The New Product Development Process

Class 6

Design and Branding

Development: Product Design

Consumer Response to Product Form (Adapted from Bloch 1995)

Product Form

PsychologicalResponses

to Product Form

CognitiveEvaluations

• Categorization• Beliefs

EmotionalEvaluations

•Aesthetics

BehavioralResponses

What Is Design?

Has been defined as “the synthesis of technology and human needs into manufacturable products.”

In practice, design can mean many things, ranging from styling to ergonomics to setting final product specifications.

Design has been successfully used in a variety of ways to help achieve new product objectives.

One thing it is not: “prettying up” a product that is about to manufactured!

Contributions of Design to the New Products Process

Range of Leading Design Applications

Purpose of Design

Aesthetics

Ergonomics

Function

Manufacturability

Servicing

Disassembly

Item Being Designed

Goods

Services

Architecture

Graphic arts

Offices

Packages

Assessment Factors for an Industrial Design

What is Product Form?

Objective Physical Properties of a Product Form Structure Texture Color

Psychological Responses to Consumer Products

Context Category Membership Functionality

What happens in the absence of context? Design communicates, but does it do so

effectively? How does the design and its context influence:

Consumers’ reactions to the new products Consumers’ communication strategies

What Does the Design Tell You?

What Does the Design Tell You?

Perceived Product Newness

CategoryProvided?

No

Yes

Product Demonstration Provided?

No Yes

16.3 19.0

18.1 20.2

Range of Scores: 4 to 28

Why does perceived newness matter?

Correlation between perceived newness and product evaluation = .43 (p < .0001)

How Do Consumers Communicate Design?

Categorization “Marketers must proactively consider how they

want consumers to categorize a product rather than leaving it to chance.” - Bloch 1995

Analogies Tendency to describe the novel in terms of the

known “Looks like” vs. “Works like”

Alternative InterpretationsFoot Massager Heater Bathroom ScaleLawnmower Toy Slide ProjectorRecord Machine CD PlayerSony Boom Box Face MassagerHot Pot Computer PeripheralGrill

MP3 PlayerOptometrist’s ToolVideo Recorder

Alternative Interpretations

Razor Medical DeviceMassage Tool Computer MouseTape Recorder Facial ScrubberMini-massager Lip ShaverMedical Device Foot BufferBlood Pressure TesterArm Pit Odor Remover

Portable HeaterMini OvenHumidifier

Analogies UsedFrisbeeUFOSalad BowlDecoy in a Science Fiction MovieYo-YoPizza

Pen Can OpenerPencil MicrophoneVideo RecorderJames Bond deviceChocolate BarFlash LightFold-Up FanTV Remote Control

Analogies Used

Hockey StickScanner

Fish TankScanner

Branding

The Value of a Strong Brand

“Brand equity has just as much effect on stock price as do earnings.”

—David AakerProfessor of Marketing, EmeritusUniversity of California, Berkeley

Build the Brand

“Now more than ever, companies see the power of a strong brand. At a time when battered investors,

customers and employees are questioning whom they can trust, the ability of a familiar brand to deliver proven value flows straight to the bottom line.”

“ … a strong brand, even in bad times, can allow companies to command premium prices.”

“ … a strong brand also can open the door when growth depends on breaking into new markets.”

—“The Best Global Brands,” Business Week, August 5, 2002

What is a Brand?

A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor, a brand is unique. A product can be quickly outdated; a successful brand is timeless.Source: Stephen King, WPP Group, London

A brand is something that resides in the minds of consumer.

A brand is a “name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.” Source: American Marketing Association

What is a Brand?

Name

Term

Sign

Symbo

l

Design

Combination

Identifies product/service

of seller anddifferentiates from

competitors

Keller, Kevin Lane. Strategic Brand Management: Building, Measuring, and Managing Brand Equity. 1998.

Importance of a Brand

The marketing battle will be a battle of brands, a competition for brand dominance. Businesses and investors will recognize brands as the company’s most valuable assets. This is a critical concept. It is a vision about how to develop, strengthen, defend, and manage a business… It will be more important to own markets than to own factories. The only way to own markets is to own market-dominant brands.

Source: Larry Light, Journal of Advertising Research

Benefits of Brands

Consumers Identification of the source of product Assignment of responsibility to product maker Risk reducer Search cost reducer Promise, bond, or pact with maker of product Symbolic device Signal of quality

Benefits of Brands (cont.)

Manufacturers Means of identification to simplify handling or

tracing Means of legally protecting unique features Signal of quality level to satisfied customers Means of endowing products with unique

associations Source of competitive advantage Source of financial returns

A Brand is More Than a Product

Product

Scope

Attributes

Uses

Quality/value

Functional benefits

Organizational associations

Brand

Personality

Symbols

Self-expressive

benefitsEmotional benefits

User Imagery

Country of origin

Brand

Brand/customer relationships

What is Brand Equity?

What distinguishes a brand from its unbranded commodity counterpart and gives it equity is the sum total of consumers’ perceptions and feelings about the product’s attributes and how they perform, about the brand name and what it stands for, and about the company associated with the brand.

Source: Alvin A. Achenbaum, “The Mismanagement of Brand Equity, 1993

Brand Equity as a Percent of Firm Tangible Assets

Industry Brand Equity

Apparel 61

Tobacco 46

Food Products 37

Chemicals 34

Electric machinery 22

Transportation 20

Primary metals 01

Picking Stocks

Suppose that you will be given 0.1 percent of the stock on one of the following companies. Which firm’s stock would you prefer, given the following information?

General Motors $166B $229B $7B

Coca-Cola $19B $17B $4B

Sales Assets Profits

Building Brand Equity

Getting awareness of the brand and the meaning.

