Developing Product and Brand Strategy

MARIAN BURK WOOD

Introduction

Product strategy is critical to the success of the overall marketing strategy. Value is captured in two key areas:

Product Strategy

Existing and proposed products. Value enhancement through awareness and image.

Branding

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Product Strategy

Product value is derived from

Features, and Benefits received

Products can be tangible goods, services, places, ideas, organizations, or people.

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Designing a Service
Tangible Activities People Processing
Health care Hotels Mass transit

Item Processing
Delivery service Janitorial service Parking garage

Intangible Activities

Mental Processing
Entertainment Management consulting Local phone service

Information Processing
Banking Legal services Accounting services

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Features and Benefits

Features: Specific attributes that enable a product or service to perform its function.

Benefits: Need-satisfaction outcomes.

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Mass Customization

Mass Customization: Creating products, on a large scale, with features tailored to the needs of individual customers.

Offerings should be analyzed, feature by feature, to help understand the benefits and value derived by the target customers. Try to avoid feature bloat.

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Sample Needs, Features and Benefits

Targeted Segment

Product

Need
Drill holes without electricity

Feature
Extra battery pack included Low down payment

Benefit
Drill can be used for long periods of time Less money needed up front to buy a home Toner cartridge lasts longer, saving money

Cordless drill Do it yourselfers

Mortgage loan

First-time Obtain home buyers money to buy a home Small business owners

Laser printer

Print Draft-quality documents printing economically mode uses less toner

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Quality
Quality: Put simply, how well the product

satisfies customers. Basic functionality is only the price of entry. Superior quality attracts business. Poor quality can lead to negative word-of-mouth.

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Design
Design: Quality comes from design,

components/ingredients and processes. At the forefront of many categories. Includes emotional quality the impact of design on how it makes the customer feel.

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Packaging

Keeps products safe. Helps companies burnish their brand imagery and highlight points of differentiation.

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Labeling

Communicates product contents, uses and warnings. Conforms to national, regional and local laws and requirements mandating warnings, allowable use of certain phrases, and even the size and type of words used. Helps attract attention, stand out from retail clutter.

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Product Development
Steps in the Product Development Process: Idea generation. Screening of new ideas. Initial concept testing. Business analysis. Prototype design. Market testing. Commercialization. Monitoring customer reaction.
Lets look at product strategy from the perspective of this development process

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Product Strategy and The Product Development Process

Idea Generation and Screening
Based on customer needs and wants Screen out unprofitable or unsuitable ideas

Initial Concept Testing

Business Analysis

Design Prototype

Market Testing

Commercialization

Research customer value of product concepts Refine concept based on research

Estimate development, production and marketing mix costs Compare costs with potential share, sales, profitability to identify good candidates

Design and produce working prototypes Test prototype functionality, customer appeal

Limited market trials or simulate d testing Test different marketin g mix combinat ions for support

Plan targeting and timing of launch Plan production and marketing mix support for launch

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The Product Life Cycle

Marketers must carefully monitor the environment to determine where their industry or product may be among the following stages of the PLC: Introduction Growth Maturity Decline
Lets look at product strategy from the perspective of the Product Life Cycle

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Product Strategy and the Product Life Cycle

Introduction Growth
Launch the new product. Support launch with marketing mix programs to build customer awareness, make product available, and encourage trial. Enhance product (new features, improved quality, added services, new packaging). Support rising sales with expanded channel coverage, pricing for market penetration, and communications to start and reinforce customer relationships.

Maturity
Add brand or line extensions. Defend market share through competitive pricing, channel expansion, communicating differentiation, and promotion to reinforce customer loyalty.

Decline
Reposition, reformulate, or cut struggling products. Manage profitability through careful pricing, pruning channel outlets, and minimal or highly targeted communications.

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Product Mix and Product Lines

Product Mix: The overall assortment of all product or services offered. Product Lines: A group of products that are all similar in some way. Product Mix Width: Number of lines offered. Product line Depth: Number of products in a line.

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Line Extensions & Brand Extensions

Line Extension: Putting an established brand on a new product and adding it to an existing product line. A low fat version of Lays potato chips. Brand Extension: Putting an established brand on a new product in a different category for a new customer segment. E.g., Snickers brand ice cream.

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Product Line and Mix Decisions

DECISION
New product
Line extension New line Brand extension Product deletion Line deletion

RESULT
Lengthens product line
Lengthens product line Widens product mix Widens product mix Shortens product mix Narrows product mix

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Planning Branding

Branding gives a product a distinct identity and differentiates it from competitive products using: words, designs, and symbols. In terms of branding, a product may carry:

Company name and individual brand.

Courtyard by Marriott

Individual name.

Gap, Old Navy

Wal-Mart

Private-label brand.

Multiple Brands (co-branding, ingredient branding).

Dell PC with Intel computer chips

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Brands Should Be.

Meaningful. Recognizable and memorable. Capable of being legally protected. Suitable for international markets.

Branding and Positioning

Branding not only identifies a particular product, but it sets it apart from the competition (both direct and indirect). Positioning: What the target group perceives about your brand relative to how they perceive the competition.

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The Power of Brand Equity

Brand Equity: the extra value customers perceive that enhances their long-term loyalty to a brand.

Can insulate a company against competitive threats. Can help new products achieve acceptance.

The Value of Strong Brands:

Encourages brand loyalty. Boosts customer lifetime value.

The total amount that a customer spends on a brand or with a company during the life of their relationship.

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Pyramid of Brand Equity

Resonance

Judgments

Feelings

Performance

Imagery

Salience

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