Marketing Management

GBA2006-01
Week 5 (Class 10)

Professor. Hyejin Lee

Product II: Brands
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Brand
〮 What is brand?
: Name, symbol, or design used to identify the products and differentiate them from
competitive offerings.
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Brand
Products Brands

〮 Tangible/Intangible 〮 Intangible: lives in

consumers’ mind

〮 Easily copied 〮 Unique

〮 Become irrelevant 〮 Timeless

〮 A transaction 〮 A relationship
〮 Value of Brands for the Customer and Marketer
〮 Why are brands important to consumers?
〮 They help consumers identify products that might benefit them
〮 They are a sign for quality and consistency and facilitate purchase
〮 Brands are risk reduction vehicles!

〮 Why are brands important for companies?

〮 They make it easier to establish customer relationships and loyalty
〮 They provide legal protection for unique product features, and they are also reduce
vulnerability to price competitions (i.e., they help a firm avoid the commodity trap)
〮 Brands help the seller to segment the market
〮 Value of Brands

“The whole purpose of branding is to differentiate your

product in the marketplace and to get consumers to
identify it as different, better, and special.”
Sergio Zyman, former Chief Marketing Officer,
the Coca-Cola Company
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Brand Name, Brand Mark, and Trademark
〮 A brand name is the words or letters of the brands. e.g., Apple, Nike

〮 A brand mark is the pictorial part of the brand.

〮 A trademark is a brand that has been given

legally protected status exclusive to the owner.
〮 10 Hidden Meanings of Famous Brands Names
〮 Brands are Valuable Assets

Source: https://interbrand.com/best-brands/
〮 Brand: Revenue Premium
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Brand Equity

“If this business were split up, I would give you the land and
bricks and mortar, and I would take the brands and
the trademarks, and I would fare better than you.”
John Stewart, former CEO of Quaker,
a large US Consumer Packaged Goods firms
〮 Brand Equity

“If every asset we own, every building, and every piece of

equipment were destroyed in a terrible natural disaster,
we would be able to borrow all the money to replace it
very quickly because of the value of our brand…
the brand is more valuable than the total of all these assets.”
Jack Greenberg, former CEO of McDonald’s
〮 Brand Equity
〮 The added value to the firm, the channel, or the consumer with which a brand endows
a product (Farquhar 1996)
〮 Brands with high brand equity have a high degree of preference and insistence.
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Brand Loyalty
High brand equity allows marketers to drive buyers toward brand loyalty.
Brand Loyalty starts with

1. Brand - some knowledge of brand. “Do you recognize a brand?”

〮 How can a firm increase brand recognition?
〮 Advertising/promotion/distribution
〮 In-store display, free samples
〮 Increase the brand exposure—increase frequency, coverage
〮 Brand Loyalty
2. Brand - Stage where consumer will prefer one brand over another, but will
not demand that brand every time. “Do you prefer a specific brand?”
〮 How can a firm increase brand preference?
〮 Advertisement using a favorable celebrity
〮 Offer great benefits
〮 Enhance the quality of the product
〮 Brand Loyalty
3. Brand - Stage where no alternatives will suffice. Few goods reach this stage.
“Do you insist to only use one brand?”
〮 How can a firm increase brand insistence?
〮 Loyalty program
〮 Invitation to special events
〮 Pre-sale calls, customer relationship management
〮 Exceptional quality and service
〮 A true, sustainable, competitive advantage
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Brand Extensions
As equity grows, competitive advantages increase, allowing the firm to offer
Brand Extensions to enhance performance.
〮 Brand Extensions -- New products in different product categories that
often carry the same brand name.
〮 In-class Exercise In-class
exercise
#1.
〮 What are some examples of brand extensions?

〮 Brand Extensions -- New products in different product categories that

often carry the same brand name.
〮 Successful Brand Extensions

soap dishwashing liquid gentle care detergent

〮 Successful Brand Extensions
Why are these brand extensions successful?
〮 Customers can easily link brand extensions to the core brands.

〮 Fit between product category of brand extension and the core brand.

〮 Consistent with brand images & customers are willing to have brand
extensions because brand extensions are based on the superior product
attributes of the core brands.
〮 Unsuccessful Brand Extensions

Sources: https://us.bic.com/en_us/writing/pens.html
https://archives.sva.edu/blog/post/paris-in-your-pocket
〮 Unsuccessful Brand Extensions
Why are these brand extensions unsuccessful?
〮 It’s hard for consumers to link brand extensions to the core brands.

