2. Kotler Speak…
The best way to hold
customers is to constantly
figure out how to give
them more for less.
3. Objectives for the day…
What are the characteristics of products?
How can a company build and manage its product
mix and product lines?
How can a company make better brand decisions?
4. Discussion Question
1. Ultimately the goal for any firm or
business unit is to gain sustainable
competitive advantage. What key
decisions are necessary to get there?
3-4
5. Combined Typology of Business-Unit
Competitive Strategies
Emphasis on new product-market growth
Heavy emphasis No emphasis
Prospector Analyzer Defender Reactor
Units with strong
Differentiation
core bus.; Units primarily
actively seeking concerned with
to expand into maintaining a
Competitive strategy
Units primarily differentiated
concerned with rel. prod-mkts
position in Units with no
with
attaining growth mature markets clearly defined
differentiated
through offerings product-market
aggressive Units with strong Units primarily development or
Cost leadership
pursuit of new core bus.; competitive
concerned with
product-market actively seeking strategy
maintaining a
opportunities to expand into low-cost
rel. prod-mkts position in
with low-cost mature markets
offerings
6. How Business Strategies Differ in Scope, Objectives,
Resource Deployments, and Synergy
Dimensions Low-cost defender Differentiated defender
• Scope Mature/stable/well- Mature/stable/well-
defined domain; defined domain;
mature tech.and mature tech.and
cust. segments cust. segment
• Goals and obj.
Adaptability (new Very little Little
product success)
Effectiveness (inc. Low Low
mrkt share)
Efficiency (ROI) High High
• Resource Generate excess cash Generate excess cash
deployment (cash cows) (cash cows)
• Synergy Need to seek Need to seek operating
operating synergies synergies to achieve
to achieve efficiencies
efficiencies
3-6
7. How Business Strategies Differ in Scope, Objectives,
Resource Deployments, and Synergy
Dimensions Prospector Analyzer
• Scope Broad/dynamic Mixture of defender and
domains; tech. and prospector strategies
cust. segments not
well-established
• Goals and obj.
Adaptability (new Extensive Mix. of defender &
product success) prospector strats.
Effectiveness (inc. High Mix. of defender &
mrkt share) Low prospector strats.
Efficiency (ROI) Need cash for product Mix. of def. & prosp. strats
• Resource dev. (? or *) Need cash for prod. dev.
deployment Danger in sharing but < prospectors
• Synergy operating fac. and Danger in sharing
programs - better to operating fac. and
share tech./mktg skills programs - better to
share tech./mktg. skills
3-7
8. Let’s combine the two perspectives and
examine the book retailing industry
Emphasis on new product-market growth
Heavy emphasis No emphasis
Prospector Analyzer Defender Reactor
Units with strong
Differentiation
core bus.; Units primarily
actively seeking concerned with
to expand into maintaining a
Competitive strategy
Units primarily differentiated
concerned with rel. prod-mkts
position in Units with no
with
attaining growth mature markets clearly defined
differentiated
through offerings product-market
aggressive Units with strong Units primarily development or
Cost leadership
pursuit of new core bus.; competitive
concerned with
product-market actively seeking strategy
maintaining a
opportunities to expand into low-cost
rel. prod-mkts position in
with low-cost mature markets
offerings
3-8
15. Discussion Questions
4. If you want to be a pioneer, what are your
strategic options?
Under what circumstances might each
option be more likely to succeed?
8-15
16. Discussion Questions
5. How might introductory marketing plans
differ under each of these pioneering
strategies?
8-16
17. Some Advice for Would-Be Pioneers
First mover advantage is trumped by pioneers
who are better. Best beats first. Concentrate on
being best.
Being a pioneer without the basis for
sustainable competitive advantage is a trap!
