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PRODUCT STRATEGY AND BRANDING
What Is the Product? Brand Name Quality Level Packaging Design Features Delivery & Credit Installation Warranty After- Sal...
Types of Products <ul><li>Consumer </li></ul><ul><li>Industrial </li></ul><ul><li>Other Entities </li></ul><ul><ul><li>Org...
Types of Products CONSUMER PRODUCTS <ul><li>Shopping Products </li></ul><ul><li>Buy less frequently </li></ul><ul><li>Gath...
Types of Products INDUSTRIAL PRODUCTS Supplies and Services Materials and Parts Capital Items Source: Prentice Hall
Characteristics of Services <ul><li>Can’t be seen, tasted, felt, heard,  </li></ul><ul><li>or smelled before purchase </li...
Individual Product Strategy Decisions <ul><li>Attributes </li></ul><ul><li>Packaging </li></ul><ul><li>Labeling </li></ul>...
Product Attributes - Where Do They Come From? <ul><li>Quality </li></ul>Features Design Source: Prentice Hall
Packaging Promotes Identifies Competitive  Advantages Describes Sales Tasks Product  Safety Packaging Labeling Source: Pre...
Multi-Product Strategy Decisions <ul><li>Branding </li></ul><ul><li>Product Lines </li></ul><ul><li>Product Mix </li></ul>...
What Do Brands Mean to Customers? Brand Personality Attributes Value Quality Benefits Culture Company Values User Characte...
Brand Equity <ul><li>The value your customers perceive to be uniquely associated with your brand </li></ul><ul><li>=   Awa...
Brand Awareness <ul><li>A brand that is not considered cannot be chosen </li></ul><ul><li>A customer cannot consider a bra...
Brand Awareness RECOGNITION
Brand Awareness RECOGNITION <ul><li>Increases likelihood of consideration at the point of purchase </li></ul><ul><li>Enhan...
Brand Awareness RECOGNITION
Brand Awareness RECOGNITION <ul><li>Free publicity in the  Wall Street Journal </li></ul>
Brand Awareness RECALL <ul><li>Essential for memory-based choice and customer-initiated contact </li></ul>Order of Recall ...
Brand Associations PERCEIVED QUALITY <ul><li>Profitability (ROI): </li></ul><ul><ul><li>    PERCEIVED RELATIVE   QUALITY <...
Brand Associations IMAGE <ul><li>Brand image is the integration of all experiences with and information about a brand as p...
Brand Equity     BRAND LOYALTY <ul><li>Brand loyalty  - the probability of choosing a brand given that you are a user of ...
Example BRAND LOYALTY <ul><li>In 1983, six people in Chicago died of cyanide poisoning from tampered TYLENOL capsules.  J&...
Brand Equity   BETTER BUSINESS RESULTS <ul><li>Brands </li></ul><ul><li>Price Market  Share   </li></ul><ul><li>Toothpast...
Brand Equity   BETTER BUSINESS RESULTS <ul><li>  Brands     Price Market Share  </li></ul><ul><li>Mouthwashes (24 oz.) Pr...
Major Brand Decisions Brand Strategy Line Extensions***Brand Extensions Multi-brands***New Brands Brand Sponsor Manufactur...
Brand Strategy Source: Prentice Hall Line Extension Multi-brand Brand Extension New Brand Brand   Name Currently Served Ne...
Brand Strategy <ul><li>Line Extension </li></ul><ul><ul><li>Existing  brand names extended to new forms, sizes, and flavor...
Brand Strategy BRAND EXTENSION <ul><li>Brand associations determine which brand extensions will be successful </li></ul>So...
Brand Strategy BRAND EXTENSION Waffles Lollipops Cheerios Froot Loops Source: Wes Hutchinson
Brand Strategy BRAND EXTENSION Apple's &quot;user-friendly&quot; image extended best to video games; IBM's &quot;serious b...
Product Mix Product Mix  -  all the product  lines offered Variety  - number of  different  product lines Assortment  - nu...
