Product Management

2009
Dr. Jagrook Dawra

1
• Base Line: “Worn
out Jeans”

• Agency: Enterprise Nexus

2
• Base Line:
“Shreds from
Killer”

• Agency: Enterprise Nexus

3
• Subhead: Live Life in Xs. X-
Dart Jeans

• Bodycopy: “With hep X-darts

across the front. A distinctive
finish. Deeper dye. Tight
construction. Zero shrinkage.
And an incredible signature
colour.”

• Baseline: “Founded Kansas,

USA, 1989.”

4
• Headline:
“Atleast the Jeans
are a perfect fit”

• Agency: Grey Worldwide

5
• Headline: “In 7.8
seconds, I
dropped weight!
And added
Curves”
• Bodycopy: “I just
zip up once a day.
No gyms. No
diets”

• Agency: JWT
6
• Headline: “Red
Loop”
• Subhead: “U in
the loop as Yet?”

• Agency: JWT

7
• Subhead:
“Sandblasted denim
jacket with
engineered pocket
detailing and anthra
tint. # JKM-622
Basic white cotton
linen shirt. Basic
five-pocket jeans
with flared hem. #
JSM-269 antique
blue sandblast.”
8
• Headline:
“Renewed 300%
Extra Style”
• Bodycopy:
“Classic Designs.
Renewed with
300% extra Style”

• Agency: ANC

9
 Session 1: Introduction
• Can you identify the basis of
differentiation of the jeans brands on
previous slides?

10
• Basis of differentiation:
– Emotional
– Rational

11
Focus of different managers in the
marketing team
• Brand Manager- • Sales Manager
– Awareness – Selling
– Brand Associations – Sales team
– Quality Perceptions management
– Brand Loyalty • Advertising
– Brand Personality
manager
• Product Manager: – Creating a
Attributes and communication
their levels message in order to
– New product communicate the
development position of the brand
vis-à-vis its
12
 Some questions that product
management seeks to answer
• Why does a consumer buy a product A rather
than a product B?
• What features/aspects of the product are valuable
to customers?
• What are the trade-offs that a customer make
while buying a product?
• How much is a consumer willing to pay for a new
feature of my product?
• What is the set of attributes that will maximize
consumer choice?
…

13
 …
• What are the benefit segments in the market
place?
• What should the product line be to satisfy the
desires of the benefit segment?
• If my firm offers a product A and prices it Rs.
20.00 and the competitor offers a product B and
prices it Rs. 15.00, what is the likely market
reaction?
• What is the demand for a new product going to
be? How can I maximize it?
• How can I estimate the demand for a new-to-the-
world product?

14
Brand equity: Preference
Emotion
al

Ration
al

Bundle Preference
of due to
Attributes Attributes

Preference
Brand due to
Brand

15
• Is the basis of differentiation (rational
vs. emotional) dependent on the type
of product category?
• What products are more likely to be
sold on
– Rational basis (Attributes)?
– Emotional basis (Brand)?

16
 Customer Focused Product
Planning
Our marketing
actions
Product, price

Customer Customer
Customers
preferences Choices

Multi-attributed Market
view shares
Competitor’s of products Sales
actions (Attribute Profits
Product, price
17
Multi-attributed view of
products

18
Multi-attributed view of
products

19
• Overall preference for a product=
preference for attribute 1 +
preference for attribute 2 +
preference for attribute 3…n
• Overall worth = sum of part-worths
• Conjoint: considered jointly
• Part-worths correspond to a single
respondent.

20
Part-worth function model

21
Part-worth function model

22
Which of these products would be
more preferred?

More
preferred 23
• Typically many factors or attributes
are included.
• Factors/ Attributes often include price
and brand name.

24
 Deciding attributes
• Related to consumer choice (based
on qualitative market research like
FGDs or Interviews)
• Distinguish different product
offerings.
• Managerially relevant.

25
 Deciding Levels of
Attributes
• Distinct, mutually exclusive, and
collectively exhaustive.
• Cover a range of interest (no
extrapolation)
• Try to keep the range of levels small
(say 3 per factor) and equal across
factors

26
Mo-bike Pump

27
28
 Designing conjoint cards
• 4 attributes, 3 levels each. 3 x 3x 3 x
3 = 81 possible cards (too many)
• Choose a representative subset of
say 18 cards.
• Fractional Factorial design (conjoint
designer software given to you)

29
• Arrange the 16 cards given to you in
order of your decreasing preference.
Keeping the most preferred card on
the top.
• Also arrange the 4 shaded cards in
the order of decreasing preference.
• How did you do it?

