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PRODUCT AND BRAND STRATEGY
Elements of Product Strategy
McGraw-Hill/Irwin
©2009 The McGraw-Hill Companies, All Rights Reserved
Three Perspectives of a Product
 Tangible product – Physical entity or service
offered
 Extended product – Tangible product along with
whole cluster of services that accompany it
 Generic product – Essential benefits the buyer
expects to receive from the product
……Avoid Marketing myopia – Executives who view
their company’s product too narrowly by
overemphasizing the physical object itself
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©2009 The McGraw-Hill Companies, All Rights Reserved
Product Definition and
Classification
 Product – The sum of the physical, psychological,
physiological, and sociological satisfactions the
buyer derives from purchase, ownership and
consumption
 Two basic criteria for product classification
 End use or market
 Degree of processing or physical transformation
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Consumer Products

General classification: what types of
customers will use them?
Businesses B2B or consumers B2C
Consumer products:
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

• For “final” users
• Classifying consumer products
• How consumers shop
• How consumers think about them
Perception usage varies (among food items and
what other product categories?)
4 Types of Consumer Products
1. Convenience
 Little time/effort; frequent purchase
 Intense distribution
 Substitutes acceptable
 Low price (grocery products)
2. Shopping: time comparing alternatives; less frequent
purchase, low loyalty
 Homogeneous: seen as same; want bargain
 Heterogeneous: seen as different; want quality;
salespeople help desired
 Marketing: fewer outlets, higher markups
4 Types of B2C Products, cont.
3. Specialty: is shopping an end, pleasurable; willingness
makes it specialty
• Planned purchase: strong desire and effort
(collectors); alternatives unacceptable
• Amount of search (Beanie Babies; xmas toys)
• Limited availability is OK; high markups
4. Unsought (tombstones; towing; dentists)
• Only want “in a pinch;” infrequent and no effort;
lack knowledge or desire
• Promotion; sales (Dentists for phobic patients)
• What are your unsought products?
What type of product?
What type of product?
B2B Products
 Businesses (B2B):
 Agricultural or organizational





Use to make other products
Bought and resold
Used for corporate or organization’s use
Less shopping is involved (vs. B2C)
Classify via:
 How buyers think about the product
 What type of customer will use the product
 How the product is used
Organizational Market Characteristics
 A primary purchasing motive for organizational goods
is profit
 Organizational markets are concentrated
geographically as in the case of steel, auto or shoes
 Can be categorized into
 Vertical market – Limited number of buyers
 It is narrow and deep
 Horizontal market – Goods are purchased by all types of
firms in many different industries
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©2009 The McGraw-Hill Companies, All Rights Reserved
Product Quality and Value
 Quality – Defined as the degree of excellence or
superiority that an organization’s product possesses
 Total-quality management (TQM)
 ISO 9000 quality systems of standards
 Value – Defines as what the customer gets in
exchange for what the customer gives
 Customers perception of value based on
 Degree the product meets expected specifications
 Price
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©2009 The McGraw-Hill Companies, All Rights Reserved
Product Planning
 Quality (What does it mean?)
 Product’s ability to satisfy customer’s
needs/requirements.
 Consistency (McDonalds and what other companies?)
 Relative quality – similar products
against each other
What do you think are some
quality products? Why?
Product Mix
 Full set of products offered for sale by an organization
 May consist of several product lines, or groups of
products sharing common characteristics, distribution
channels, customers, or uses
 Product mix described by
 Width – Number of product lines handled by
organization
 Depth – Average number of products in each line
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Product Items, Lines, and
Mixes
 Item: version of a product (Diet Coke)
 Line: group of closely related products
 Mix: all the products a company offers
 Modify and reposition (Coke) for variety,
diversification, and multi-product lines
 Line extension – Brand name used to facilitate entry
into a new market segment
Branding


Identify product via letters, terms, designs
Branding strategies:

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

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


Brand name – letters associated with product
Trademark/servicemark – words, symbols for one firm
(legally protected)
Co-brand (apple ipod and coach)
Multibranding – Different brand names assigned to
each product (ipad; ipod; iphone)
Dual branding – Integration of two or more branded
products
Family – one brand, many products (Hershey’s,
Campbell’s)
Generics – no brand (signal of savings)
Dealer/private label: by store
Multi-Branding Strategy
 Advantages
 Firm can distance products from other offerings it markets
 Image of one product is not associated with other
products the company markets
 Products can be targeted at specific market segments
 If the product fails, the effect on other products is
minimized
 Disadvantages
 No consumer brand awareness due to different names
 Significant money spent on familiarizing new brands
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Elements of Brand Equity
McGraw-Hill/Irwin
©2009 The McGraw-Hill Companies, All Rights Reserved
Branding
 Brand equity: financial value of the brand name
 Value (are we just paying for the name?)
 Consumer – familiarity
 Seller- be authentic, true to your people
 Less promotion (Reese’s)
 Legal protection (Coke; Olympic rings)
Hot or not…What are the most
equitable brands?
Equitable Brands
1.
2.
3.
4.
5.
6.
7.
8.
Apple
Blackberry
Google
Amazon
Yahoo
eBay
Red Bull
Starbucks
9. Pixar
10. Coach
11. Whole Foods
12. EA Sports/Games
13. MTV
14. Samsung
15. Victoria’s Secret
16. Nike
Packaging

Defined as:

Container or wrapping

Elements:
1. Function (fridgepack; pill bottles)
2. Promotion (L’eggs pantyhose; square Chanel)

Issues:
- UPC codes needed

Information: government guidelines (good or bad??)

