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Product and Brand Management

Session 2 Category, Competitor and Customer Analysis Francis Rodrigues


Topics Covered:

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Introduction to Product Management Role and Operations of Product Managers in Marketing Product Analysis – Category/Customer/Competitor Brand Vs. Product, Brand Elements Brand Identity Brand Equity Brand Building Strategies

Category Attractiveness Analysis

Aggregate category factors Category Size  Category Growth  Stage in product Life Cycle  Sales Cyclicity  Seasonality  Profits  .

Attractiveness of Market Variables Attractiveness High Market Size Market Growth Sales Cyclicity Sales Seasonality Profit Level Profit Variability + + + Low + + + .

Category Attractiveness over the Product Life Cycle Sales Maturity Growth Introduction Stage of product life cycle Category size Category growth Decline Introduction Growth Maturity Decline Time Small Low Moderate High High Large Low Low/high Moderate Negative Low Low Category attractiveness .

Category Factors Threat of new entrants  Bargaining power of buyers  Bargaining power of suppliers  Current category rivalry  Pressure from substitutes  Category capacity  .

Five Forces Analysis New Entrants Suppliers Rivalry Buyers Substitutes Michael Porter’s Five Force Model .

.800 .000 to 1. above 1. 1.g. The combined shares of the three largest firms 3. The share of the largest firm 2.The Sum of Squared Shares of the Firms in the Industry . 1 percent) 4.Use Thresholds: below 1000.800.Industry Concentration Measures 1. The share of the largest firm divided by the share of the next three largest competitors 5. Herfindahl-Hirschman Index (HHI): . The number of firms with at least x percent of the market (e.

Buyer Bargaining Power is High When: Product bought is a large percentage of the buyer’s cost. Product bought is undifferentiated Buyers earn low profits Buyer threatens to backward integrate Buyer has full information Substitutes exist for the seller’s product or service .

Supplier Bargaining Power is High When:  Suppliers are highly concentrated. that is. dominated by a few firms  There is no substitute for the product supplied  Supplier has differentiated its product or built in switching costs  Supply is limited .

Major Characteristic of Categories Exhibiting Intensive Rivalries  Many or balanced competitors     Slow growth High fixed costs Lack of product differentiation Personal rivalries .

Impact of Category Factors on Attractiveness .

Environmental Factors Technological  Political  Economic  Regulatory  Social  .

.Typology of Technical Developments * Includes agronomic and biomedical developments.

Conceptualizing Political Risks .

Business Implications of Social Changes  The Shrinking Day Connected Individual Body + Soul   .

Category to Competitor Analysis • • • Define the competitive set  Boundary Industry Analysis  Macro level Competitor Analysis  Micro level .

e.Competitor Analysis System Secondary data Primary data Key questions: Who are they? What are the competing product features? What do they want? What is their current strategy? - - Differential competitor advantage analysis i. Who has the competitive product advantage? What are they going to do? .

Key Questions to Ask • • • • • Do you know…? What are the Capabilities of competitors? What are the Competitors’ Objectives? What are the Current Strategies being used and how successful have they been? What are their likely Future Strategies? .

Secondary Sources of Competitor Information Customer communications Consultants Trade press Internet Internal sources Local newspapers Annual reports Patent filings Secondary data Promotional literature Business press Trade associations News releases Electronics databases Government .

Primary Sources of Competitor Information Investment bankers Consultants/ Specialized Firms Sales force Primary data Employees Customers Suppliers .

Other Sources of Information • • • • • Help-Wanted Ads Reverse Engineering Monitoring Test Markets Hiring Key Employees Plant Tours .

Information Sources with Ethical Considerations • • • • Aerial Reconnaissance Buying/Stealing Trash (Garbology) Printers Phony Want Ads .

Step1: Assess Competitors’ Objectives    Three Categories Market share or profit Issues to consider  Ownership structure  Operating philosophy and procedures  Country of origin .

Step 2: Assess Competitors’ Current Strategies  Assess competitors’ Marketing Strategy  Target Market Selection  Core Strategy (Value-chain comparison)  Implementation (Supporting Marketing Mix)  Pricing  Promotion  Distribution  Product/Service Capabilities: Product Features Matrix .

Value Chain Support Activities Firm Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing and Sales Service Primary Activities .

Salespeople. Customers  .Step 2: Assess Current Strategies (Cont’d) How to Assess Competitors’ Strategies  Two key elements of a strategy:  Segments appealed to  Core strategy  For Industrial Products: Sales literature  For Consumer Products: Media Tracking (SOV)  Marketing Mix variables: Ask Distributors.

Step 2: Assess Current Strategies (cont’d) Assessing Competitors’ Technological Strategy 1. Competitive timing: initiate versus respond 6. R&D investment level 5. Level of competence 3. Technology selection or specialization 2. Sources of capability: internal versus external 4. R&D organization and policies .

Step 2: Assess Current Strategies (cont’d) Four Basic Technological Strategies 1. Market Segmentation . First to Market 2. Late to Market or Cost Minimization 4. Second to Market 3.

Step 3: Assess Competitors’ Capabilities Ability to conceive and design  Ability to produce  Ability to market  Ability to finance  Ability to manage  .

What to do with all the information?  (Differential Advantage Analysis) Simplified Competitive Analysis: Paints (Indian Market) Market Factors Nerolac ICI Asian Paints Sherwin Williams Nippon Commitment to Paints business Financial strength 2 5 3 1 2 1 3 1 4 2 4 5 4 5 Brand awareness 3 Management ability 3 Highest = 1 Lowest = 5 2 1 5 4 .