30
 Next Class
• Case: Sunbeam

31
32
33
 Consumer choice
• Choice Share
• Market Share

34
Airstick makes a change

35
What would happen if a new
company Relistick were to

36
Case 1: Sunbeam

37
 Brand
HLL Line

Breadth

D
e
pt

Product Brand Brand 38

Line Family Portfolio
Redesigning of product lines
• Mature
• Redesign the product lines to make
them more responsive to needs and
dictates of its markets.
• To optimize market share of each
product category.
• Goals:
– What models should be in the line?
– What should their physical appearance be?
– What should their performance
characteristics be?
39
 Process
• Consumer usage and attitude survey.
• Consumer attribute and benefit
survey.
• A conjoint analysis survey.
• Product line simulations.

40
• What were the different attributes of
a food processor that were
considered?
• What were the levels of these
attributes?
• How many distinct processor
combinations are possible with these
attributes and levels?
• How many were chosen for the
41
• Mathematics behind Conjoint – Linear
Programming.
• Was there a qualitative study that
preceded the conjoint study? What
was the major objective for this
study?
• How were the huge number of
configurations reduced to 27?

42
• What data was collected?
• What was the relevance of each data
item to the study?
• How was the data collected?
• Notice how the job of sorting was
made easy for the respondents.

43
• What were the important attributes?
• What is the benefit of having
importance data?
• What were the segmentation results?
• How do you think they were found
out?
• Simulations?

44
• What makes you say that the results
of the exercise were valid (or not
valid)?
• What is base case simulation?
• Assumptions during simulations.
• Simulating “what if” scenarios.
• What is the benefit of simulations?
• How reliable are these simulations?

45
How does the software estimate
this?
• Uses linear
programming
• E.g. Card 11 > Card 7
• S(bookbag) + T(10
min) + E(Medium) +
P(500) > S(bookbag) +
T(0.5 min) + E(Difficult)
+ P(2000)
• 18C2 = 153 such pairs
• S(bookbag) + T(10
min) + E(Medium) +
P(500) = S(bookbag) +
T(0.5 min) + E(Difficult)
+ P(2000) + Z1 46
 Deciding attributes
• Related to consumer choice (based
on qualitative market research like
FGDs or Interviews)
• Distinguish different product
offerings.
• Managerially relevant.

47
 Deciding Levels of
Attributes
• Distinct, mutually exclusive, and
collectively exhaustive.
• Cover a range of interest (no
extrapolation)
• Try to keep the range of levels small
(say 3 per factor) and equal across
factors

48
 Designing conjoint cards
• 4 attributes, 3 levels each. 3 x 3x 3 x
3 = 81 possible cards (too many)
• Choose a representative subset of
say 18 cards.
• Fractional Factorial design (conjoint
designer software given to you)

49
• Assignment

50
Designing Cards

51
 Estimating part-worth
utilities
• Using Linmap
• Estimated for each respondent
• Enter data in a notepad in the
following format
– RES1 6 4 15 9 5 8 16 10 13 2 3 11 7 14
12 1 20 19 18 17
• Change the extension from .txt to
.dat

52
 Assignment 2
• Rearrange the cards and rank order them.
• Input them into a text file and change its
extension from .txt to .dat
• Check for mistakes using the program
checkdat.exe
• What is the factor that you laid most importance
on? Is it consistent with your findings from the
analysis?
• Use Linmap.exe to get utility curves and
misorders
• Input the data of your friends.
• Use linmap.exe to get group utility curves.

53
 Caution…
• Adding (or subtracting) the same constant to all
partworths of an attribute does not alter the
relative values of overall preference.
• The fact that part-worth for 0.5 min is positive
and 10 min is negative does not mean that the
respondent ‘likes’ 0.5 min and ‘dislikes’ 10 min.
zero point on the partworth scale is arbitrary.
• It is not meaningful to compare the part-worth of
the level of one factor with some partworth of
some other factor.
• Units of measurements are arbitrary.
Transformations can be done. But they should be
done to all partworths of all attributes.

