Comprehensive Guide to Product Management Strategies
Overview of Product
Management
1
Product and Major Classifications
•
What is a Product?
•
Tangible goods Vs Service
•
Levels of Product and Services
•
Core Product
•
Formal Product
•
Augmented Product
•
Product and Service Classifications
•
Consumer Products
•
Industrial products
2
Product Decisions
•
Product Line Decisions
•
A product line is a group of products that are closely
related
•
The line can be lengthened by:-
•
Product line stretching
•
Product-line filling
•
Product line length is the number of items in the
product line.
3
Product Decisions
•
Product Mix Decisions
•
A product mix (or product assortment) consists of all
the product lines and items that a particular seller offers
for sale.
•
A company’s product mix can be described in terms of
the following through which the company can increase
its business:-
•
Width
•
Length
•
Depth
•
Consistency
4
New Product Development Strategy
•
Defining a New Product.
•
A product that has been introduced in the market place
for the very first time.
•
A product that is new to the company.
•
The product can be a radical innovation which is entirely
new in its category or a minor/ major upgrades to the
existing products in terms of features/ packaging/
marketing.
•
Eg:- Ipad, Ipod Classic, Ipad2, Ipod Nano, Crocin
Advance etc.
•
Why develop new products?
5
New Product Development Strategy
•
Two ways to obtain new products by the organization:-
•
Acquisition
•
New Product Development
•
Eg:- Microsoft acquisition of Nokia
Facebook acquisition of Instagram & WhatsApp
•
Eg:- Ipad, Ipod, 3D TV, IBM Mainframes, Sewing
Machines, Microsoft Windows Operating System.
•
Innovation can be very risky. Why?
•
How to overcome difficulties and pitfalls is to identify
successful new products?
6
New Product Development Strategy
•
Various Steps in New Product Development Process
•
Idea Generation
•
Concept Development and Testing
•
Idea Screening
•
Marketing Strategy Development
•
Business Analysis
•
Test Marketing
•
Commercialization
•
Product Development
7
New Product Development Strategy
•
Idea Generation (Stage 1)
•
Systematic search for new product ideas
•
Sources for new product ideas:- Internal sources,
customers, competitors, distributors, suppliers and
others in the distribution chain
•
Idea Vs Commercialization
•
Idea Screening (Stage 2)
•
One of the most important step in the overall strategy
•
companies must proceed only with product ideas that
will turn into profitable products
8
New Product Development Strategy
•
Concept Development and Testing (Stage 3)
•
Identifying attractiveness of each concept to consumer
•
Concepts may take on several forms
•
Testing the concepts with a group of target consumers
•
New ways to make product concepts more real to
concept-test subjects
9
•
Caselet: DaimlerChrysler's
New Product Development Strategy
•
Marketing Strategy Development (Stage 4)
•
Designing an initial marketing strategy
•
A marketing strategy statement should be produced
which consists of three parts:-
•
Target market
•
product's planned price, distribution, and
marketing budget for the first year
•
planned long-run sales, profit goals, and
marketing mix strategy
10
New Product Development Strategy
•
Business Analysis (Stage 5)
•
Review of the sales, costs, and profit projections and
the break even point for a new product
•
Ensuring the projections are in line with the company
objectives
•
Survey for the market opinion
11
•
To estimate sales, the company might look at the
sales history of similar products and conduct
surveys of market opinion
New Product Development Strategy
•
Product Development (Stage 6)
•
Developing the product concept into a physical product
•
Investment is paramount at this stage
•
This stage can be time consuming and multiple versions
of the product concept could be developed
•
Prototypes must have the required functional features
and convey the intended psychological characteristics
12
•
Caselet: Gillette
New Product Development Strategy
•
Test Marketing (Stage 7)
•
Product and marketing program are introduced into
more realistic marketing settings
•
Objective:- To test the product itself in real markets
•
The effort in the stage varies with each new product
•
Costs can be high during this stage for the company
•
Approaches used by consumer product companies:-
•
Standard test markets
•
Controlled test markets
•
Simulated test markets
13
New Product Development Strategy
•
Standard Test market
•
Identification of Test Cities
•
conducting a full marketing campaign
•
Drawbacks:- Costs and lengthy period
14
•
Controlled test markets
•
Eg:- Clorox vs P&G
•
uses controlled panels of stores that have agreed to
carry new products for a fee.
