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ProductProduct StrategyStrategyChapter 9, 10Chapter 9, 10

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The concept of a product, brand, The concept of a product, brand, product line and product mixproduct line and product mix

►► A product is anything that is capable of satisfying A product is anything that is capable of satisfying customer needs.customer needs.

►► A brand is a distinctive product offering created by A brand is a distinctive product offering created by the use of a name, symbol, design, packaging or the use of a name, symbol, design, packaging or some combination of these intended to some combination of these intended to differentiate it from its competitors.differentiate it from its competitors.

►► A product line is a group of brands that are closely A product line is a group of brands that are closely related in terms of function and benefit they related in terms of function and benefit they provide.provide.

►► A product mix is the total set of products A product mix is the total set of products marketed by a company.marketed by a company.

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Difference between manufacturer Difference between manufacturer and ownand own--label brandslabel brands

►►Manufacturer brands are created by Manufacturer brands are created by producers and bear their chosen brand producers and bear their chosen brand name.name.

►►OwnOwn--label brands are created and owned by label brands are created and owned by distributors (e.g. Supermarkets)distributors (e.g. Supermarkets)

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The difference between core and The difference between core and augmented productaugmented product

►► A core product is anything that provides the A core product is anything that provides the central benefits required by customers.central benefits required by customers.

►► The augmented product is produced by adding The augmented product is produced by adding extra function and/or emotional values to the core extra function and/or emotional values to the core product, and combining them in a unique way to product, and combining them in a unique way to form a brand.form a brand.

►► Unsuccessful brands provide no added value over Unsuccessful brands provide no added value over the competition.the competition.

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The difference between a core and an The difference between a core and an augmented product (the brand):augmented product (the brand):

Core ProductCore Product

central benefits central benefits

AAugmented ugmented PProductroduct

central benefitscentral benefits

eextraxtra functionalfunctional andandemotional valueemotional value

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Why strong brands are important?Why strong brands are important?Because theyBecause they…………....

►►Enhance company valueEnhance company value►►Positively affect customer perceptionPositively affect customer perception►►Produce high profits through premium Produce high profits through premium

prices and high market shareprices and high market share►►Act as a form of quality certification, which Act as a form of quality certification, which

aids the consumer decisionaids the consumer decision--making process.making process.►►Build trust among consumersBuild trust among consumers

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How to build strong brands:How to build strong brands:Strong brands can be built byStrong brands can be built by……..

►► building quality into core productbuilding quality into core product►► creating a unique position in the market placecreating a unique position in the market place►► repositioning to take advantage of new repositioning to take advantage of new

opportunitiesopportunities►► using communication to create a clear position in using communication to create a clear position in

the minds of target audience.the minds of target audience.►► being first in the market with unique marketing being first in the market with unique marketing

positionposition►► taking a longtaking a long--term perspectiveterm perspective

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The Difference between family, The Difference between family, individual and combined brand individual and combined brand

names.names.►►Family name is used for all products in a Family name is used for all products in a

range (e.g. range (e.g. NescafNescaféé))►►An individual brand name does not identify An individual brand name does not identify

a brand with a particular company.a brand with a particular company.►►Combined brand name combines family and Combined brand name combines family and

individual brand names (Microsoft Windows)individual brand names (Microsoft Windows)

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Characteristics of an effective brand Characteristics of an effective brand name:name:

►►should evoke positive associationsshould evoke positive associations►►easy to pronounce & remembereasy to pronounce & remember►►suggest product benefitssuggest product benefits►►be transferable and not infringe on existing be transferable and not infringe on existing

registered brand namesregistered brand names

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RebrandingRebrandingWhy?Why?

►► merger or acquisitionmerger or acquisition►► desire to create a new image/position in the desire to create a new image/position in the

marketplacemarketplace►► sale or acquisition of parts of a businesssale or acquisition of parts of a business►► corporate strategy changescorporate strategy changes►► brand familiaritybrand familiarity►► international marketing considerationsinternational marketing considerations►► consolidation of brands within a national boundaryconsolidation of brands within a national boundary►► legal problemslegal problems

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Brand Extension & Brand StretchingBrand Extension & Brand Stretching

Brand ExtensionBrand Extension: The use of an established : The use of an established brand name on a new brand within the brand name on a new brand within the same broad market or product category.same broad market or product category.

