product and brand strategy notes

7/31/2019 Product and Brand Strategy Notes

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Chapter 8 Notes

Denition of a ProductAnything that can be offered to a market for attention, acquisitionuse, or consumption and that might satisfy a want or need.Products can be physical objects, services, events, persons,places, organizations, ideas, or a combination of these things.Services are products that do not result in the ownership ofanything.Countries are marketed as products to encourage tourism.

What is a Product?A product is anything that can be offered to a market for attention,acquisition, use, or consumption that might satisfy a want or a

need. It could take in any one of the following forms:GoodsServicesExperiencesOrganizationsPlacesPeopleIdeas

Levels of a ProductCore product or benetActual product

Packaging, features, design, quality level, brand nameAugmented Product

Warranty, delivery, credit, installation, serviceConsumer Products (used for personal consumption)

Convenience products

Frequent purchase, easy buy, highly available, mass promotionE.g. soap, candy, newspapers

Shopping productsLess frequent, brand comparison, selective distribution andpromotionE.g. furniture, clothing, cars, appliances

Specialty productsStrong brand preference, social effort, low price sensitivity,exclusive distribution, targeted promotion


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E.g. Lamborghini, RolexUnsought products

Low awareness, negative interest, use personal sellingE.g. life insurance, cemetery plots, blood donations

Industrial Products (purchased for reselling purposes)Materials and partsCapital itemsSuppliers and servicesThose purchased for further processing or for use in conductingbusiness.Does not include consumer products as they move through adistribution channel.

Product CharacteristicsThree product levels: core, actual, augmented

Product DecisionsProduct attributes: quality, features, designPackaging and labellingProduct support servicesProduct line decisions

Product mix (or assortment) decisionsWidth refers to the number of product lines in the mixDepth refers to the number of versions of each product

Social responsibility decisionsRegulated by the Competition BUreau

Regulated by federal statues such as the Hazardous products andthe Consumer Packaging and Labelling Act

International product decisionsWhich countriesWhether to standardize, adapt, or inventPackaging, labelling, and language

Individual Product DecisionsQuality

Ability of a product to perform its functionsFeatures

Differentiates a product from the competitionAssessed based on value and cost

Style and designStyle = appearance: design is the heart of the product

BrandingCreating, maintaining, protecting, and enhancing products and

services.


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A brand is a name, term, sign, symbol, design, or a combinationof these that identies the marker or seller of a product orservice.

PackagingDesigning and producing the container or wrapper for a product.Developing a good package includes developing the packagingconcept, packaging elements, product safety concerns andenvironmental concerns.

LabellingPrinted information appearing on or with the package.Performs several functions such as identifying the product orbrand, describes the product and promotes the produce throughattractive graphics.

Product Support ServicesAssess the value of current services and obtain ideas for newservices.

Assess the cost of providing new services.Put together a package of services that delights the customersand yields prots for the company.

Product Line DecisionsProduct line is a group of products that are closely related becausethey function in a similar manner, are sold the the same customergroups, are marketed through the same types of outlets, or fallwithin given price ranges.Product line decisions are based on the line length.Can manage the line by....

Line stretching - adding products to the line outside of currentrange.Line lling - adding more products within current range.

Product Mix DecisionsProduct Mix

All of the product lines and items that a particular seller offers forsale.

WidthNumber of different product lines the company carries.

DepthNumber of versions offered of each product in the line.

ConsistencyHow closely related the various lines are.

Services MarketingService is any activity or benet that one party can offer to another

that is essentially intangible and does not result in the ownership of


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anything.Services marketing is associated with marketing the intangiblecomponents related to a product.

Services Marketing ConsiderationsSpecial characteristics of services that make them different fromgoods:

Intangibility, inseparability, variability, perishabilityServices marketing strategy requires:

The service-prot chain, internal marketing, interactivemarketing

Service differentiation:Just like products, services must be positioned in the minds ofconsumers and differentiated from the competition

Service CharacteristicsIntangibility

Cannot be seen, tasted,felt, or smelled before purchasing.

InseparabilityProduced and consumed at the same time and cannot beseparated from their providers.

VariabilityQuality may vary greatly, depending on who provides them andwhen, where, and how.

