Product and Service Strategy and Brand Management - ppt video

AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: Explain the offering concept and offering mix portfolio. Describe how the marketing manager modifies the offering mix. Identify and describe the stages in the new-offering development process. Identify and describe the stages in the product life cycle.
Product and Service Strategy and Brand Management
Explain the types of positioning strategies. Define the concepts of brand and brand equity. Describe how brand equity is created as well as its value to organizations. Explain the types of branding and brand growth strategies.
OFFERING STRATEGY DECISIONS. An organization’s profitability depends on its product or service offering(s) and the strength of its brand(s) Marketers face three offering-related strategy decisions: Modifying the Offering Mix. Positioning Offerings. Branding Offerings.
CHAPTER 5: PRODUCT AND SERVICE STRATEGY AND BRAND MANAGEMENT. THE OFFERING PORTFOLIO.
THE OFFERING PORTFOLIO. The Offering Concept. An offering consists of the benefits or satisfaction provided to target markets by an organization. It contains the following elements: Tangible Product/Service. Related Services. Brand Name(s) Warranties/ Guarantees. Packaging. Other Features.
The Offering Concept. Focusing on an offering’s benefits or satisfaction establishes a conceptual framework for marketers. This framework is useful in: Analyzing competing offerings. Identifying target market unmet needs and wants. Developing new products or services.
THE OFFERING PORTFOLIO. Offering Mix/ Portfolio. The totality of an organization’s offerings. Offering Lines. Groups of offerings similar in terms of usage, buyers marketed to, or technical characteristics. Offering Items. A specific product or service noted by a brand, size, or price.
THE OFFERING PORTFOLIO. Offering Mix/Portfolio Decisions. Width (Breadth) The number of offering lines. The number of items in each line. Depth. The extent to which offerings satisfy similar needs, appeal to similar buyer groups, or use similar technologies. Consistency.
Offering Mix/Portfolio Decisions Based on: Organizational Resources. Competitive Situation. Marketing Strategy. One Offering. High-Profit or High-Volume Offerings. Complete Lines.
CHAPTER 5: PRODUCT AND SERVICE STRATEGY AND BRAND MANAGEMENT. MODIFYING THE OFFERING MIX.
Additions take the form of: Single Offering. Entire Line. Questions to ask: How consistent is the new offering with existing offerings Consistency. Does the organization have the resources to introduce and sustain the offering Resources. Is there a viable market for the offering Market.
Consistency. Consider demand interrelationships (offering substitutes or complements) —the cannibalization effect. Consider the degree to which the new offering fits the organization’s existing selling and distribution strategies.
Resources. Consider the firm’s financial strength. Consider the large initial cash outlays for a new offering’s R&D and marketing program. Consider the speed and magnitude of the competitive response. Consider the market growth rate.
Market. Consider whether a market exists (consumer willingness and ability to buy) Consider whether the new offering has a competitive advantage. Consider if there is a distinct market segment for which no present offering is satisfactory.
Idea Generation. Idea Screening. Business Analysis. Market Testing. Commercial-ization.
Idea Generation. Sources of new offering ideas include: Employees. Buyers. Competitors. Suppliers. Ideas are obtained through marketing research (formal) and informal means.
Idea Screening. Assess the match between prospective buyers and the proposed offering: Does it have a relative advantage over existing offerings Is it compatible with buyers’ use or consumption Is it simple enough for buyers to understand and use Can it be tested prior to actual purchase Are there immediate benefits from it once consumed If yes and the offering satisfies a felt need, then go to the business analysis stage.
Business Analysis. Assess financial viability based on estimated: Sales. Costs. Profits. Forecasting sales is difficult for new offerings. Profitability analyses relate to: Investment. Break-even. Payback Period.
Business Analysis. The number of years required for an organization to recapture its initial offering investment. = Payback Period. Total Fixed Costs. = Cash Flows. Payback Period.
STAGES IN THE NEW-OFFERING DEVELOPMENT PROCESS. Business Analysis. The ratio of net earnings (return) divided by total investment. = Return on Investment (ROI) Net Earnings. = Investment. × Return on Investment (ROI)
Market Testing. May include product concept or buyer preference tests in a laboratory situation or field test market. A test market is a scaled-down implementation of one or more alternative marketing strategies for a new offering. Ideas that pass through this stage are then commercialized.
Commercialization. 3,000 raw ideas are needed to produce a single commercially successful new offering. New offering success depends on a fit with: Market needs. Organizational strengths and resources.
