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Outline

y Product Hierarchy y Product-Mix Decisions y Product-Line Strategies y New product development in ASPAC y Positioning & Repositioning y Brand decisions

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Introduction
y Product (or service) is the main element of the marketing mix y Therefore, need to determine the Product Strategies before deciding on the remaining marketing mix

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7-Levels of Product Hierarchy
y Product need y y y y y

to satisfy a need e.g. feet protection Product class a family of products having similar function e.g. all shoes Product line a group of products with closely related functions e.g. sports shoes Product type products within a line having similar form e.g. basket-ball shoes Brand a name representing a product or line e.g. Nike Item (Stock Keeping Unit) a unit item e.g. one pair of Nike basket-ball shoe
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Product-Mix Decisions
Decisions on the product mix (the number of product lines and items in each line) that the company may offer y A single product
y Most firms started off as a single-product company

y Multiple products
y e.g. Creative Technology markets sound cards as well as

MP3 players

y A systems of products
y e.g. Nikon sells camera, lenses, filters & other options

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Product-Line strategy
y How many product lines should we have?

y Example: A company offering a multi-

security solution offer a comprehensive range of products, including portable and platform mounted night vision systems and thermal imaging systems, head- and helmet mounted displays, laser rangefinders and fire control

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6 .Product-Line strategy (cont d) y How many product items in each line? y Example: Both Gardenia and Bonjour launched new flavors in January 1999 to nibble away at each other s market share of a loaf estimated to be worth about $80 million.

g.Expanding the Product Line 1. extralarge size for hospital 2. Product line extension: add an item to the existing product line y Many FMCG companies introduced various sizes of the same product e. and Pantene in the same category 7 . Rejoice.g.mini-packs for travelers. y P&G have Vidal Sassoon. Product category extension: add a new item or line of items for a company e. Head & Shoulders.

g. y y Brand extension: Product category extension that uses an existing brand name e. Nestle extended its Bear Brand condensed milk in Thailand by introducing Bear Brand with Honey Kellogs thrives on Live extensions in India 8 .Expanding the Product Line (cont d) 3.

y Toyota introduced the Lexus and Nissan introduced the Infiniti ( Not all are successful Grand Vitara) 9 .More on Product Line Extension y Downward stretch by introducing lower range of the products e.g.g. y Sony & Aiwa y Mercedes introduced the baby Merz to cater to the upper class mid-sized range of the market y Upward stretch by entering the high end of the market e.

Product Line Extension (cont d) y Two-way stretch by filling the whole line e. y Toyota has the Starlet at the lower end.g. the Camry in the uppermanagement range and the Lexus in the luxury range 10 . the Corolla in the executive range.

a new product is a product that it is unfamiliar in any way 11 . well organized NPD process having top-management support y What is a new product? (see next slide) y From a firm's perspective.New Product Strategy y New products are critical to survival y New-product development (NPD) is essential for companies seeking growth y It should be an on-going.

a watch that can go into suspended animation 12 .Definition of Product Newness 1.g When Creative Technology first introduced the Sound-blaster When disposable cameras were first introduced When Seiko introduced the Seiko Kinetic Relay. y y y Products new to the world. usually revolutionary products resulting from product innovation e.

Later it introduced the Clinic All Clear hair conditioner based shampee y Costs reductions and re-positionings 13 . y y Products new to the firm Improvements to existing products e.g.g. Clini + introduced shampoo liquid and in later introduced Clinic+ Anti-Dandruff shampoo y y Additions to existing lines e.Definition of Product Newness (cont d) 2.

has come up with a mouse that allows the user to feel what is seen on the screen. This mouse [is] called the iFreeMouseMan 14 . the world's biggest maker of computer mice.Example of NPD--Logitech Logitech.

Product Convergence First coined by Creatives Sim W H who was referring to the marriage between the PC and home entertainment y Creative Multi-Speaker Surround (CMSS) uses seven audio channels 15 .

y Buyers respond to branding by making repeat purchases because they identify the item with the name of its producer. design. term. y Brand: name.Managing Brands for Competitive Advantage y Branding is the process of creating that identity. symbol. sign. or some combination that identifies the products of a firm while differentiating them from the competition s 12-16 .

y Brand insistence Consumer refusals of insistence: alternatives and extensive search for desired merchandise. 12-17 . y Brand preference Consumer reliance on previous preference: experiences with a product to choose that product again.y Brand Loyalty y Brand recognition Consumer awareness and recognition: identification of a brand.

