Productstrategiesprodmodificationlineextensionbrandmanagement-brandequity

8/13/2019 Productstrategiesprodmodificationlineextensionbrandmanagement-brandequity

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Product Strategies, Product Modification, Brand

Management and

Brand EquitySession 4

By: - Neeraj Gupta


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Developing Product Strategies

On what basis the companys products haveto be developed so that it focuses on onlythose customers whom it is going to target.

These strategies can be as follows: - Time-to-market

Low Product Cost

Low Development Cost

Product performance, Technology & innovation Quality, Reliability, Robustness

Service, Responsiveness & Flexibility


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Time-to-market: -This is typical of companies involved with

rapidly changing technology or products with rapidly changingfashion. Pursuit of this strategy will typically will lead to tradeoffs

in optimizing product performance, cost and reliability.

Low Product Cost: -This orientation typically will requireadditional time and development cost to optimize product cost

and the manufacturing process.

Low Developm ent Cost : -While this orientation is not as

common as the other orientations, it occurs when companies aredeveloping products under contract for other parties, where a

company has severely constrained financial resources, or where

a "stealth" development effort is being undertaken on a

"shoestring".


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Product Performance, Technology & Inno vat ion: -This

orientation focuses on having the highest level of productperformance, the highest level of functionality or functions andfeatures, the latest technology or the highest level of productinnovation.

Quali ty, Rel iabi l i ty , Robu stness : -This orientation is typical ofindustries requiring high quality because of the significant coststo correct a problem (e.g., recalls in the automotive or foodprocessing industries), the need for high levels of reliability (e.g.,aerospace products), or where there are significant safety issues

(e.g., medical devices, pharmaceuticals, commercial aircraft,nuclear plants, etc.).

Service, Responsiveness & Flexibi l i ty : -This orientationrequires additional resources (and their related costs) to provide

this service and responsiveness.


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Stages in PLC


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Product Life Cycle


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Product Development

Developing a new product is a major task which

considers various factors. In other words, the aim

of product development is : -

Production of goods to meet market demand

Adjusting with the variation in quantity required Right pricing of the products.

Categories of Product Development: -

Introduction of new products

Improvement of existing products


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Stages of Product Development

Find Consumer Desire Analysing Feasibility

Design

Selection of Process and Production systems Process Development


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NEW PRODUCT

DEVELOPMENT

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THE NEW-PRODUCT-DEVELOPMENT

DECISION PROCESS


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I. IDEA GENERATION

DuPont-takes around 3000 raw ideas toproduce just two winning commercialproducts.


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TECHNIQUES FOR IDEA GENERATION

Attribute Listing

Forced Relationship

Morphological Analysis

Reverse assumption analysis

New contexts

Mind mapping


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II. IDEA SCREENING

This is an important stage at which Goor

Dropdecisions/errors are made.


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IIIA. CONCEPT DEVELOPMENT & TESTING

Consumers do not buy product ideas; they buy product concepts

PRODUCT IDEA: To produce a powder to add to milk to increase itsnutritional value and taste. This is a product idea.

A product idea can be turned into several concepts. The first questionis: Who will use this product? The powder can be aimed at infants,children, teenagers, young or middle-aged adults, or older adults.

Second, what primary benefit should this product provide? Taste,nutrition, refreshment, energy? Third, when will people consume hisdrink? Breakfast, midmorning, lunch, mid afternoon, dinner, lateevening? By answering these questions, a company can form severalconcepts:

Concept 1: An instant breakfast drink for adults who want a quicknutritious breakfast without preparing a breakfast.

Concept 2: A tasty snack drink for children to drink as a middayrefreshment.

Concept 3: A health supplement for older adults to drink in the lateevening before they go to bed.


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IV. MARKETING STRATEGY


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17-18

V. BUSINESS ANALYSIS

ESTIMATING TOTAL SALESFirst Times Sales

Replacement Sales

Repeat sales

ESTIMATING COSTS AND PROFITS


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Beta Testing and Market Testing

To produce a physical prototype or mock-up

to test the product and its packaging in typical

usage situations by conducting focus group

customer interviews or introductions at tradeshow etc.


