Product strategy

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  • 1. PRODUCT STRATEGY AND BRANDING
  • 2. What Is the Product? Brand Name Quality Level Packaging Design Features Delivery & Credit Installation Warranty After- Sale Service Core Benefit or Service Actual Product Core Product Augmented Product Source: Prentice Hall
  • 3. Types of Products
    • Consumer
    • Industrial
    • Other Entities
      • Organizations
      • Persons
      • Places
      • Ideas
  • 4. Types of Products CONSUMER PRODUCTS
    • Shopping Products
    • Buy less frequently
    • Gather product information
    • Fewer purchase locations
    • Compare for:
      • Suitability & Quality
      • Price & Style
    • Convenience Products
    • Buy frequently & immediately
    • Low priced
    • Many purchase locations
    • Includes:
      • Staple goods
      • Impulse goods
      • Emergency goods
    • Specialty Products
    • Special purchase efforts
    • Unique characteristics
    • Brand identification
    • Few purchase locations
    • Unsought Products
    • New innovations
    • Products consumers don’t
    • want to think about
    • Require much advertising &
    • personal selling
    Source: Prentice Hall
  • 5. Types of Products INDUSTRIAL PRODUCTS Supplies and Services Materials and Parts Capital Items Source: Prentice Hall
  • 6. Characteristics of Services
    • Can’t be seen, tasted, felt, heard,
    • or smelled before purchase
    • Can’t be separated from service
    • providers
    • Quality depends on who provides
    • them and when, where and how
    • Can’t be stored for later sale or use
    Intangibility Inseparability Variability Perishability Source: Prentice Hall
  • 7. Individual Product Strategy Decisions
    • Attributes
    • Packaging
    • Labeling
    • Product Support
  • 8. Product Attributes - Where Do They Come From?
    • Quality
    Features Design Source: Prentice Hall
  • 9. Packaging Promotes Identifies Competitive Advantages Describes Sales Tasks Product Safety Packaging Labeling Source: Prentice Hall
  • 10. Multi-Product Strategy Decisions
    • Branding
    • Product Lines
    • Product Mix
      • Variety
      • Assortment
  • 11. What Do Brands Mean to Customers? Brand Personality Attributes Value Quality Benefits Culture Company Values User Characteristics
  • 12. Brand Equity
    • The value your customers perceive to be uniquely associated with your brand
    • = Awareness + Associations
    • Awareness
      • Recall
      • Recognition
    • Associations
      • Perceived Quality
      • Image
  • 13. Brand Awareness
    • A brand that is not considered cannot be chosen
    • A customer cannot consider a brand unless they are aware of it
    I don’t know who you are. I don’t know your company. I don’t know your company’s product. I don’t know what your company stands for. I don’t know your company’s customers. I don’t know your company’s record. I don’t know your company’s reputation. Now--what was it you wanted to sell me? MORAL: Sales start before your salesman calls--with business publication advertising.
  • 14. Brand Awareness RECOGNITION
  • 15. Brand Awareness RECOGNITION
    • Increases likelihood of consideration at the point of purchase
    • Enhances the salesperson’s initial contact (industrial)
    • Enhances in-store promotional efforts
    • Increases attention and comprehension of advertising
  • 16. Brand Awareness RECOGNITION
  • 17. Brand Awareness RECOGNITION
    • Free publicity in the Wall Street Journal
  • 18. Brand Awareness RECALL
    • Essential for memory-based choice and customer-initiated contact
    Order of Recall (movie data) 0% 5% 10% 15% 20% 25% 30% 35% Recalled 1st (top of mind) Recalled 2nd or 3rd Recalled 4th or 5th Recalled 6th or 7th Recalled 8th or 9th Percent seeing film before 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Percent seeing film after Source: Wes Hutchinson Seen before recall Seen after recall
  • 19. Brand Associations PERCEIVED QUALITY
    • Profitability (ROI):
      • PERCEIVED RELATIVE QUALITY
      • inferior moderate superior
      • RELATIVE high 21% 27% 38%
      • MARKET medium 14% 20% 29%
      • SHARE low 7% 13% 20%
      • SOURCE: PIMS (Profit Impact of Market Strategies; based on 2,200 business units)
    • Future Profitability (Stock Price):
      • Stock Price = f (ROI, perceived quality)
      • * ROI and perceived quality exert approximately equal effects *
      • SOURCE: Aaker, D. A. and R. Jacobson (1994; based on daily measures of NYSE, AMEX, and NASDAQ).