54
 Other simulations and
analyses
• Sensitivity of market share to other product
attributes.
• “Optimizing” product bundle
• Competitive price reactions
• Price equilibrium calculations
• Product line simulations
• Competitive product improvements
• Entry of new competitive products
• Cross tabulation of results against different
segments

55
 Word of caution
• Market Share vs. Profits
• Run simulation for different concepts.
• Estimate costs of tooling/
manufacturing each concept.
• Compare profitability of alternative
concept.

56
 Limitation of Conjoint
• Attribute list is not complete.
• Aesthetics, smell, taste, etc difficult to capture.
• Measurement, sampling errors are present.
• Does not include the effect of an innovative
attribute or level.
• How much does a consumer really value an
attribute?
– May vary from time to time and situation to situation.
• Cannot be used when the product category is so
radically new that customers don’t even know
how they may use the product.
• Cannot be used in image driven, holistic products
(e.g. perfumes, paintings)
• Full profile conjoint does not take into effect the
interaction effect between attributes.
• Gilligan Island Syndrome 57
 Primary uses of conjoint
• Product line planning
• New product evaluation (concept
testing)
• Competitive analysis
• Pricing
• Benefit segmentation

58
 New developments in
conjoint
• Full profile conjoint
• Regression based conjoint
• Trade – off tables
• Paired comparison
• Self explicated conjoint
• Hybrid methods
• Choice based conjoint
• Adaptive conjoint
• HB Conjoint
59
 Brand equity
• Preference for the attribute “Brand”

60
Some suggested products for your
projects
• Hostel mess food. • Electric irons
• Hostels • Computers
• Students activity • i-phone
clubs • Students canteen
• Mobile phones
• Mobile services
• 2 wheelers
• Cars
• MP3 players

61
Case 2: Clark material
handling

62
Segmentation

63
 Segmentation
• What is the relevant basis for
segmentation in product
management?
• Benefit Segments

64
 Benefit Segments-
Computers*
• The Germans – “We want the best”
• The Indians – “We want the best
today and tomorrow”
• The Taiwanese – “We want it cheap
with a name”
• The Americans – “We want service
too”

*Customer-focused product planning: Personal

Computers in India
Jagrook Dawra, Kanupriya Katyal, Vishal Mishra, 65
 Cluster Analysis
• Segment.exe
• SPSS/ SAS
• Basis:
– Euclidian distance

66
 How many segments?

• Dendogram
– How many
cluster?
• 27? 4? 2? 1?
67
 How many clusters?

• B= between segment
variation
• W= within segment
variation
• K= no. of segments
• N= sample size
• tr= trace of the matrix
• Tr[B]= variation summed 68
• What are the benefit segments that
you have got for bicycle pump?
• What are the advantages of benefit
segmentation?
• How is it relevant to product
management?

69
Product planning in different
Shorter inter-purchase cycle
Lower prices, “softer” attributes

70
Product planning in different product
categories
Shorter inter-purchase cycle
Lower prices, “softer” attributes

71
Multidimensional Scaling:
Perceptual mapping

72
 MDS Map (Mental map)
Outside
Going to church Oriented
Doing voluntary
service

Going to a beauty
parlor

Famil Powdering the Sunbathing

Person
y baby
al
Baking a cake
Relaxing in a bath
Using a room
Smoothening on a
freshener Wearing soft hand lotion
clothes
Using fabric Smelling flowers
softener Moisturizing face
with a cream
Windows to air out
the room
Cooking dinner

Home 73
Oriented
Typical MDS questionnaire

74
• Brands may also form a part of the
attributes.
• SPSS or SAS may be used.

75
 Exercise
• Eg. Toothpastes
– Germ killing
– Fresh breath
– Calcium
– Strong teeth
– White teeth
– Colgate
– Close up
– Pepsodent

76
77
How does rotation of axis help in
MDS

78
PRODUCT DEVELOPMENT

79
• Product Design
• Product Innovation

80
 Idea generation
Is the idea worth considering?

Idea screening
Is the idea compatible with
the company’s objectives
strategies, and resources?