8-17
18. The Product and the Product Mix
Product
Physical goods
Services
Experiences
Events
Persons
Places
Properties
Organizations
Information
Ideas Components of the Market
Offering
19. The Product and the Product Mix
Product levels
Customer value hierarchy
Core benefit
Basic product
Expected product
Augmented product
Potential product
(Consumption system)
Five Product Levels
20. The Product and the Product Mix
Product hierarchy
Need family
Product family
Product class
Product line
Product type
Item
Product system
Product mix
21. The Product and the Product Mix
Product classifications
Durability and Tangibility Classification:
Nondurable goods
Durable goods
Services
23. The Product and the Product Mix
Industrial-Goods Classification
Materials and parts
Farm products
Natural products
Manufactured materials and parts
Component materials
Component parts
Capital items
Installations Equipment
24. The Product and the Product Mix
Supplies and business services
Maintenance and repair items
Operating supplies
Maintenance and repair services
Business advisory services
Product mix (Product assortment)
Product mix has a certain:
Width
Length
Depth
Consistency
26. The Product and the Product Mix
Product-line decisions
Product-line analysis
Sales and Profits
Four types of product classes:
Core product
Staples
Specialties
Convenience items
27. The Product and the Product Mix
Market profile
Product Map for a Paper-Product Line
28. The Product and the Product Mix
Product-line length
Line Stretching
Downmarket Stretch
The company may notice strong growth opportunities as mass
retailers attract a growing number of shoppers
The company may wish to tie up lower-end competitors who
might otherwise try to move upmarket
The company may find that the middle market is stagnating or
declining
Upmarket Stretch
Two-Way Stretch
29. The Product and the Product Mix
Line Filling Brand decisions
Just-noticeable Difference What is brand?
Line Modernization, Attributes
featuring, andpruning Benefits
Values
Culture
Personality
User
30. What is a Brand?
30
A name, term, sign, symbol or
design, or a combination
Identifies the goods or services of a
seller
differentiates them from competitors
31. Brand
Commonly used research
approaches to determine
brand meaning:
Word associations
Personifying the brand
Laddering up the brand
essence
Brand essence
Laddering up
32. The Eight Roles of a Brand
32
Identify the maker
Simplify product handling
Organize accounting
Offer legal protection
33. The Eight Roles of a Brand
33
Signal quality
Secure Price Premium
Create Barriers to Entry
Create Competitive
Advantage
34. Building Brand Identity
Building Brand Identity
Brand bonding
Brands are not built by advertising but by the brand
experience
Everyone in the company lives the brand
Three ways to carry on internal branding – Employees must
Understand
Desire, and
Deliver on the brand promise
35. Building Brands in the New Economy
Building Brands in the new economy
Heidi and Don Schultz urge companies to:
Clarify the corporation’s basic values and build the corporate
brand.
Use brand managers to carry out the tactical work.
Develop a more comprehensive brand-building plan.
Define the brand’s basic essence to be delivered wherever it is sold.
Use the brand-value proposition as the key driver of the company’s
strategy, operations, services, and product development.
Measure their brand-building effectiveness, not by the old
measures of awareness, recognition, and recall, but by a more
comprehensive set of measures including customer-perceived
value, customer satisfaction, customer share of wallet, customer
retention, and customer advocacy
36. Brand Equity
Brand Equity
Brand awareness
Brand acceptability
Brand preference
Aaker’s five levels of customer attitude:
The customer will change brands, especially for price reasons.
No brand loyalty.
Customer is satisfied. No reason to change brands.
Customer is satisfied and would incur cost by changing brand.
Customer values the brand and sees it as a friend.
Customer is devoted to the brand.
37. Brand Value
Value of Brand Equity
Brand valuation
Competitive advantages of high brand equity:
The company will have more leverage in bargaining with distributors
and retailers because customers expect them to carry the brand.
The company can charge a higher price than its competitors because
the brand has higher perceived quality.
The company can more easily launch extensions because the brand
name carries high credibility.
The brand offers some defense against price competition.
Managing Brand Equity
Branding Challenges
Branding Decision: To Brand or Not to Brand?
