Product & brand strategy

29,163 views

Published on

Product & brand strategy

  1. 1. Slide 11.1 Lecture 6 Product and Brand Strategy Chapter 11 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.2 Product strategy 1. Introduction 2. Product 3. Brands 4. Product differentiation 5. Product platforms 6. Summary and recap Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 1
  2. 2. Slide 11.3 Definition of product A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organisations and ideas. Kotler (2001) Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.4 Levels of product Augmented product Core product Tangible product Installation Packaging Quality Delivery Core After- Brand benefit and sales name or service credit service Features Styling Warranty Authors such as Kotler and Levitt have proposed different dimensions for a product. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 2
  3. 3. Slide 11.5 Market introduction of brands Twinings 1706 Boeing 1916 Schweppes 1798 Adidas 1920 Levis 1850 Volvo 1926 Agfa 1873 McDonald’s 1937 Coca-Cola 1886 Benetton 1965 Philips 1891 Nike 1972 Pepsi-Cola 1898 Body Shop 1976 Persil 1907 Swatch 1982 Nivea 1911 Eternity 1988 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.6 What is a brand? • Branding is the process by which firms distinguish their products from that of their competitors. E.g. Ford and Mercedes • This is usually achieved by developing distinctive names, packaging, design. Often through using logos and effective advertising. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 3
  4. 4. Slide 11.7 What is a brand? (Continued) • Brands are linked to perceptions It is well known that in blind product testing, consumers fail to distinguish between brands in each product category. • Different meanings A brand is a complex symbol that can convey up to six levels of meaning (Kotler, 2001). Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.8 6 levels of meaning • Attributes – good engineering, quality, performance • Benefits – feeling of safety, savings, etc. • Values – the producer’s values e.g. prestige • Culture – the producer’s culture – creativity or efficiency • Personality – projection of personality e.g fun or austere • User – can suggest the type of consumer who buys it Kotler (2001) Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 4
  5. 5. Slide 11.9 Internal and external brand contacts External brand flow Internal brand flow Customer facing Raw materials Activities Product quality Complaints procedures sourcing Clubs After-sales Repairs Finance department R&D function Communications NPD Activities The Sponsorship brand Ads Direct marketing Brand Database management Production process promotions Warehousing Sales force Distribution & information Retailers/licensees Systems Dealers Packaging Point of sale price Source: H. Rubenstein (1996) ‘Brand first management’, Journal of Marketing Management, Vol. 12, 269–80 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.10 What is strategy? • Purpose to focus and integrate team effort and permit delegation • Groups/teams in NPD • Variety of inputs, including mission, objectives, platforms, portfolio, differentiation, etc. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 5
  6. 6. Slide 11.11 What is differentiation? • Why is differentiation important? • Differentiation related to competencies of the firm • Types of differentiation and cost leadership Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.12 Product differentiation • Product uniqueness and novelty • Technically superior • Product quality • Product attractiveness and design • High performance to cost ratio Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 6
  7. 7. Slide 11.13 Product differentiation (Continued) • Form • Durability – size, shape, physical structure – expected operating life • Features – balanced with technological obsolescence – supplements basic function • e.g. car CD player, trim level, • Reliability child seats – probability of • Performance quality malfunction/failure – appropriate to target market • Repairability and competitor performance – ease of repair, cost, technical levels support • Conformance quality • Style – each product identical, meets – aesthetics – look and feel the promised specification and – distinctive and difficult to copy performance Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.14 Product-based competition Five basic strategies: • Product proliferation (e.g. Sony, Honda) – Many new products simultaneously or in close succession – Market response determines support (supporting those products that prove successful) – Cover all segments and block new entrants (market coverage) • Value (e.g. Toyota/Lexus) – New quality/cost trade-off curves – Continuous improvement/re-engineering (maintain leadership) • Design (e.g. Braun, Harley-Davidson) – Aesthetics, touch, ease of use, etc. – Engineering design + aesthetic design • Innovation (e.g. Canon, 3M, Merck) – Technological and marketing innovations – Either market pioneers or fast-followers – Utilise both radical and incremental innovation • Service (e.g. Otis Elevators, SAS) – Customer relations, physical distribution, after-sales service. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 7