Step 4: Assess A Competitor’s Will and Future Strategy   Questions to assess a competitor’s will .How visible is the commitment to the market? .How crucial is this product to them? .Who is involved? To Figure out Future Strategy  Forecast with historical data  Simulation with historical data  Game Theory .

A Competitive Conjecture Process First period Our total outcome Second period Should we cut price? .

In summary. you need to know  Major Competitors’ Objectives Major Competitors’ Strategies  Target Market  Core Strategy Major Competitors’ Capabilities   .

Customer Analysis .

Where consumers buy When consumers buy How consumers choose Why the prefer a product How they respond to marketing programs Will they buy it (again)? .What we need to know • • • • • • • • Who buy and use the product What consumers buy and how they use it.

Communication and Promotion strategy  Product developing. brand strategy. promotion strategy  Brand equity. . product development  Distribution strategy  Distribution and communication strategy  Product development. promotion programs.What we need to know • • • • • • • • Who What Where When How Why How Will  Target for product development and communication  Consumer values. product strategy.  Communication.

Who buy and use the product  Buyer VS users  Initiator – who identify the need for product  Influencer – who has informational or preference inputs to the decision.who makes the actual purchase.  Purchaser .  Decider – who makes the final decision through budget authorization.  User – who actually ‘use’ or ‘consume’ the product .

Buying Roles and Needs/Benefits Sought .

geographical location. traveling. education. occupation. and stage of life cycle) Socioeconomic ( income. sex. . art. Personality 4. Demographic (age. 3. etc. 2.Basis for describing consumers 1. social class) Psychographic and values or Lifestyle (sports. music.

nationality. Psychographic  Social class.. benefits. user status. race. occupation. lifestyle.Major Segmentation Variables for Consumer Markets     Geographic  Region. attitude towards product. personality Behavioral  Occasions. density. city. loyalty status. gender. education. religion. family size. usage rate. . climate Demographic  Age. income.

capabilities Purchase-function organization. size of orders Buyer-seller similarity.Major Segmentation Variables for Business Markets    Demographic    Industry. power structure. location Technology. Urgency. general purchasing policies. purchasing criteria. loyalty Operation variables Purchasing approaches   Situation Factors   Personal Characteristics . company size. attitude towards risks. Nature of existing relationship. specific application. user/non-user status.

consumer values. Recency. Monetary value Brand switching How. Frequency. with what else? Purchase pattern  Product assortment  Use  .What customer buy and how they use it     Benefits:  Product benefits.

Potential customers Unaware Aware Accepting willing to use Attracted – positive attitude Active – buy the product Advocate – buy. actively encourage others to buy . loyal.

Where consumer buy Things to consider:  Convenience  Price advantages  Reliability  Expected after sales service .

When consumer buy Things to consider:  Seasonality  Needs  Purchasing power  Shelf-life of products  Consistency of supply  Price consistency or price expectation .

How Customers Choose
Finding how consumer choose a product (from many products and brands) in a category? Multiattribute Model Questions Which attributes do customers use to define a product? What are the perceptions of the products on the attributes? What are the importance weights? What decision rule is used to combine the information?
  Compensatory Noncompensatory

1. 2.
3. 4.

Bank Perceptual Map
B• A•
Courteous personnel

C• D•
Convenient ATM locations


Why consumer prefer a product
Customer value of a brand composes of 3 basic elements: Importance of the usage situation Effectiveness of the product category in the situation Relative effectiveness of the brand in the situation Sources of Customer Value
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1. 2. 3.

Economic Functional Psychological: Brand Equity

Attachment .Measuring Brand Equity 1. Attitude 4. Awareness 2. Associations 3.

Manifestation of customer value Signs of the value of a product. (NOTE: Value can more or less than price)  Price  Price sensitivity  Satisfaction  Complaints or compliments  Word of mouth  Margin or profit contribution  Sales  Competitive activity  Repeat purchase rate .

3.Assessing the Value of the Product Category 1. 4. Determine the uses of the product Estimate the importance of the uses List competing products for the uses Determine the relative effectiveness of the product category in each usage situation . 2.

Assessing the Value of the Brand/Product • • • Direct Ratings Constant Sum Ratings Graded Pair Comparison • Conjoint Analysis .

Paired Comparison Example: Soft Drink Preference .

Customer survey-base methods. Analyses of past data . 4. 3.How consumers respond to marketing programs Methods for assessing sensitivity: 1. Experiments. controlled setting or actual market observation. Expert judgment 2.

Satisfaction    Expectation of performance / quality Perceived performance / quality The gap between expectation and performance 2. 2 major factors: 1. Intention .Will consumers buy the product (again?)  To estimate expected repeat purchase in order to forecast sales and design marketing mix.

 Yet tailor made for individuals is too costly .Consumer Segmentation Why?  Consumers are different. Each individual is unique.  Consumers can be grouped somehow. who have something in common or who prefer similar things.

3. 6. 4. 2. 5. Identifiable Sizable Reachable Respond differently Coherent Stable .Desirable criteria for segments 1.

e.g.Methods for Market Segmentation     Cluster analysis  Collect data about descriptors and behaviors variables from a sample of customers and then form groups. Tabular analysis  Categorize based on consumer response. Regression analysis  Use model. Usage = a + bX1 + cX2 + dX3 Latent class analysis  Brand switching data .

Methods for market segmentation  Descriptive Purpose Cluster Analysis Tabular Analysis  Prescriptive Purpose Regression Analysis: Individual-based Latent Class Analysis: Segment-based .

Cluster Analysis Illustration .

Where consumers buy When consumers buy How consumers choose Why the prefer a product How they respond to marketing programs Will they buy it (again)? .Summary : What we need to know • • • • • • • • Who buy and use the product What consumers buy and how they use it.