38. Discussion Question
When is a brand more than just a brand? Have you
ever based a purchasing decision primarily on the
brand? Was it because of some perceived quality
difference, or was it based on the expectation of how
others would see or treat you? Have you ever seen
someone buying a given brand of an item in an
attempt to be seen as “cool”?
39. Eight Advantages of Strong Brands
39
Improved Perceptions of Quality
Greater Loyalty
Less Vulnerability to Competitive Actions
Less Vulnerability to Crises
40. Eight Advantages of Strong Brands
40
Larger Margins
More inelastic consumer response
Increased IMC effectiveness
Potential Licensing opportunities
41. Branding Decisions
Brand-Sponsor Decisions Brand-Name Decision
Manufacturer brand Four available strategies:
Distributor brand Individual names
Licensed brand name Blanket family names
Separate family names for
Slotting fee
all products
Brand ladder
Corporate name combined
Brand parity with individual product
names
42. Qualities of a brand name
Desirable qualities for a brand name
It should suggest something about the product’s benefits
It should suggest the product or service category
It should suggest concrete, “high imagery” qualities
It should be easy to spell, pronounce, recognize and remember
It should be distinctive
It should not carry poor meanings in other countries and
languages
43. Tools
Brand building tools
Public relations and press releases
Sponsorships
Clubs and consumer communities
Factory visits
Trade shows
Event marketing
Public facilities
Social cause
High value for the money
Founder’s or a celebrity personality
Mobile phone marketing
44. Discussion Question
Nike’s arrangement with Michael Jordan has
provided an excellent example of a celebrity
endorsement. Can you think of an endorsement
campaign that backfired? What did it cost the
company in the short term? What, if any, have been
the lasting effects?
47. Packaging as Branding
Packaging and Labeling Labeling
Packaging
Functions
Package
Identification
Primary Package
Grading
Secondary Package
Shipping Package Description
Factors which have Consumerists have
contributed to the growing lobbied for:
use of packaging as a
marketing tool Open dating
Self-Service Unit pricing
Consumer affluence Grade labeling
Company and brand image Percentage labeling
Innovation opportunity
48. Branding is a Business Process
One that is planned, strategically-focused and
integrated throughout the organization. Branding
establishes the direction, leadership, clarity of
purpose, inspiration and energy for a company’s
most important asset – its brand. Even the most
potentially powerful strategy will fail if not executed
effectively and consistently.
49. Brand Promise
Everyone in the company must live up to the Brand
Promise – the concept is simple but all-
encompassing – it is about turning every company
member, product, service, piece of communication or
interfaces into a walking, talking, touchable
reflection of the brand itself
50. Brand Strategy
It is not a
consequence, but
the starting point
itself.
51. Three requirements of Branding Strategy
Clearly articulated business strategy with a view
of the scale & scope of the business and how you
want to compete
Deep customer insights and understanding of
evolving business economics
Determine the role of branding as perceived by your
corporation which will help shape many strategic
brand decisions during the development process.
53. Brand Positioning, Identity and Image
Brand Identity
How brand strategists want the
brand to be perceived or needed
to be perceived as part of the
business strategy
Brand
Brand Image Positioning
How the brand is currently being The part of the brand identity
perceived in the market place as and value proposition to be
confirmed by research actively communicated to
selected target segments
54.
55. Kingfisher – Irreverence, individual, freedom-loving
and anti-establishment.
Kingfisher stands for all the above qualities whether
you like it or not and that’s why it is loved.