•
Less costly than the earlier procedure
•
Takes less time period than standard test markets
New Product Development Strategy
•
Simulated Test market
•
Less expensive and requires short time period
•
simulated test markets are as accurate or
reliable as larger, real-world tests.
•
Still, simulated test markets are used widely,
often as "pretest" markets
15
•
Example:
Mistake by McDonalds: McLean Deluxe
New Product Development Strategy
•
Commercialization (Stage 8)
•
This step is introducing a new product into the market
•
Full scale implementation of advertising and
promotional strategies
•
Decisions related to timing and place for the launch of
products is decided and implemented.
•
Launch in the global markets could be done in the
initial launch or in a phased approach.
•
E.g.:- Most of the foreign players introduce new
mobile phones in developed countries and then later
on launch them in developing countries.
16
Consumer Adoption Process
•
Adoption is defined as the decision by an individual to
become a regular user of the product
•
This process is a type of decision making and occurs
over a period of time.
•
Adoption Process was described by Bourne in 1959
•
It is during this adoption process the consumer decides
to become a new customer or not.
•
The stages in the consumer adoption process become
the set of rules for the consumer at the beginning of
new product.
•
There are 5 stages in the consumer adoption process
17
Consumer Adoption Process
•
Stages in the Adoption Process
•
Interest (Stage 2)
•
Awareness (Stage 1)
•
Evaluation (Stage 3)
•
Trial (Stage 4)
•
Adoption (Stage 5)
•
Different Adopter Categories
•
Early adopters
•
Innovators
•
The early majority
•
The late majority
•
Laggards
18
Consumer Adoption Process
•
Influence of Product Characteristics on Rate of Adoption
•
Values and Experience (Innovation’s compatibility )
•
Superiority (Innovation’s relative advantage )
•
Ease of use (Innovation’s complexity )
•
Limited basis trial (Innovation’s divisibility )
•
Results being observed or described to others
(Innovation’s communicability )
•
Other factors/ characteristics such as costs, risk,
uncertainty, social approval, customs and behaviour may
affect the rate of adoption.
19
Product Life Cycle and Strategies
•
Each product seems to go through a life cycle
•
Problem of new-product development
•
Two major challenges of PLC
•
Problem of product life cycle strategies
•
The
product life-cycle (PLC)
is the course of a product’s
sales and profits over its lifetime
•
The PLC has become one of the central topic to
Marketing and is utilized by many firms as a part of their
forecasting process.
20
Product Life Cycle and Strategies
•
Product Life Cycle involves five distinct stages
•
The introduction stage
•
The product development Stage
•
The growth stage
•
The maturity stage
•
The decline stage
21
Product Life Cycle and Strategies
•
The product development Stage
•
sales are zero
•
Starts with a a new-product idea
•
company’s investment costs mount
22
Product Life Cycle and Strategies
•
The Introduction Stage
•
Profits are negative or low
•
Product is new and available for purchase
•
Lower number of sales (with exceptions, eg: Apple
products)
•
High distribution costs
•
Higher Promotion & Advertising costs (to improve
awareness level)
•
Prices tends to be high (Again depends on the pricing
strategy of the company)
23
Product Life Cycle and Strategies
•
The Introduction Stage
•
More focus on buyers (Early adopters)
•
Usually few competitors
•
Low market size (Until the awareness level improve)
•
High investment costs
•
Company can have the 1
st
mover advantage if the
strategy is executed properly
•
Market Growth Rate will be highest (over a course of
time)
24
Product Life Cycle and Strategies
•
The Growth Stage
•
Word of Mouth, advertising and promotional
strategies result in increased sales at this stage
•
In this stage product’s sales start climbing quickly
•
New competitors may enter the market place
•
Market expansion takes place
•
Entry of paratroopers with same or enhanced features
25
•
Competition may result in a price war
•
Advertising and promotion budget increases
Product Life Cycle and Strategies
•
The Growth Stage
•
Firm would trade off between high market share and
high current profit
•
Profits will increase, due to higher sales.
