PRODUCT STRATEGY AND BRANDING

1
PRODUCT STRATEGY AND BRANDING

• Professor Chip Besio
• Cox School of Business
• Southern Methodist University

2
What Is the Product?
Augmented Product
Installation
Packaging
Features
Brand Name
Delivery Credit
After- Sale Service
Core Benefit or Service
Quality Level
Design
Actual Product
Core Product
Warranty
Source Prentice Hall
3
Types of Products

• Consumer
• Industrial
• Other Entities
• Organizations
• Persons
• Places
• Ideas

4
Types of ProductsCONSUMER PRODUCTS

• Convenience Products
• Buy frequently immediately
• Low priced
• Many purchase locations
• Includes
• Staple goods
• Impulse goods
• Emergency goods

• Shopping Products
• Buy less frequently
• Gather product information
• Fewer purchase locations
• Compare for
• Suitability Quality
• Price Style

• Specialty Products
• Special purchase efforts
• Unique characteristics
• Brand identification
• Few purchase locations

• Unsought Products
• New innovations
• Products consumers dont
• want to think about
• Require much advertising
• personal selling

Source Prentice Hall
5
Types of ProductsINDUSTRIAL PRODUCTS
Materials and Parts
Capital Items
Supplies and Services
Source Prentice Hall
6
Characteristics of Services
Intangibility
Inseparability

• Cant be seen, tasted, felt, heard,
• or smelled before purchase
• Cant be separated from service
• providers
• Quality depends on who provides
• them and when, where and how
• Cant be stored for later sale or use

Variability
Perishability
Source Prentice Hall
7
Individual Product Strategy Decisions

• Attributes
• Packaging
• Labeling
• Product Support

8
Product Attributes - Where Do They Come From?

• Quality

Features
Design
Source Prentice Hall
9
Packaging
Competitive Advantages
Product Safety
Sales Tasks
Packaging Labeling
Promotes
Identifies
Describes
Source Prentice Hall
10
Multi-Product Strategy Decisions

• Branding
• Product Lines
• Product Mix
• Variety
• Assortment

11
What Do Brands Mean to Customers?
Quality
Value
Attributes
Benefits
Brand
User Characteristics
Personality
Company Values
Culture
12
Brand Equity

• The value your customers perceive to be uniquely
  associated with your brand
• Awareness Associations
• Awareness
• Recall
• Recognition
• Associations
• Perceived Quality
• Image

13
Brand AwarenessRECOGNITION
14
Brand AwarenessRECOGNITION
15
Brand AwarenessRECALL

• Essential for memory-based choice and
  customer-initiated contact

Order of Recall (movie data)
35
9
8
30
7
25
6
20
5
Percent seeing film before
Percent seeing film after
4
15
3
10
2
5
1
0
0
Recalled
Recalled
Recalled
Recalled
Recalled
1st (top
2nd or
4th or
6th or
8th or
Source Wes Hutchinson
of mind)
3rd
5th
7th
9th
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Brand AssociationsPERCEIVED QUALITY
Profitability (ROI) PERCEIVED
RELATIVE QUALITY inferior moderate superior RE
LATIVE high 21 27 38 MARKET medium 14 20 29
SHARE low 7 13 20 SOURCE PIMS (Profit
Impact of Market Strategies based on 2,200
business units) Future Profitability (Stock
Price) Stock Price f(ROI, perceived quality)
ROI and perceived quality exert
approximately equal effects SOURCE Aaker,
D. A. and R. Jacobson (1994 based on daily
measures of NYSE, AMEX, and NASDAQ).
17
Brand AssociationsIMAGE

• Brand image is the integration of all experiences
  with and information about a brand as perceived
  and remembered by customers
• The whole is more than the sum of its parts
• Brand image is relative easy to create, but
  almost impossible to change!
• Example 1 K-Mart and the Blue Light Special
• Example 2 Hyundai and product quality

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Brand Equity ? BRAND LOYALTY

• Brand loyalty - the probability of choosing a
  brand given that you are a user of that brand -
  can result from
• Inertia the general tendency to repeat previous
  purchases due to high switching costs,
  convenience, or habit
• Preference an enduring preference for a brand
  over and above what would be expected based on
  the benefits derived from the product or from a
  long-term relationship with the brand

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ExampleBRAND LOYALTY

• In 1983, six people in Chicago died of cyanide
  poisoning from tampered TYLENOL capsules. JJ
  reacted quickly and appropriately withdrawing all
  capsules from the market. Tylenol shared dropped
  only from 37 to 35 and eventually recovered
  completely.

20
Brand Equity ?BETTER BUSINESS RESULTS

• Brands
• Price Market Share
• Toothpastes (6 oz.) Price Premium Share
  Premium
• Crest 2.19 .44 27.2 17.3
• Colgate 2.19 .37 21.8 12.2
• Aqua-fresh 2.19 .24 15.1 6.6
• Close-Up 2.14 .27 16.5 8.0
• SOURCE Park, C. S. and V. Srinivasan (1994
  based on survey results)

21
Brand Equity ?BETTER BUSINESS RESULTS

• Brands Price Market Share
• Mouthwashes (24 oz.) Price Premium Share
  Premium
• Scope 3.83 .47 31.2 13.7
• Listerine 3.79 .42 26.8 11.1
• Close-Up 5.02 .23 2.3 .8
• Plax 4.29 .26 10.3 3.4
• Colgate 5.22 .10 1.4 .2
• SOURCE Park, C. S. and V. Srinivasan (1994
  based on survey results)

22
Major Brand Decisions
Brand Name
Selection Protection
Brand Sponsor
Manufacturers BrandCo-branding Private
BrandLicensed Brand
Brand Strategy
Line ExtensionsBrand Extensions Multi-brands
New Brands
Source Prentice Hall
23
Brand Strategy
Source Prentice Hall
24
Brand Strategy

• Line Extension
• Existing brand names extended to new forms,
  sizes, and flavors of an existing product
  category
• Brand Extension
• Existing brand names extended to new product
  categories
• Multi-brands
• New brand names introduced in the same product
  category
• New Brands
• New brand names in new product categories

Source Prentice Hall
25
Brand StrategyBRAND EXTENSION

• Brand associations determine which brand
  extensions will be successful

Source Wes Hutchinson
26
Product Mix
Variety - number of different product lines
Product Mix - all the product lines offered
Assortment - number of items within product lines