ a b Neumeier, Marty (2004), The Dictionary of Brand. ISBN 1-884081-06-1, pp.2013. ̂ What's in a Brand Name?

14. ̂ [1]15. ̂ Diller S., Shedroff N., and Rhea D (2006) Making Meaning: How Successful Businesses Deliver

Meaningful Customer Experiences. New Riders, Berkeley, CA,16. ̂ Kunde, J., (2002) Unique Now... or Never: the Brand Is the Company Driver in the New Value Economy,

Financial Times/Prentice Hall. London17. ̂ Paul S. Richardson, Alan S. Dick and Arun K. Jain "Extrinsic and Intrinsic Cue Effects on Perceptions of

Store Brand Quality", Journal of Marketing October 1994 pp. 28-3618. ̂ http://merriamassociates.com/2010/12/wikileaks-hacktivism-and-brands-as-political-symbols/19. ̂ http://merriamassociates.com/2010/11/general-motors-a-reorganized-brand-architecture-for-a-

reorganized-company/20. ̂ http://merriamassociates.com/2009/09/brand-architecture-strategic-considerations/21. ^ a b c d[page needed] Klein, Naomi (2000) No logo, Canada: Random House, ISBN 0-676-97282-922. ̂ Muji brand strategy, Muji branding, no name brand - VentureRepublic23. ̂ Matt Heig, Brand Royalty: How the World's Top 100 Brands Thrive and Survive, pg.21624. ̂ Trenmatter.com25. ̂ Tom Peters (August 1997). "The brand Called You". Fast Company (Mansueto Ventures LLC.) (10):

pp. 83. http://www.fastcompany.com/magazine/10/brandyou.html.26. ̂ Cooke, Phil; Branding Faith: Why Some Churches and Nonprofits Impact Culture and Others Don't; Regal,

2008; ISBN 978-083074563027. ̂ www.en.wikipedia/Nationbranding28. ̂ MarketingMagazine.co.uk29. ̂ Colapinto, John (3 October 2011). "Famous Names". The New Yorker.

http://www.newyorker.com/reporting/2011/10/03/111003fa_fact_colapinto. Retrieved 9 October 2011.30. ̂ (U.S.) Trademark History Timeline31. ̂ Jstor.org32. ̂ Mildred Pierce, Newmediagroup.co.uk33. ̂ Brandpad.co.uk - Is the BRAND approach dead?

[edit] Bibliography

Birkin, Michael (1994). "Assessing Brand Value," in Brand Power. ISBN 0-8147-7965-4 Fan, Y. (2002) “The National Image of Global Brands”, Journal of Brand Management, 9:3, 180-192,

available at Brunel.ac.uk Gregory, James (2003). Best of Branding. ISBN 0-07-140329-9 Holt, DB (2004). "How Brands Become Icons: The Principles of Cultural Branding" Harvard University

Press, Harvard MA Philip Kotler (2004). "Marketing Management", ISBN 81-7808-654-9 Klein, Naomi (2000) No logo, Canada: Random House, ISBN 0-676-97282-9 Kotler, Philip and Pfoertsch, Waldemar (2006). B2B Brand Management, ISBN 3-540-25360-2. Martins, Jose Souza (2000) The Emotional Nature of a Brand: Creating images to become world

leaders. Brazil: Marts Plan Imagen Ltda. Miller & Muir (2004). The Business of Brands, ISBN 0-470-86259-9. Olins, Wally (2003). On Brand, London: Thames and Hudson, ISBN 0-500-51145-4. Schmidt, Klaus and Chris Ludlow (2002). Inclusive Branding: The Why and How of a Holistic approach

to Brands. Basingstoke: Palgrave Macmillan, ISBN 0-333-98079-4 Wernick, Andrew (1991). Promotional Culture: Advertising, Ideology and Symbolic Expression