•
Growth rate would be high
•
At this stage the company may want their current
subscribers to purchase the new product
E.g.:- Amazon promoting Kindle Paper white
Apple exchanges iPhone 4/4s for iPhone
5
26
Product Life Cycle and Strategies
•
The Maturity Stage
•
Hunt for new users and segments
•
Sales growth slows or levels off
•
Introduction of loyalty programs to retain
existing customers
•
Reposition of the brand to appeal a larger segment
•
E.g:- Repositioning strategy by Moov
27
•
Product modification may happen
•
Marketing mix modifications to sustain growth
•
Market players consolidation
Product Life Cycle and Strategies
•
The Maturity Stage
•
Market growth rate will be low
•
No. of competitors remain stable
•
Profits start to decrease or remain stagnant
every quarter
•
Market size would be largest
28
•
Investment would remain stable
•
Continued reduction in costs of product due to
economies of scale and improvement in production
mechanisms over time
Product Life Cycle and Strategies
•
The Decline Stage
•
Market share would also decline
•
Product sales and profit figures decline
•
Companies need to pay more attention to their
aging products
•
Carrying the product may impact the company
29
•
Companies look towards other manufacturing options
to lower the cost or will be willing to exit the market
place.
Product Life Cycle and Strategies
•
The Decline Stage
30
•
Management may decide to
maintain
its brand
without change in the hope that competitors will
leave the industry
•
Management may decide to reposition or
reformulate the brand.
Eg:-
Frito-Lay’s Cracker Jack brand
Product Life Cycle and Strategies
•
Does PLC curve remains same for all the products ?
•
Not all products follow the S-shaped PLC
•
The PLC can describe a product class, a product
form, or a brand
•
The PLC can also be applied to styles, fashions, and
fads
31
Product Life Cycle and Strategies
32
•
Difficulties with PLC
•
Trouble identifying which stage of the PLC the product
is in
•
Difficult to forecast the sales level of the PLC stage, the
length of each stage, and the shape of the PLC curve
•
PLC concept to develop marketing strategy can also be
difficult because strategy is both a cause and a result of
the product’s life cycle
Case Study
Red Bull: Waking a New Market
33
Branding
•
Introduction:-
•
Branding started to develop and came to the picture in
USA around early 20
th
century
•
Brand was a guarantee of homogeneity and a signal
of product quality
•
Definition of Brand
34
•
Aaker (1991), Keller (1998) Kotler (1994) & Lovelock
(1999) defines brand as “Distinguishing name and/or
symbol intended to identify and differentiate”.
Branding
•
Definition of Brand
35
•
Peter Doyle of Warwick University has given a
comprehensive definition: “A name, symbol, design, or
some combination which identifies the product of a
particular organization as having a substantial,
differentiated advantage
•
Development Of Branding
•
Brands can also reduce the risk consumers face
•
Consumerisation increases the focus changes from
the
primitive selling to the advanced concept of brand
Branding
36
•
Development Of Branding
•
Peter Doyle has classified this development of brand
management in six eras namely:-
•
Stage 1: Unbranded Goods
•
Stage 2: Brand As Reference Or Awareness
•
Stage 3: Brand As Bundle Of Ideas, Thoughts And
Images Or Personality
•
Stage 4: Brand As Icon Or An Identity
•
Stage 5: Brand As A Position
•
Stage 6: Brand as Policy
Branding
37
•
Stage 1: Unbranded Goods
•
Goods are treated as commodities
•
Goods are not branded
•
Demand is more, supply is less
•
Rarely seen in developed economies
•
Stage 2: Brand As Reference Or Awareness
•
competitive pressures stimulate producers to
differentiate their goods
•
Changes in physical product attributes
Branding
38
•
Stage 3: Brand As Bundle Of Ideas, Thoughts And
Images Or Personality
•
Stage 4: Brand As Icon Or An Identity
•
brand is "owned by consumers”
•
Consumers use brands it to create their self-identity
•
Differentiation becomes exceedingly difficult
•
marketers begin to give their brands personalities
•
value of the brand becomes self-expression
Branding
39
•
Stage 5: Brand As A Position
•
Stage 6: Brand as Policy
•
Few companies to date have entered this stage
•
Distinguished by an alignment of company with
Ethical, Social And Political Causes
•
This stage marks the change to modern marketing
•
Brand has a complex identity and has complex
interaction with the consumer
Branding
40
•
From Products to Brands
•
Lewis has suggested that a product becomes a
brand through a process of formalization.