D R O P
Concept development and
testing
Which of the alternative
products would customers
be willing to try?

Marketing strategy
development
STP, 4 Ps

Business Analysis
Will this product meet
our profit goal?
81
Product development
Is the product technically
and commercially sound?

D R O P
Market testing Send the idea
Have sales met the back for product
expectations? Development?

Commercialization Modify the product

Are sales meeting the or marketing
expectations? Program?

82
 Generating new ideas
• The largest single hurdle to new
product development is the paucity
of Ideas!!!

83
 Idea Generation
Techniques
•Attribute listing
•Forced relationships

•Morphological analysis

•Reverse assumption analysis

•New contexts

•Mind mapping

84
 Attribute listing
• List features of a product and
improve each and every feature one-
by-one.
– Improving patient experience.

85
 1-
0- min
min

86
2- 6-
Some solutions

87
 Forced Relationships
• While on the move a person needs
to:
– Stay connected
– Listen to music
– Stay organized
– Know where (s)he is
– Capture interesting instances
– Etc…

88
 Morphological analysis
• Identify need
• Designing a storage cabinet for
Children
– Ikea

89
90
91
92
93
 Reverse assumption
analysis
• Consumers have very strong
assumptions
– High price means high quality
– High power means low safety
– High power also means low fuel
efficiency
– Something user friendly is for amateurs
only.
– Anything that tastes good must be oily/
cheesy (not healthy)
• Subway
94
 New contexts
• Washing machines

95
• Toilet papers
– Mexico

Mind Mapping
96
 Creativity imperatives
• Small is the new big
– God is in the details.
• Empathy
– Person out vis-à-vis Organization in
• Finding yourself in the margins
– Seeing things afresh
– Having a beginners mind.
• Pick battles big enough to matter, small enough
to win.

97
 Categories of New Products
• Cost reductions
• Repositionings
• Improvements to products
• Additions to product lines
• New product lines
• New-to-the-world

98
A framework and terminology for
•

thinking about and discussing projects.

Scope
Team size
Budget
Duration,
etc

BREAKTHROUGHS PLATFORMS MAINTAINENCE

Completely new Integrating new and Minor
products existing components modifications:
Building products and and processes into a Product
process capabilities Systems solution.
for
DERIVATIVE
Incremental change to
existing platform or
process 99
 More Product change Less

BREAK-
More
THROUGH
Completely new
Product and
Processes
required Ri
Creativity sk
Process change

PLATFORM
Systems solution to
a product challenge.
Cross-
functional DERIVATIVE
Develop- Incremental
ment change
to existing product
Re required
tu One or two
rn functional
s MAINTAI
NENCE
Sustaining
Less

Routine
processes
100
101
 Readings for the next class
• Case: Kirkham instruments
• 01 Conjoint note
• 02 Perceptual maps
• 03 christensen
• 03 enlightened experimentation
• 03 new product commercialization
mistakes
• 03 new product development
imperitive 102
Forecasting Penetration

“The art of prophecy is very

difficult – especially with
respect to the future”
- Mark Twain

103
 Forecasting for existing
products
– Trend analysis
– Moving averages
– Exponential smoothing techniques
– Time series analysis
– Advanced econometric models
• ARMA, ARIMA, Box-Jenkins, etc.
• All the above techniques need past
data to predict!!!

104
How do you forecast for a new-
to-the-world product?
• “The world has a potential market of
five computers”
– Thomas Watson, Chairman IBM

• There is no past data available!!

105
 Why do we need to predict
penetration of new-to-the-
• Total market potential
– Capacity of the plant
• Rate of adoption
– Investment decisions
• Arvind mills
• Kellogs, India

106
107
Forecasting new-to-the-
world products

108
How do you forecast for a new-
to-the-world product?
• Diffusion Models
• Bass Diffusion Model
– Predict penetration based on the sales
of a similar product.

