Polytechnic University of the Philippines

Anonas, Sta. Mesa, Manila

LESSON 5:
PRODUCT STRATEGIES

Submitted to:
Dr. Leonardo G. Adap

Submitted by:
Dino, Roi Lawrence A.
Fernandez, Twiqsee Margaux
Luna, Nikki C.
Pineda, Sharmaine C.

ACADEMIC YEAR 2019 – 2020

LESSON 1: NEW PRODUCT STRATEGY

WHAT MAKES YOUR PRODUCT MARKETABLE?

It is very well understood that it is a challenge for every entrepreneur to

make his/her own product to have its own unique selling point. Having a great

idea of a product is just a small part of their success, but what matters is their

preparation – from the business plan, market studies, demand estimation, and

their own marketing strategy. This is where the real competition starts.

CREATING A BUSINESS MODEL

Business model refers to a product concept that seeks to make money

and make your product known. This model aims to make one’s business

sustainable. This serves as a machine that generates profit, which covers the

costs of the operation and returns a good investment. If the business cannot

accomplish this, it will definitely fail.

There are several ways to make a business model, depending on what fits

your product idea the best. The following are some examples of business

models:

1. FACEBOOK

 Facebook began as a “pure” social media site, they don’t have a

clear business model in their mind. As time goes by, their business

model now became definite: it is to make a huge pool of users as

possible and force them to be the audience for advertising

 revenues. In this way, they were able to gain profit, much more

than expected.

2. BUFFETS

 Buffets has been a trend. It became a good alternative for “a la

carte” fair restaurants. Buffets like Vikings, Buffet 101, Cabalen use

a model that is based on statistics: even though it is a ‘’eat all you

can”, they do ensure that an average person cannot consume more

than what he/she has paid for.

3. JOLLIBEE FOOD CORPORATIONS

 Behind Jollibee Food Corporations’ success is a stable business

model. Food quality, price-value relationship, store location and

ambiance, and efficient operations keep their business in the

competition. Through the years, JFC continues to reach milestones

and more success, because of holding into a stable business

model. As of June 30, 2019, it has 3,195 operating restaurant

outlets in the country.

Aside from being costumer dependent, there are still other alternative

forms of revenue generation that you might as well want to consider:

1. ADVERTISING

 Advertising as a form of business model emphasizes with the sale

of
 “advertising’’ as their main source of revenue or profit. You get the

product covered through promotions.

2. SPONSORSHIP

 According to Howard (2014), sponsorship is a fixed promotion. It is

usually longer than advertising. Sponsorship aims to promote

among the large and general masses – getting noticed by as many

people as possible.

3. DONATIONS

 This business model is usually used by non-profit organizations and

some game developers. These people offer their products and

services for free, and rely totally to the donations given to them by

their costumers, hoping that the money given may keep their

business going.

4. RENT OR LEASE

 Rent or lease business model is usually good with expensive

assets because the market considers renting an asset than buying

them. Renting is a payment made to the owner for the use of a said

property. Payment is made for at least as long as the lease requires

it. On the other hand, lease pertains to the contractual arrangement

 for the use of an asset, for a specific time (usually 6-12 months

long).

5. SUBSCRIPTION

 Subscription is a type of the “rental strategy”. A subscription type of

business sends products regularly to its customers in exchange for a

fixed monthly fee. An example is Amazon Prime, wherein they send

groceries to your home. Another example is the very known “Netflix”

wherein you can watch different TV shows and movies.

THE BUSINESS PLAN

Aside from a business model, another important document a business has

to accomplish is their business plan. It serves as a road map for bringing an idea

to life and making it successful. This also specifies the idea a business model

has to bring. This is a blueprint, which breaks down the details of your business

and how should it generate the profit.

Here are the essential parts of a business plan:

1. STATEMENT OF OPPORTUNITY

 The statement of opportunity refers to the target market of the

business. This describes the customers’ interests, and what would be

the business’ focus. It also discusses the demand for your product.

