Marketing Strategy - Session II

DAY 2Product & Branding StrategiesBUSINESS STRATEGIES AND THEIR MARKETING IMPLICATIONS

Kotler Speak…The best way to holdcustomers is to constantlyfigure out how to givethem more for less.

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?

Discussion Question1. 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

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 aCompetitive 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

How Business Strategies Differ in Scope, Objectives, Resource Deployments, and SynergyDimensions 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

How Business Strategies Differ in Scope, Objectives, Resource Deployments, and SynergyDimensions 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

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 aCompetitive 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

Ideas for new products or new ventures: How do we know how fast customers will adopt? Laggards and nonadopters Innovators Late Early Early majority majority adopters 34% 34% 2.5% 13.5% 16%Source: Adapted with permission from Marketing, 11/e, Acetate 8-8, by Michael J. Etzel, Bruce J. Walker, and William J. Stanton. The McGraw-Hill Companies, Inc. © 1997. All rights reserved. 5-9 5-6

Discussion Questions4. How fast will the adoption curve move for a particular innovation? 5-10

How do opportunities evolve over time?Profit per unit Product category sales (real dollars) Life cycle extension Profit/unit Sales(real dollars) Introduction Maturity Decline or extension Competitive Growth turbulence Time (years) Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West Publishing Company. All rights reserved. 8-11 8-3

Discussion Questions1. Key question: Is it better to be a market pioneer, or a follower? 8-12

Discussion Questions2. So, when, and for whom, does it make sense to pursue a pioneer strategy? 8-13

Discussion Questions3. When, and for whom, does it make sense to pursue a follower strategy? 8-14

Discussion Questions4. 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

Discussion Questions5. How might introductory marketing plans differ under each of these pioneering strategies? 8-16

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

The Product and the Product Mix Product  Physical goods  Services  Experiences  Events  Persons  Places  Properties  Organizations  Information  Ideas Components of the Market Offering

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

The Product and the Product Mix Product hierarchy  Need family  Product family  Product class  Product line  Product type  Item  Product system  Product mix

The Product and the Product Mix Product classifications  Durability and Tangibility Classification:  Nondurable goods  Durable goods  Services

The Product and the Product Mix Consumer-Goods Classification:  Convenience goods  Staples  Impulse goods  Emergency goods  Shopping goods  Homogeneous shopping goods  Heterogeneous shopping goods  Specialty goods  Unsought goods

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

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

Example

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

The Product and the Product Mix Market profile Product Map for a Paper-Product Line

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

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

What is a Brand? 30A name, term, sign, symbol ordesign, or a combinationIdentifies the goods or services of asellerdifferentiates them from competitors

Brand Commonly used research approaches to determine brand meaning:  Word associations  Personifying the brand  Laddering up the brand essence  Brand essence  Laddering up

The Eight Roles of a Brand 32Identify the maker Simplify product handling Organize accounting Offer legal protection

The Eight Roles of a Brand 33Signal quality Secure Price Premium Create Barriers to Entry Create Competitive Advantage

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

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

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.

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?

Discussion QuestionWhen is a brand more than just a brand? Have youever based a purchasing decision primarily on thebrand? Was it because of some perceived qualitydifference, or was it based on the expectation of howothers would see or treat you? Have you ever seensomeone buying a given brand of an item in anattempt to be seen as “cool”?

Eight Advantages of Strong Brands 39Improved Perceptions of QualityGreater LoyaltyLess Vulnerability to Competitive ActionsLess Vulnerability to Crises

Eight Advantages of Strong Brands 40Larger MarginsMore inelastic consumer responseIncreased IMC effectivenessPotential Licensing opportunities

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

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

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

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?

4 Branding Strategies 45

Branding Decisions Brand Strategy Decision  Multibrands, New  Functional brand Brands, and Co-Brands  Image brand  Multibrand  Experimental brands  Flanker Bands  Line Extensions  Co-branding (Dual  Branded variants branding)  Brand extensions  Ingredient co-branding  Brand dilution  Same-company co- branding  Joint venture co-branding  Multisponsor co-branding

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

Branding is a Business ProcessOne that is planned, strategically-focused andintegrated throughout the organization. Brandingestablishes the direction, leadership, clarity ofpurpose, inspiration and energy for a company’smost important asset – its brand. Even the mostpotentially powerful strategy will fail if not executedeffectively and consistently.

Brand PromiseEveryone in the company must live up to the BrandPromise – the concept is simple but all-encompassing – it is about turning every companymember, product, service, piece of communication orinterfaces into a walking, talking, touchablereflection of the brand itself

Brand Strategy It is not aconsequence, butthe starting point itself.

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.

7 Step Brand Strategy Development Process

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

Kingfisher – Irreverence, individual, freedom-lovingand anti-establishment.Kingfisher stands for all the above qualities whetheryou like it or not and that’s why it is loved.

Brand Positioning Example Uniqueness Importance Endurance 5Consistency Positioning Believability Principles

7 Step Brand Strategy Development Process

END OF DAY 2

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Marketing Strategy - Session II

by Nanda Kishore Sethuraman on Dec 08, 2011

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Marketing Strategy - Session II — Presentation Transcript