109
•m = market potential = maximum number of
consumers who will eventually adopt
•p = parameter denoting innovative tendency to

adopt.
•q = parameter denoting imitative tendency to

adopt
•Y
t-1 = cumulative sales at t-1
Ft-1 = fraction who have adopted at the end of
• 110
111
112
113
Estimation

114
• Calculate
values of m, p,
q for different
products
meant for
different
customer
segments.
115
116
 Example: Satellite radio
• Calculate market size (m)
– Through an elaborate market research
involving 80 questions, 6000
respondents.
– 30 million

117
 Calculating p and q by
analogy
Decide
Step
Calculate criteria
Establish
Step2:
1: Identify
finalobtain to
scoresp establish
some
weighted and
onpbasis similarity
products/
q for of
and of to
thesimilarity
products
markets/the new
from
segments
the product
new
previous
product
similar to
after
the
q to existing research
products
New-to-the-world
thorough
studies and give weights.
product

Calculate a weighted score using the

method given below

118
•m = market potential = maximum number of
consumers who will eventually adopt
•p = parameter denoting innovative tendency to

adopt.
•q = parameter denoting imitative tendency to

adopt
•Y
t-1 = cumulative sales at t-1
Ft-1 = fraction who have adopted at the end of
• 119
120
• To be able to do the exercise, you need to read:
• “Forecasting the adoption of a new product” example on page
6 to 8
• The exercise on e-books can be done on the same lines as the
above example.
• Market potential (m)
• = 111.3 M households X 67.8%internet penetration X
28% consumers who read recreational material on e-book
device
• =21M
121
122
123
124
125
Nestle Contadina

BASES Model

126
Johnson wax

127
 Test marketing using
ASSESSOR
• Objectives:
– To test the potential of the new product
(acceptability, market share)
– To test the effectiveness of proposed
marketing strategy (advertising, positioning,
trial rate, repeat purchase rate, etc.)
• Key decision to take:
– Should the product be launched?
– Should the attribute(s) of the product be
changed?
– Does the marketing program require any
change?
128
 ASSESSOR: 5 Tests
1. Initial Questionnaire – evoked set
2. Preference questionnaire – Conjoint
• Ad was shown
6. Ad recall
7. Laboratory purchasing
8. Brand ratings

129
1. Results: Market structure
– What were the factors that emerged?
– How were these factors arrived at?
– How was enhance positioned?
– How was agree positioned?
– Was cannibalization likely?

130
131
 2. Results: Advertising
Recall
• What is recall?
• How is it measured?
• What attributes was Enhance
associated with?

132
 3. Results:
Trial
• What was Enhance’s trial
rate?

• What was Agree’s trial rate?

• Was it sufficient?

• What was Agree’s trial rate at

ASSESSOR stage?

• How do you increase trial?

– Advertising

– Increasing brand association

with an successful existing
product.

133
4. Results: Repeat purchase
estimation
• Did Enhance live up to expectation?
• How did it compare with Agree?
• How do you increase repeat
purchase?

134
 5. Results: Product
acceptance
• What was wrong with Enhance ads

135
 6. Results: Market share
prediction
• Trial and Repeat model
• Preference Model
• Why were two models used for
market share estimation?
– Convergent Validity

136
Trial and Repeat Model

M=Market share
T=ultimate cumulative trial rate (penetration)
S= Ultimate repeat purchase rate among buyers who ever
made a trial purchase of the brand (retention)

TRIAL AND REPEAT MODEL

137
 Calculating T CU
FKD

T=FKD+CU-(FKD x
CU)
F= trial rate in ACCESSOR test-
ultimate trial rate that would
happen if all consumers were
aware of the Ad.
K=long run probability that a
consumer will become aware
of the Enhance
D=Proportion of stores that will
carry Enhance
C=proportion of the target
market that receives the
samples.
U=proportion of those receiving
138
Calculating S

1st 100 81 100-81=

19 0 0 0
81%
65.6 of 81-65.6= 20% of 19-3.8=
2nd 81 15.4 19 3.8 15.2
81= 19 =
65.6+3.8 56.2 13.2 15.4+15.2= 24.5
3rd 69.4 30.6 6.1
=
4th 62.3 50.5 11.8 37.7 7.5 30.2
Etc…

100 people tried a product.

81% repeat rate
20% switchback rate

139
Calculating S

140
Calculating S

S=retention rate
SB= switchback rate
R=repeat purchase rate

141
142
 Calculating market share
using Preference model
• Conjoint to calculate preference
• Probability of choosing a brand given
the preference for the brand and
preference for competing brands
• Market share= proportion of
consumers for whom brand j is in the
evoked set * average probability of
purchase of brand j

143
144
 7. Results: Cannibalization
• Using Conjoint.
– No significant cannibalization effect.