〮 Inconsistent with brand images & customers are not willing to accept
brand extensions because brand extensions are NOT based on the
superior product attributes of the core brands.
〮 Possible to “bridge” extensions
〮 Brand Extensions
Pros of brand extensions
〮 The new product benefits
instantly from existing brand
〮 The brand name is recognized
by more customers
〮 Faster market penetration/
adoption
Cons of brand extensions
〮 Lack of fit with the primary
category may doom
the extension brand
〮 If not done well, the new
product may hurt sales of
the existing brand as well
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Product Line Extensions
〮 If a firm has a successful product, it often offers product line extensions – introducing
new products in the same product category.
〮 Example:

Source: https://us.coca-cola.com/products/coca-cola-flavors/
〮 Other Examples of Product Line Extensions
〮 Product Line Extensions
〮 If a firm has a successful product, it often offers product line extensions – introducing
new products in the same product category.
〮 Example:

Source: https://us.coca-cola.com/products/coca-cola-flavors/
〮 Product Line Extensions
〮 Benefits of Product Line Extensions (PLE)
〮 PLEs can enhance firm growth - in the mature stage of Product Life
Cycle, profits begin to decline, so introducing new products can build
company sales.
〮 PLEs allow for more optimal uses of company resources - most PLEs are
slight variations of existing products (e.g., flavor changes), so the
company can enjoy economies of scale in production, distribution, and
advertising.
〮 Key Concepts

1. Brand
2. Brands versus Products
3. Brand Name, Brand Mark, Trademark
4. Brand Equity
5. Brand Loyalty – The Three Dimensions
6. Brand Extensions
7. Product Line Extensions
8. Cannibalization
〮 Potential Pitfalls of Product Line Extensions
〮 Cannibalization
〮 Manufacturers must avoid damaging cannibalization or the theft of sales
from existing products by the new PLE. Test markets can determine the
degree of cannibalization that may occur.
〮 Retailers are also concerned about cannibalization because they do not
want to stock products that steal sales from one another without
increasing overall sales and profits.
〮 In-class Exercise In-class
exercise
#2.
〮 Choose one brand that you like and propose both brand extension and
product line extension strategies.

〮 Brand Extensions -- New products in different product categories.

〮 Product Line Extensions -- New products in the same product category.

New Product Development
〮 Key Concepts

1. Product Life Cycle

2. New Products
3. Continuous and Discontinuous Innovation
4. Importance of New Products to the Firm
5. New Product Failures
6. The Seven-Step New Product Development Process
〮 Product Life Cycle
〮 The product life cycle describes the stages a new product goes through in the
marketplace: introduction, growth, maturity, and decline.
〮 Product Life Cycle
〮 Product Life Cycle

Source: https://www.bitmascot.com/unlimited-possibilities-of-vr-technology/
https://www.bhg.com/homekeeping/house-cleaning/cleaning-products-tools/best-robot-mops/
https://www.apple.com/kr-k12/shop/buy-iphone/iphone-12
https://ko.aliexpress.com/item/32664347865.html
〮 In-class Exercise In-class
exercise
#1.
〮 Think of the products that you would classify as

1. Introduction

2. Growth

3. Maturity

4. Decline
〮 Product Life Cycle
〮 The product life cycle concept is based on four premises:
1. Products have a limited life.
2. Product sales pass through distinct stages, each with different marketing
implications.
3. Profits from a product vary at different stages in the life cycle.
4. Products require different life cycle stages.
〮 Product Life Cycle
〮 High Learning Product

Extended
introductory period

Significant consumer education is required for these products,

which have an extended introductory period.
〮 Low Learning Product

Short
introductory
period

Little consumer education is required resulting in a short

introductory stage for the product.
〮 Fashion Product

resurface

The life cycle for fashion is relatively short and cyclical going from
introduction to decline within two years, only to resurface again
a few years later.
〮 Fad Product

Novelty products with very short product life cycles that experience
immediate rapid growth, followed by an equally rapid decline.
〮 Key Concepts

1. Product Life Cycle

2. New Products
3. Continuous and Discontinuous Innovation
4. Importance of New Products to the Firm
5. New Product Failures
6. The Seven-Step New Product Development Process
〮 New Products
What is a new product? Examples?
〮 New Products
〮 Firms’ view: Anything different from previous products.

〮 Customers’ view: A product’s “newness” is defined by the degree of consumer

learning required to use the product properly.
〮 Key Concepts

1. Product Life Cycle

2. New Products
3. Continuous and Discontinuous Innovation
4. Importance of New Products to the Firm
5. New Product Failures
6. The Seven-Step New Product Development Process
〮 New Products
LOW Degree of New Consumer Learning Needed HIGH

Basis of Comparison

Disrupts customer’s Requires new learning

Requires no new
Definition routine but little new and consumption
learning by customers
learning required patterns by customers
New flavors, packaging, Electric toothbrushes, Airplane, Car, TV, GPS,
Examples
and colors DVDs PCs, smart phones
Educate customers
Build customer Promote points of
using promotion,
Marketing Emphasis awareness using same difference between old
personal selling, and
distribution channels and new
trial
〮 New Products
1. Which of the three categories of new products offers the greatest potential return on
investment? The least?