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VI. PRODUCT DEVELOPMENT

The job of translating target customer requirements into a workingprototype is helped by a set of methods known as quality functiondeployment (QFD). This methodology takes the list of desiredcustomer attributes (CAs) generated by market research and turnsthem into a list of engineering attributes (EAs) that the engineerscan use.

Alpha testing means testing the product within the firm to see howit performs in different applications. After refining the prototypefurther, the company moves to beta testing, enlisting customers touse the prototype and give feedback on their experiences. Betatesting is most useful when the potential customers areheterogeneous, the potential applications are not fully known,several decision makers are involved in purchasing the product,and opinion leadership from early adopters is sought.


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17-21

Consumer testing can take a variety of forms, frombringing consumers into a laboratory to giving themsamples to use in their homes. In-home placementtests are common with products ranging from icecream flavors to new appliances. For example, whenDuPont developed its new synthetic carpeting, it

installed free carpeting in several homes in exchangefor the homeownerswillingness to report their likesand dislikes about the carpeting.

Sales Wave Research: -working with consumers whointially try the product at low cost and when the

product is offered at slightly reduced prices. Simulated test Marketing- qualified shoppers by

inducing them to buy the new brand and asking themto give comparitive feedback

Controlled Test marketing: -engaging the number of

stores that will carry the new product for a fee.

Market Testing


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TEST MARKETING

Before going out to sell products, it is importantfor the company to test-market them to see if

there is a demand for it. Otherwise firm mightend up investing time and resources onsomething that few customers are keen to buy.

Test market is a geographic region ordemographic group used to gauge the viability ofa product or service in the mass market prior to awide scale roll-out.


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Technical Implementation

Including new program initiation, resource

estimation, requirement publication,

engineering operations planning, department

scheduling, supplier collaboration, logisticsplan, resource plan publication, program

review and monitoring, contingency planning,

what-if planning.


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VIII. COMMERCIALIZATION

major decisions during this stage include:

When (timing). Marketing timing is critical. If a firm learns that acompetitor is nearing the end of its development work, it can choose:first entry (being first to market, locking up key distributors andcustomers, and gaining reputational leadership; however, if the productis not thoroughly debugged, it can acquire a flawed image); parallelentry (launching at the same time as a rival may gain bothproducts

more attention from the market); or late entry (waiting until after acompetitor has entered lets the competitor bear the cost of educatingthe market and may reveal problems to avoid).

Where (geographic strategy)

To whom (target-market prospects).

How (introductory market strategy).


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Adopter Categorization on the Basis of

Relative Time of Adoption of Innovation


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STAGES IN THE ADOPTION PROCESS

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1. Awareness. In this stage the consumer is aware of the

new product but lacks further information about it.

2. Interest. The consumer is motivated to seek

information about the new product.

3. Evaluation. The consumer determines whether or notto try the new product.

4. Trial. The consumer tries the new product on a small

scale to test its efficacy in meeting his or her needs.Trial can be imagined use of the product in some

cases.

5. Adoption. The consumer decides to make use of the

product on a regular basis.


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Factors Influencing adoption process

Readiness to try new product

Characteristics of the innovation

Organizations readiness to adopt new

innovation.


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Product Life Cycle Strategies for different Stages


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Marketing Strategies During Introduction Stage


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Marketing Strategies During Introduction Stage

Skimming

Penetration


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Growth Strategies

Two Different Kinds Of marketing behavior: -

Early Growth

Late Growth

Strategies relate to products position also based onwhether product is a: -

Leader can choose to fight, keep its leadership position, or

to flee, i.e. cedes market share to another product.

Follower depends on the strength of leader, its own

strength, and market conditions, can exit quickly, invest in

some other product having long term potential, or to

leapfrog the competition.


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Maturity Strategies

In maturity the sales curve has flattened out

and relatively few new buyers enter the

market.

While some untapped market potentialusually remains, it is difficult and/or

expensive to reach.