  8. 8. Slide 11.15 Differentiation vs standardisation • Key questions: – How to deliver distinctive products to market whilst building on core capabilities and conserving development, production and marketing resources? – How to balance the needs of high-volume manufacturing/service delivery with the needs of individual customers? • Product platforms: – Common platforms for a range of products – Shared components/parts, production processes, knowledge, people and relationships – Improves efficiency. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.16 Product platforms High Audi TT Audi A3 Single platform Product price Many common parts VW Golf Seat Leon Skoda Oktavia Low Overall cost leadership Differentiation Generic strategy Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 8
  9. 9. Slide 11.17 Product portfolios (VAG) Volkswagen Group Volkswagen Volkswagen Audi Seat Skoda Bentley Lamborghini Bugatti  Fox Commercial  A3  Alteo  Fabia  Brooklands  Murcielago  EB110  Lupo Vehicles  A4  Alhambra  Octavia  Gallardo  Veyron  Caddy  Arnage  Polo  A6  Toledo  Roomster  Continental  Transporter  Golf  A6  Leon  Superb  Crafter  Azure  Passat  A8  Ibiza  Carravelle  Jetta  R8  California  Beetle  Q7  Touran  TT  Phaeton  Touareg Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.18 Product platforms • The benefits of product platforms include: – Increased product variety and ability to serve multiple market segments (mass customisation) – Greater speed to market – Improved management of demand and uncertainty – Accommodating differential technology change – Reducing production costs – Supports late-stage differentiation of products – Reduces service infrastructure requirements – Greater speed and efficiency in technological learning and knowledge creation. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 9
  10. 10. Slide 11.19 A Successful Strategy: • Helps achieve coordination among functional areas of the organization. • Defines how resources are to be allocated. • Leads to a superior market position. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.20 Elements of a Product Strategy 1. Statement of the objective(s) the product should attain 2. Selection of strategic alternative(s) 3. Selection of customer targets 4. Choice of competitor targets 5. Statement of the core strategy 6. Description of supporting marketing mix. 7. Description of supporting functional programs Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 10
  11. 11. Slide 11.21 Hierarchy of Objectives Company Mission/Vision Level 0 Corporate objectives Level I Corporate strategies Divisional objectives Level II Divisional strategies Product/brand objectives Level III Brand strategies Program objectives Level IV Tactics Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.22 Total Product Concept Potential Generic product product Expected product Augmented product Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 11
  12. 12. Slide 11.23 Five Areas for Differentiation 1. Quality 2. Status and Image 3. Branding 4. Convenience and Service 5. Distribution Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.24 Brand Equity Reduced marketing costs Trade leverage Brand Attracting new Brand loyalty customers loyalty • Create awareness • Reassurance Provides value to customer by Time to respond to enhancing competitive threats customer’s: • Interpretation/ Anchor to which processing of other associations information can be attached • Confidence in the purchase decision Brand Familiarity-liking Brand • Use satisfaction awareness loyalty Signal of substance/ commitment Brand to be considered Brand Brand equity loyalty Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 12
  13. 13. Slide 11.25 Brand Equity cont. Brand Reason-to-buy Brand equity loyalty Differentiate/ position Provides value to Perceived Brand quality Price firm by loyalty enhancing: Channel member • Efficiency and interest effectiveness of Extensions marketing programs • Brand loyalty Help process/ • Prices/margins retrieve • Brand extensions information • Trade leverage Brand Brand Reason-to-buy • Competitive associations loyalty advantage Create positive attitude/feelings Extensions Other Brand proprietary Competitive loyalty brand assets advantage Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.26 WHAT IS A BRAND? • Brands include all names, terms, symbols or designs - all are used to identify and differentiate the goods of one seller from those of competitors. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 13
