You are on page 1of 51

Product Management 5

Brand Business
 Business

Strategy  New Product Development Process  Growth Strategies  Competitive Strategies  Marketing Strategies in different situations

For New Product Development



For Existing Product/ Brand


Business Strategy Document
New Product Proposal: Existing Brand/ New Brand
 Business
– – –


Consumer NEED Analysis:Trends & Practices, Habits & Attitudes, Need gap assessment Competitive Analysis: Positions, Strategies…. SWOT Corporate Analysis: Mission, Policy, …Portfolio Analysis…SWOT

Business Strategy Document

Business Objective:
– –

Competition Focus- Reactive- Market Threat Self Driven- Proactive- Market Growth/ Leadership Market Penetration, Market Development, Product Development Diversification

Business Strategy:
– – – –

 

Business Potential: Volume Projection, Demand
Estimation… User-Usage-Frequency Investment details, Profits)

Business Plan: 3 year financial projection ( Turnover,

NPD: Process
 Stage

1: Formulation of Business Strategy  Stage 2: Product Development Stage  Stage 3: Testing & Developing the Marketing Strategy  Stage 4: Commercialization  Stage 5: Market Rollout

Stage 1: Ideation to Business Strategy

Idea Generation Process
 Objective:

To identify categories of interest for the next 3 years  Internal ( multifunctional) Brainstorming session from time to time  Various techniques used to Capture the Needs / Voice of the Consumers  Rule: Quantity over Quality… To generate multiple ideas without applying “judgment”

Idea Generation Triggers : Case Illustration
 Brand
– – –

: Parachute, Product : Coconut Hair Oil  Triggers : (mental map)
Hair Needs: Wash to dry-clean, Natural style to Colouring, Split ends to Dandruff. Oil Needs: Non oily oil, Non Smelly oil… single use oil, Ayurvedic oil, massage oil Coconut needs: Haircare to skincare…..soaps to shampoos

Idea Screening Process: Innovation Funnel

Assessment of Ideas generated so as to PRIORITIZE the same Application of “ Judgment”: rationalization, quantification techniques,feasibility studies Key Inputs :
– – – –

Business Direction of the Organization Consumer Trends: Usage & Attitude Studies Environment / Market Scan: segment size & growth Competitive Analysis

Screening : Case Illustration
 Process
– – –

of Rationalization:

Skincare , Hair Colourants: Low priority Split ends & Dry Clean: Niche Markets Shampoos : Extremely Competitive

 Process
– –

of Prioritization:

Hair Problems that can be addressed by a hair oil ( dandruff , hair growth etc) Modern forms of Hair oils ( light , perfumed etc)

Concept Development & Testing
  

Conversion of Ideation to Product Ideas Formulation of Product Concepts from Product ideas Product Concept captures the product benefit, product usage details….image details Concept Testing : Projective techniques amongst target consumer segments or end user segments

Product Idea To Product Concept : Case Illustration

 

 

Product Idea: Hair oil to fight hair problems…dandruff, greying, hairfall etc Product Concept 1: Herbal hair oil for strong hair Product Concept 2: Hair oil + Anti dandruff agents for Dandruff Product Concept 3:Hair oil + sunscreens for greying Product Concept Test : amongst hair oil users

Product Concept vs Positioning Concept
  

  

Product positioning Idea: A specialized hair oil to fight dandruff Pdt Positioning Concept 1 : A herbal hair oil containing ingredients which also fight dandruff Pdt Positioning 2 : An effective dandruff treatment oil, which is better than other dandruff treatment products TARGET SEGMENT Concept Test 1 : Hair oil users having dandruff Concept Test 2: Anti Dandruff Product users also using hair oil

Product Approval Process: GATE
BUSINESS STRATEGY PRESENTATION  Presentation of the Product Concept to the Top Management Team for Approval  Presentation to include the Marketing Strategy :
– – –

Market size, structure.Consumer analysis (why?) Product Opportunity…volumes, profitability, resources,time frames (what?) Long term strategy,projected financials ( how?)