Waste (kids lunches)

Size (changing??)
Product Life Cycle
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©2009 The McGraw-Hill Companies, All Rights Reserved
Product Life Cycle (1)

Product life cycle (4 stages): for product
IDEA, not individual firms.
1. Introduction (phones with net access; plasma TV)
•
•
•
•
•

High marketing costs (inform)
Slow sales increase
Low or no profit (Amazon.com)
Low competition
Price often high (ex. Calculator)
What other products can you think of that are
in introduction?
Product Life Cycle (2)

Product life cycle (cont…)
2. Growth (solar changing lens)
• High marketing expense (inform and persuade)
• Many small competitors – market entry (athletic
apparel)
• Little price competition
• Industry profits rise/peak and sales
increasing

What other products
are in growth?
Product Life Cycle (3)
3. Maturity (Beer and Auto)
• Industry sales level off; profits down
• Promotions stop rising: moderate marketing
expense (persuade)
• Fewer, stronger competitors: tough competition in
general
• Many consumers view product as homogeneous;
price competition

What other products can you think of that are in
maturity?
Product Life Cycle (4)
4. Decline: being replaced (VCR)
• Decrease in industry sales/profits
• Low marketing expense; small groups remain loyal
• Dropouts: few competitors; most gone

What other products can you think of that are
in decline?
Product Life Cycle (5)
 Criticisms:
 Accuracy pertaining to the longevity of the product in
different stages of the cycle can’t be predicted
 Self fulfilling prophecy (Is beer always going to be
a mature product?)
 All do not follow pattern (fads; fashion; scooters:
comeback)
 Product may be in different stages by the market
(B&W T.V.; Coke)
 What do you see are the advantages of the
PLC? Why should m.managers care?
Product Life Cycle (6)

Factors that may speed products through
PLC:
1. Ease of trial (supermarkets, no risk, test drive)
2. Ease of use (some assembly required; Toys R Us
(bike); Gateway store)
3. Easy to communicate advantages (Always low
price; cars)
4. Compatible with customer experience (Poland &
free samples)
Marketing Strategy Implications of the
Product Life Cycle
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©2009 The McGraw-Hill Companies, All Rights Reserved
Product Adoption And Diffusion
 Adopter categories
 Innovators
 Early adopters
 Early majority
 Late majority
 Laggards
 Diffusion – Spread of the product through the
population is known as the diffusion of innovation
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©2009 The McGraw-Hill Companies, All Rights Reserved
Adopter Categories
McGraw-Hill/Irwin
©2009 The McGraw-Hill Companies, All Rights Reserved
Product Audit
 A marketing management technique whereby the
company’s current product offerings are reviewed to
ascertain whether each product should be continued
as is, improved, modified, or deleted
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Deletions
 Deletion decisions are difficult because of the
potential impact on customers and the firm
 Considerations in the deletion decision include
 Sales trends – Have sales moved over time? What has
happened to market share?
 Profit contribution – What has been the profit
contribution of the product to the company?
 Product life cycle – Has the product reached a level of
maturity?
 Customer migration patterns – If the product is deleted,
will customers switch to another product marketed by
our firm?
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©2009 The McGraw-Hill Companies, All Rights Reserved
Product Improvement
 Another important objective of the audit is to ascertain
whether to alter the product in some way or leave
things the way they are
 Attributes – Refer mainly to product features, design,
package and so forth
 Marketing dimensions – Refer to features like pricing,
promotion strategy and distribution channels
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©2009 The McGraw-Hill Companies, All Rights Reserved
Product Improvement
 Benchmarking – Continuous process of measuring
products, services, and practices against those of the
toughest competitors or companies renowned as
leaders
 Advantages
 Boosting product quality
 Developing more user-friendly products
 Improving customer order processing activities
 Shortening delivery lead times
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©2009 The McGraw-Hill Companies, All Rights Reserved
Advantages of Rejuvenating a
Product
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Organizing for Product Management
 Market management system – One person is
responsible for overseeing an entire product line with
all of the functional areas of marketing such as
research, advertising, sales promotion, sales, and
product planning
 Brand management system – A manager focuses on
a single product or a very small group of new and
existing products
McGraw-Hill/Irwin
©2009 The McGraw-Hill Companies, All Rights Reserved
Cross Functional Teams
 Use of cross functional teams has become an
important way to manage the development of new
products
 Venture team – A cross-functional team responsible
for all tasks involved in development of new product
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©2009 The McGraw-Hill Companies, All Rights Reserved
Some Requirements for the Effective Use of CrossFunctional Teams in Product Management and New Product
Development
McGraw-Hill/Irwin
©2009 The McGraw-Hill Companies, All Rights Reserved