•
Formalization creates emotional interphase
between the product and customer.
•
Involves conscious effort by the company to
categorically detail out rational & emotional features
of a brand
•
Brand Equity is value the brand generates to a
product. This value effort is the output of the entire
branding effort
•
Case Studies: a) Dr. Batra’s Postive Health Clinic Ltd
b) Navratna Oil
Branding
41
•
Build Strong Brands
•
Brands as the major enduring asset of a company
•
The brand is more valuable than the totality of all
these assets
•
Brands are more than just names and symbols
•
Brands reside in the minds of consumers
•
A powerful brand has high brand equity
•
Brand valuation is the process of estimating the
total financial value of a brand
•
Apple is $98 billion, Coca-Cola is $79 billion,
Microsoft is $59 billion, and IBM is $78 billion
(Interband.com, 2013)
Branding
42
•
Build Strong Brands
•
Branding poses challenging decisions to the
marketer
•
major brand strategy decisions involve brand
positioning, brand name selection, brand
sponsorship, and brand development
Branding
43
•
Brand Positioning
•
Defined as the Distinct Space a Brand occupies in
the customers mind.
•
This can be done at any of three levels:
•
Product attributes.
•
Name association with a desirable benefit.
•
Positioned on beliefs and values
•
A brand can be better positioned by associating
its name with a desirable
benefit.
•
Volvo (safety), Hallmark (caring), Harley-
Davidson (adventure)
Branding
44
•
Brand Name Selection
•
finding the best brand name is a difficult task.
•
Begins with a careful review of the following:-
•
product and its benefits, the target market and
proposed marketing strategies
•
Desirable qualities for a brand name include:-
•
Name suggesting the product's benefits and
qualities. E.g:- Ujala, Hajmola .
•
Easy to pronounce, recognize, and remember
Examples: Tide, Crest, Lux, Bata, Airel etc.
•
should be distinctive, extendable and easily
transferable into foreign languages. Eg: cinthol,
Amazon, Oracle
Branding
45
•
Brand Sponsorship
•
A manufacturer has four sponsorship options:-
•
Manufacture’s Brands, Private Brands, Licensing
andCo-Branding
•
Increasing number of retailers and wholesalers have
created their own private brands
•
Eg: Sears, Walmart and Future group
•
Private brands can be hard to establish and costly to
stock and promote.
•
Private brands generally have higher profit margins.
Branding
46
•
Licensing
•
Creating a brand name is time consuming
•
Some companies license names or symbols
previously created by other manufacturers, names of
well-known celebrities, or characters from popular
movies and books
•
Apparel and accessories sellers pay large royalties to
adorn their products
•
Almost half of all retail toy sales come from
products based on television shows and movies
•
The fastest-growing licensing category is
corporate brand licensing, E.g:- Coca-Cola
Branding
47
•
Co-Branding
•
Co-branding occurs when two established brand
names of different companies are used on the same
product.
•
Kellogg & ConAgra
•
Co-branding offers many advantages
•
Co-branding also allows a company to expand
•
licensing its Healthy Choice brand to Kellogg,
ConAgra entered the breakfast segment with a solid
product
•
Co-branding also has limitations (complex legal
contracts and licenses)
Branding
48
•
CO-BRANDING
•
four choices when it comes to developing
brands namely:-
•
Line Extensions
•
Brand Extensions
•
Multibrands
•
New Brands
Branding
49
•
Line extensions:-
•
A company might introduce line extensions as a
low-cost, low-risk way of introducing new
products in order to:-
•
Meet consumer desires for variety.