Business analysis:Estimating Sales, Costs & profits, financial paybacks GO or NO GO

Stage 2 : Product Development

Technology Brief

Project handover to the Research & Development Team to develop a “Technical solution” to the Product Need..within specified time frame & cost considerations The Technical Task : Example:

“Effective Dandruff Hair oil”: A coconut hair oil which reduces the dandruff flakes, & does not freeze during the winter months “Fairness Soap” : A wash off product ( soap) which provides UV protection for a minimum of 5 hours post bath

Product Development
 Product

Brief:For the completion of the actual product & packaging development  Quality Function Deployment ( QFD): a technique to translate consumer needs & wants into a technical concept or design
– –

Marketing & R&D work towards a joint solution Translation of marketing inputs ( consumer needs, wants & perceptions) & R&D factors ( design attributes & specs) via a relationship matrix

Product Tests & Concept Tests ( Concept Use Test)

To finetune the product attributes according to consumer needs Product form tests: product attributes, delivery system, colour, shape, perfume etc

Example: “playtime” & absorbency of a lotion and foam & after wash perfume of a detergent : important parameters of Quality Example: Shampoos in sachets and Lip Balms in tubes : deliver Convenience

Packaging options: size , colour, design , finish etc

Clinical Tests
    

 

To quantify the product performance Product usage amongst the target consumer Technical calibration of before & after use Often used in communications as “ Product Claims” Example: Fair skin over 6 weeks or Twice as effective as other washing powders Expensive & time consuming Competitive attack : High Legal sensitivity

Completion of a Benched Product
 Preparation

of a product & packaging

prototype  Quality checks to test stability & other parameters  Issue product Raw Material & Packaging Material specifications to the Manufacturing Department for the Commercialization stage.

Stage 3: Market Testing of Brand Strategy

Brand Strategy
 Brand

Positioning : Benefits, competitive advantage  Target Segment Definition  Marketing mix elements ( product , branding, packaging,price, promotion, distribution)  Communication development  Marketing Plan  Brand financials

Market Testing Methods

Test Market launch:
– – – –

Select markets ( Strong & weak) Launch prototype product with complete support Expensive, time consuming but reliable Issues on Confidentiality Simulate a test market situation Sample consumers exposed to advertising Map responses before & after product placement

Simulated Test Market
– – –

Testing Parameters
 Volume

Validation  Key measures: awareness,trial, repeat, adoption, purchase frequency  Communication Effectiveness  Pricing Test  Priority Markets  Finetune product / packaging  Image Indicators

Stage 4 : Commercialization

Project Management : Manufacturing Interface
 Plan

project Schedules  Allocate responsibilities  Control Brand Decisions  Co ordinate inter functional activities  Manage changes

Sales Target Setting : Sales Interface
 Market

Prioritization  Seasonal Skews  Distribution Plan  Selling Strategy

Stage 5 : Market Rollout

Product Launch : Front Stage
 Sales

Launch Conference: Product background ,market analysis,product support, selling tools  Product placement: Retail briefing, displays, incentives…below the line activities  Media Break

Important Tracks : Back Stage
     

Monitor stock distribution, movement, inventory control Monitor sales- areawise, outletwise, SKU wise Monitor effectiveness of inputs – displays, promotions Monitor advertising effectiveness Monitor media effectiveness Take corrective action : where ever & when ever required


Business Potential

Brand Values

Marketing Mix: Segment Product/Pkg Mktg Target Price Plan Position Place Promo


Sales Plan

Busi. Obj.

Mktg Obj

Mktg Obj

Sales Obj



Business Strategy Powering the Engine

Business/ Growth Potential: Analyse CompanyCompetition- Consumer G r o w t h C h a r t
N e w U s e r s I n c r e a s e U s a g I ne c Q r eu aa sn e t i tU y s a g e F r e q u


o n


U g

s e r s U s e r s d s

x is t in O S O C A N

t h e r B r a n W I T C H w N n B I B r a n d A L I Z





Brand Fit: Image- Identity- Proposition-Position

Growth Strategies

Intensive Growth Opportunities
1. 2. 3.

