SEMESTER : PRODUCT MANAGEMENT (PM) …imm-gsm.s3.amazonaws.com/2014/Docs/Assignment-Docs/IMMGSM/PM001...assignment 1st semester : product management (pm) product management (pm001)

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© IMM Graduate School of Marketing Assignment: 1

st Semester 2014 PM / PM001

ASSIGNMENT 1ST SEMESTER : PRODUCT MANAGEMENT (PM) PRODUCT MANAGEMENT (PM001) CHAPTERS COVERED : CHAPTERS 11 - 13

DUE DATE : 3:00 p.m. 18 MARCH 2014

TOTAL MARKS : 100

CASE STUDY : NIVEA SUN PRODUCT OF THE YEAR

INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS The complete ‘Instructions to Students for Completing and Submitting Assignments’ must be collected from any IMM GSM office, the relevant IMM GSM recognised Additional Tuition Centre or can be downloaded from the IMM GSM website. It is essential that the complete instructions be studied prior to commencing your assignment. The following points highlight only a few important notes.

1) You are required to submit ONE assignment per module.

2) The assignment will contribute 20% towards the final examination mark, and the other 80% will be contributed by the examination, however, the examination papers will count out of 100%.

3) Although your assignment will contribute towards your final examination mark, you do not have to earn credits for admission to the examinations; you are automatically accepted on registering for the exam.

4) Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname, student number and subject at the top of each page.

5) The IMM GSM requires assignments to be presented in a typed format, on plain A4 paper. Unless otherwise specified, this assignment must be completed within a limit of 2500 words, excluding the bibliography. Students who exceed the word limit may find that only part of the submitted assignment will be marked.

6) A separate assignment cover, which is provided by the IMM GSM, must be attached to the front of each assignment.

7) Retain a copy of each assignment before submitting, in case the original does not reach the IMM GSM.

8) The assignment due date refers to the day up to which assignments will be accepted for marking purposes. The deadline is 3:00 p.m. on 18 March 2014. Late assignments will be accepted, but 25 marks will be deducted from the maximum mark, if received after 3:00 p.m. on 18 March 2014 and up to 5:00 p.m. the following day, after which no assignments will be accepted.

9) If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot accept responsibility for the return of the assignment. It may even result in your assignment not being marked.

Results will be available on the IMM GSM website, www.immgsm.ac.za, on Friday, 2 May 2014.

http://www.immgsm.ac.za/

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Answer all of the following questions after having read the attached case study on Nivea Sun or the article titled ‘Product of the year’. You are also advised to research the companies in question in more detail to enable you to give more insightful answers.

SPECIFIC INSTRUCTIONS:

1. Answer ALL the questions in detail. 2. Use your own words to answer the questions! 3. Read each question carefully to determine exactly what is required before

attempting the answer. 4. Answers must be set out in a systematic way under appropriate headings

and sub-headings. Number your answers clearly. 5. Do not simply give theoretical discussions. Practical application is essential

for all questions and should form the bulk of your answers. 6. Take note that 10 marks are allocated to the presentation and layout of your

assignment.

7. Make sure that you give a bibliography at the end of the assignment and provide references in the body of your answers where you have referred to other sources. Use the correct referencing method (Harvard system).

8. All answers must be based on the attached case study on Nivea Sun or the article entitled ‘Product of the year’.

9. Refer to the Nivea Sun website: http://www.nivea.co.za/products/Sun-Care for more information on the product in the case study. (Questions 1, 3 & 4).

10. Prescribed textbook: Trott, P., 2012. Innovation Management and New Product Development. 5th ed. Harlow: FT Prentice Hall.

http://www.nivea.co.za/products/Sun-Care

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QUESTION 1 [26] Product strategy will express how the organisation seeks to differentiate itself, and distance itself, from its competitors and it will be the bedrock of its market positioning. It stands to reason that for new products to be successful in the market they need to be perceived as beneficial by prospective buyers and that this benefit needs to stand out and be distinctive and attractive. Required: Using Nivea Sun as the product 1.1 explain how differentiation and product positioning have been used in the

development of the product strategy. Identify the key bases of differentiation and the approach used for product positioning. (18)

1.2 describe, in detail, the brand strategy that has been used. (8)

