Marketing Strategy - Session II


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Session two of my classes at ITM Executive MBA for Marketing Strategy. This covers Product & Branding Strategy including Theory & speaker notes provides some examples too.

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  • 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 –
  • 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.
  • Marketing Strategy - Session II

    2. 2. Kotler Speak…The best way to holdcustomers is to constantlyfigure out how to givethem more for less.
    3. 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. 4. 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
    5. 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 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
    6. 6. 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
    7. 7. 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
    8. 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 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
    9. 9. 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
    10. 10. Discussion Questions4. How fast will the adoption curve move for a particular innovation? 5-10
    11. 11. 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
    12. 12. Discussion Questions1. Key question: Is it better to be a market pioneer, or a follower? 8-12
    13. 13. Discussion Questions2. So, when, and for whom, does it make sense to pursue a pioneer strategy? 8-13
    14. 14. Discussion Questions3. When, and for whom, does it make sense to pursue a follower strategy? 8-14
    15. 15. 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
    16. 16. Discussion Questions5. How might introductory marketing plans differ under each of these pioneering strategies? 8-16
    17. 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. 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. 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. 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. 21. The Product and the Product Mix Product classifications  Durability and Tangibility Classification:  Nondurable goods  Durable goods  Services
    22. 22. 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
    23. 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. 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
    25. 25. Example
    26. 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. 27. The Product and the Product Mix Market profile Product Map for a Paper-Product Line
    28. 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. 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. 30. What is a Brand? 30A name, term, sign, symbol ordesign, or a combinationIdentifies the goods or services of asellerdifferentiates them from competitors
    31. 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. 32. The Eight Roles of a Brand 32Identify the maker Simplify product handling Organize accounting Offer legal protection
    33. 33. The Eight Roles of a Brand 33Signal quality Secure Price Premium Create Barriers to Entry Create Competitive Advantage
    34. 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. 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. 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. 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. 38. 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”?
    39. 39. Eight Advantages of Strong Brands 39Improved Perceptions of QualityGreater LoyaltyLess Vulnerability to Competitive ActionsLess Vulnerability to Crises
    40. 40. Eight Advantages of Strong Brands 40Larger MarginsMore inelastic consumer responseIncreased IMC effectivenessPotential Licensing opportunities
    41. 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. 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. 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. 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?
    45. 45. 4 Branding Strategies 45
    46. 46. 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
    47. 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. 48. 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.
    49. 49. 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
    50. 50. Brand Strategy It is not aconsequence, butthe starting point itself.
    51. 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.
    52. 52. 7 Step Brand Strategy Development Process
    53. 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. 54. 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.
    55. 55. Brand Positioning Example Uniqueness Importance Endurance 5Consistency Positioning Believability Principles
    56. 56. 7 Step Brand Strategy Development Process
    57. 57. END OF DAY 2