Making brand associations Building perceived quality Loyalty in repurchase -- locking them in Getting reseller support

Brand EquityBrand Equity

Perceived Brand Quality

BrandAwareness• Brand Name• Symbols

BrandLoyalty

OtherProprietaryBrand Assets•Patents•Trademarks•Channel relationships

Brand Associations• Personality• Benefits• Attitudes

Provides Value to Customerby Enhancing:• Interpretation/processing of information• Confidence in the Purchase Decision• Use Satisfaction

Provides Value to Firm by Enhancing:• Efficiency and Effectiveness of Marketing Programs• Brand Loyalty• Prices/margins• Brand extensions • Trade Leverage• Competitive Advantage

What is Brand Equity?

Source: Aaker (1991) “Managing Brand Equity”Source: Aaker (1991) “Managing Brand Equity”

Brand Loyalty

Ultimate test Realistic test

Brand Awareness

Brand Awareness Measurement

Brand Associations

Brand Associations Strength of Brand Associations Favorability of Brand Associations Uniqueness of Brand Associations

Brand Personality

Dimensions of Brand Personality

Brand personality

Describe the personality of the following: Arizona Iced Tea Intel Blockbuster Video Wal-Mart Toyota Dr. Pepper Aquafina Seiko Texas Instruments Nordstroms

Brand personality

What personality characteristics come to mind for the following: Brand is repositioned several times or changes its slogan

repeatedly Brand uses continuing character in its advertising Brand charges a high price and uses exclusive distribution Brand frequently available on deal Brand offers many line extensions Brand sponsors show on PBS or uses recycled materials Brand features easy-to-use packaging or speaks at consumer’s

level in advertising Brand offers seasonal clearance sale Brand offers five-year warranty or free customer hot line

The Personality-like Associations of Selected ColorsThe Personality-like Associations of Selected Colors

Commands respect, authority

• America’s favored color• IBM holds the title to blue• Associated with club soda• Men seek products packaged in blue• Houses painted blue are avoided• Low-calorie, skim milk• Coffee in a blue can be perceived as “mild”

Caution, novelty, temporary, warmth

• Eyes register it faster• Coffee in yellow can be perceived as “weak”• Stops traffic• Sells a house

Secure, natural, relaxed or easy going, living things

• Good work environment• Associated with vegetables and chewing gum• Canada Dry ginger ale sales increased when it

changed sugar-free package from red to green and white

BLUEBLUE

YELLOWYELLOW

GREENGREEN

Human, exciting, hot, passionate, strong

• Makes food “smell” better• Coffee in a red can be perceived as “rich”• Women have a preference for bluish red• Men have a preference for yellowish red• Coca-Cola “owns” red

Powerful, affordable, informal

• Draws attention quickly

Informal and relaxed, masculine, nature

• Coffee in a dark-brown can was “too strong”• Men seek products packaged in brown

Goodness, purity, chastity, cleanliness, delicacy, refinement, formality

• Suggests reduced calories• Pure and wholesome food• Clean, bath products, feminine

Sophistication, power, authority, mystery

• Powerful clothing• High-tech electronics

Regal, wealthy, stately • Suggests premium price

REDRED

ORANGEORANGE

BROWNBROWN

WHITEWHITE

BLACKBLACK

SILVERSILVER, , GOLDGOLD

Three Keys to Brand Equity

Consumer response to marketing

Brand knowledge

•Network of nodes and connecting links

•Brand Awareness

•Depth– Recall, Recognition

•Breath—Purchase & consumption

•Brand image

•Brand associations held in memory

Differential Effects

•Preferences—choice of brand

•Actions to sales promotions

•Evaluations to brand extensions

Why Extend a Brand?

Immediate brand awareness Transfer existing associations Faster trial Reinforce core brand

Why Not Extend a Brand?

“Boomerang” potential Dilution Bad “fit”

Questions and Guidelines in Brand Name Selection

Question GuidelineWhat is the brand's role or purpose? If the brand is to aid in positioning, choose a brand

name with meaning (DieHard, Holiday Inn). Ifpurely for identification, a neologism (made-upword) such as Kodak or Exxon will work.

Will this product be a bridgehead to a line ofproducts?

If so, choose carefully so as not to be a limitation inthe future (Western Hotels changed name toWestern International, then finally to Westin.)

Do you expect a long-term position in the market? If not, a dramatic, novelty name might be useful(such as Screaming Yellow Zonkers).

Is the name irritating or insulting to any marketsegment?

Women found Bic's Fannyhose to be objectionable.

Crapsy Fruit French cereal Fduhy Sesane China Airlines snack foodMukk Italian yogurtPschitt French lemonadeAtum Bom Portuguese tunaHappy End German toilet paperPocari Sweat Japanese sport drinkZit German lemonadeCreap Japanese coffee creamerI'm Dripper Japanese instant coffeePolio Czech laundry detergentSit & Smile Thai toilet paperBarf Iranian laundry detergent

Some Brand Names That Didn’t Work

How Brand Equity Provides Value

HighBrand

Loyalty

Other BrandAssets

More/BetterBrand

Associations

HighPerceived

Quality

HighBrand

Awareness

Reduced marketing costs

Increased trade leverage

Patents or trademarks

Strong channel relationships

Creates positive image

Helps customer process information

Supports quality positioning

Supports higher-price strategy

Easier to make brand associations

Increased liking and familiarity

Provides value to customer:Assists in customer information processingIncreases confidence in purchaseIncreases satisfaction in product use

Provides value to firm:Increases effectiveness of marketing programsIncreases customer loyalty and trade leverageFacilitates brand extensionsIs a source of competitive advantage