•
Meet excess manufacturing capacity.
•
Simply command more shelf space.
•
Risks include:-
•
An overextended brand might lose its specific
meaning.
•
Can cause consumer frustration or confusion.
•
The extension could be at the expense of other
items in the line.
Branding
50
•
Brand Extensions:-
•
Existing brand names are extended to new or
modified product categories.
•
Helps a company enter new product categories
•
Aids in new product recognition.
•
Saves on high advertising cost.
•
Drawbacks:-
•
The extension may confuse the brand image.
•
The brand name may not be appropriate for a
particular new product.
•
The brand name may be because of special
positioning in the mind of the consumer.
Branding
51
•
Multi Brands
•
New brand names are introduced in the same
product category
•
They gain more shelf space.
•
The company can establish flanker or fighter
brands
•
helps to develop healthy competition & each
brand has a separate following
•
Drawbacks:-
•
Each brand may only obtain a small market
share and be unprofitable
Branding
52
•
New Brands
•
New brand names in new categories are
introduced
•
Helps move away from a brand that is failing
.
•
Can get new brands in new categories by
corporate acquisitions
•
Drawbacks:-
•
Spreading resources too thin
Positioning & Differentiation
53
•
Positioning involves implanting the brand's unique
benefits and differentiation in customers' minds.
•
Eg:- Mercedes and Cadillac on luxury, and
Porsche and BMW on performance.
•
Choosing a Positioning Strategy (3 Steps)
•
Identifying a set of possible competitive
advantages
•
Choosing the right competitive advantages &
Selecting an overall positioning strategy.
•
Effectively communicate and deliver the
chosen position to the market
Positioning & Differentiation
54
•
Identifying Possible Competitive Advantages
•
Positioning begins with actually differentiating
the company's marketing offer.
•
In what specific ways can a company
differentiate its offer from those of competitors?
•
along the lines of product, services, channels,
people, or image
•
Firm can also differentiate the services that
accompany the product
•
Eg: Domino’s 30 min delivery
Positioning & Differentiation
55
•
Identifying Possible Competitive Advantages
•
Installation can also differentiate one company
from another
•
Firms that practice channel differentiation
•
E.g:- Caterpillar, Dell, Amazon etc
•
when competing offers look the same, buyers
may perceive a difference based on company or
brand image differentiation
•
The company might build a brand around a
famous person
•
Some companies even become associated with
colors
Positioning & Differentiation
56
•
Choosing the Right Competitive Advantages
•
How many differences to promote?
•
company needs to avoid three major positioning
errors
•
Under Positioning
•
Over Positioning
•
Confused Positioning
•
Which differences to promote ?
•
Promote those differences that are important,
distinctive, superior, communicable, preemptive,
affordable & profitable11
Positioning & Differentiation
57
•
Selecting an Overall Positioning Strategy
•
This figure shows possible value propositions
upon which a company might position its
products.
Positioning & Differentiation
58
•
More for More
•
involves providing the most upscale product or
service and charging a higher price to cover the
higher costs
•
E.g:- Mont Blanc, Parker, Mercedes-Benz,
Häagen-Dazs, Starbucks etc.
•
More for the same
•
Companies can attack a competitor's more-for-
more positioning by introducing a brand offering
comparable quality but at a lower price
•
Eg:- Lexus and Mercedes automobiles
Positioning & Differentiation
59
•
Same for Less
•
Offering "the same for less" can be a powerful
value proposition—everyone likes a good deal.
•
Dell Computers, wall-Mart, Big Bazaar
•
Effort to lure customers away from the market
leader
•
Less for Much Less
•
consumers will settle for less than optimal
performance in exchange for a lower price.
•
Example:- ITC low cost hotels (Ginger), No
firlls economy Airlines (Spicejet, Indigo etc).
Positioning & Differentiation
60
•
More for less
•
winning value proposition would be to offer
"more for less.
•
Many companies like Procter & Gamble, Home
Depot claim to do this.
•
Yet in the long run, companies will find it very
difficult to sustain such best-of-both positioning.