145
 Key question!!!
• Should Enhance be launched in the present for
in the present way?
• Given the fact:
– Enhance MDS’ results were not exciting.
– Brand association results.
– Market share predictions were also not very
exciting.
• What should be done?
– Change:
• Attributes
• Ads
• Positioning strategy
• Something else (Brand, etc)
– Drop the product
146
• Was ASSESSOR helpful in taking an
appropriate:
– Product decision?
– Strategic decision?

147
Integrating competence,
customer needs and
competition with Product

148
 Quality Function
Deployment
• Method to transform user demands
into design quality,
• To deploy the functions forming
quality,
• To deploy methods for achieving the
design quality into subsystems and
component parts, and ultimately to
specific elements of the
manufacturing process
149
 Roof: This is the Customer
Correlation matrix. It Competitive
shows how the HOWs Assessment. It
Customer Provides customers’
conflict with one
requirements: "voice
another This section views on existing
of customer." It products. This matrix
focuses on
represents thedesign
improvement. uses questionnaires
"what's" of the It to elicit information
focuses on negative
system.
relationships in the
This section
design lists how Relationship Matrix:
Targets: It It occupies the middle
the company
summarizes thewill meet
the customer portion of the HOQ
conclusions of the diagram which is the
requirements
planning matrix.
•Top-level solution- largest portion. It uses
•Technical priorities the prioritization
independent
(relative metrics
importance of
•Product/service matrix. It shows how
each technical well customer
requirements
requirement)
•Product/service requirements are
•Competitive addressed by product
features or(relative
benchmarks
capabilities features
position of the existing
product)
•Targets (engineering
target values to be
met by the new
150
product design)
151
Car Door

152
All features are not equally
important

153
Customers evaluate
competition

154
Delivering/ Matching
Features

155
 How engineering
decisions/ Features impact

156
Measurement is
important

157
 Features could be
correlated

158
 Establish costs and
Targets

159
Competition

160
 Levels of competition
• What is our market?
• What is the market of Coke?
– Cola?
– Soft-drinks?
– Thirst-quenching drinks?
• What is the market of Harley Davidson?
– Bikes?
– Swimming pools?
• What was the market of:
– Floppy diskettes?
– CD?
– DVDs?
– Flash drives?

161
 1st Level of competition
• Product form competition
– Companies offering a similar product or
service to the target market, utilizing a
similar technology, and exhibiting
similar degrees of vertical integration.
– Same features/ values, appealing to one
segment of the market.
– Diet Coke, and Diet Pepsi

162
 2nd Level of competition
• Product category competition
– All the companies in the same product
or service category
– Similar features/ values, some
differentiated features appealing to
different segments of the market.
– Diet Coke, Diet Pepsi; regular Coke,
Pepsi, Thums-up.

163
 3rd Level of competition
• Generic Competition
– All the products satisfying a particular
need
– Diet Coke, Diet Pepsi; regular Coke,
Pepsi, Thums-up; Nimbu pani, juices,
concentrates, other beverages.

164
 4th Level of competition
• Budget Competition
– Competing for the customer’s purse.
– Diet Coke, Diet Pepsi; regular Coke,
Pepsi, Thums-up; Nimbu pani, juices,
concentrates, other beverages; Ice-
cream, Fast food, etc.

165
 Newcomers to a market
1. They already sell to your customers,
but expand their participation to
include new customer functions
– Intel starts making hard disks
– Toothpaste manufacturer enters
mouthwash segment.
2. They already satisfy customer
functions that you satisfy, but
expand into your market.
– Intel makes chips for CNC machines
3. They already operate in upstream/
downstream businesses.
– Intel starts manufacturing PCs or HP
starts manufacturing its own chip
4. Enter an unrelated business
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 Enacting barriers for entry
• ‘Unique’ attribute or feature.
• Excellent quality perceptions for your
product.
• Patents and trademarks.
• Innovation driven product
management.