2. ENVIRONMENTAL ANALYSIS
  Environment Analysis refers to the external factors of your company,

it tackles the key issues and trends in the industry, which can affect

your sales.

3. MARKET ESTIMATES AND MARKET SEGMENTS

 This part pertains to the estimated size of the potential market with

possible market segments.

4. COMPETITIVE ANALYSIS

 This part is the assessment of your competition. It is an analysis of

the strengths and weaknesses of the existing competition, and may

also include the possible substitutes of the products, together with

their strengths and weaknesses as well.

5. BUSINESS STRATEGY

 The business strategy is the draft blueprint on how the ideas would

be executed like the logistics needed for the shipping of goods,

product distribution, promotions, and many more.

6. RISK ANALYSIS

 This part identifies and gives assessment to the risks, that a company

can encounter. This helps to foresee the possible things at stake,

and at the same time give possible solutions to avoid the problem, or

reduce its impact.

7. FINANCIAL FORECASTS
  This part estimates the company’s finances from the initial

capitalization, asset acquisition, working capital, overhead, and

inventory. This includes cash flows from three to five years, which will

help you determine if the cash flow is positive – meaning you are

gaining good profit.

COMPETITIVE STRATEGIES

It is a challenge for the businessmen and women to make his or her own

product competitive in the market. It has always been a question on how will a

product stand out from the rest. Here are some of the common strategies used

by businessmen, once you develop an idea.

1. LEAST COST

 One of the most important things that affects the buyers is the

affordability of a product. If the product is affordable, it attracts a

massive population. In order for a businessman to do that, he or she

must find the cheapest way to produce his or her goods and services

without compromising the quality of the product.

2. DIFFERENTIATION

 This strategy requires brand-building. What makes your product

unique, and why should the consumers buy it? Will the product be
 useful, or will it be helpful? In example, if you would want to invest to

a good car, Toyota has been a leading brand. They adapt according

to your country’s needs, depending on the geographic location. They

offer a wide range of variants.

3. NICHE

 Niche is usually used for small enterprises, since niche focuses on a

certain target market only. For example, if you were to create a

clothing line, you only offer clothes for women, or if you’re interested

in producing books for surgeons, you would only produce books

exclusively for them.

LESSON 2: SERVICE STRATEGIES

GOODS VS. WANTS

The term “product” is a generalized term, whether it is a good or service

your business has to offer, as long as it can satisfy the needs and wants of the

consumer. But it is still important to know the difference between the two.

GOODS refer to tangible products that the senses could observe. These

are the objects with physical manifestations, that can be produced, bought, and

sold by the customers. Some examples are food, clothing, and jewelry.

As stated by Chappelow (2019), there are two types of goods, the durable

and nondurable goods. Durable goods pertain to the items which can be useful

more than 3 years, like toys, home appliances, and books. On the other hand,
nondurable goods are best used less than 3 years such as medications,

cosmetics, food, fuel, and beer.

Services refer to the intangible products offered to the market. These are

the things abstract in nature. Some examples of services are delivery,

professional help, health care, and education.

TYPES OF SERVICE PROCESSES

There different types of service processes, it can be directed to the people

itself, or through possessions.

Table 1.
Types of Service Processes
Directed at people Directed at possessions

Tangible Acts People Processing Possession Processing

Airlines, hospitals, hotels, Freight, Repair, cleaning,

restaurants landscaping, retail

Intangible Acts Mental Stimulus Information Processing

Processing

Broadcasting, consulting, Legal, insurance,

education, therapy research, banking
 People processing is a type of service process that involves people. In

example, airlines deliver people from one destination to another. It becomes

possession processing – freight, where in it is the act of delivery itself.

Services can also be applied through the processing of information.

Education in example involves the passing of information from the instructor to

the students.