•
Developing a Positioning Statement
•
The statement should follow this form:
To
(target segment and need) our (brand) is
(concept) that (point-of-difference).
Positioning & Differentiation
61
•
Communicating and Delivering the Chosen
Position
•
company must take strong steps to deliver and
communicate the desired position to target
consumer
•
Designing the marketing involves working out
the tactical details of the positioning strategy
•
Companies find it easier to come up with a good
positioning strategy than to implement it.
•
a product's position should evolve gradually as it
adapts to the ever-changing marketing
environment.
Brand Repositioning
62
•
Brand Repositioning exercise may be due to the
following reasons:-
•
Increasing Market Penetration (Moov, Lifebuoy,
Kurl, Marlboro cigarette )
•
Increasing Relevance to Customer (Alto,
Bournvita , Earlier Coca cola’s mello yello )
•
Making Brand Contemporary (Bajaj, Tata Sumo,
Sugar-free)
•
Change in Market or market Conditions
(McDonald)
•
Brand Repositioning is changing the positioning of
brands.
Case Study
63
Repositioning
from
mass to Class
Case Study
64
Establishing Alpenliebe as a
Brand
Pricing Decisions
65
•
What Is a Price?
•
price is the amount of money charged for a product
or service
•
price is the sum of all the values that consumers
exchange for the benefits of having or using the
product or service.
•
Objective of pricing: To find the price that will let the
company make a fair profit by harvesting the customer
value it creates.
•
price has been the major factor affecting buyer choice
•
Price is the only element in the marketing mix that
produces revenue
Pricing Decisions
66
•
Factors Affecting Pricing Decisions
•
A company's pricing decisions are affected by
both internal company factors and external
environmental factors
•
Internal factors affecting pricing decisions
•
marketing objectives
•
marketing mix strategy
•
costs
•
organizational considerations
Pricing Decisions
67
•
Marketing Objectives
•
company must decide on its strategy for the product
before setting the price
•
Common objectives include survival, current profit
maximization, market share leadership, and product
quality leadership
•
Many companies use current profit maximization as
their pricing goal
•
Other companies want to obtain market share
leadership.
•
company might decide that it wants to achieve
product quality leadership (
Caterpillar ,
Gillette)
Pricing Decisions
68
•
Marketing Objectives
•
A company might set prices low to prevent
competition from entering the market
•
Prices can be reduced temporarily to create
excitement for a product or to draw more customers
into a retail store
•
Not-for-profit and public organizations may adopt a
number of other pricing objectives
•
A not-for-profit hospital may aim for full cost recovery
in its pricing.
•
A social service agency may set a social price geared
to the varying income situations of different clients
Pricing Decisions
69
•
Marketing Mix Strategy
•
Decisions made for other marketing mix variables
may affect pricing decisions
•
Price is a crucial product-positioning factor that
defines the product's market, competition & design
•
Many firms support a price-positioning strategy
technique called target costing
•
Pricing that starts with an ideal selling price, then
targets costs that will ensure that the price is met.
E.g:- Swatch Watch
•
Other companies deemphasize price and use other
marketing mix tools to create
nonprice
positions.
Pricing Decisions
70
•
Costs
•
Costs set the floor for the price that can be charged.
•
A company's costs may be an important element in its
pricing strategy.
•
Companies with lower costs can set lower prices that
result in greater sales and profits.
•
A company's costs take two forms, fixed and variable
•
Total costs are the sum of the fixed and variable costs
for any given level of production.
•
The company must watch its costs carefully so that it
doesn’t be more than competitors.
Pricing Decisions
71
•
Organizational Considerations
•
Companies handle pricing in a variety of ways.
•
In small companies, prices are often set by top
management
•
In large companies, pricing is typically handled by
divisional or product line managers.
•
In industrial markets, salespeople may be allowed to
negotiate with customers within certain price ranges
•
This pricing department reports to the marketing
department or top management
Pricing Decisions
72
•
External Factors Affecting Pricing Decisions
•
Nature of The Market and Demand
•
Competition
•
Other relevant factors (economy, resellers,
government etc.)
•
Nature of the market and demand
•
Economists recognize four types of markets, each
presenting a different pricing challenge.