167
Differentiate the product
on emotional level:
Branding

168
• Basis of differentiation:
– Rational
– Emotional
Building Preference
Em
otio
nal

Ra
tion
al

Bundle Preference
of due to
Attributes Attributes

Preference
Brand due to
Brand
 Washing machines
• Voltas
• LG
• Samsung
• “Two cars come off the same
assembly line, in the same American
pant. A Japanese nameplate goes on
one [Mitsubishi Eclipse], an American
nameplate goes on the other
[Plymouth Laser or Eagle Talon], and
people prefer the Japanese version.”
• Voltas Ltd. manufactures not just its
own refrigerators in its factory, but
has also signed OEM contracts with
LG and Samsung to make
refrigerators in their Hyderabad
plant. Therefore the same plant is
manufacturing 3 different brands of
refrigerators, but consumers have
different preferences for the 3 brands
Source: Business Standard, “Voltas Inks two –
year OEM fridge deal with Samsung”, October 14, 2003
 Is there a difference between
the tastes of:
• Coke
• Pepsi
• Thums – Up?
• Results of the blind taste test.
 How does branding help?
• Awareness
• Associations
• Loyalty
• Perceived quality
• Brand Personality – self concept
congruence
 When to brand?

• To create awareness
• Impulse/ low involvement products
• When scope for rational differentiation is limited.
• Entry barriers for competitors.
• Inelastic consumer response to price increases.
• Larger margins
• Greater trade cooperation and support
• Possible licensing opportunities
• Additional brand extension opportunities
• Greater customer loyalty
• Less vulnerability to competitor actions
Portfolio analysis
 BCG Matrix

Question Marks

? STARS
Market Growth
Rate

Dogs Cash Cow

0
0.1x 1x 10x
Relative Market Share
GE Matrix
 High Attractiveness
Strong Competitive Position

• Provide maximum
investment
• Diversify
• Consolidate your
position to focus your
resources
• Accept moderate near-
term profits to build
share
 High Attractiveness
Average Competitive Position

• Build selectively on strength

• Define the implications of
challenging for market leadership
• Fill weaknesses to avoid vulnerability
 Medium Attractiveness
Strong Competitive Position

• Invest heavily in selected segments,

• Establish a ceiling for the market
share you wish to achieve
• Seek attractive new segments to
apply strengths
 High Attractiveness
Weak Competitive Position

• Ride with the market growth

• Seek niches or specialization
• Seek an opportunity to increase
strength through acquisition
 Medium Attractiveness
Average Competitive Position

• Segment the market to find a more

attractive position
• Make contingency plans to protect
your vulnerable position
 Low Attractiveness
Strong Competitive Position

• Defend strengths
• Shift resources to attractive
segments
• Examine ways to revitalize the
industry
• Time your exit by monitoring for
harvest or divestment timing
 Medium Attractiveness
Weak Competitive Position

• Act to preserve or boost cash flow as

you exit the business
• Seek an opportunistic sale
• Seek a way to increase your
strengths
 Low Attractiveness
Average Competitive Position

• Make only essential commitments

• Prepare to divest
• Shift resources to a more attractive
segment
 Low Attractiveness
Weak Competitive Position

• Harvest or divest
 Size of the market

Market Share
 Brand Line
HLL

Breadth

D
ep
th

Product Line Brand Family Brand Portfolio

 Breadth of Product Mix
• 3 sets of factors that determine the
inherent attractiveness of a product
category:
– Aggregate market factors
• Large, fast-growing, in the growth stage of PLC,
relatively high and steady profit margins.
– Category factors
• Low entry barriers, low bargaining power of
buyers, low levels of competition, few close
substitutes
– Environmental factors
• Technological, political, legal, social factors
 Depth of product mix
• Different market segments based on
considerations:
– Different price segments
– Different geographical regions
– Different channels of distributions
– To attract customers seeking variety
– To yield economies of scale
– To increase internal competition
 Some other roles of new
brands in a product portfolio
• To enter a particular market not being
covered currently by other brands of the
firm
• To serve as a flanker and protect the
flagship brand
• To serve as a cash cow and be milked for
profits
• To serve as a high end prestige product to
add prestige and credibility to the entire
brand portfolio
PLC and Product
management
Product Life Cycle

New variants,
divestment.

“prefer my brand”

Price and differentiated

“try my product” features become more
important
• Tomorrow's case: INTEL
• Deadline for finishing the project:
22nd aug

200