  14. 14. Slide 11.27 Branding • Brand Extension — launching a new product line in another product class, making use of the existing brand name, eg. Cadbury‟s ice cream • Success is more likely if there is a logical tie between the core brand and the extension (Cadbury example above). The extension needs to be carefully evaluated as to any negative impact on the brand equity of the core brand [eg, if a bank introduced a defective security service as a brand extension, this might make people think the bank is not secure and therefore weaken the core (banking) brand]. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.28 Brand loyalty • Brand loyalty reflects both a positive attitude to a brand and the behavioural repeat purchase probability of buying the same brand. • Bednall, Walker and Grant (see pages 163-164 of text) suggest that most consumers are co-loyal — that is loyal to a small number of brands that dominate their evoked set. • Scan Exhibit 8.4 from the text — contrast the type of products at the top and bottom. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 14
  15. 15. Slide 11.29 BENEFITS OF BRANDING TO BUYER: • Help buyers identify the product that they like/dislike. • Identify marketer • Helps reduce the time needed for purchase. • Helps buyers evaluate quality of products especially if unable to • Judge a products characteristics. • Helps reduce buyers perceived risk of purchase. • Buyer may derive a psychological reward from owning the brand, ie Rolex or Mercedes. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.30 BENEFITS TO SELLER: • Differentiate product offering from competitors • Helps segment market by creating tailored images, ie Contact lenses • Brand identifies the company‟s products making repeat purchases easier • Reduce price comparisons • Brand helps firm introduce a new product that carries the name of one or more of its existing products...half as much as using a new brand, • lower costs: designs, advertising and promotional costs. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 15
  16. 16. Slide 11.31 EXAMPLE • Easier cooperation with intermediaries with well known brands • Facilitates promotional efforts. • Helps foster brand loyalty helping to stabilise market share. • Firms may be able to charge a premium for the brand. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.32 MANUFACTURERS’ BRANDS: • Initiated by the producer. • 85% food items, all cars, 75% major appliances, more than 80% patrol • Requires the producer to be involved in distribution, promotion, and to some extent, pricing. • Brand loyalty is encouraged by quality, promotion and guarantees. • Producer tries to stimulate demand, encouraging middlemen to make the product available (PULL) Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 16
  17. 17. Slide 11.33 PRIVATE DISTRIBUTOR BRANDS: • Initiated and owned by the resellers eg Bob Jane T-Mart for tyres • Manufacturers not identified in the product. • Helps retailers develop more efficient promotion, generate higher margins and increase store image. • Wholesalers brands-IGA • Retailers brands K-Mart, Target, Safeway Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.34 GENERIC BRANDING „no brand‟ strategy - identifies product by contents small % of sales cheaper promotion and packaging costs lower Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 17
  18. 18. Slide 11.35 FAMILY BRANDING • single name for all products in the product mix • reduces cost of introducing new products makes promotional efforts more efficient Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.36 TRADE NAME WITH A BRAND NAME allows all brands to benefit from the company trade name while maintaining a distinctive and descriptive label Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 18
  19. 19. Slide 11.37 REASON FOR INCREASE IN PRIVATE BRANDS: • Increasing prices of MB in 1990s. • Increasing Quality of PB • Increasing Promotion of PB • PB offer retailers higher margins • Offer regional products Manufacturer brands are responding with: • Reduced price • Promotions focus on quality and directed at PL • New product launches, line extensions. • Focus on core products Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.38 DESIRABLE QUALITIES FOR A BRAND NAME • It should suggest something about the products benefits and qualities. eg: Beautyrest, Slumberland, Sunkist, Spic & Span, Pure & Simple. • Should be easy to pronounce, recognise and remember. eg: Clix, Jatx, Ritz. • Should be distinctive. eg: Kodak, Unisys. • Should translate easily in foreign languages or has no meaning eg Exxon. • It should be capable of registration and legal protection. Name must be unique. • Guard against a brand name becoming a generic term used to refer to general products category. Generic cannot be protected. eg Aspirin Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 19
  20. 20. Slide 11.39 BRANDS • Brands allow customer to recognise product. • Brands encourage the use of preselling and reduce the need for personal contact at the retail level. • Brands simplify introduction of new products. • Example of early brands that still survive in Australia - Nugget, Vegemite, Vaseline, Velvet Soap. • Family Brands are groups of products sold under one label by a single firm. eg: Heinz, Arnotts, GM Holden, Black & Decker (w hich has scrapped the w ell know n GE brand to market under B & D). Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.40 BRAND MEANINGS • Attributes. A brand elicits certain product attributes in the minds of consumers. • Benefits. The benefits may produce objective need-satisfiers, such as increased safety, or psychological benefits, such as enhanced self-esteem. • Values. The benefits of the brand indicate that these things are important to the consumer who chooses them. • Personality. People personify brands and products. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 20
