1

5
Setting Product Strategy
Chapter Questions

2
What is a Product?

A product is anything that can be offered to

a market to satisfy a want or need, including
physical goods, services, experiences,
events, persons, places, properties,
organizations, information, and ideas.

3
Figure 12.1 Components of the
Market Offering

4
Figure 12.2 Five Product Levels

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6
Core: a warm coat will protect you from the cold and the
rain
Basic: For a warm coat this is about fit, material, rain
repellent ability, high-quality fasteners, etc.
Expected: really warm and protect from the weather and
the wind and be comfortable when riding a bicycle
Augmented: warm coat in style, its colour trendy and
made by a well-known fashion brand
Potential: a warm coat that is made of a fabric that is as
thin as paper and therefore light as a feather that allows
rain to automatically slide down

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Product Classification Schemes

Durability

Tangibility

Use

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Durability and Tangibility

Nondurable goods

Durable goods

Services

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Durable goods: are tangible goods that
normally survive many uses: refrigerators,
machine tools, and clothing
Nondurable goods are tangible goods normally
consumed in one or a few uses, such as beer
and shampoo
Services are intangible, inseparable, variable,
and perishable products that normally require
more quality control, supplier credibility, and
adaptability

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Consumer - Industrial

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Consumer Goods Classification

Convenience

Shopping

Specialty

Unsought

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Consumer Goods Classification

Convenience

Staples

Impulse

Emergency

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Consumer Goods Classification

Shopping goods

Homogeneous shopping goods

Heterogeneous shopping goods

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Consumer Goods Classification

Specialty goods

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Consumer Goods Classification

Unsought

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 Industrial Goods Classification
 Materials and parts
 Capital items
 Supplies/business services

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Good vs Service

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Good Differentiation
 Product form  Durability
 Features  Reliability
 Customization  Repairability
 Performance  Style
 Conformance

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Service Differentiation
 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
 Returns

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Design

22
The Product Hierarchy

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 Insurence

The need family. Security is an example.

The product family. Examples are savings and income.
The product class. Financial instruments are an example.
The product line. Life insurance is an example.
The product type. Term life insurance is an example.
An item (also called stock-keeping unit or product variant) is a distinct unit within a
brand or product line distinguishable by size, price, appearance, or some other
attribute.

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Product Systems and Mixes

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Contributions to a Product Line’s
Total Sales and Profits

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Figure 12.4 Product Map for a
Paper-Product Line

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Line Stretching

Down-Market Stretch

Up-Market Stretch

Two-Way Stretch

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 Product-Mix Pricing
 Product-line pricing
 Optional-feature pricing
 Captive-product pricing
 Two-part pricing
 By-product pricing
 Product-bundling pricing

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Ingredient Branding

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What is the Fifth P?

Packaging, sometimes called the 5th P,

is all the activities of designing and
producing the container for a product.

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 Factors Contributing to the
Emphasis on Packaging
 Self-service
 Consumer affluence
 Company/brand image
 Innovation opportunity

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 Packaging Objectives
 Identify the brand
 Convey descriptive and persuasive
information
 Facilitate product transportation and
protection
 Assist at-home storage
 Aid product consumption

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Functions of Labels

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The four phases of our Brands
planning process:
1 2 3

Deep-dive Brand Marketing

business review Decision Execution Plan
Dig into every Decide on target Big idea map set up
aspect of the brand: consumer profile, communication,
company, rational & emotional innovation,
competitors, benefits, narrow to purchase moment &
consumers,. a brand brand experience.
positioning Develop brief,
statement, build a calendar, budgets,
big idea to set up project plans
a brand concept. (leader/timeline).

Major brand Brand Positioning Creative Brief

challenge Brand Concept Project Plans

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 Strategic brand management
2
Quản trị chiến lược thương hiệu

Strategic brand management involves the

design and implementation of marketing
programs and activities to build, measure, and
manage brand equity. In this text, we de ne the
strategic brand management process as
having four main steps

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2

37
 Identifying and Developing Brand Plans
2

The brand positioning model describes how to guide

integrated marketing to maximize competitive
advantages.

The brand resonance model describes how to create

intense, activity loyalty relationships with customers.

The brand value chain is a means to trace the value

creation process for brands, to better understand the
financial impact of brand marketing expenditures and
investments.

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2

Choosing Brand Elements

Integrating the Brand into Marketing Activities

and the Supporting Marketing Program

Leveraging Secondary Associations

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 Designing and Implementing Brand Marketing
2
Programs

1. The initial choices of the brand elements making

up the brand and how they are mixed and
matched;

2. The marketing activities and supporting marketing

programs and the way the brand is integrated into
them; and

3. Other associations indirectly transferred to or

leveraged by the brand as a result of linking it to
some other entity (such as the company, country
of origin, channel of distribution, or another
brand).

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 Measuring and Interpreting Brand
2
Performance

Brand equity measurement system

S1. creating brand equity charters,
S2. assembling brand equity reports
S3. defining brand equity responsibilitie
Brand audits
Brand tracking

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 Growing and Sustaining Brand Equity
2

Defining Brand Architecture

brand portfolio

brand hierarchy

Managing Brand Equity over Time

Managing Brand Equity over Geographic
Boundaries, Cultures, and Market Segments

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2

43
 IMC – integrated marketing
communication
Truyền thông tiếp thị tích hợp
3

Never promise more than you can perform.

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3

45
3

46
3

 Personal Selling
 Direct Marketing

 Public Relations

 Trade Shows and Exhibitions

 Advertising

 Sales Promotion

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 Personal Selling
3

 Face-to face interaction with one or more

prospective customers for the main purpose of
obtaining orders is generally called personal
selling.
 In business markets it is by far more common to

serve business customers directly than in consumer

markets.