PerishabilityCannot be stored for later sale or use.

The Service-Prot ChainLinks service rm prots with employee and customer satisfaction.Consists of ve links:

Internal service qualitySatised and productive service employeesGreater service valueSatised and loyal customersHealthy service prots and growth

Service rms should pay attention to both interactive as well asinternal marketing strategies.Brand Strategy and Management

A brand is what denes one seller's product as distinct from thoseof other sellersBrands have status, value, and personalityAny type of product (service, idea, person, etc.) may be brandedAs dened earlier, a brand is beyond a name. It could be a word,symbol, or image that identies a company, product, or service


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Branding DecisionsBrand Equity

Is the dollar amount attributed to the value of the brand, basedon all the intangible qualities that create that value.

Brand PositioningAttributes, benets, beliefs, and values.

Brand AttributesThe qualities associated with a brand.

Brand NameSelection, protection.

Brand ManagementLovemark

A term to describe a brand that consumers feel especiallypassionate about. Coined by advertising agency Saatchi &Saatchi.

Brand Development Strategies

Manufacturer's brand, private brand (i.e. private label, licensing,co-branding, line extension, brand extension, multi brand.

Brand Management StrategiesManufacturer's Brand

Brand sponsored and promoted by the producer of the itemPrivate Brand

Brand created and owned by a reseller of a product or serviceLicensing

Selling the use of established brand names or identities tocompanies

Co-brandingUsing the established brand names of two different companieson the same product

Brand Development Strategies

Line ExtensionIntroduction of additional items in a given product category

under the same brand name (e.g. new avours, forms, colours,


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ingredients, or package sizes)Brand Extension

Using a successful brand name to launch a new or modiedproduct in a new category

Multi-brandsOffers a way to establish different features and appeal todifferent buying motives

New BrandsDeveloped based on belief that the power of its existing brand iswaning and a new brand name is needed. Also used forproducts in new product categories

Why Develop New Products?Follow changing market demandsRemain competitiveKeep up to changing technologyReplace dying products

Refresh and evolve existing productsDiversify product offering to reduce risk

Obtaining New ProductsAcquire

PatentsLicensesCompanies

Develop

New productsModications to existing productsImprovements to existing products

Successful New ProductsOffer a unique superior productHigher quality in productsFeatures and higher value in useHave a well-dened product concept

Senior management commitmentRelentless innovationSmoothly functioning new product development processClear understanding of its target market

New Product FailuresTarget market not appropriately dened or evaluatedFailure to conduct market research to understand the potentialMarket size may have been overestimated

Poor quality or design


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Incorrect positioning, pricing, or promotionDoes not deliver superior valueProduct is developed as a pet project of an executive

New Product Development ProcessIdea Generation

Idea ScreeningProduct Concept

Marketing StrategyBusiness Analysis

Product DevelopmentTest Marketing

CommercializationInitial Stages

Sources of new ideasEmployees, customers, suppliers, partners, competitors

Idea screeningNarrow down to those worth more time and money

Concept developmentDevelop prototypes and test consumer interest

Idea GenerationSystematic search for new ideasSources

Own staff, executives, scientist, engineers, manufacturing, andsales personnelCustomers, distributors, and suppliers

Marketers could get valuable insights from customers by watchingand listening to them

E.g. Heinz launching green ketchup targeting kidsOutside new product consultants and design rms could alsoprovide valuable insights

Idea ScreeningSorting through new product ideas to identify good ideas, and

separate them from the not-so-good ideasIn screening for ideas, estimations of market size, product price,development time, manufacturing, and marketing costs and rate ofreturn would be usefulEvaluate these ndings against a set of company criteria for newproducts

Concept Development and TestingA product concept is a detailed version of the new product idea thatcan be shown to potential customers


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It involves developing the new product idea into various alternativeforms and testing the concept with a group of potential customersPicture description, more physical presentation of the concept willincrease reliability of the testToday virtual reality through computer simulations are increasingbeing used for concept tests.