  21. 21. Slide 11.41 BRAND EQUITY • Brand Equity Brands are used to: create awareness, build preference, and ultimately, to command loyalty among consumers. • Companies with strong brands often attempt to build brand portfolios by acquiring brands with strong brand equity from other companies. • Brand Name Selection requires careful attention to the needs of the product for success in the competitive marketplace. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.42 BRAND STRATEGY Some Definitions • Brand Extensions are any effort to use a successful brand name to launch new or modified products. • Multibranding offers a way to establish different features and appeal to different buying motives. • New Brands are created with a new brand name enters a new product category • Line Extensions occur when a company introduces additional items in a given product category. • Brand repositioning might require changing both a product and its image. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 21
  22. 22. Slide 11.43 EXAMPLE: Brand Extension • When Coca-Cola first developed a low-sugar coke it chose to market it under a new brand name - TAB. • When PepsiCo came out with Diet Pepsi it captured much of the market. Coca-Cola reacted by introducing Diet Coke • Brand / Line extension Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.44 BRAND IMAGE OPTIONS: EXAMPLES • Multiproduct (Family Brand) - one name for a range of company products eg Honda: Civic, Accord, Prelude, Legend. Uncle Tobys, Sharp, Penfolds • Multibrand - one company with many brands CUB- Vic Bitter, Melb Bitter, Carlton Cold • Reseller Brands - David Jones Fashion, Bob Jane brand of tyres • Mixed (use a variety of strategies) eg Colgate-Palmolive has multibrand detergents (ColdPower, Fab, Dynamo) and uses multiproduct branding in toothpaste • Generic (minimises brand image except for pricing) eg Farmland, Black & Gold Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 22
  23. 23. Slide 11.45 BENEFITS OF VARIOUS STRATEGIES • Family Branding - Single name for all products in the product mix - Reduces cost of introducing new products (carry-over effects) - Makes promotional efforts more efficient • Generic Branding - Promotional and packaging costs are lower - Goods are cheaper Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.46 BENEFITS SOUGHT FROM BRANDING • consistency of customer perception • positive image • opportunity for leverage • standardisation of quality • opportunity for preference generation • loyal following Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 23
  24. 24. Slide 11.47 BRAND LEVERAGING Moving a successful name from one product category into another Eg Colgate launched the Palmolive brand leveraging it from its core markets of soap and dishwashing detergents into hair-care, skin lotion, deodorants and automatic dishwashing liquids. Most of these being successful. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.48 Why would a company wish to create Brand Identity? • To establish an image that differentiates it from competition • To communicate qualities & attributes • To facilitate recognition • To shape customer perception and response to the product • To establish preference for the brand • To secure loyal purchase behaviour Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 24
  25. 25. Slide 11.49 BRAND ASSETS: Loyalty • Contributes to brand value - repeat buying in a market that presents substitutes. • In extreme form loyalty is an attachment. Insulates brand from competitive pressures • Helps consumers minimise “buying” effort • Makes demand for product less price elastic • Lowers marketing costs • Results in higher margins and profits • Gives you time to respond to competitive threats Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 11.50 BRAND ASSETS: Awareness • Familiarity leads to confidence and hence reduces the risk • assists one thru the buyer decision stages • consumers tend to prefer brands with which they are familiar • choice of a known brand provides consumer with justification for decision Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 25
  26. 26. Slide 11.51 BRAND ASSETS: Perceived Quality • Inherent in a brand is a view of quality (good or bad) • There is an association between the name and attributes eg Gillette makes fine-quality razors • A brand can become synonymous with a category eg Xerox, Kleenex • Brand has strong price associations that influence quality perceptions eg Kmart is low in price and probably low in quality Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 26

×