(Theory, Culture & Society S.), London: Sage Publications, ISBN 0-8039-8390-5

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Pricing Methods

Four models for calculating your pricing

From Scott Allen, former About.com Guide

See More About:

pricing positioning marketing

(Continued from Page 1)As we said earlier, there is no "one right way" to calculate your pricing. Once you've considered the various factors involved and determined your objectives for your pricing strategy, now you need some way to crunch the actual numbers. Here are four ways to calculate prices:

Cost-plus pricing - Set the price at your production cost, including both cost of goods and fixed costs at your current volume, plus a certain profit margin. For example, your widgets cost $20 in raw materials and production costs, and at current sales volume (or anticipated initial sales volume), your fixed costs come to $30 per unit. Your total cost is $50 per unit. You decide that you want to operate at a 20% markup, so you add $10 (20% x $50) to the cost and come up with a price of $60 per unit. So long as you have your costs calculated correctly and have accurately predicted your sales volume, you will always be operating at a profit. 

Target return pricing - Set your price to achieve a target return-on-investment (ROI). For example, let's use the same situation as above, and assume that you have $10,000 invested in the company. Your expected sales volume is 1,000 units in the first year. You want to recoup all your investment in the first year, so you need to make $10,000 profit on 1,000 units, or $10 profit per unit, giving you again a price of $60 per unit. 

Value-based pricing - Price your product based on the value it creates for the customer. This is usually the most profitable form of pricing, if you can achieve it. The most extreme variation on this is "pay for performance" pricing for services, in which you charge on a variable scale according to the results you achieve. Let's say that your widget above saves the typical customer $1,000 a year in, say, energy costs. In that case, $60 seems like a bargain - maybe even too cheap. If your

product reliably produced that kind of cost savings, you could easily charge $200, $300 or more for it, and customers would gladly pay it, since they would get their money back in a matter of months. However, there is one more major factor that must be considered. 

Psychological pricing - Ultimately, you must take into consideration the consumer's perception of your price, figuring things like: 

Positioning - If you want to be the "low-cost leader", you must be priced lower than your competition. If you want to signal high quality, you should probably be priced higher than most of your competition. 

Popular price points - There are certain "price points" (specific prices) at which people become much more willing to buy a certain type of product. For example, "under $100" is a popular price point. "Enough under $20 to be under $20 with sales tax" is another popular price point, because it's "one bill" that people commonly carry. Meals under $5 are still a popular price point, as are entree or snack items under $1 (notice how many fast-food places have a $0.99 "value menu"). Dropping your price to a popular price point might mean a lower margin, but more than enough increase in sales to offset it. 

Fair pricing - Sometimes it simply doesn't matter what the value of the product is, even if you don't have any direct competition. There is simply a limit to what consumers perceive as "fair". If it's obvious that your product only cost $20 to manufacture, even if it delivered $10,000 in value, you'd have a hard time charging two or three thousand dollars for it -- people would just feel like they were being gouged. A little market testing will help you determine the maximum price consumers will perceive as fair.

Now, how do you combine all of these calculations to come up with a price? Here are some basic guidelines:

Your price must be enough higher than costs to cover reasonable variations in sales volume. If your sales forecast is inaccurate, how far off can you be and still be profitable? Ideally, you want to be able to be off by a factor of two or more (your sales are half of your forecast) and still be profitable. 

You have to make a living. Have you figured salary for yourself in your costs? If not, your profit has to be enough for you to live on and still have money to reinvest in the company. 

Your price should almost never be lower than your costs or higher than what most consumers consider "fair". This may seem obvious, but many entrepreneurs seem to miss this simple concept, either by miscalculating costs or by inadequate market research to determine fair pricing. Simply put, if people won't readily pay enough more than your cost to make you a fair profit, you need to reconsider your business model entirely. How can you cut your costs substantially? Or change your product positioning to justify higher pricing?

Pricing is a tricky business. You're certainly entitled to make a fair profit on your product, and even a substantial one if you create value for your customers. But remember, something is ultimately worth only what someone is willing to pay for it.