[Note: It is essential that you conduct further research on this topic. You will not find sufficient depth of information in Trott (2012). Consult additional textbooks, read articles, and conduct Internet searches, when researching this topic. Use the correct referencing method.] QUESTION 2 [10] Read the article titled ‘Product of the year’ before answering this question. Take note of the different products that won awards in their respective categories and some of the comments given by some of the winning product representatives. Required: Select one winning product from the list. Utilising the theory addressed in Chapters 11 and 13 in Trott (2012), as well as any other sources that you identify, discuss what made this particular product a winner in its category over its competitors. [Hint: search for more information on the product on the product’s website as well as go to stores to see the product in the retail setting in relation to its competitors.] QUESTION 3 [30] Packaging is a frequently overlooked aspect of managing products. Phillip Kotler has even suggested that packaging is so significant that many marketing managers have called it a fifth P, along with price, product, place and promotion. The development of the Nivea Sun product range clearly required some key decisions regarding packaging as part of the product development process. Assume that you were part of the development process for the Nivea Sun range of products. One of the key contributions you made was in the development of the packaging.

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Required: Referring to the topics addressed in Chapter 13 in Trott (2012), describe the key considerations that would have been applied by you when developing the packaging for the Nivea Sun product range. In your answer you should at the very least address the following issues:

Principles of packaging (8)

Characteristics of packaging (10)

Product and pack size variation (5)

Packaging systems (5)

Ensuring retailer acceptance. (2) Make sure that you motivate why a particular option would be chosen over the others. [Hint: make sure you keep the nature and characteristics of the product in mind. The practical application component of your answer is crucial.] QUESTION 4 [24] Chapter 11 in Trott (2012) addresses the topic of product and brand strategy. In this chapter attention is given to issues like the development of product strategy, differentiation and positioning, and managing brand strategy. Chapter 12 addresses new product development and the process or model to be followed when developing new products. Whilst these chapters provide valuable insights into the development of product and branding strategies, they do not identify specific pitfalls/problems that exist in the development of product strategies that need to be avoided by the product manager. Required: Write an essay on the mistakes and pitfalls that a product manager should avoid or be on the lookout for when developing a product strategy. Identify at least eight (8) specific pitfalls/mistakes and describe what the problem is and how it can be avoided or minimised. Support your theoretical discussion with practical examples linked to the product in the case study – Nivea Sun. [Note: It is essential that you conduct further research on this topic when answering this question. You will not find sufficient information in Trott (2012). Consult additional textbooks, read articles, and conduct Internet searches when researching this topic. Use the correct referencing method.] PRESENTATION [10]

ASSIGNMENT TOTAL: 100

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CASE STUDY: NIVEA SUN

INTRODUCTION Beiersdorf is the international skin care company behind the leading brands NIVEA, ELASTOPLAST, ATRIXO and EUCERIN. Over the past 10 years the company has grown rapidly in the UK by developing a balanced and well managed portfolio of brands. A brand portfolio should consist of a range of products which support each other, irrespective of which categories they operate in. The NIVEA range includes product types ranging from female face and body products to men's shaving gels, through to deodorants and sun care products. NIVEA identifies market segments that meet individual consumer needs. Segmentation occurs when a market is split into sub-markets (segments) which can respond in similar ways to different marketing activities. Each segment:

contains consumers with similar needs or tastes

is best satisfied by products targeted to meet their specific needs. This can be at a macro level (e.g. total health and beauty market) and at a micro level (i.e. within a specific category). NIVEA Sun is a major international sun care brand, recognised worldwide as a leader in sun care research and development. The market is worth R1730.6m with an overall category purchase penetration of 33% (usage penetration is higher).

Pro

tec

tio

n

Moisturising sun lotions:

SPF4, 8, 12, 15, 20, 30, 40, 50+

Moisturising sun sprays

SPF6, 10, 15, 20, 30, 50+

Firming sun lotion

SPF15 Satin Sheen sun lotion

SPF 8, 15 Sun oil

SPF4

Sensitive sun lotion

SPF30, 50+

Pampering protection mousse

SPF8, 15

Children’s sun lotion

SPF25, 40, 50+

Sun spray

SPF20, 30, 40, 50+

Baby sun lotion

SPF50+

Aft

er

su

n Moisturising

after sun lotion

200 & 400ml

Cooling after sun spray

After sun tan prolonger

Regenerating after sun balm

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Se

lf t

an

Sun Touch lotion

Normal to dark or fair skin

Sun Touch caring spray

Sun Touch face cream


Sun Touch aerosol spray


Sun Touch wipes

Sun care is a serious issue for all and the protection message is key to the NIVEA Sun brand proposition. NIVEA Sun appeals to, and is used by men, women and children with quality products to meet all needs. The brand also aims to bring fun to the market through recognising situations when sun care products are applied.