  • 20. Brand Associations IMAGE
    • Brand image is the integration of all experiences with and information about a brand as perceived and remembered by customers
      • The whole is more than the sum of its parts
    • Brand image is relative easy to create , but almost impossible to change !
    • Example 1: K-Mart and the “Blue Light Special”
    • Example 2: Hyundai and product quality
  • 21. Brand Equity  BRAND LOYALTY
    • Brand loyalty - the probability of choosing a brand given that you are a user of that brand - can result from:
    • Inertia : the general tendency to repeat previous purchases due to high switching costs, convenience, or habit
    • Preference : an enduring preference for a brand over and above what would be expected based on the benefits derived from the product or from a long-term relationship with the brand
  • 22. Example BRAND LOYALTY
    • In 1983, six people in Chicago died of cyanide poisoning from tampered TYLENOL capsules. J&J reacted quickly and appropriately withdrawing all capsules from the market. Tylenol shared dropped only from 37% to 35% and eventually recovered completely.
  • 23. Brand Equity  BETTER BUSINESS RESULTS
    • Brands
    • Price Market Share
    • Toothpastes (6 oz.) Price Premium Share Premium
    • Crest $2.19 $ .44 27.2% 17.3%
    • Colgate $2.19 $ .37 21.8% 12.2%
    • Aqua-fresh $2.19 $ .24 15.1% 6.6%
    • Close-Up $2.14 $ .27 16.5% 8.0%
    • SOURCE: Park, C. S. and V. Srinivasan (1994; based on survey results)
  • 24. Brand Equity  BETTER BUSINESS RESULTS
    • Brands Price Market Share
    • Mouthwashes (24 oz.) Price Premium Share Premium
    • Scope $3.83 $ .47 31.2% 13.7%
    • Listerine $3.79 $ .42 26.8% 11.1%
    • Close-Up $5.02 $ .23 2.3% .8%
    • Plax $4.29 $ .26 10.3% 3.4%
    • Colgate $5.22 $ .10 1.4% .2%
    • SOURCE: Park, C. S. and V. Srinivasan (1994; based on survey results)
  • 25. Major Brand Decisions Brand Strategy Line Extensions***Brand Extensions Multi-brands***New Brands Brand Sponsor Manufacturer’s Brand**Co-branding Private Brand**Licensed Brand Brand Name Selection Protection Source: Prentice Hall
  • 26. Brand Strategy Source: Prentice Hall Line Extension Multi-brand Brand Extension New Brand Brand Name Currently Served New Product Category Existing New
  • 27. Brand Strategy
    • Line Extension
      • Existing brand names extended to new forms, sizes, and flavors of an existing product category
    • Brand Extension
      • Existing brand names extended to new product categories
    • Multi-brands
      • New brand names introduced in the same product category
    • New Brands
      • New brand names in new product categories
    Source: Prentice Hall
  • 28. Brand Strategy BRAND EXTENSION
    • Brand associations determine which brand extensions will be successful
    Source: Wes Hutchinson B C REALITY Higher income D E Higher price, & benefits   Segment 2     E D C Original Market New Market 0 2 4 6 8 Breath Mint Toothbrush Close-Up Crest 0 2 4 6 8 Waffles Lollipops Cheerios Froot Loops 0 2 4 6 8 Moisturizer Deodorant Camay Irish Spring 0 2 4 6 8 Video Games Cellular Phone Apple IBM 0 2 4 6 8 Bottled Water Scotch Coors Budweiser
  • 29. Brand Strategy BRAND EXTENSION Waffles Lollipops Cheerios Froot Loops Source: Wes Hutchinson
  • 30. Brand Strategy BRAND EXTENSION Apple's "user-friendly" image extended best to video games; IBM's "serious business" image extended best to cellular phones. Close-Up's singles-oriented, "romantic" image extended best to breath mints; Crest's family-oriented "dental health" image extended best to toothbrushes. Source: Wes Hutchinson B C REALITY Higher income D E Higher price, & benefits   Segment 2     E D C Original Market New Market 0 2 4 6 8 Breath Mint Toothbrush Close-Up Crest 0 2 4 6 8 Waffles Lollipops Cheerios Froot Loops 0 2 4 6 8 Moisturizer Deodorant Camay Irish Spring 0 2 4 6 8 Video Games CellularPhone Apple IBM 0 2 4 6 8 Bottled Water Scotch Coors Budweiser
  • 31. Product Mix Product Mix - all the product lines offered Variety - number of different product lines Assortment - number of items within product lines