with no advertising and no brand name y Manufacturers brand or National Brand Brand: brand name owned by a manufacturer or other producer y Private brands brand name placed on products brands: marketed by wholesalers and retailers 12-18 .Types of Brands y Generic product item characterized by plain product: label.

y Captive brands: national brands that are sold brands exclusively by a retail chain y Family brand brand name that identifies several brand: related products y Individual brand unique brand name that brand: identifies a specific offering within a firm s product line and that is not grouped under a family brand 12-19 .

wellequity: known brand name gives to a product in the marketplace. y Brand equity increases the likelihood that consumers will recognize the firm s product when they make purchase decisions y A strong brand equity can contribute to buyers perceptions of product quality y Branding can also reinforce customer loyalty and repeat purchases 12-20 .y Brand equity added value that a respected.

y Brand Equity y The Young & Rubicam Model: y Brand Asset Valuator 12-21 .

12-22 .y The Role of Category and Brand Managers y Brand manager: Marketing professional charged with manager planning and implementing marketing strategies and tactics for a brand y Category management Product management management: system in which a category manager with profit and loss responsibility oversees a product line.

kerosene. and zipper) 12-23 .Product Identification y Brand name part of a brand consisting of words name: or letters that form a name that identifies and distinguishes a firm s offering from those of its competitors y Brand mark: symbol or pictorial design that mark identifies a product y Generic name branded name that has become a name: generically descriptive term for a class of products (e. aspirin.. nylon.g.

and any slogan or product name abbreviation y Trade Dress: visual cues used in branding to create Dress an overall look y The distinctive shape of Philips light bulbs and the McDonald s arches provide an example of trade dress 12-24 .y Trademark: legal protection which confers the Trademark exclusive right to user brand name. trade mark.

y Developing Global Brand Names and Trademarks y Potentially an acute problem for international marketers y An excellent brand name or symbol in one country may prove disastrous in another y Trademarks that are effective in their home countries may fare less well in other cultures 12-25 .

Packaging y A package serves three major objectives: y Protection against damage. spoilage. and pilferage y Assistance in marketing the product y Cost effectiveness y Labeling y Label y Universal Product Code (UPC) 12-26 .

or related products y Brand licensing practice allowing other licensing: companies to use a brand name in exchange for a payment 12-27 . styles.y Brand extension application of a popular extension: brand name to a new product in an unrelated product category y Line extensions refers to new sizes.

New Product Planning y As a firm s offerings enter the maturity and decline stages of the product life cycle. it must add new items to continue to prosper y Alternative Product Development Strategies 12-28 .

and advantages and disadvantages in relation to those of competing brands y Cannibalization: a loss of sales of the current product due to competition from a new product in the same line 12-29 . uses. quality.y Product Development Strategies y Product positioning: consumers perceptions of a product s attributes.

The Consumer Adoption Process y Adoption process: Stages that consumers go y Awareness y Interest y Evaluation y Trial y Adoption or rejection through in learning about a new product. trying it. 12-30 . and deciding whether to purchase it again.

y Consumer innovator: People who purchase new innovator products almost as soon as the products reach the market y Diffusion process Process by which new goods process: or services are accepted in the marketplace 12-31 .

8 y Categories of Adopters Based on Relative Times of Adoption 12-32 .y Figure 12.

y Identifying Early Adopters y Substantial benefits may be obtained by locating the likely first buyers of new products (innovators and early adopters) y Suggestions for modifying the product may be obtained from these individuals y Acceptance or rejection of the innovation by innovators and early adopters can help forecast sales 12-33 .

y Rate of Adoption Determinants y Characteristics of a product innovation that influence its adoption rate include: y y y y y Relative advantage Compatibility Complexity Possibility of trial use Observability 12-34 .

y Organizing for New Product Development y New-Product Committees y New-Product Departments y Product Managers y Venture Teams y Task forces 12-35 .

New Product Development Process y New product development process: six stages through which new product ideas progress before being introduced to the overall market 12-36 .