The three main product segments The diagram below shows the three main product segments that make up the NIVEA Sun range. As you will see, there are a variety of products in each, which can also be segmented as shown.

Skin type Moderate temperature Hot temperature Very hot temperature

Very light SPF 30 SPF 40 SPF 50+

Fair SPF 20 SPF 30 SPF 40

Normal SPF 15 SPF 20 SPF 30

Dark SPF 15 SPF 15 SPF 30

Children’s SPF 30 SPF 50+ SPF 50+

1. Protection It is vital that skin is adequately protected against the sun’s harmful effects (although no sunscreen can provide total protection). NIVEA Sun provides products that enable people to be as safe as possible. NIVEA Sun also encourages the use of other forms of protection (e.g. wearing a sun hat and avoiding midday sun). Protection is the largest segment in the sun care market with a purchase penetration of 28%. NIVEA Sun is the protection segment market leader by value (i.e. more money is spent on NIVEA Sun protection products than any other sun care brand in SA). When choosing sunscreens there are two important factors to consider:

Skin type. The chart below shows segmentation by skin type. The level of protection required for each segment will vary according to generalised skin types (as seen below):

Skin type Very light Fair Normal Dark

Hair colour Reddish Blonde Dark blonde Brown

Freckles Many Some Few None

Sunburn Very quickly Quickly Regular Slow

Tanning Slowly Slowly Quickly Very quickly

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Skin type applies to children, as well as adults. Children’s skin is thinner and its repair mechanism is not yet fully developed. As a result they require extra protection and sun screens that are specifically developed for their skin.

Location. NIVEA Sun provides a range of lotions and sprays targeted at different climates and to users with different skin types. Someone with fair skin may be well protected with a SPF 20 product when in Sweden, but if they were in South Africa they would need SPF 40.

2. After Sun NIVEA Sun is the market leader within this segment in the RSA, which has been growing rapidly. 3. Self-tan In contrast to protection and after sun, the self-tan category is concerned mostly with cosmetic appeal. Many adults use self-tan to have an all year round sun kissed glow.

Brand vision A vision paints a picture of what you are trying to achieve with your brand in a simple sentence. NIVEA Sun's vision is "To be the Number 1 brand in the South African sun care market in penetration, sales and likeability." Penetration relates to the percentage of potential customers that purchase a product. Sales relate either to value (the money spent on the product) or volume (the quantities sold). Likeability is all about enjoyment. If people like a brand/product they will continue to buy it. One key way to achieve the vision is to provide innovative solutions to market needs. This has been a key success factor for NIVEA Sun. As a brand it has achieved this through continually segmenting its consumers in order to:

effectively meet consumers' needs

identify new market opportunities.

Consumer segmentation Segmentation has been vital to the success of NIVEA Sun and allowed the brand portfolio to grow to over 40 products, all meeting clear consumer needs.

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The following factors are used to develop and define the sun care segments:

Demographics - different groups of consumers behave differently (factors relate to age, gender, etc). Demographic differences relevant to NIVEA Sun include different buying behaviours between men/women and adults with children. There is a stark contrast between awareness and usage of sun care products between men (who prefer convenience) and women (who enjoy more luxurious sun care products). Similarly, adults with children are another broad segment with differing needs.

Demographic segments are broad. As research shows, the level of awareness of sun care transcends income and social class.

Attitudinal this is the most important segmentation variable. Consumers' attitudes towards sun care influences their purchases. NIVEA Sun conducts market research to understand user attitudes. This involves questionnaires using a nationally representative sample, and more intensive research with small groups, to discuss individual skin protection habits and preferences. This has identified 5 distinct groups for protection and after-sun:

o Concerned Consumers 'a good tan is not important'. These consumers are conscious of the harmful effects of the sun and purchase sun protection products that are most likely to offer high sun protection factors.

o Sun Avoiders - avoid sunbathing and using sun protection when in the sun - it is seen as a chore. These are unlikely to purchase a sun care product. Through education, this segment may be convinced to protect using more easy-to apply products such as sprays.

o Conscientious Sun Lovers - adore sunshine and like to use a trustworthy brand with suitable protection factors. They know about sun care and use this knowledge to purchase suitable products for their skin.

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o Careless Tanners - adore the sun but don't protect against harmful dangers. Tanning is important to this group, not protection. They don't worry about the long-term damage to their skin and may purchase a low SPF product, if any at all.

o Naive Beauty Conscious - like to have a good sun tan. They recognise that sun protection is important but fail to understand about Sun Protection Factors (SPFs). These consumers may still be interested in the core features of a sun protection product (e.g. SPF) and be more inclined to purchase an added-value offering such as a mousse.