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Maturity Strategies


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Maturity Strategies


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Decline Strategies


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Product Modification

Product Modification is an attempt by companies to extend the length of the

Product Life Cycle by making small, or bigchanged to a product to keep customers interested in the product, or cause them

to buy accessory items to keep the product

popular.


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Forces causing companies to continuously make

modifications in their products

The intens i ty of compet it ion

The con t inued advances in techno logy

The Econom ic Envi ronment

The Soc ial /Cultural Environment Two aspects of the markets for product

modification information: The manner in which retention and conquesting

modifications affect competition between downstream

firms, and The optimal selling and pricing policies for a vendor who

markets product

NEW PRODUCT DECISIONS


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NEW PRODUCT DECISIONS

Product features

Product design

BrandingNew

BrandsMulti brands

Brand ExtensionLine

Extension


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Product Line Extension

Short term gain -line extensions represent the most effective and

least imaginative way to increase sales quickly and inexpensively. Competitive intensity- managers often see extensions as a short-

term competitive device

That increases a brand's control over limited retail shelf space and,its overall demand for the category for new branded or private-

label competitors and to drain the limited resources of third andfourth place brands.

Trade pressure-Line Extensions occur when a company introducesadditional items in the same product category under the samebrand name such as new flavors, forms, colors, added ingredients,

package sizes. Maggi Noodles, Maggi Atta Noodles, Maggi Rice Noodles

Sunsilk Dry hair, Sunsilk Oily Hair, Sunsilk anti-dandruff

Clinic plus, clinic all clear etc.

Tide, Tide Jasmine


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Brand Extension

Three types: -

Product Related Extensions-also known as line

extensions. Typically a product or flavour variant.

Nirma detergent extending into cake and Frooti extending into

other variants besides the mango variant

Image-Related ExtensionsCinthol moving into talcs from

toilet soaps and Maggi moving into soups, sauces etc.

Unrelated Extensions- Godrej appearing on soaps, safety

locks, almirahs, typesetters, hair-dyes, refrigerators etc.

LINE EXTENSION


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LINE EXTENSION

Fair & Lovely Fairness Cream-1978

Fair & Lovely Ayurvedic Fairness Cream-2001

Fair & Lovely Fairness Cream with extra brightness -2003

Fair & Lovely Menz Active-2006

Fair & Lovely Winter Fairness Cream-2009

AXE Deodorant-1999

Tagline The Axe Effect

Portrayed as a weapon of seduction

Five Fragrance: Dimension, Java,

Phoenix, Pulse and Voodoo

BRAND EXTENSION


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BRAND EXTENSION

Existing brand names are extended to new or modified

product categories.

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MULTIBRANDS


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MULTIBRANDS

New brand names are introduced in the same

product category.

HUL: Lux, Lifebuoy, Liril, Hamam, Breeze, Dove,

Pears, Rexona

Cannibalization

NEW BRANDS


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NEW BRANDS

New BrandsNew brand names in new categories are introduced

CO BRANDING


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CO-BRANDING

NDTV

Kingfisher


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Brand and Brand Management

"A brand is a name, term, sign, symbol, or design, ora combination of them, intended to identify thegoods or services of one seller or group of sellersand to differentiate them from those of competitors.

Three aspects of the Brand: - 'What', of the brand.

What the brand 'does'.

Finally, a brand becomes an asset or property which only

the owner has the right to use. Brands do not exist for the sake of identification and

differentiation.



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Evolution of a Brand


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Characteristics of Brands

Generic- Basic level product that can satisfy

a need that a person has.

B d M


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Brand Management

Brand Management is the application of

marketing techniques to a specific product,product line, or brand. It seeks to increase the

product's perceived value to the customer and

thereby increase brand franchise and brandequity.

A good brand name should:

be protected (or at least protectable) under

trademark law

be easy to pronounce

be easy to remember


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Brand Management

be easy to recognize

be easy to translate into languages in markets where brandwill be used

attract attention

suggest product benefits (e.g.: Easy-Off) or suggest usage(note the tradeoff with strong trademark protection)

suggest the company or product image

distinguish the product's positioning relative to thecompetition

be super attractive stand out among a group of other brands < like that one

compared to the others.


