BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT
SECTION 2BBrand Management and the Firm
Corporate Strategy and Customer Orientation:Understanding Wants, Needs, and the Competitive Environment
ALAN L. WHITEBREAD
PORTER’S FIVE FORCES MODEL:Industry Analysis
See Michael E. Porter, Competitive Strategy, New York Free Press, 1980, for more information.
What is the amount of rivalry among existing competitors?
What is the bargaining power
of your key customers?
What is the threat of
substitute products and/or
services?
What is the bargaining power
of your key suppliers?
What is the threat of
significant new entrants?
You should spend some time looking at competitive analysis models and reports on the internet for suggestions for your business.
COMMON FIRM-SPECIFIC ADVANTAGES
• INTELLECTUAL PROPERTY• KNOWLEDGE MANAGEMENT
– Databases, systems, processes, …
• BRANDS [other than IP]• CONTROL OF MATERIALS / COMPONENTS• DISTRIBUTION CONTROL [selective +]• CAPACITY / CAPACITY FLEXIBILITY• TECHNOLOGY• HUMAN RESOURCES• ?
COMPETITIVE ADVANTAGE OF THE FIRM [Basic competitive strategy*]
DIFFERENTIATIONPerceived value
[Coke vs. Pepsi]
OVERALL COST LEADERSHIP[Commodities,
Dell]
NICHEUnderstanding and focus
No direct battles with major competitors!
INDUSTRY
WIDE
MARKET
SEGMENT
ONLY
Customer Perceived Uniqueness Low Cost Position
COMPETIVE
SCOPE
COMPETITIVE ADVANTAGE
LOW COST STRATEGIES MAY BE ACHIEVED THROUGH
• Location – Distribution centers near major roads
• Low-cost suppliers– Total systems cost approach
• Process technologies• Product design [clothing brands example]
• Scale economies – Volume; timing; speed to market
• Supply [value] chain consolidation• ?
DIFFERENTIATION STRATEGIES MAY BE ACHIEVED THROUGH
• Improved performance [Intel]
• Mass customization [Dell]
• New functional capabilities [cell phones, TVs]
• Product tailoring
• ?
LEGAL BOUNDS OF COMPETITION
• Federal protection– Sherman Act– Clayton Act– Robinson-Patman Act [resellers]– many more
• Agencies– FTC– FDA– CPSC
ATTACKING COMPETITORS:GAP ANALYSIS*
CHANNELS OF DISTRIBUTION
PRODUCTS
SERVICES
APPLICATIONS
13
2
2
MARKETS / SEGMENTS
GAPS - INCREASE INDUSTRY MARKET POTENTIAL
Demographic changes The baby boom meant more baby food
An aging population means more medical services, …
New uses or user segments Clorox® expands with color safe bleach, and …
Innovative product differentiation
Function / price many levels of features / benefits for DVD players
Go see a store selection.
Add new product lines Crayola® crayons, then bags, tablets, shirts, …
GAPS – PRODUCT LINE GAP
Fill out existing lines Automobiles, trucks AND SUV’s
Create new elements / extend current lines
Miller beer + Miller Lite + Miller Ice
GAPS - DISTRIBUTION
Expand coverage New product introduction
Begins regional and expands nationwide
Increase intensity TOTAL® toothpaste tries to maximize the number of toothpaste outlets
Increase exposure Kellogg’sTM obtains more shelf space for their cereals
GAPS - USEAGE
Stimulate non-users Look at the wine industry program.
Increase consumption by light users
“Did you have your Wheaties® this morning?”
Increase consumption per use
2 Alka-Seltzer® per package
GAPS - COMPETITIVE
Penetrate substitute’s position
Felt tip pen vs. ball point pen
Take share from competition
Gel pens from …
GAPS – DEFEND THE FIRM’S POSITION
Increase firm’s sales New generation of computers
PRODUCT LINE PLANNINGTHE APPLICATION OF GAP ANALYSISPRODUCT PLACE PROMO-
TIONPRICE COMPETI-
TION
Features Expand channels
Stimulate light users
How to compete
Brands Intensify coverage
Attract non-users
Penetrate / Substitute
Market segments
Demographic changes
Use more each time
Model number
Services added
Price is the last competitive weapon you should use. Someone can always have a lower price!
A Determinant Gap Map
http://www.northpark.edu/sbnm/documents/BSE3640-McMathWeek8.ppt#282,8,A Determinant Gap Map
A Determinant Gap Map
http://www.northpark.edu/sbnm/documents/BSE3640-McMathWeek8.ppt#282,8,A Determinant Gap Map
THE PRODUCT CONCEPT
BrandName
QualityLevel
Packaging
Design
Features
Delivery& Credit
Installation
Warranty
After-Sale
Service
CoreProduct
orService
CoreProduct
orService
Actual / BrandedProduct
Actual / BrandedProduct
CoreProduct
CoreProduct
AugmentedProduct
AugmentedProduct
THE PRODUCT CONCEPT:APPLIED TO THE AIRLINE INDUSTRY
AUGMENTEDPRODUCT
AUGMENTEDPRODUCT
ACTUAL / BRANDEDPRODUCT
ProfessionalPilots
Meals /Snacks
Baggage Checkingand Handling
CourteousFlight
Attendants
Frequent FlyerProgram
Ample andeasily
availableparking
Skycap services On-site or veryclose hotels
Mass transitto / fromairport
COREMovement from
point A to point B
COREMovement from
point A to point B
Convenientairport
Airportsecurity
POTENTIAL PRODUCT = ?
HOW MARKETING SATISFIESCONSUMER NEEDS
LO3
The 4 P’s: Controllable Marketing Mix Factors
1-20
PRODUCT
-PRODUCTS-SERVICES
-Product / Service Combos
PRICEPROMOTION
Integrated
Marketing
Communications
PLACE
THE MARKETING MIX - 4 P’s
PRODUCT PRICEPROMOTIONPLACE
Creates the ValueCommunicates
the valueProves the value
with benefits
In rank order, what are the three most important benefits?
In rank order, where do consumers prefer to purchase the item?
What are the most effective ways for consumers to recognize the benefits?
What are the most effective ways for consumers to recognize the value of the benefits?
STRATEGIC GROWTH OPTIONS
• NPD• M&A• JV or other types of venturing• Licensing• Franchising• Acquire external technology• Six Sigma
– Major accounts
• Strategic alliances– Tom Byers [SYMANTEC] video
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