BUILDING UP THE SERVICE EXPERIENCE

It is important to give your customers a good service experience, since

they tend to evaluate their interaction with the company, more than the

technicalities. The following are service elements that should be taken into

consideration to build an excellent overall customer experience.

1. PERSONNEL SELECTION AND TRAINING

 It is important to choose the right personnel, especially your front-

liners because the customers evaluate their interaction with the

company. Personnel must have a pleasing personality. Personnel

must also undergo proper training to give your clients a good service.

2. USER INTERFACE

 It is important to ensure that your online services is a “quality service”

Put in mind to make them as easy to use, so the customers can

easily navigate websites.

 3. POINTS OF CONTACT

 All points of contact with the customers must be managed and

controlled, from the atmosphere of the venue, waiting areas, or even

the type of music played.

4. TANGIBLE MOMENTOS

 To stimulate recollection to your customers, give them momentos that

will keep them coming back for more. Momentos can be in the form of

thank you cards, giveaways, and gift bags.

LESSON 3: BRANDING

WHAT IS IN A BRAND?

A brand is a mark of distinction that can be sensed through signs and

symbols, names, design elements, and many more. It is more than just a “label”,

but a concise contract between a consumer and a producer. The following are

the functions of the brand:

1. IT IDENTIFIES THE PRODUCT OR SERVICE.

2. IT COMMUNICATES MESSAGES.

3. IT FUNCTIONS AS A LEGAL PROPERTY.

ORIGINS OF BRANDING

Back in the days of the Medieval Europe, branding is marking their

properties (cattle) with hot iron, since “brand” means “burn” in Germany. Since

literacy was rare during the early times, brands are in the forms of symbols. This
was signified by groups of people since there was a system of coats of arms and

heraldic badges to show membership.

Visual signifiers came along, where certain objects are used to stand for

something. In example, stethoscope is used to symbolize a doctor. The visual

signifiers made it easy for people identify establishments, such as market stalls.

Branding today is a necessity for businesses. Since businesses produce

goods or products for a wide distribution, it is important because there is a need

to identify the source of the product. Logos now are branded in the boxes and the

goods itself. Logos then became the explanation of one’s product.

ELEMENTS OF THE BRAND

1. TRADE NAME

 Trademarked name of the product, in example McDonald’s., Zalora,

and Nike.

2. GENERIC CATEGORY

 It is the category where your product falls under, in example fast-food

chain, clothing line, and shoes. It is important to specify this since the

Intellectual Property Office requires to do so.

3. LOGO

 It is the visual symbol or image that identifies the product.

4. TAGLINE

 It is a catchphrase, such as BDO’s “We find ways.” And Jollibee’s

“Langhap Sarap”.
 5. VISUAL CUES

 Brands can also be represented with distinctive visual identifiers,

such as the red and green bands that wrap around the outside of a

Seven-Eleven store, and the blue and yellow bands of the convenient

store Mini Stop.

6. SHAPES

 the actual form of the product or packaging

7. COLORS

 A Yellow Cab store is quickly distinguishable from afar thanks to its

bold yellow signs with black letterings.

8. SOUNDS

 Such as advertising jingles, or even very short intro sounds such as

those heard upon starting up a computer.

9. SCENTS

 Establishments such as Rustan’s and the Shangri-La Hotel have

signature fragrances made that help to create distinctive atmospheres

in their premises, even in cars.

10. TASTES

 This includes special recipes or secret ingredients, such as Conti’s

Mango Bravo and Jollibee’s fried chicken.

ELEMENTS OF LOGO DESIGN

1. KEEP IT SIMPLE.
  Simplicity gives the logo design versatility, allowing it to be used in a

wide range of media.

2. MAKE IT RELEVANT.

 The design should be appropriate to the business it is identifying – to

the industry, to the market, and to the audience it is addressing.

3. INCORPORATE TRADITION

 Logos should not pursue to be trendy but contain symbolic elements

as far as the nature of the business is concerned.