Current Mkt New Market

Market Penetration Strategy Market Development Strategy Product Development Strategy



2 Diversify Current Pdt New Pdt

Integrative Growth Opportunities
Backward( Supplier), Forward( Distribution), Horizontal( Competition)

Diversification Growth Opportunities

Market Penetration Strategy: Increase Mkt Share
G N e w U s e r s I n r o w t h U C h a r t c r e a s e s a g I ne c Q r e u a a s n e t i U y s a t





U g

s e U

r s s e n r s d s

x is t i n O

t h e r B r a S W I T C H O w N N n B I B



r a n d A L I Z





Market Development Strategy: Increase Availability
 New

User Groups / Consumer Markets  New Distribution Channel  New Location/ Region

Product Development Strategy
 Additional/

New Features  Improved Quality

Growth Strategies
G A t t r a c t N e w U s e r s t o r o w t h e t h B C h a r t o r e U s a g e r a n d M

C E g

o n v e r t N o n - U s e r s o f t h e P I dn tc rC e aa t s e i g o r y h e n g t o c c a M a r k e t P e n e t r a t i o n S t a r t e g Uy s a g e F r e q u e n c y o : U p g r a d e T o o t h p o w d e r u s E e gr s : B o r ut o s o h t i hn pg a T s et e e t h t t e r N e w M a r k e t S e g m e n Mt s o r e U s a g e p e r O M a r k e t D e v e l o p m e n t S t r a t e U g sy a g e A m o u n t o r Q g : C o m p u t e r s f r o m O f Ef i cg e : A t o p H l y o m h e a m s p e o o U p s t w ic e w g it c h C o m p e t i t o r 's U s e r s N t oe w y o / u D r i Bf f er ar B r a n d S w i t c h i n g N e w : F a ir & L o v e l y u s e r s s w i t c E h g i n : g M t i ol k F m a en n d t U s e s U s e s ia r e d v ef o r r D e i E n


Growth Path
     

Britannia Cheese: Major player in Niche market Cadbury’s Dairy milk: Leading the Chocolates market. Nestle Frugurt: First Mover of the Flavoured yoghurt market. Pepsi Cola: Less than 30 % share in a Competitive market, dominated by Thums Up & Coke Bisleri : First mover of the Mineral water market. Lost its position to Kinley. Onida TV: Erstwhile Market Leader in a competitive Market.

Competitive Analysis- Porter’s Model
Five Competitive Forces determine Industry Profitability – Threat of New Entrants/ Entry of New Competitors

Entry Barriers: Market Leadership, Brand identity,Distribution, Capital Reqt, Technology, Govt. Policy, Switching Cost

Threat of Substitutes….Mobiles to Telephones, Shampoos
to hairoils  Price- Value equation, Switching cost

Bargaining Power of Buyers….Instore Labels

Buyer concentration/ information/ volumes/ switching costs, Ability to backward integrate, substitute products, relative switching costs, price sensitivity

Porter’s Model

Bargaining Power of Suppliers…Godrej Real Good
Chicken, Diamonds  Differentiation of inputs, Importance of volume, Forward Integration ability, Relative switching Costs

Rivalry amongst existing competitors
 Product

Differentiation, Brand identity, Industry growth, Market penetration, Operating Costs, Exit Barriers

Competitive Strategies

Based on Level/ Nature of Competition

Cost Leadership Strategy
– – –

Lower Cost of Production than its Competitors May or May NOT be at the Lowest price Ensures Higher returns which it can use advantageously against the Competitor Differentiating the Product/ the Offering in the minds of the Consumer From Product Innovation to Brand Building , all aim to create a sustainable competitive advantage Selecting only a certain segment/ group in the entire market… & then ensure a cost advantage over the competitors or a point of differentiation to attract the consumers.