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Product strategy

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Product strategy

  1. 1. PRODUCT STRATEGY AND BRANDING
  2. 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. 3. Types of Products <ul><li>Consumer </li></ul><ul><li>Industrial </li></ul><ul><li>Other Entities </li></ul><ul><ul><li>Organizations </li></ul></ul><ul><ul><li>Persons </li></ul></ul><ul><ul><li>Places </li></ul></ul><ul><ul><li>Ideas </li></ul></ul>
  4. 4. Types of Products CONSUMER PRODUCTS <ul><li>Shopping Products </li></ul><ul><li>Buy less frequently </li></ul><ul><li>Gather product information </li></ul><ul><li>Fewer purchase locations </li></ul><ul><li>Compare for: </li></ul><ul><ul><li>Suitability & Quality </li></ul></ul><ul><ul><li>Price & Style </li></ul></ul><ul><li>Convenience Products </li></ul><ul><li>Buy frequently & immediately </li></ul><ul><li>Low priced </li></ul><ul><li>Many purchase locations </li></ul><ul><li>Includes: </li></ul><ul><ul><li>Staple goods </li></ul></ul><ul><ul><li>Impulse goods </li></ul></ul><ul><ul><li>Emergency goods </li></ul></ul><ul><li>Specialty Products </li></ul><ul><li>Special purchase efforts </li></ul><ul><li>Unique characteristics </li></ul><ul><li>Brand identification </li></ul><ul><li>Few purchase locations </li></ul><ul><li>Unsought Products </li></ul><ul><li>New innovations </li></ul><ul><li>Products consumers don’t </li></ul><ul><li>want to think about </li></ul><ul><li>Require much advertising & </li></ul><ul><li>personal selling </li></ul>Source: Prentice Hall
  5. 5. Types of Products INDUSTRIAL PRODUCTS Supplies and Services Materials and Parts Capital Items Source: Prentice Hall
  6. 6. Characteristics of Services <ul><li>Can’t be seen, tasted, felt, heard, </li></ul><ul><li>or smelled before purchase </li></ul><ul><li>Can’t be separated from service </li></ul><ul><li>providers </li></ul><ul><li>Quality depends on who provides </li></ul><ul><li>them and when, where and how </li></ul><ul><li>Can’t be stored for later sale or use </li></ul>Intangibility Inseparability Variability Perishability Source: Prentice Hall
  7. 7. Individual Product Strategy Decisions <ul><li>Attributes </li></ul><ul><li>Packaging </li></ul><ul><li>Labeling </li></ul><ul><li>Product Support </li></ul>
  8. 8. Product Attributes - Where Do They Come From? <ul><li>Quality </li></ul>Features Design Source: Prentice Hall
  9. 9. Packaging Promotes Identifies Competitive Advantages Describes Sales Tasks Product Safety Packaging Labeling Source: Prentice Hall
  10. 10. Multi-Product Strategy Decisions <ul><li>Branding </li></ul><ul><li>Product Lines </li></ul><ul><li>Product Mix </li></ul><ul><ul><li>Variety </li></ul></ul><ul><ul><li>Assortment </li></ul></ul>
  11. 11. What Do Brands Mean to Customers? Brand Personality Attributes Value Quality Benefits Culture Company Values User Characteristics
  12. 12. Brand Equity <ul><li>The value your customers perceive to be uniquely associated with your brand </li></ul><ul><li>= Awareness + Associations </li></ul><ul><li>Awareness </li></ul><ul><ul><li>Recall </li></ul></ul><ul><ul><li>Recognition </li></ul></ul><ul><li>Associations </li></ul><ul><ul><li>Perceived Quality </li></ul></ul><ul><ul><li>Image </li></ul></ul>
  13. 13. Brand Awareness <ul><li>A brand that is not considered cannot be chosen </li></ul><ul><li>A customer cannot consider a brand unless they are aware of it </li></ul>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. 14. Brand Awareness RECOGNITION
  15. 15. Brand Awareness RECOGNITION <ul><li>Increases likelihood of consideration at the point of purchase </li></ul><ul><li>Enhances the salesperson’s initial contact (industrial) </li></ul><ul><li>Enhances in-store promotional efforts </li></ul><ul><li>Increases attention and comprehension of advertising </li></ul>
  16. 16. Brand Awareness RECOGNITION
  17. 17. Brand Awareness RECOGNITION <ul><li>Free publicity in the Wall Street Journal </li></ul>