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Selecting a Brand Name

Criteria for choosing brand name: - Easy for customers to say, spell and recall (inc. foreigners)

Indicate products major benefits

Should be distinctive

Compatible with all products in product line

Used and recognized in all types of media

Single and multiple words Bic, Dodge Grand Caravan, IBMPC (letters), or a combination Mazda RX7

Availability, already over 400 car "name plates", this makesit difficult to select a new one.

Use words of no meaning to avoid negative connotation,Kodak, Exxon

Can be created internally by the organization, or by aconsultancy.


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BRAND NAME

Based on persons name

Example: Ford, Khaitan, Bajaj, Honda etc.

Based on locations

Example: Indian, Lloyds

Other basesExample: Nirma, Mercedes

Searching for a brand name is like search for a husbandthere are lots

of choices but the best ones have already been taken.


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SELECTING BRAND NAME

Name communicating functions

Example: Boost, Aquaguard, Wipro-Jyothishi

Name communicating specialty

Example: Opel, Ikon, Lancer

Use of Acronyms

Example: BPL, MRF, AMUL, FIAT

Use of Company maneLG, Samsung, Sony

Brand Name

Company as brand name

E.g. Philips

Strong Company Endorsement

Cadburys Dairy Milk

Weak Company Endorsement

Kit Kat (Nestle)

Individual Brand Name

Ariel, Tide

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Brand name selection

Separate family Brand Name meeting: -

Company.

Individual Name.

Separate brand family names Contribution of company name and Product Name

Maruti Zen, Hero Honda CBZ, Fiat Palio.

Durables quality of Brand Name

Q li i f B d N


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Qualities of Brand Name

Name should be suggestive of some product benefitfair and handsome cream, fair glow, roohafza.

Name should b suggestive of product or servicecategory e.g. Himalya Ayurvedic concepts business

world etc. Name should be suggestive of suggestive imagery

that projects qualities, such as gillette Mach 3, Nikeetc.

Name should be disticntive. Name should not suggest any negative associations

in other languages and countries.

B di h ll d O i i


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Branding challenges and Opportunities

Savvy Customers

Brand proliferation: -Using brand name to introduce

newer extensions of brand.

Media Fragmentation: -the emergence of interactive

and non traditional media, promotion and other

communication alternatives.

Increased Competition

Increased costs- cost of introducing a new product

has increased. It makes it difficult to match theinvestment and level of support that brands were

able to receive in previous years.

Greater Accountability-

Wh i B di ?


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What is Branding?

Branding is the business process of managing your trademarkportfolio so as to maximize the value of the experiences associated

with it, to the benefit of your key stakeholders, especially current and

prospective:

Employees

Customers

Stock/share holders

Suppliers

Intermediaries

Opinion leaders

Local communities

Purchasers and licensees

Br di Ch ll


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Branding Challenges

React ive App roach to Brand Development

Branding Ini t iat ives Lack Accountabi l i ty (Return

on Brand ing Investment, ROBI)

Can' t Br ing Branding Ini t iat ives to Conclus ion "Who are we Today" Syndrome

Compet it ion " Sto le" the Business away from Us

"We're in a Commodity Business: -Due to

competitors using price-cutting tactics essentially tobuy market share, perceived value is being driven

out of the business.

Branding Challenges


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Branding Challenges

"Branding Doesn't Work in Our Industry-

This statement is often paired with, "Branding

is a necessary evil.

"Everybody Knows Us.: -"What do peopleTHINK about you?

Unreal ist ic Expectat ions

"Nobody Knows Us "We Don 't Have the Budget ."

B d E i


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Brand Equity

B d E i


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Brand Equity

Brands have equity because they have high

awareness, many loyal consumers, a high

reputation for perceived quality, proprietary

assets such as access to distributionchannels or to patents, or the kind of brand

associations ( such as personality

associations).

Total accumulated value or worth of a brand.

Marketing observers also agree with following basic


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Marketing observers also agree with following basic

principles of branding and brand Equity

Differences in outcomes arise from the "added value"endowed to a product as a result of past marketing activity for

the brand.

