product decisions

Product Product DecisionsDecisions

Chapter Chapter SevenSeven

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 7-2

Key Learning PointsKey Learning Points

Elements of brand equity, developing Elements of brand equity, developing strong brands, and brand extensionsstrong brands, and brand extensionsDeveloping and using perceptual maps Developing and using perceptual maps to make positioning and repositioning to make positioning and repositioning decisionsdecisionsGlobal and technology-related issues Global and technology-related issues in positioning and brandingin positioning and brandingProduct line managementProduct line managementIssues in packaging and product Issues in packaging and product designdesign


OverviewOverview

Product strategy: Product strategy: Value Value proposition.proposition.Product Product positioningpositioning

Other issues:Other issues:Product featuresProduct featuresProduct lineProduct linePackagingPackagingProduct designProduct design


BrandingBranding

Why do consumers value Why do consumers value brands?brands?

Branded products are perceived Branded products are perceived as superior to generic as superior to generic equivalents.equivalents.

Changing the brand name is Changing the brand name is often a key strategy for often a key strategy for troubled brands.troubled brands.


Table 7.1Table 7.1Consumer Ratings of Analgesic Consumer Ratings of Analgesic

BrandsBrands


BrandingBranding

Types of BrandsTypes of Brands

Corporate Corporate BrandsBrandsCorporate Corporate Parent BrandsParent Brands

Distinct Product Distinct Product BrandsBrandsSub-brandsSub-brandsCo-brandsCo-brandsIngredient Ingredient brandsbrands


IllustrationIllustration

What type of brands are these?What type of brands are these?


- David A. Aaker

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


Figure 7.1Figure 7.1Brand EquityBrand Equity


BrandingBranding

Brand names are product Brand names are product characteristics.characteristics.

Brand names can create Brand names can create tremendous value for firms.tremendous value for firms.

Awareness is not the same as Awareness is not the same as equity.equity.


Discussion QuestionsDiscussion Questions

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

2.2. What associations do these brand What associations do these brand names engender? names engender?

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

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


BrandingBranding

Building strong brands:Building strong brands:Create a brand identity.Create a brand identity.

Be consistent over time.Be consistent over time.

Track the equity.Track the equity.

Assign responsibility for brand Assign responsibility for brand development activities.development activities.

Invest in the brands.Invest in the brands.

Managing brands is increasingly Managing brands is increasingly difficult.difficult.


BrandingBranding

The success of brand The success of brand extensions is difficult to predict.extensions is difficult to predict.

See the See the brand extension examples..

““Fit” is important in Fit” is important in determining brand extension determining brand extension success.success.


BrandingBranding

Extension “Fit” ConsiderationsExtension “Fit” Considerations

Transferability of associationsTransferability of associationsComplementarity of the Complementarity of the productproductSimilarity of the usersSimilarity of the usersTransferability of the symbolTransferability of the symbol


- Russell S. Winer

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


BrandingBrandingFactors Favoring Global MarketingFactors Favoring Global Marketing

Consumer convergenceConsumer convergenceDemographic convergenceDemographic convergenceDecline of the nuclear Decline of the nuclear familyfamilyThe changing role of womenThe changing role of womenStatic populationsStatic populationsHigher living standardsHigher living standardsCultural convergenceCultural convergence


BrandingBranding

Objections to global marketing:Objections to global marketing:Reflects product orientationReflects product orientation

Advantage of selling global brands Advantage of selling global brands has declined in emerging marketshas declined in emerging markets

Some brands cannot be used Some brands cannot be used everywhereeverywhere

Local brands can be powerful Local brands can be powerful competitorscompetitors


BrandingBranding

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

Global Citizens (55%)Global Citizens (55%)

Global Dreamers (23%)Global Dreamers (23%)

Antiglobals (13%)Antiglobals (13%)

Global Agnostics (9%)Global Agnostics (9%)


Procter and Gamble’sProcter and Gamble’sDefinition of a Global BrandDefinition of a Global Brand

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

- Russell S. Winer


Table 7.2Table 7.2Best Global BrandsBest Global Brands


BrandingBranding

Branding for high-tech products:Branding for high-tech products:Important for high-tech products in Important for high-tech products in mature phase of life-cyclemature phase of life-cycle

Often difficult to accomplishOften difficult to accomplish

Campaigns should deemphasize Campaigns should deemphasize features and focus more on benefitsfeatures and focus more on benefits

Component manufacturers may Component manufacturers may also benefit from brandingalso benefit from branding


The “Intel Inside” The “Intel Inside” branding branding campaign has campaign has been incredibly been incredibly successful, successful, resulting in a 95% resulting in a 95% share of the chip share of the chip market and $33 market and $33 billion in sales in billion in sales in 2009.2009.