  18. 18. Brand Awareness RECALL <ul><li>Essential for memory-based choice and customer-initiated contact </li></ul>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. 19. Brand Associations PERCEIVED QUALITY <ul><li>Profitability (ROI): </li></ul><ul><ul><li> PERCEIVED RELATIVE QUALITY </li></ul></ul><ul><ul><li>inferior moderate superior </li></ul></ul><ul><ul><li>RELATIVE high 21% 27% 38% </li></ul></ul><ul><ul><li>MARKET medium 14% 20% 29% </li></ul></ul><ul><ul><li> SHARE low 7% 13% 20% </li></ul></ul><ul><ul><li>SOURCE: PIMS (Profit Impact of Market Strategies; based on 2,200 business units) </li></ul></ul><ul><li>Future Profitability (Stock Price): </li></ul><ul><ul><li>Stock Price = f (ROI, perceived quality) </li></ul></ul><ul><ul><li>* ROI and perceived quality exert approximately equal effects * </li></ul></ul><ul><ul><li>SOURCE: Aaker, D. A. and R. Jacobson (1994; based on daily measures of NYSE, AMEX, and NASDAQ). </li></ul></ul>
  20. 20. Brand Associations IMAGE <ul><li>Brand image is the integration of all experiences with and information about a brand as perceived and remembered by customers </li></ul><ul><ul><li>The whole is more than the sum of its parts </li></ul></ul><ul><li>Brand image is relative easy to create , but almost impossible to change ! </li></ul><ul><li>Example 1: K-Mart and the “Blue Light Special” </li></ul><ul><li>Example 2: Hyundai and product quality </li></ul>
  21. 21. Brand Equity  BRAND LOYALTY <ul><li>Brand loyalty - the probability of choosing a brand given that you are a user of that brand - can result from: </li></ul><ul><li>Inertia : the general tendency to repeat previous purchases due to high switching costs, convenience, or habit </li></ul><ul><li>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 </li></ul>
  22. 22. Example BRAND LOYALTY <ul><li>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. </li></ul>
  23. 23. Brand Equity  BETTER BUSINESS RESULTS <ul><li>Brands </li></ul><ul><li>Price Market Share </li></ul><ul><li>Toothpastes (6 oz.) Price Premium Share Premium </li></ul><ul><li>Crest $2.19 $ .44 27.2% 17.3% </li></ul><ul><li>Colgate $2.19 $ .37 21.8% 12.2% </li></ul><ul><li>Aqua-fresh $2.19 $ .24 15.1% 6.6% </li></ul><ul><li>Close-Up $2.14 $ .27 16.5% 8.0% </li></ul><ul><li>SOURCE: Park, C. S. and V. Srinivasan (1994; based on survey results) </li></ul>
  24. 24. Brand Equity  BETTER BUSINESS RESULTS <ul><li> Brands Price Market Share </li></ul><ul><li>Mouthwashes (24 oz.) Price Premium Share Premium </li></ul><ul><li>Scope $3.83 $ .47 31.2% 13.7% </li></ul><ul><li>Listerine $3.79 $ .42 26.8% 11.1% </li></ul><ul><li>Close-Up $5.02 $ .23 2.3% .8% </li></ul><ul><li>Plax $4.29 $ .26 10.3% 3.4% </li></ul><ul><li>Colgate $5.22 $ .10 1.4% .2% </li></ul><ul><li>SOURCE: Park, C. S. and V. Srinivasan (1994; based on survey results) </li></ul>
  25. 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. 26. Brand Strategy Source: Prentice Hall Line Extension Multi-brand Brand Extension New Brand Brand Name Currently Served New Product Category Existing New
  27. 27. Brand Strategy <ul><li>Line Extension </li></ul><ul><ul><li>Existing brand names extended to new forms, sizes, and flavors of an existing product category </li></ul></ul><ul><li>Brand Extension </li></ul><ul><ul><li>Existing brand names extended to new product categories </li></ul></ul><ul><li>Multi-brands </li></ul><ul><ul><li>New brand names introduced in the same product category </li></ul></ul><ul><li>New Brands </li></ul><ul><ul><li>New brand names in new product categories </li></ul></ul>Source: Prentice Hall
  28. 28. Brand Strategy BRAND EXTENSION <ul><li>Brand associations determine which brand extensions will be successful </li></ul>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. 29. Brand Strategy BRAND EXTENSION Waffles Lollipops Cheerios Froot Loops Source: Wes Hutchinson
  30. 30. Brand Strategy BRAND EXTENSION Apple's &quot;user-friendly&quot; image extended best to video games; IBM's &quot;serious business&quot; image extended best to cellular phones. Close-Up's singles-oriented, &quot;romantic&quot; image extended best to breath mints; Crest's family-oriented &quot;dental health&quot; 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. 31. Product Mix Product Mix - all the product lines offered Variety - number of different product lines Assortment - number of items within product lines

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