Consumer segments were identified by analysing answers to questions about attitudes. The two main aspects of attitudes relate to:

Usage occasion (when) e.g. holiday, outdoor sports, gardening, working etc. This relates to the Sun Protection Factor (SPF) required, e.g. the SPF required for a holiday in Iceland differs greatly to outdoor work in South Africa. This is one of the reasons why NIVEA Sun produce a wide range of sun protection from SPF 4 to 50. Research has shown that consumers often purchase a variety of SPF's for differing needs and occasions. This factor alone however is not an accurate means of segmenting markets.

Benefit sought - protection is the primary benefit but the preference by which this is delivered will vary by segment, e.g. convenience is important to men (so they choose spray applicators). Parents want to provide maximum protection for children (high SPFs and coloured products are therefore important).

The benefit sought differs across the attitudinal segments. Whilst 'Concerned Consumers' want a very functional product providing 'adequate protection' (e.g. SPF 30), 'Naive Beauty Conscious' may want a more luxurious sun protection product (e.g. mousse). This also applies to consumers with special skin types, who require a more specialised product. Recognising that this is a separate segment, NIVEA Sun has formulated sensitive skin products

Brand strategy The key proposition of the NIVEA Sun brand is protection. The main elements of this proposition include:

making sun care simple

educating that protection can lead to safer tanning

reinforcing the immediate protection message.

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This last point relates to the immediate protection formula which was developed by NIVEA Sun and launched in 2005 to provide proven instant and full UVA and UVB protection. This was researched and developed following consumer studies which found that consumers often failed to apply sun screens 20-30 minutes before sun exposure (despite packaging instructions). NIVEA Sun follows a strategy of product innovation, in order to achieve its long-term objectives. This takes the form of timely new product launches to enable the brand to more closely meet the needs of different types of consumers. Some good examples of innovative launches include:

spray products that are easy to apply (particularly appealing to men)

a coloured formulation for children's sun products (making application more fun)

reformulation of the products to offer immediate protection. For 2006, NIVEA Sun has developed 'Long Lasting Water Resistance' for children, a product which has increased the water resistance of sun protection from 80 minutes to 120 minutes. This allows children to be safer in the sun for longer. In addition NIVEA Sun creates innovative marketing communication. Women are the main purchasers of sun care for the family. This is reflected in above-the-line (advertising) communications, generally targeted towards a female audience. However, in 2005, NIVEA Sun targeted male consumers with its immediate protection message in press advertising. This was presented in a fun and 'non-serious' way in order to appeal to a male audience. Children are not purchasers of sun care. However, NIVEA Sun recognises it can play an important part in educating children from a young age to be safer when in the sun. Every year, a 'Sun Sense' primary school resource pack is distributed to over 10,000 teachers to communicate this key message. Continual segmentation is vital to fully understand consumer needs and changing habits. This helps provide appropriate products to meet their needs.

Conclusion Segmentation is the tool that enables NIVEA Sun to identify different groups of customers, and provide the best possible products to meet individual requirements. The sun care market consists of different consumers with differing needs. SA has the biggest sales of NIVEA Sun across Beiersdorf within Africa. Understanding segmentation enables NIVEA Sun to maintain a Number 1 value position in protection and after sun in South Africa. Source: Adapted from The Times 100: Business Case Studies. [Online] Available at: http://businesscasestudies.co.uk/nivea/segmentation/introduction.html #axzz2NSvhaaXW. [Accessed: 27 February 2013]

http://businesscasestudies.co.uk/nivea/segmentation/introduction.html#axzz2NSvhaaXW

http://businesscasestudies.co.uk/nivea/segmentation/introduction.html#axzz2NSvhaaXW

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ARTICLE Read the following article before answering Question 2.

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Source: Mack, M., 2013. Product of the year. [Online] Supermarket and Retailer, March 2013, pp.19-22 Available from: http://www.supermarket.co.za/flipbooks/Supermarket_Retailer/March%202013/index.html. [Accessed 11 June 2013].

http://www.supermarket.co.za/flipbooks/Supermarket_Retailer/March%202013/index.html

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SEMESTER : PRODUCT MANAGEMENT (PM) …imm-gsm.s3.amazonaws.com/2014/Docs/Assignment-Docs/IMMGSM/PM001...assignment 1st semester : product management (pm) product management (pm001)