Let us discuss this form J&J perspective.List of productsConsumerBaby Care (Shampoo, Powder, Soap, Hair oil, wipes)Beauty (Neutrogena, Clean & Clear)OTC (Caladryl, Benedryl, Nizoral)Women Health (Stayfree)Wound Care (Band Aid, Savlon)Janssen-CilagCNSCRFDermatologyOncologyPrimary CareMedical (ASP, Cordis, Depuy, Ethicon, EES, J&J Hospital Services, Lifescan)Ortho-Clinical DiagnosticsVision Care (Acuvue)Services – Johnsonbaby.com
Let’s work on an Indian Example. HUL / P&G / J&J
LINE STRETCHING IN MARKETINGEvery company product line covers a certain part of the total possible range. For example BMW automobiles are located in the upper price range of the automobile market. Line stretching occurs when a company lengthens its product line beyond the current product range. The company can stretch its line down market or up market or both ways.Down Market stretch:A company positioned in the middle market may want to introduce a lower priced line for any of these reasons:1. The company may notice strong growth opportunities as mass retailers such as Wal Mart, Big Bazaar, Best Buy and others attract a growing number of shoppers who want Value-priced goods.2. The company may wish to tie up lower end competitors who might otherwise try to move up market. If the company has been attacked by low end competitor, it often decides to counter attack by entering the low end of the market.3. The company may find that the middle market is stagnating or declining.A company faces a number of naming choices in deciding to move down market. Sony for example faced three choices:A. Use the name Sony on all of its offeringsB. Introduce lower price offerings using a sub-brand name such as Sony Value line. Other companies have done this, such as Gillette, Ramada Limited, Hindustan Lever etc., The risks are that the Sony name loses some of its quality image and that some Sony buyers might switch to the lower priced offerings.C. Introduce the lower price offerings under a different name without mentioning Sony but Sony would have to spend a lot of money to build up the new brand name, and the mass merchants may no even accept a brand that lacks the Sony name.Moving down market carries risks. Kodak introduced Kodak Funtime film to counter lower priced brands, but it did not price Kodak Funtime low enough to match the lower priced film. It also found some of its regular customers buying Funtime, so it was cannibalizing its core brand. It withdrew the product.On the other hand Mercedes successfully introduced its class cars at $30,000 without injuring its ability to sell other Mercedes cars for $100,000 and up.UpMarket stretch:Companies may wish to enter the high end of the market for more growth, higher margins or simply to position themselves as full time manufacturers. Many markets have spawned surprising upscale segments: Star Bucks in coffee, HaagenDaaz in Ice cream and Evian in bottled water. The leading Japanese auto companies have each introduced an upscale automobile namely Toyota’s Lexus, Nissan’s Infiniti and Honda’s Acura. It may be noted that they invented entirely new names rather than using or including their own names.Two way stretch:Companies serving the middle market might decide to stretch their line in both directions. Texas instruments introduced its first calculators on the medium price and medium quality end of the market. Gradually it added calculators to the lower end taking market share away from Bowmar and at the higher end to compete with Hewlett Packard
Brand Moment of Truth.What is Moment of Truth?How is it important?Where does a Moment of Truth begin?Where does it end?How do you ensure that the brand promise is always met?
Short & Long term business strategy as to how the brand / corporation will create value & how they will compete in the chosen industry. Strategy thus should be a bridge between past & future.Identify the key stakeholders (includes senior management) & work out their power, influence, interest and intent. Develop a good understanding of the stakeholders to win their supportJust doing it based on consumer needs may not be entirely useful. Results may not be economically viable or actionableCrafting a brand vision helps identify where you want the brand to be over longer term to support your corporate strategy. Helps identifying research requirements and product management.Brand Promise – Brand in itself is a promise. Identify the promise that the brand stands for (or should stand for). Remember. Promises are always made FROM people TO people. Hence the promises must be serious.HP – We make technology accesible for everyoneCoca Cola – RefreshNokia – Connecting PeopleGE – Better LivingIdentify what your brand means, what it is perceived as and then identify the positioning / imagery etc.Example – Coke. Remember the imagery. Remember the logo
Bring in Indian Example – Equivalent for Target / Virgin (Kingfisher / Hippo)
Step 7.Companies invest considerable time, money & energy into developing a brand promise and then the employees don’t live them! Poof!Brand Moments of Truth.How can companies expect the frontline employees to be brand ambassadors if they don’t understand the promise themselves?Make a believable, keepable promise and get the employees to actually keep it.