Life cycles are divided into 4 stages: Introduction. Growth. Maturity- Saturation. Decline.
Sales. Growth. Maturity-Saturation. Introduction. Decline. Time.
Introduction Stage. Focus on stimulating trial of the offering by: Advertising. Giving out free samples. Obtaining adequate distribution. The vast majority of sales volume is due to trial purchases.
Marketers focus on retaining existing buyers of the offering through offering: Modifications. Enhanced brand image. Competitive pricing.
LIFE-CYCLE CONCEPT. Maturity-Saturation Stage. There is an increase in the: Proportion of buyers who are repeat purchasers. Standardization of production operations and product-service offerings. Incidence of aggressive pricing activities by competitors.
LIFE-CYCLE CONCEPT. Maturity-Saturation Stage. Marketers: Find new buyers for the offering. Significantly improve the offering. Increase usage frequency among current buyers. Decline Stage. Marketers decide to harvest or eliminate the offering.
MODIFYING, HARVESTING, AND ELIMINATING OFFERINGS. Involves adding new features and higher-quality materials or augmenting the offering with attendant services and then raising the price. Trading Up. Modifying the Offering. Is the process of reducing the number of features or quality of an offering and lowering the price. Trading Down.
MODIFYING, HARVESTING, AND ELIMINATING OFFERINGS. Eliminating the Offering. An offering may be dropped from the offering mix if the answers to these questions are very little or none. What is the offering’s future sales potential How much is the offering contributing to offering mix profitability How much is the offering contributing to the sale of other offerings in the mix How much could be gained by modifying the offering What would be the effect on channel members and buyers
CHAPTER 5: PRODUCT AND SERVICE STRATEGY AND BRAND MANAGEMENT. POSITIONING OFFERINGS.
Positioning is the act of designing an organization’s offering and image so that it occupies a distinct and valued place in the target customer’s mind relative to competitive offerings.
POSITIONING OFFERINGS. Positioning Approaches. Strategies include positioning by: Attribute or Benefit. Use or Application. Product or Brand User. Product or Service Class. Competitors. Price and Quality. Marketers often combine two or more of these strategies when positioning a product, service, or brand.
POSITIONING OFFERINGS. Positioning by Attribute or Benefit. Is the strategy most frequently used. Requires determining: Which attributes are important to target markets. Which attributes competitors emphasize. How the offering can be fitted into this offering-target market environment. Accomplished by designing an offering that contains or stresses the appropriate attributes.
Positioning Matrix. Develop a matrix relating attributes of the offering to market segments (see Exhibit 5.2) Benefits of the positioning matrix: Can spot potential opportunities for new offerings and determine if a market niche exists. Can estimate the extent to which a new offering might cannibalize existing offerings. Can judge the competitive response to a new offering more effectively.
EXHIBIT 5.2: ATTRIBUTES AND MARKETING SEGMENT POSITIONING. Adults. Toothpaste Attributes. Children. Teens; Young Adults. Family. Market Segments. Principal Brands for Each Segment. Topol; Rembrandt. Aim; Stripe. Ultra Brite; McCleans. Colgate; Crest.  NOTE: A check () indicates principal benefits sought by each market segment. Flavor. Color. Whiteness of Teeth. Decay Prevention. Fresh Breath. Price. Plaque Prevention. Stain Prevention.
POSITIONING OFFERINGS. Positioning Statement. For (target market and need), the (product, service, brand name) is a (product/service class or category) that (statement of unique attributes or benefits provided). Volvo’s position statement: For upscale American families, Volvo is the family automobile that offers maximum safety.
POSITIONING OFFERINGS. Making the Positioning Decision. The choice of which positioning strategy to use can be made by answering the following: Who are the likely competitors, what are their marketplace positions, and how strong are they What are the preferences of the target consumers and how do they perceive competitors’ offerings What position, if any, does the organization already have in the target consumers’ mind
CHAPTER 5: PRODUCT AND SERVICE STRATEGY AND BRAND MANAGEMENT. BRAND EQUITY AND BRAND MANAGEMENT.
A brand name is any word, device (design, sound, shape, or color), or combination of these that are used to identify an offering and set it apart from competing offerings. Brand equity is the added value a brand name bestows on a product or service beyond the functional benefits provided.
Has two marketing advantages: Provides a competitive advantage, such as signifying quality. Can charge a higher price since consumers are often willing to pay for the brand’s equity premium.