4. AIM FOR DISTINCTION

 The logo should easily stand out. Prioritize shape and form over

color. A tip is to work first in just black and white so that distinct form

is emphasized over anything else.

5. COMMIT TO MEMORY

 Great logos should be memorable even after just one quick glance.

This is useful given the rapidly moving nature of the world that we live

in.

6. THINK SMALL

 Logos may look great on a billboard but they should also be

recognizable in small executions, which will be useful when placing

the logo on small items such as zippers and coffer stirrers.

7. FOCUS ON ONE THING

  The most iconic logos have just one feature that helps them to stand

out. Incorporating more than one key element will only clutter the

mark and make it less memorable.

LEVELS OF MEANING

A brand is not just a signifier. But as a signifier, it can manage to have

several layers of meanings. The following are six levels of meanings that a brand

can have:

1. ATTRIBUTES

 Characteristics of the product or service itself

2. BENEFITS

 What consumers stand to gain from patronizing the brand, such as

peace of mind, comfort, time savings, and happiness.

3. VALUES

 The core values that the brand is identified with.

4. CULTURE

 The culture or sub-culture that a brand is associated with such as

Bacolod Chicken Inasal being expressly associated with its titular

province and Tous Le Jours from France.

5. PERSONALITY
  If the brand was a person, What personalities would it radiate to

attract its target market?

6. USER

 The specific target market or aspirational group that the brand

becomes associated or related with.

BRAND EQUITY

If there is one end goal for all of a marketer’s duties and responsibilities, it

would be the building up brand equity.

Brand equity refers to the value of the brand. Ideally, this value would be

expressed to the form of peso values. Unfortunately, figuring out the peso value

of a brand is not quite that simple to do. This is because brand equity is, for the

most part, intangible and near-speculating. That is to say, there is really no way

to figure out the exact value of a brand in real time.

Brand equity could be calculated through:

1. The Present Value |(PV) of the income stream from an average

customer of the brand, also known as the Customer Lifetime Value

(CLV). CLV is the present value of the anticipated profit stream S

(anticipated revenues minus anticipated costs) throughout the

customer’s lifetime relationship with a brand.

2. The current market size of the brand (MS).

3. The average expected growth rate of the brand from here on (G).
 4. The expected commercial lifespan of the brand (LS), which is a rough

estimate but can be set to 20 years for practical purposes.

To determine the value of the brand at any point in time, multiply first the

CLV by the MS to derive the Current Market Lifetime Value (CMLV). This

represents the present value of the total market that the brand has at the

moment.

Next, the expected growth rate G shall be factored in the CMLV and this

will yield the Market-Based Brand Value (MBBV).

BRAND VALUATION

Since there is no clear way to estimate brand equity in terms of monetary

value, marketers have resorted to utilizing nonmonetary measures of brand

value. An example of this is the BrandAsset® Valuator from Young & Rubicam

(Young & Rubicam, n.d.). These brand valuators can be a number of metrics that

are deemed to be important for gauging how much consumers appreciate a

brand, such as the number of times a customer patronizes the product for

annum, how customers rate the brand versus competitors on key attributes, and

how much customers say they “like” the brand on a scale of 1 to 10.

Marketers will have to construct their own brand asset value by creating

an index out of all these disparate metrics. An index is a single number that

summarizes the quantifications of essential brand elements that have to be

monitored. It could be something like:

 Brand Value Index = (Number of Patrons) x .15 + (Number of Facebook

Likes) x .05 + (Average satisfaction rating for brand) x .30…

Once the index value is calculated, a marketer can compare this with

previous periods’ performance in order to determine if the brand asset value is

improving or not. Note that there is no single standard, or even industry

standards, for the construction of brand value indices. These indices are purely

for internal use and are not meant to compare industry competitors – unless an

industry association emerges and dictates an index formula for industry use.