Differentiation Strategy …. Competitive Advantage
– –

Focus Strategy

Understanding Business Strategies
Underlying Factors of a Business Strategy Market Attractiveness:  Market Potential of the Category…. Market Size & Market Growth Competitive Position:  Level of Competition in the Category …Market Share & Relative Market share of the players i.e. Market Share Relative to the largest competitor. Where the “Market” or the Potential User Segment ( those who will use the pdt) is first defined by the Marketer, & then quantified. While the competition is accordingly determined.

The Strategy Matrix

Market Competitiveness

Hi Innovation Differentiation Focus Expansion Hi Market Attractiveness Lo Lo

Business Strategies of Brands

Growth / Market Expansion….Market Leader Strategies – When the Market Potential is high, & the level of competition is minimal – Objective to build a User base. – High Investment Required over a period of time Eg : Creation of the Deodorants category in India by Rexona. Differentiation/ Competitive Advantage…Market Challenger Strategies – When the Market Size is high, but there are strong existing competitors one has to deal with. – Objective to gain market share through Brand switches. – Medium- High Investments Eg: Introduction of Britannia Milkman, in the dairy pdts mkt dominated by Amul & Nestle.

Business Strategies of Brands
Focus/ Specialization….Market Nicher stategies – When Market Size is limited, no major competitors – Objective to focus on & gain ownership of a particular target segment Eg: Launch of Loreal Hair Colour in India…focused on Beauty Parlour distribution Innovation+ Significant Cost advantage…Frontal/ Encirclement Attack strategy – Need a lot of consideration before entering such a market – Objective to displace competition Eg: Launch of Pond’s Body Lotion at a Low Price Point in the Skincare Market..threatening the leadership of Lakme Maximum Moisturiser.

Marketing Strategies
Based on Market Position

Market Leader:

Market Expansion Strategy…Market Growth strategies  Developing New Users- convert non-users to users of the Product Category Eg: Airlines flexible fares to attract Rail Passengers.  Developing New Uses for the Product …New applications, new markets. Eg: Maggi noodles … from choice cuisine to commonplace easy to make snack food/ tiffin.  More Usage – Increase amount used or frequency of use of the Product Eg: Toothpastes promoting twice a day brushing Defense Strategy…Through continuous innovation ( Brand Revitalization Strategy)

Marketing Strategies
Based on Market Position

Market Challenger:

Attack Strategy- Competitive
  

Frontal attack- Pitched against Competitor’s Strength
– –

Eg: Pepsodent- Fights germs Better than Colgate Eg Anchor Toothpaste as 100% Vegetarian, unlike others

Flank attack- Bring to light Competitor’s Weakness Encirclement Attack- Close in on Competitor with Multiple Attacks on all fronts

Eg: Airtel Eg: Reliance Mobiles with Technology, Nirma with Price Eg: Nihar Coconut Hair Oil

 

Bypass Attack – Deviate to unrelated products/areas
– –

Guerilla attack- Harass Competitor with small frequent attacks

Marketing Strategies
Based on Market Position

Market Follower: Me- Too Strategy- Following or copying the moves of the Key Competitor

Eg: Detergents…Ghari, Coconut Hair oil…Cococare, CocoRaj Specialist/ Focus Strategy- Building Customer goodwill where competition is weak or not present or not interested. Eg: Gillete in men’s pdts Low volumes, but high growth & high margins. Eg: Loreal Hair Colour

Market Nichers:
– – – –

Legal Aspects of Brand Management

  

New Product Development: Product classification/ Excise classification, Trademark registration, copyright, patent, FDA regulations on Brand name, formulation & packaging Advertising & promotions: Claim substantiation, ASCI rulings, MRTP regulations Sales & Distribution: Distributor relationship, region specific issues Manufacturing:Manufacturer relationship, product specific issues