This value can be created for a brand in many different ways.

Brand equity provides a common denominator for interpretingmarketing strategies and assessing the value of a brand.

B d E i


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Brand Equity

Brand adds value for both customer and marketer


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Brand adds value for both customer and marketer

Value for Customer: - It helps customer in information processing. Reduces chaos.

A brands assets enhance customer confidence in the purchasedecision by making customers feel more confident.

It creates usage satisfaction.

Value for Marketer: - Effectiveness and efficacy of marketing programmes is increased

by brand equity assets.

Brand equity dimensions allow a firm to have greater customerloyalty.

Allows a firm to charge premium.

Provides greater opportunity for growth. Good source of achieving leverage in distribution channels.

Provider of competitive advantage.

Brand Equity at Different Hierarchical Levels


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Brand Equity at Different Hierarchical Levels

B d L lt


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Brand Loyalty

Brand loyalty is the biased behavioral response, expressed overtime by some decision-making unit, with respect to one or morealternative brand out of a set of such brands, and is a function ofpsycholigical processes.

Loyalty is at the heart of equity and a very important brand equity

asset. 5 levels of brand loyalty according to Aaker: -

No Brand Loyalty

Satisfied but still change the brand without any reason

Satisfied with brand and doesnt switch because switching

involves high switching costs. Customer values the brand and considers it a friend.

Customer is devoted to the brand with intense feelings.

B d A


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Brand Awareness

Brand awareness is the second brand equity asset.It includes brand recognition and brand recall. Brand

recognition is the ability to confirm prior exposure

(Yes, I've seen it earlier) and recall is the ability to

remember the brand when a product category isthought about.

This sort of awareness is essential for a brand to be

able to take part in the decision process. Brand

awareness may exist at three levels: brand

recognition, brand recall and top-of-the-mind recall.

P r i d Q lit


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Perceived Quality

The quality can be objective or perceived.

The objective quality means the actual

superiority of product or service.

However, the perceived quality is perceptionof superiority of a product or service with

respect to its intended function. Perceived

quality is customer based.

Brand Associations


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Brand Associations

Primary associations are qualities/equity inherently possessed bythe brand i.e. utility they provide, performance, imagery

(reputation of brand), judgment about its ability to compete. Secondary association: - More of a branding-marketing function.

i.e. transferring the quality of one entity to other. TATAsreputation of quality transferred to Salt.

Some ways of adding Secondary associations: - Company (Relating existing brands with company image)

Country of Origin or other Geographic Areas Like-KashmiriPashmina Shawls, Nagpuri Oranges, Kashmiri Apple etc.

Co-Branding: - Brand Alliance or Brand Building-two or moreexisting brands are combined into a joint product.

Licensing/Franchisee: -Mc Donalds, Pizza Hut etc.

Celebrity Endorsement: -Well known admired people to promoteproduct is a wide spread phenomenon

Sporting, cultural or other event: -Like many award ceremoniescricketing events etc. are sponsored by companies to promotetheir brands

Brand Personality


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Brand Personality

It is a comprehensive concept, which includes all the tangibleand intangible traits of a brand, like, beliefs, values,

prejudices, features, interests, and heritage. Brand

Personality is a set of human characteristics associated with a

brand. In general, it expresses how the brand behaves.

E.g. : -IBM is 'older' while Apple is 'younger'

India Today is 'old-fashioned' while Outlook is

'trendier'

Coke is 'conforming' while Pepsi is 'irreverent In essence, it can be said that 'Personality traits

are what the brand will live and die for'.

Brand Personality


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Brand Personality

The concept of brand personality is useful becauseof following reasons. It: Enriches understanding

Helps gain an in-depth understanding of consumer

perceptions of and attitudes towards the brand Can provide more insight than is gained by asking about

attribute perceptions

Contributes to a differentiating identit

Can differentiate brands especially where brands are

similar in product attributes In fact, it can define not only the brand but the product

class context and experience


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Productstrategiesprodmodificationlineextensionbrandmanagement-brandequity