LESSON 4: DEVELOPING THE BRAND

A well-designed brand strategy helps to enhance a product’s chances of

being recognized by the market, and being highly accepted. This gives the

customers a good impression, and gives them an overview of what to expect.

Here are the following steps to develop a good brand.

STEP 1. DEVELOP THE BRAND STRATEGY.

It is important to understand the product, your own concept of branding,

your business and your own business model. The first step is stepping up the

groundwork and the foundations of your brand.

  PRODUCT INFORMATION. What are the products or services that

you plan to offer? A planned discussion of the proposed product, and

the possible line-up of products is in product. This is a good time to

create a good road map.

 MARKET INFORMATION. Who would be the potential market of the

brand? Knowing their age range, lifecycle stages, socio-economic

behaviors. This will help the company to build their name.

 TRADEMARK IDEAS. How would I stand out? This is a question

that a businessman should put in mind, knowing that there are a lot of

great products in the market.

 BRANDNAME OBJECTIVES. What would I like to leave in the minds

of my customers? How could I excite the market? What should you

accomplish in the minds of your market? Having goals will help in

developing the brand’s creative aspects.

STEP 2: DEVELOP A CREATIVE THEME.

The second step aims to create the “aura” of the product. This is where

the house of “standards” solidifies, and where the eventual brand resides in.

 BRAND PERSONALITY. If the brand was a person, what would its’

personality be? The branding then again depends on who your target

market will be.

  INFERENCES AND CONNOTATIONS. What meaning does your

brand want to convey to your customers? “If my brand was a

celebrity, who would it be?”

 COLOR PALATTE AND STYLE SHEETS. It is best to choose

designs and colours that best represents your product.

 FONT. Choosing fonts may give distinction to your product. Those

with bigger budgets usually customize their own font for them to be

remembered.

 VISUAL CUES. Symbols, icons, shapes, and images that you want to

associate with the brand will have an effect to your overall branding.

This helps the market to recall your product.

 ACCEPTABLE USES AND MATERIALS. Every material and

medium used in creating a product will have an effect to your buyer.

In example, in buying a Intermediate pad, you saw Cattleya Note and

Best Buy, what makes their product distinct, knowing that they are

both papers?

 RETAIL PLACEMENT. This is the selection of places where your

products would be available. Would you place Starbucks Coffee in a

rural place? Where do you plan on selling your product?

STEP 3. CREATE THE NAME.

After the groundwork, it is time to think of your actual brand name.

  KEEP IT SHORT. Notice how memorable the names of the famous

fast food chains like McDo which is originally McDonalds, and KFC

which stands for Kentucky Fried Chicken. It is better to make your

names short, knowing that it is proven that the human mind can easily

remember words not exceeding 3 syllables.

 MAKE IT EASY TO PRONOUNCE AND REMEMBER. It won’t be

effective if you would be naming your store with words that are hard

to spell or pronounce as this will only dilute its potential for

transmission once promoted in the media.

 IT SHOULD TRANSLATE WELL IN TARGET MARKETS. Your

product should not connote something negative, knowing that the

world is diverse with cultures. This must be remembered, if you have

plans to enter the international or even the local market only.

Here are some ideas on how to create your brand name:

1. EPONYMS or names from the founders of the stores, or even historical

names. A good example is KFC, or Kentucky Fried Chicken, and Ibarra, a

Filipino restaurant found in Intramuros, Manila.

2. DESCRIPTIVE connoting something about the product itself and its

benefits like Head a & Shoulders, an anti-dandruff shampoo or Chowking

for a Chinese quick serving food.

3. ABBREVIATIONS OR PORTMANTEAUS. Abbreviations are such as

CNN (Cable News Network), and IBM (International Business Machines)

 and portmanteaus refers to the combination of words to create a new word

like Adidas which stands for the founder Adolf “Adi” Dassler.

4. SYMBOLIC OR IMAGE-DRIVEN are those brand names with hidden

meaning like Hidden Springs, a brand of mineral water, or Black Scoop,

pertaining to milktea.