2. Which presents the firm with the greatest risk?

3. Which is most common? Why?

〮 Key Concepts

1. Product Life Cycle

2. New Products
3. Continuous and Discontinuous Innovation
4. Importance of New Products to the Firm
5. New Product Failures
6. The Seven-Step New Product Development Process
〮 New Products
〮 Why are new products so important to firms?
〮 More sales/revenue

〮 Higher prices for new products

〮 Build competitive advantages

〮 Build employee morale

〮 Key Concepts

1. Product Life Cycle

2. New Products
3. Continuous and Discontinuous Innovation
4. Importance of New Products to the Firm
5. New Product Failures
6. The Seven-Step New Product Development Process
〮 New Products
〮 About 8 out of every 10 new products fail. Why?
〮 Lack of competitive advantages

〮 Don’t understand customers’ needs/ Mismatch between new products and customer needs

〮 Too little market attractiveness

〮 Poor execution of the marketing mix

〮 Competitors’ actions/reactions
〮 The 1985 Launch of New Coke
〮 The 1985 Launch of New Coke

As we go through the New Product Development Process, think about…

〮 In what stages did Coca-Cola go wrong?

〮 What could Coca-Cola have done differently?

〮 Key Concepts

1. Product Life Cycle

2. New Products
3. Continuous and Discontinuous Innovation
4. Importance of New Products to the Firm
5. New Product Failures
6. The Seven-Step New Product Development Process
〮 The New Product Development Process (NPDP)
〮 Step 1: Idea Generation
〮 Many good ideas come from consumers.
〮 Specifically, from understanding consumer needs and pain points.

〮 Unfortunately, the starting point for MOST research into solving consumer problems
is wrong: 55% of all new product ideas come from employees within the company.
〮 Step 1: Idea Generation
〮 Typical questions in most customer research include…
“How would you improve this product?
“What features would you like added or subtracted from your present solution?”
“Why is your present solution making you unhappy?”

〮 What is interesting about these questions?

〮 They all focus on existing products and are product-centered rather than
customer-need focused.
〮 Step 1: Idea Generation

Research focusing on
existing products yields…

Incremental solutions vs.

Breakthrough innovations

Why just
incremental solutions
(i.e., slight variation of
existing products)?
〮 Step 2: Screening
〮 Separate ideas that have merit from those that do not.
〮 Sophisticated firms use complex tools to screen projects, examining expected financials,
competitive reactions, ability to manage the new product over time, etc.

Frito-Lay, a snack food company, uses one criterion in the

development of a new product: It must be forecasted to
generate $150 to $200 million before the product moves
to the next stage. It experimented with 50 different shapes
before settling on a thin, rectangular chip with ridges
called Sun Chips.
〮 Step 2: Screening
〮 Most new product ideas do not pass this step.

Source: Stevens and Burley (1997)

〮 Step 3: Concept Development & Testing
〮 The measurement of consumer attitudes and perceptions relevant to the product.

〮 Focus groups are given a description of the product and their attitudes and
perceptions are assessed.

“Would this product be of interest to you?”

“If the price of this product was $100, would you consider
buying it?”
〮 Step 4: Marketing Strategy
〮 The marketing strategy describes:
〮 Target market – who is most likely to buy the product/service?

〮 Price, distribution (i.e., place), promotion and the marketing budget.

〮 Planned sales and profit figures are announced and marketing mix strategy
is illustrated.
〮 Step 5: Development
〮 A physical product now exists and results can be analyzed by the company.
〮 In this stage, tests, revisions, and refinements occur before the product is actually
test marketed.
〮 Step 6: Test Marketing
〮 The process of selecting a specific geographical area considered to be
generalizable to the product's overall target market.

〮 The idea of a test market is to have consumers evaluate and buy without knowing
they are participating in a test market. During the test market, sales are monitored
so the company can estimate the product's performance in a full-scale
introduction.
〮 Adventures in Test Marketing
〮 Step 7: Commercialization
〮 last step; fully introducing the new product into the marketplace.
〮 Now the 3Ps need to be developed for the product (Steps 1-6 take care of the
missing “P” - product).
〮 Many practical decisions must be made including decisions about which
distribution channels to use, promotion, pricing, hiring new salespeople, or training
old salespeople, etc.
〮 This stage requires tremendous financial resources and extensive coordination of
all aspects of the marketing mix.
〮 Let’s revisit New Coke case.
〮 In what stages did Coca-Cola go wrong?

〮 What could Coca-Cola have done differently?