Product and Brand Management (2)
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Transcript of Product and Brand Management (2)
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Product and Brand Management
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What is a product?
y A product is any offering by a company to a market that
serves to satisfy customer needs and wants.
y It can be an object, service, idea,etc.
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New Product Development
y Most new product development is an improvement on
existing products
y Less than 10% of new products are totally new concepts.
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Success rate of new products
y The success rate of new products is very low less than 5%.
You have to kiss a lot of frogs to find a prince.
y Product obsolescence is rapid with improvements in
technologyy Shorter PLCs
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Product Development Stages
y Idea generation
y Idea screening
y Concept development and testing
y Concept testingy Conjoint analysis to find out the best valued attributes by
consumers
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Business analysis
y The most customer appealing offer is not always the most
profitable to make
y Estimate on costs, sales volumes,pricing and profit levels are
made to find out the optimal price volume mix.y Breakeven and paybacks
y Discounted cash flow projections
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Market testing
y Test markets
y Test periods
y What information to gather?
y What action to take?
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Commercialization
y When? (Timing)
y Where? (Which geographical markets)
y To whom? (Target markets)
y How? (Introductory Marketing strategy)
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Product LevelsIn planning its market offering, the marketer needs to address five product levels in any product
or service. Each level adds more customer value, and the five constitute a customer value
hierarchy.
y Core benefit Eg:A hotel guest is buying rest and sleep.The purchaser of a drilling machine is
buying holes.
y Basic product: the marketer prepares an expected product, a set of attributes and conditions
buyers normally expect when they purchase this product. Eg: a hotel room includes a bed,
bathroom, towels desk and a closet.
y Expected product : the marketer prepares an expected product, a set of attributes and
conditions buyers normally expect when they purchase this product. Eg: Hotel guests expect a
clean bed, fresh towels, working lamps, and a relative degree of calm.y Augmented product Other add on features. Eg: Hotels withTV Sets, Remote & Satellite
Connection.
y Potential product - encompasses all the possible augmentations and transformation the product
or offering might undergo in the future. Eg:Tata Sky Plus Special recording feature to the DTH
Service.
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Customer Delight
y When you exceed customer expectations
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Product classification
y Durable
y Non durable
y Services
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Consumer goods classification
y Convenience goods
y Shopping goods
y Specialty goods
y Unsought goods
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Industrial goods classification
y Materials and Parts
- raw materials
- manufactured materials and parts
y Capital itemsy Supplies and business services
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Product Mix
y The assortment of products that a company offers to a
market
y Width how many different product lines?
y Length the number of items in the product mixy Depth The no. of variants offered in a product line
y Consistency how closely the product lines are related
in usage
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Product Line decisions
y Product rationalization
y Market rationalization
y Product line length
too long when profits increase by dropping a productin the line
too short when profits increase by adding products to
the product line
y Line pruning capacity restrictions to decide
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Brand
y A name becomes a brand when consumers associate it with a
set of tangible and intangible benefits that they obtain from
the product or service
y
It is the sellers promise to deliver the same bundle ofbenefits/services consistently to buyers
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Brand Equity
y When a commodity becomes a brand, it is said to have
equity.
y The premium a brand can command in the market
yThe difference between the perceived value and the intrinsicvalue
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Levels of meaning
y Attributes
y Benefits
y Values
y Culturey Personality
y Users
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Brand Powery Customer will change brands for price reasons
y Customer is satisfied. No reason to change.
y Customer is satisfied and would take pains to get the brand
y
Customer values the brand and sees it as a friendy Customer is devoted to the brand
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Brand Equity Competitive
Advantages
y Reduced marketing costs
y Trade leverage
y Can charge a higher price
y Can easily launch brand extensionsy Can take some price competition
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Managing Brand Equity
y Brand Equity needs to be nourished and replenished. We
must not flog the brand for equity to be diluted or dissipated
y Store brands
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Advantages of branding
y Easy for the seller to track down problems and processorders
y Provide legal protection of unique product features
y
Branding gives an opportunity to attract loyal andprofitable set of customers
y It helps to give a product category at different segments,having separate bundle of benefits
y
It helps build corporate imagey It minimises harm to company reputation if the brand
fails
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Brand parity
y Consumers buy from a set of acceptable/ preferred brands
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Umbrella Brandy Products from different categories under one brand
y Dangerous to the brand if the principal brand fails
y Sometimes the company name is prefixed to the brand. Insuch cases the company name gives it legitimacy.Theproduct name individualises it.
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Naming the Brand
y Product benefits
y Product qualities
y Easy to pronounce
y Should be distinctivey Should not have poor meanings in other languages and
countries
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Brand strategy
y Line extension existing brand name extended to newsizes in the existing product category
y Brand extension brand name extended to new productcategories
y Multibrands new brands in the same product category
y New brands new product in a different productcategory
y
Cobrands brands bearing two or more well knownbrand names
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Brand Repositioning
y This may be required after a few years to face new
competition and changing customer preferences
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Packaging
y Includes the activities of designing and producing the
container for a product
y Packaging is done at three levels
- primary- secondary
- shipping
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Packaging as a marketing tool
y Self service
y Consumer affluence
y Company and brand image
y innovation
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Designing packaging
y Packaging concepts
y Technical specifications
y Engineering tests
y Visual tests
y Dealer tests
y Consumer tests
y
Packaging innovationsy Environmental considerations
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Labels
y Identification
y Grade classification
y Description of product
yManufacturer identity
y Date of mfg., batch no.
y Instructions for use
y Promotion
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Labels as a marketing tool
y Labels need to change with time or packaging changes to
give it a contemporary and fresh look