Suppliers. Retailers. Employees. Independent inventors y Screening Screening separates ideas with commercial potential from those that cannot meet company objectives y Checklists of development standards can be helpful at this stage 12-37 . Customers. R&D specialists. The competition.y Idea Generation New product ideas come from many sources including: y Sales force.

y Business Analysis The business analysis consists of assessing the new product s market potential. growth rate. likely competitive strengths. and compatibility of the proposed product with organizational resources y Concept testing y Development Converting an idea into a physical product y Requires interaction among many of the firm s departments y Prototypes may go through many changes 12-38 .

marketing intermediaries and potential customers are acquainted with the new product 12-39 . the firm establishes marketing strategies. moving directly to full-scale commercialization y Commercialization In this stage. and funds outlays for production and marketing y The sales force.y Test Marketing Test marketing: Introduction of a trial version of a new product supported by a complete marketing campaign to a selected city of television coverage area y Some firms skip this stage.

Product Safety and Liability y Product Liability responsibility of Liability: manufacturers and marketers for injuries and damages caused by their products 12-40 .

ON) y Product line .all product lines y Brand mix .all brand lines . TA.products similar in price. or distribution y Product mix . Gap.Brand-Product Matrix: Relationships Diagramed y Brand line . used to maximize equity (BR.all products sold under a brand y Brand portfolio -set of all brands and brand lines a company offers in a product category.

political. economic. social . bargaining power of buyers & suppliers y Environmental factors .Breadth of Branding Strategy: Product Mix y Aggregate market factors . profits y Category factors .technological.competition. stage.size. growth.

Chrysler) Mazda . Mercury.Cad) Volvo. Lexis) Jaguar. Lincoln. LRover Up-market (BMW.Depth of Branding Strategy Multiple brands are used to pursue multiple market segments Segment Ford brand Luxury (MB. GM. Ford. Astin Martin Mid-price (HTN.

to create stronger POP with competition so flagship brand keeps desired position (Philip Morris use of discount Basic to protect Marlboro hi $) y Cash cow .sub brands used to leverage on basis of price or quality (BMW Z3.Depth Tactics y Flankers . 700 series) .milked till dead (Trac II) y Low end entry or hi end prestige .

Brand Hierarchy y Corporate .GM y Family .Park Avenue y Modifier (model) .Ultra .Buick y Individual .

individual positioning (P&Gs Ariel.one name for a group (Green Giant vegetables) y Umbrella brand . cameras.Branding System y Product brand . equipment) y Source brand .diverse products & brands (General Motors cars) .one brand for products in many markets (Canon copiers. Tide. clothing lines) y Endorsing brand .family with different names (Calvin Kline perfume.cross branding (Renault) y Range brand . Dash detergents) y Line brand .

Common product attributes. trust. Values and programs (social resp) 4. benefits (Quality. Corporate credibility (expertise.Equity Corporate level image determinants 1. People and relationships (customer orientation) 3. likeability) . innovation) 2.

Designing branding strategy Corporate dominant corporate brands (Kellogg) house brands (Frosted Flakes Mixed brands duel brands (equal prominence) endorsed brands (Chevy Blazer) Brand dominant mono brand (Absolute) furtive brand (identity secret. Turning Leaf) .

5RL) 1. Mixed dominance: Bosch/ Blaupunikt 5.from equal (Acura Legend) to corporate dominance (Acura 3. Equal dominance: Nissan Maxima 4. Corporate dominance: Xerox Acura . . Brand dominance: Marlboro (PM) 3.Corporate/Product Relationships Single entity: Federal Express 2.

How would you improve the company s branding strategy? Characterize Nissan hierarchy.Question Characterize Mercedes Benz brand hierarchy. How does their strategy differ from that of MBZ? .

2. y y New brand name Apply existing brand name (TracIII) Combination of new with existing brand name (brand extension) line extension . Absolute citron category extension .Naming choice for new products 1.new flavor.Swiss Army luggage . 3.

Expanding meaning with brand extensions brand product extension meaning Crayola crayons paint. clay kid craft Swiss Army knife luggage adventure Mont Blanc pens watches luxury Billabong surfboard snow & all sports skate boards .

Sub-branding to give new element (DuPont Stainmaster carpet) 2. Vaseline Difficult to extend directly to other product categories. Jell-O.Master brands Owning an association in the consumer s mind: Band-Aid. Super-branding adds improved element (Everready Energizer batteries) 3. Brand bundling fortifies master w/co-branding 4. Alka-Seltzer. Directions for leveraging master brands are: 1. Brand bridging to new category . Crayola.

You be the judge Evaluate whether or not the following brand extensions work and why Honda lawn mowers Visa traveler s checks Harley Davidson wine coolers Kissan Leather accessories .