Figure 7.2Figure 7.2Intel’s Co-Branding CampaignIntel’s Co-Branding Campaign


BrandingBranding

Brand personality Brand personality dimensions include:dimensions include:

Sincerity.Sincerity.

Excitement.Excitement.

Competence.Competence.

Sophistication.Sophistication.

Ruggedness.Ruggedness.


ActivityActivity

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

SinceritySincerity

RuggednessRuggedness

ExcitementExcitement

CompetenceCompetence

SophisticationSophistication


BrandingBranding

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


BrandingBranding

Retail branding:Retail branding:National brandsNational brands

Regional brandsRegional brands

Value brandsValue brands

Private labelsPrivate labels

GenericsGenerics


BrandingBranding

Benefits of Private LabelsBenefits of Private LabelsPrivate Labels appeal to price-Private Labels appeal to price-sensitive consumers.sensitive consumers.

Retailers earn higher profit margins.Retailers earn higher profit margins.

Retailers can use strong private Retailers can use strong private labels to differentiate themselves labels to differentiate themselves from the competition.from the competition.

Labels can be used to secure better Labels can be used to secure better terms from national brand terms from national brand manufacturers.manufacturers.


Figure 7.4Figure 7.4New and Old Pepsi LogosNew and Old Pepsi Logos


BrandingBranding

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

Behavioral measuresBehavioral measures

Intermediate measuresIntermediate measures


Product PositioningProduct Positioning

Positioning is both a noun and a Positioning is both a noun and a verb:verb:

PositioningPositioning

PositionPosition

Four steps are involved in Four steps are involved in making positioning decisions.making positioning decisions.


Figure 7.5Figure 7.5Credit Card Joint Space: Attribute Credit Card Joint Space: Attribute

BasedBased


Figure 7.6Figure 7.6Credit Card Joint Space: Credit Card Joint Space:

Multidimensional Scaling VersionMultidimensional Scaling Version



Making positioning decisions:Making positioning decisions:Perceptual maps determine if the Perceptual maps determine if the value proposition is well-value proposition is well-implemented.implemented.

Maps are useful only for brands Maps are useful only for brands that appeal to the same target that appeal to the same target group.group.

Trade-offs must be considered Trade-offs must be considered when repositioning.when repositioning.



Considerations in repositioningConsiderations in repositioningRepositioning is common.Repositioning is common.

Tired brandsTired brandsNew segmentsNew segmentsEnvironmentally consciousEnvironmentally conscious

Multiple positionsMultiple positionsPositioning decisions may be Positioning decisions may be linked to PLC.linked to PLC.


Product DecisionsProduct Decisions

Product featuresProduct featuresTypes of features consideredTypes of features consideredCreating product configurationsCreating product configurations

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



Number of products in a line and Number of products in a line and product differentiationproduct differentiation

Variants may be added to a line as long Variants may be added to a line as long as the incremental sales exceed the as the incremental sales exceed the incremental costs.incremental costs.

Eliminating brands is sometimes Eliminating brands is sometimes preferable.preferable.

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


Figure 7.7Figure 7.7Growth Share MatrixGrowth Share Matrix



Resource allocation using the Resource allocation using the BCG matrix:BCG matrix:

DogsDogs

Problem childrenProblem children

StarsStars

Cash cowsCash cows


Table 7.3Table 7.3Example of a Product Portfolio: Example of a Product Portfolio:

Large Southern U.S. Bank (1986)Large Southern U.S. Bank (1986)



Mass customizationMass customizationMass customization is made possible Mass customization is made possible by information technology by information technology improvements.improvements.

Majority of mass customization efforts Majority of mass customization efforts have occurred in manufacturing.have occurred in manufacturing.

Customers have become product Customers have become product makers through interactive makers through interactive choiceboards.choiceboards.

Ex: Ex: NikeID.nike.com; ; MyMMs.com



Approaches to mass Approaches to mass customization:customization:

Collaborative customizersCollaborative customizers

Adaptive customizersAdaptive customizers

Cosmetic customizersCosmetic customizers

Transparent customizersTransparent customizers



Packaging and Packaging and product design:product design:

Packaging Packaging decisions have decisions have both functional both functional and strategic and strategic implications.implications.

Functional Functional aspectsaspectsStrategic Strategic aspectsaspects



Packaging and Packaging and product design:product design:

Product design Product design can can differentiate a differentiate a brand from the brand from the competition.competition.


Executive SummaryExecutive SummaryComposition of brand equity.Composition of brand equity.

Brand extension success is a function of four Brand extension success is a function of four factors.factors.

Global brands can be useful.Global brands can be useful.

High-tech products benefit from branding.High-tech products benefit from branding.

Implementing positioning involves four steps.Implementing positioning involves four steps.

Product features should suit the target Product features should suit the target market.market.

Product lines need to be carefully managed.Product lines need to be carefully managed.

Packaging and product design differentiate a Packaging and product design differentiate a brand.brand.


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