BRAND EQUITY AND BRAND MANAGEMENT. Branding Strategy. Multiproduct Branding. A firm uses one name for all its products in a product class. Multibranding. A firm gives each product or product line a distinct name. Private Branding. A firm supplies a reseller with a product bearing a brand name chosen by the reseller.
BRAND EQUITY AND BRAND MANAGEMENT. Multiproduct Branding. Also called family branding/corporate branding. Establishes dominance in an offering class. Allows buyers to transfer the good brand equity of one offering to others with the same name. Lowers promotion costs and raises brand awareness since the same name is used.
Multibranding. Is a useful strategy when each brand is intended for a different market segment or uniquely positioned in the marketplace. Often arises from company acquisitions. Increases promotional costs since consumers and distributors must accept each new brand of the firm.
Multibranding. Reduced risk that one brand’s failure will transfer to the firm itself or to its other brands. Advantage. Disadvantages. The strategy is complex to implement. Promotional costs are higher than with multiproduct branding.
Private Branding. Private branding (or private labeling) involves a manufacturer supplying a reseller (retailer, wholesaler, or distributor) with an offering bearing a brand name chosen by the reseller.
Private Branding. If a reseller carries its own private brands: Avoids price competition with other resellers since they don’t carry an identical brand. Accrues brand goodwill attributed to the offering to the reseller, not the manufacturer. Must locate a willing manufacturer.
BRAND EQUITY AND BRAND MANAGEMENT. Brand Growth Strategies. Line Extension. Introducing additional offerings with the same brand in a product class that it currently serves. Brand Extension. Using a current brand name to enter a completely different product class. New Brand. Developing of a new brand and often a new offering for a product class not yet served by the firm. Fighting/ Flanker Brand. Creating a new brand to attract specific consumer segments not served by a firm’s existing brands to counteract competitors’ brands.
New Brand Strategy. Line Extension Strategy. Brand Extension Strategy. Fighting/ Flanker Brand Strategy. Existing Product Class. New Product Class. New Brand. Product/Service Class Served by the Organization. Brand Name. Existing Brand.
BRAND EQUITY AND BRAND MANAGEMENT. Line Extension Strategy. Consists of new or different flavors, forms, colors, ingredients, features, and package sizes. This strategy: Responds to customers’ desire for variety. Eliminates gaps in a product line. Lowers advertising and promotion costs. Risks product cannibalism. Can create production and distribution problems. e.g., new bitter chocalate of Nestle, new Magnum ice cream, orange flavoured Absolute.
BRAND EQUITY AND BRAND MANAGEMENT. Brand Extension Strategy. Provides consumers with the familiarity of an established brand when introducing it in a new market. Requires that the perceptual fit and core product benefit of the brand transfers to the new product class. Dilutes the meaning of a brand for buyers if the brand name has too many uses.
BRAND EQUITY AND BRAND MANAGEMENT. Brand Extension Strategy. e.g., Google car, Nestle water, Ferrari perfumes. Renault & Samsung cooperation Samsung branded cars.
New Brand Strategy. Used when existing brand names are not extendable to a new product class for which it is targeted. May be the most challenging to successfully implement and the most costly: $50 to $100 million for a new brand. This strategy is akin to diversification. e.g., P&G acquired Duracell and Gillette and Unilever acquired Vaseline.
BRAND EQUITY AND BRAND MANAGEMENT. Flanker/Fighting Brand Strategy. Adding new brands on the high or low end of a product line based on a price-quality continuum. Flanker Brand. Adding a new brand whose sole purpose is to confront competitive brands in a product class being served by an organization. Fighting Brand.
BRAND EQUITY AND BRAND MANAGEMENT. Fighting Brand Strategy. Introduced when: An organization has a high relative market share of the sales in a product class. Its dominant brand is susceptible to having its high market share reduced by competitors through aggressive pricing or promotion. The organization wishes to preserve its profit margins on its existing brand.
BRAND EQUITY AND BRAND MANAGEMENT. Flanker/Fighting Brand Strategy. Fighting and flanker brand strategies risk cannibalizing other lower-priced brands in a product line. A preemptive cannibalism strategy is the practice of stealing sales from a firm’s existing products or brands to keep buyers from switching to competitors’ offerings so as to not lose sales.
Fighter brands. - Turkish Airlines-Anadolu Jet. - Renault-Dacia. - Intel: Celeron chip. Flanker brands: - Hyundai-Genesis. - Toyota-Lexus. Ariel and Alo laundry detergent brands of P&G.
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