5. SYNTHETIC, meaning that the brand name could not be found in the

dictionary such as Lexus or Neutrogena.

STEP 4. TEST THE NAME.

This step is about testing your selected brand name and its impact to your

target market. It is better to find a few representatives from your target market

and see how will your brand imagery affect them. Asking their opinions and

insights will help you improve.

STEP 5. SCREEN FOR TRADEMARK AVAILABILTY.

If your proposed brand is now effective, you need to go to the Intellectual

Property Office to check if your idea is still available. If it is, better for you, and if

not, you have to try a different name.

LESSON 5: BUILDING PRODUCT PORTFOLIOS

GOING BEYOND ONE PRODUCT

 Small enterprises would likely begin with just one product, effectively

behaving just like a single business unit. Sooner or later, however, the business

will likely need to expand its product line. For most businesses, this is an

inevitability.

Why should firms expand their offerings? Mostly, it will be about

economies of scope. Whereas economies of scale pertains to the reduction in

costs of goods when production is ramped up, economies of scope pertains to

the reduction in overhead costs that is possible when the enterprise produces

more than one good.

THE PRODUCT MIX

The product mix is the set of all products that a business offers for sale

and is categorized along the following dimensions:

LENGTH – the length of the product line

WIDTH – the number of different product lines carried

DEPTH – the number of variants per product in a line

Length pertains to the number of products offered in a product line. As

mentioned earlier, this typically involves having each product in the line targets a

distinct market. This is actually an important point because what you do not want

is to have two different products in the line that inadvertently target the same

target market. If this happens, then cannibalization is the result, with one product

simply stealing market share from the other. Ideally, each product will have its
own market, with just minimal overlap so that the total market penetration of the

entire line grows with every new product introduced.

Width refers to the number of product lines that a marketing entity may

have. A company can start out with a single product line and then eventually

expand its width by introducing a new product category. Whereas new products

within a line have to target different markets, an expansion through width offers a

different opportunity. It is a chance to sell other products to the same target

markets that have already been targeted by existing products.

Thus, if a large market segment is already patronizing your soap, you can

still get this same segment to spend more for your products by offering them a

new product category to spend on.

Finally, there is depth. Depth pertains to variety, which is typically

manifested as flavors, colors, sizes, or formulations for a particular product. An

example would be ice cream coming in different flavors such as vanilla and

chocolate, with each new flavor expanding the depth of the product even further.

LINE IMAGING AND LINE FEATURING

Firms that have popular upscale products may decide to introduce

medium-priced variants in order to gain wider market share, hoping at the same

time, that the reputation of the higher-end products seeps down. In example,

makers of a television set would be releasing a new smart tv, hoping that the

specs of their new product may bring them up to the chart, and may boost their

credibility.
 Having a smart television among the products in a line is called line

imaging. Technically, you are having a place in your own industry. Promotions

can focus on your product if it is impressive, then brand recognition would be

given to you.

A different approach would be to aggressively promote a product that

offers great value. This is called line featuring and it tends to0 communicate that

the whole brand is composed of good value products.

REFERENCES:

Berry, Tim. (no date). Environmental Analysis. Retrieved from:

https://articles.bplans.com/qa-environmental-analysis/

Howard, Bradley. (2014, October, 3). The Sponsorship Business Model.

Retrieved from: https://www.bradbox.com/blog/the-sponsorship-business-model/

Chappelow, Jim. (2019, June 25). Consumer Goods. Retrieved from:

https://www.investopedia.com/terms/c/consumer-goods.asp

Jollibee Food Corporation. (2020). The Business. Retrieved from:

https://www.jollibee.com.ph/investors/jollibee-foods-corporation/

Pahwa, Aashish. (2019, August 10). 10 Types of Revenue Model. Retrieved

from: https://www.feedough.com/revenue-model/