Business Case StagesMarketing Strategy

Target marketProduct positioningSales, market share, and prot objectivesInvolves designing an initial marketing strategy for a newproduct based on the product conceptPhase One - describes target market

Value proposition, sales, market share, and prot goalsPhase Two - strategy statement

Product's planned price, distribution, marketing budgetPhase Three - planned long run return

Sales and prot goals, marketing mix strategyBusiness Analysis

Review of sales, costs, and prot projectionsWill product meet corporate objectives?Involves a review of the sales, costs, and prot projections toassess t with company obejectives

If yes, then move to the product development phaseProduct Development

Developing the product concept into a real working version of theproductSubjecting it to a variety of testsCalls for large jump in investmentPrototypes are developedPrototype must have correct physical features and conveypsychological characteristicsStages of New Product Development

Idea generation - from internal and external sourcesIdea screening - choose the best ideas to developConcept development and testing - dene marketing goalsBusiness analysis - gure out return on investmentProduct development and testing - using the actual productTest marketing - nd out how customers respond to the newproduct


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Commercialization - product is rolled out to the marketCommercialization

Relates to the full scale introduction of the new product into themarketMust decide on timing (when to introduce the product)Must decide on where to introduce the product (single location,state, region, nationally, or internationally)Must develop a market rollout plan

Test MarketingTesting the product and marketing program in real, but limited,market conditionsCan be expensive and time consuming, but better than making amajor marketing mistakeIf the response to the test marketing is favourable, then the newproduct will be rolled out to the larger market

Approaches to Managing New Product Development

Customer-centered new product developmentTruly begins and ends by solving customer problems

Team-based new product developmentDepartments work closely together in cross-functional teamsoverlapping the steps of the process

Product Life Cycle (PLC)The lifespan of a new product, from its development to its eventualdecline.

The product typically runs through ve stages.Development - no customers, no prots, heavy spendingIntroduction - early adopter customers, no prots, high launchcostsGrowth - early majority customers, rapid sales growth andrevenuesMaturity - late majority customers, at sales, declining protsDecline - laggard customers, declining sales, replaced by newproducts

Introduction PhaseThe product life cycle stage in which the new product is rstlaunched into the market.This stage is characterized by:

Sales - lowCosts - high cost per customerProts - negativeMarketing objectives - create product awareness and trial


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Product - offer a basic productPrice - use cost-plusDistribution - build selection distributionPromotion - heavy to entice product trial

Growth PhaseThe product life cycle stage in which a product's sales startclimbing quickly.This stage is characterized by:

Sales - rapidly risingCosts - average cost per customerProts - risingMarketing objectives - maximize market shareProduct - offer extension, service, warrantyPrice - penetration strategyDistribution - build intense distributionPromotion - reduce to take advantage of demand

Maturity PhaseThe stage in the product life cycle in which sales growth slows,then levels off.This stage is characterized by:

Sales - peakCosts - low cost per customerProts - highMarketing objectives - maximize prots while defending market

shareProduct - diversify brand and modelsPrice - match or best competitorsDistribution - build more intensive distributionPromotion - increase to encourage brand switching

Maturity Stage StrategyModify the market

Increase the consumption of the current product

How?Look for new users and market segmentsReposition the brand to appeal to larger or faster-growingsegmentLook for ways to increase usage among present customers

Modify the productChanging characteristics such as quality, features, or style toattract new users and to inspire more usage

How?


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Improve durability, reliability, speed, tasteImprove styling and attractivenessAdd new featuresExpand usefulness, safety, convenience

Modify the marketing MixImproving sales by changing one or more marketing mixelements

How?Cut pricesLaunch a better ad campaignMove into larger market channelsOffer new or improved services to buyers

Decline PhaseThe product life cycle stage in which a product's sales begin todecreaseThis stage is characterized by:

Sales - decliningCosts - low cost per customerProts - decliningMarketing objectives - reduce expenditures and milk the brandProduct - phase out weak itemsPrice - cut priceDistribution - selective and phase out unprotable outlets

Promotion - reduce to minimum levelStyle, Fashion, and Fads

Style is a basic and distinctive mode of expressionE.g. styles appear in homes, clothing, art, etc.

Fashion is a popular style in a given eldE.g. prime time game shows

Fad is a fashion that enters quickly, is adopted quickly and declinesquickly

E.g. pet rocks

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