Brand StretchingBrand Stretching: The use of an established : The use of an established brand name for brands in unrelated markets brand name for brands in unrelated markets or product categories.or product categories.

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Two major forms of coTwo major forms of co--branding:branding:

►►Product based coProduct based co--brandingbrandingparallelparallelingredientingredient

►►Communication based coCommunication based co--brandingbranding

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Chapter 10Chapter 10

Product life cycle, portfolio Product life cycle, portfolio planning & production growth planning & production growth

strategiesstrategies

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Product life cycleProduct life cycle

Four stages of product life cycle:Four stages of product life cycle:

IntroductionIntroduction

GrowthGrowth

MaturityMaturity

DeclineDecline

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The Product Life CycleThe Product Life Cycle

Source: Principles and Practice of Marketing 4th edition; David Jobber

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Source: Principles and Practice of Marketing 4th edition; David Jobber

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The Uses & Limitations of PLCThe Uses & Limitations of PLC

►►need to terminate old & develop new need to terminate old & develop new productsproducts

►►danger of assuming growth will last foreverdanger of assuming growth will last forever►►maintain balanced set of productmaintain balanced set of product►►not all products follow the classic Snot all products follow the classic S--shaped shaped

curvecurve►►not only dependant on marketing activitynot only dependant on marketing activity►►duration of stages are unpredictableduration of stages are unpredictable

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Boston Consulting Group MatrixBoston Consulting Group Matrix

Source: Principles and Practice of Marketing 4th edition; David Jobber

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Strategic Objectives & the Strategic Objectives & the ““Boston Boston BoxBox””

Source: Principles and Practice of Marketing 4th edition; David Jobber

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BCG Growth Share MatrixBCG Growth Share Matrix

►► The matrix allows portfolios of products to be The matrix allows portfolios of products to be depicteddepicted

►► Stars are likely to have cash flow balanceStars are likely to have cash flow balance►► Problem children cause a drain on cash flowProblem children cause a drain on cash flow►► Cash Cows generate large positive cash flowCash Cows generate large positive cash flow►► Dogs usually produce low or negative cash flowDogs usually produce low or negative cash flow►► The matrix provides guidelines for setting strategic The matrix provides guidelines for setting strategic

objectives.objectives.

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The Criticism of BCGThe Criticism of BCG--MatrixMatrix

►► Distracts management from focusing on Distracts management from focusing on sustainable competitive advantagesustainable competitive advantage

►► Can lead to unhealthy preoccupation with market Can lead to unhealthy preoccupation with market shareshare

►► Ignores interdependencies between productsIgnores interdependencies between products

►► Competitor reactions are ignoredCompetitor reactions are ignored

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The General Electric MatrixThe General Electric Matrix

Source: Principles and Practice of Marketing 4th edition; David Jobber

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Advantages over Advantages over ““Boston BoxBoston Box””

►► More criteria than just market growth rate and market More criteria than just market growth rate and market share are used to determine the position of products in the share are used to determine the position of products in the matrix.matrix.

►► More flexibleMore flexible

►► Provides guidelines for setting strategic objectivesProvides guidelines for setting strategic objectives

►► Analysis much richer than Boston Box Analysis much richer than Boston Box →→ more factors are more factors are being used being used →→ better resource allocationbetter resource allocation

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The The AnsoffAnsoff MatrixMatrix

Source: Principles and Practice of Marketing 4th edition; David Jobber

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Product Strategies for Growth Product Strategies for Growth ::AnsoffAnsoff MatrixMatrix

Useful way of looking at growth Useful way of looking at growth opportunities.opportunities.Comprises 4 general approaches to sales Comprises 4 general approaches to sales growth: growth:

Market Penetration/ExpansionMarket Penetration/ExpansionProduct DevelopmentProduct DevelopmentMarket DevelopmentMarket DevelopmentDiversificationDiversification

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Thank You!Thank You!