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Product Management 5

Brand Business
 Business

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

For New Product Development
BUSINESS STRATEGY

MARKETING STRATEGY

MARKETING PLAN

For Existing Product/ Brand
BUSINESS STRATEGY

BRAND STRATEGY/ BRAND PLAN MARKETING PLAN

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

Analysis

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

BRAND-WAGON

Business Potential

Brand Values

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

Analysis

Sales Plan

Busi. Obj.
BUSINESS STRATEGY

Mktg Obj

Mktg Obj

Sales Obj

MARKETING STRATEGY

SALES STRATE

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

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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

1

3

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

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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

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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

E S E

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