MT450 DB6

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Product Decisions

Chapter Seven

Key Learning Points

Elements of brand equity, developing strong brands, and brand extensions Developing and using perceptual maps to make positioning and repositioning decisions Global and technology-related issues in positioning and branding Product line management Issues in packaging and product design

Overview

Product strategy: Value proposition. Product positioning

Other issues: Product features Product line Packaging Product design

Branding

Why do consumers value brands? Branded products are perceived as superior to generic equivalents. Changing the brand name is often a key strategy for troubled brands.

Table 7.1 Consumer Ratings of Analgesic Brands

Branding

Types of Brands

Corporate Brands Corporate Parent Brands

Distinct Product Brands Sub-brands Co-brands Ingredient brands

Illustration

What type of brands are these?

- David A. Aaker

“Brand equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm or that firm’s customers.”

Figure 7.1 Brand Equity

Branding

Brand names are product characteristics. Brand names can create tremendous value for firms. Awareness is not the same as equity.

Discussion Questions

1. What factors influence consumers’ perceptions of brand names?

2. What associations do these brand names engender?

3. If associations are negative, can the brands above be “fixed”? If so, what would you do?

Think about how perceptions of McDonald’s (or the brand of your choice), have changed over time.

Branding

Building strong brands: Create a brand identity. Be consistent over time. Track the equity. Assign responsibility for brand development activities. Invest in the brands.

Managing brands is increasingly difficult.

Branding

The success of brand extensions is difficult to predict. See the brand extension examples. “Fit” is important in determining brand extension success.

http://brandcool.com/brand-extension.html

Branding

Extension “Fit” Considerations

Transferability of associations Complementarity of the product Similarity of the users Transferability of the symbol

- Russell S. Winer

“The term global marketing is used in two ways: as a generic term encompassing any marketing activities outside a company’s home market and to refer to a standardization of the marketing strategies used to market a product around the world.”

Branding Factors Favoring Global Marketing

Consumer convergence Demographic convergence Decline of the nuclear family The changing role of women Static populations Higher living standards Cultural convergence

Branding

Objections to global marketing: Reflects product orientation Advantage of selling global brands has declined in emerging markets Some brands cannot be used everywhere Local brands can be powerful competitors

Branding

Global marketing managers should understand segments based on attitudes towards global brands:

Global Citizens (55%) Global Dreamers (23%) Antiglobals (13%) Global Agnostics (9%)

Procter and Gamble’s Definition of a Global Brand

“To obtain clear and consistent brand equity across geographic markets, a brand should be positioned the same, have the same formulation, provide the same benefits, and have a consistent advertising message.”

- Russell S. Winer

Table 7.2 Best Global Brands

Branding

Branding for high-tech products: Important for high-tech products in mature phase of life-cycle Often difficult to accomplish Campaigns should deemphasize features and focus more on benefits Component manufacturers may also benefit from branding

The “Intel Inside” branding campaign has been incredibly successful, resulting in a 95% share of the chip market and $33 billion in sales in 2009.

Figure 7.2 Intel’s Co-Branding Campaign

Branding

Brand personality dimensions include:

Sincerity. Excitement. Competence. Sophistication. Ruggedness.

Activity

Identify a brand that personifies each of the brand dimensions listed below:

Sincerity Ruggedness Excitement Competence Sophistication

Branding

Brand person relationships: Some people find comfort and satisfaction in their relationships with those brands to which they are loyal. Ethnographic research and depth interviews provide data. Strong brand feelings manifest in unusual ways. Passionate brand fans may be useful.

Branding

Retail branding: National brands Regional brands Value brands Private labels Generics

Branding Benefits of Private Labels

Private Labels appeal to price-sensitive consumers. Retailers earn higher profit margins. Retailers can use strong private labels to differentiate themselves from the competition. Labels can be used to secure better terms from national brand manufacturers.

Figure 7.4 New and Old Pepsi Logos

Branding

Marketing ROI and branding Two approaches are used for measuring brand equity:

Behavioral measures Intermediate measures

Product Positioning

Positioning is both a noun and a verb:

Positioning Position

Four steps are involved in making positioning decisions.

Figure 7.5 Credit Card Joint Space: Attribute Based

Figure 7.6 Credit Card Joint Space:

Multidimensional Scaling Version

Positioning

Making positioning decisions: Perceptual maps determine if the value proposition is well-implemented. Maps are useful only for brands that appeal to the same target group. Trade-offs must be considered when repositioning.

Positioning

Considerations in repositioning Repositioning is common.

Tired brands New segments Environmentally conscious

Multiple positions Positioning decisions may be linked to PLC.

Product Decisions

Product features Types of features considered Creating product configurations

Product line decisions Product variants are developed for different reasons. Brand names may be shared. Complementary items

Product Decisions

Number of products in a line and product differentiation

Variants may be added to a line as long as the incremental sales exceed the incremental costs. Eliminating brands is sometimes preferable.

Product line resource allocation Degree of product variation often dictates resource allocation strategy.

Figure 7.7 Growth Share Matrix

Product Decisions

Resource allocation using the BCG matrix:

Dogs Problem children Stars Cash cows

Table 7.3 Example of a Product Portfolio: Large

Southern U.S. Bank (1986)

Product Decisions

Mass customization Mass customization is made possible by information technology improvements. Majority of mass customization efforts have occurred in manufacturing. Customers have become product makers through interactive choiceboards.

Ex: NikeID.nike.com; MyMMs.com

http://nikeid.nike.com/nikeid/index.jsp

http://www.mymms.com/

Product Decisions

Approaches to mass customization: Collaborative customizers Adaptive customizers Cosmetic customizers Transparent customizers

Product Decisions

Packaging and product design:

Packaging decisions have both functional and strategic implications.

Functional aspects Strategic aspects

Product Decisions

Packaging and product design:

Product design can differentiate a brand from the competition.

Executive Summary Composition of brand equity. Brand extension success is a function of four factors. Global brands can be useful. High-tech products benefit from branding. Implementing positioning involves four steps. Product features should suit the target market. Product lines need to be carefully managed. Packaging and product design differentiate a brand.

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Product Decisions
Key Learning Points
Overview
Branding
Table 7.1�Consumer Ratings of Analgesic Brands
Slide Number 6
Illustration
Slide Number 8
Figure 7.1�Brand Equity
Branding
Discussion Questions
Branding
Branding
Slide Number 14
Slide Number 15
Slide Number 16
Branding
Branding
Slide Number 19
Table 7.2�Best Global Brands
Branding
Slide Number 22
Branding
Activity
Branding
Branding
Slide Number 27
Figure 7.4�New and Old Pepsi Logos
Branding
Product Positioning
Figure 7.5�Credit Card Joint Space: Attribute Based
Figure 7.6�Credit Card Joint Space: Multidimensional Scaling Version
Positioning
Positioning
Product Decisions
Product Decisions
Figure 7.7�Growth Share Matrix
Product Decisions
Table 7.3�Example of a Product Portfolio: Large Southern U.S. Bank (1986)
Product Decisions
Product Decisions
Product Decisions
Product Decisions
Executive Summary
Slide Number 45