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 Direct Marketing
3

… tools include the use of direct mail,

telemarketing, fax, e-mail, newsletter, catalog,
internet, and others to communicate directly with
specific customers and prospects.
 The use of direct marketing tools has been

constantly growing over the last two decades.

 A direct marketing tool that has experienced a

major take-off in the last decade is electronic

shopping.

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 Public Relations (PR)
3

 … are about generating coverage in the media that

reaches various stakeholder groups.
 Because of their authenticity they are more

credible to readers. PR can moreover reach

potential customers that tend to avoid salespeople
and advertisements.[i]
 PR can affect brand awareness at only a fraction of

the cost of other communications elements.

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 Trade Shows and Exhibitions
3

 Trade shows and exhibitions are of major

importance in the B2B environment.
 They also provide customers with access to many

potential suppliers and customers in a short

period time at relatively low costs compared to
regular information gathering methods.
 Customers can easily compare competitive

offerings at one place.

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 Sponsoring
3

 Sponsorships of public events such as world-

famous bicycle and car races are quite common for
B2B brands.
 Corporate goals for sponsorship can be: increase

revenue, create a platform for developing

relationships, and provide an opportunity to
entertain customers in a unique environment as
well as to generate benefits for employees

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 Advertising
3

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 Advertising
3

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 Sales Promotion
3

 … are incentives of various kinds that are used to

increase the value of a market offering over a
specified period of time.
 In contrast to consumer promotion, trade

promotions are targeted at retailers, distributors,

and other members of the trade channel.
 They often come in the form of financial

incentives

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 Product Life Cycle
Introduction—A period of slow sales growth as the product is
introduced in the market. Profits are nonexistent because of the
heavy expenses of product introduction.

Growth—A period of rapid market acceptance and substantial profit

improvement.

Maturity—A slowdown in sales growth because the product has

achieved acceptance by most potential buyers. Profits stabilize or
decline because of increased competition.

Decline—Sales show a downward drift and profits erode.

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Sales and Profit Life Cycles

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Growth-Slump-Maturity

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Common PLC Patterns:
Cycle-Recycle

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Figure 11.5c
Common PLC Patterns:
Scalloped

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Figure 11.6 Style, Fashion, and
Fad Life Cycles

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 Eight Stages in New Product
Development Process
1. Idea generation
2. Idea screening
3. Concept development and testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Market testing
8. Commercialization

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1. New-Product Development Strategy
Two ways to obtain new products

Acquisition refers to the buying of a whole

company, a patent, or a license to produce
someone else’s product

New product development refers to original

products, product improvements, product
modifications, and new brands developed
from the firm’s own research and
development

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New-Product Development
Reasons for new product failure

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2. The New-Product Development Process
2.1. Idea Generation

Idea generation is the systematic search for

new-product ideas

Sources of new-product ideas

 Internal
 External

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New-Product Development Process
Idea Generation

Internal sources refer to the company’s own

formal research and development,
management and staff, and intrapreneurial
programs
External sources refer to sources outside the
company such as customers, competitors,
distributors, suppliers, and outside design
firms

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New-Product Development
Process
2.2. Idea Screening

 Identify good ideas and drop poor ideas

 R-W-W Screening Framework:
 Is it real?

 Can we win?

 Is it worth doing?

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New-Product Development
Process
2.3. Concept Development and Testing
 Product idea is an idea for a possible product
that the company can see itself offering to
the market
 Product concept is a detailed version of the
idea stated in meaningful consumer terms
 Product image is the way consumers
perceive an actual or potential product

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New-Product Development
Process
Concept Development and Testing

Concept testing refers to testing new-product

concepts with groups of target consumers

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New-Product Development
Process
2.4. Marketing Strategy Development

 Marketing strategy development refers to the

initial marketing strategy for introducing the
product to the market
 Marketing strategy statement includes:
 Description of the target market

 Value proposition

 Sales and profit goals

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New-Product Development
Process
2.5. Business Analysis

 Business analysis involves a review of the

sales, costs, and profit projections to find out
whether they satisfy the company’s
objectives

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New-Product Development
Process
2.6. Product Development

 Product development involves the creation

and testing of one or more physical versions
by the R&D or engineering departments
 Requires an increase in investment

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New-Product Development
Process
2.7. Marketing Strategy Development

Test marketing is the stage at which the

product and marketing program are
introduced into more realistic marketing
settings
 Provides the marketer with experience in

testing the product and entire marketing

program before full introduction

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New-Product Development
Process
Types of Test Markets

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 Advantages of simulated test markets
 Less expensive than other test methods
 Faster
 Restricts access by competitors
 Disadvantages
 Not considered as reliable and accurate due
to the controlled setting

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76
New-Product Development
Process
2.8. Commercialization

Commercialization is the introduction

of the new product
 When to launch

 Where to launch

 Planned market rollout

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 2. Product Life-Cycle Strategies

Fads are temporary periods of unusually high

sales driven by consumer enthusiasm and
immediate product or brand popularity

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Product Life-Cycle Strategies
Introduction Stage

 Slow sales growth

 Little or no profit
 High distribution and promotion expense

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Product Life-Cycle Strategies
Growth Stage
 Sales increase
 New competitors enter the market
 Price stability or decline to increase volume
 Consumer education
 Profits increase
 Promotion and manufacturing costs gain
economies of scale

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Product Life-Cycle Strategies
Maturity Stage

 Slowdown in sales
 Many suppliers
 Substitute products
 Overcapacity leads to competition
 Increased promotion and R&D to support
sales and profits

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Product Life-Cycle Strategies
Maturity Stage Modifying Strategies

 Market modifying
 Product modifying
 Marketing mix modifying

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Product Life-Cycle Strategies
Decline Stage

 Maintain the product

 Harvest the product
 Drop the product

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