•
pure competition, monopolistic competition,
oligopolistic competition and pure monopoly
Pricing Decisions
73
•
Pure Competition
•
the market consists of many buyers and sellers
•
No single buyer or seller has much effect on the going
market price
•
A seller cannot charge more/ less than the going price
•
In a purely competitive market, marketing research,
product development, pricing, advertising, and sales
promotion play little or no role
Pricing Decisions
74
•
Monopolistic Competition
•
market consists of many buyers and sellers who trade
over a range of prices
•
A range of prices occurs because sellers can
differentiate their offers to buyers
•
Buyers see differences in sellers' products
•
Sellers try to develop differentiated offers for
different customer segments
•
less affected by competitors' marketing pricing
strategies than in oligopolistic markets
Pricing Decisions
75
•
Oligopolistic Competition
•
Market consists of a few sellers who are highly
sensitive to each other's pricing
•
The product can be uniform (steel, aluminum) or
nonuniform (cars, computers).
•
There are few sellers due to high entry barriers
•
Each seller is alert to competitors' strategies and
moves
•
If an oligopolist raises its price, its competitors might
not follow this lead.
Pricing Decisions
76
•
Pure Monopoly
•
market consists of one seller
•
Seller may be a government or private regulated or
private non regulated.
•
Very few product categories are left with such
markets due to globalization and free trade
•
A government monopoly can pursue a variety of
pricing objectives. In a regulated monopoly, the
government permits the company to set rates
•
Nonregulated monopolies are free to price at what
the market will bear
Pricing Decisions
77
•
Competitors' Costs, Prices, and Offers
•
company's pricing strategy may affect the nature of
the competition it faces
•
If company follows a high-price, high-margin strategy,
it may attract competition.
•
A low-price, low-margin strategy, however, may stop
competitors or drive them out of the market
•
Other external factors
•
Economic factors such as boom or recession, inflation,
and interest rates
•
Impact of pricing on other parties in the environment
•
social concerns
Pricing Methods/ Approaches
78
•
Companies set prices by selecting a general pricing
approach that includes one or more of these three sets of
factors:-
•
Product costs
•
Competitors prices and other internal and
external factors
•
Consumer perception of value
•
We shall examine basic three pricing approaches:-
•
cost-based approach (cost-plus pricing)
•
buyer-based approach (V
alue-based pricing
)
•
competition-based approach (
going-rate and
sealed-bid pricing)
Pricing Methods/ Approaches
79
•
Cost Plus Pricing
•
The simplest pricing method is cost-plus pricing
•
Involves adding a standard markup to the cost of the
product.
•
Markup pricing remains popular for many reasons
•
Frequent adjustments are not necessary all the time
•
When firm uses this method, prices tend to be similar
and price competition is thus minimized
•
Many organizations perceive cost-plus pricing is fairer
to both buyers and sellers
Pricing Methods/ Approaches
80
•
Value Based Pricing
•
Setting price based on buyers' perceptions of value
rather than on the seller's cost.
•
Value-based pricing uses buyers' perceptions of value,
not the seller's cost, as the key to pricing.
•
Cost-based pricing is product driven. Value-based
pricing reverses this process.
•
A company using value-based pricing must find out
what value buyers assign to different competitive
offers
•
Measuring perceived value can be difficult.
•
important type of value pricing at the retail level is
everyday low pricing (EDLP)
Pricing Methods/ Approaches
81
•
Competition Based pricing
•
Consumers will base their judgments of a product's
value on the prices that competitors charge for similar
products.
•
The firm might charge the same as, more than, or less
than its major competitors.
•
The smaller firms follow the leader
•
Going-rate pricing is quite popular When demand
elasticity is hard to measure.
•
Competition-based pricing is also used when firms bid
for jobs
Pricing Strategies
82
•
Pricing strategies usually change as the product passes
through its life cycle.
•
During the Introductory Stage, companies choose
between two broad strategies: market-skimming pricing
and market-penetration pricing
•
Market-Skimming Pricing
•
Many companies that invent new products initially set
high prices to "skim" revenues layer by layer from the
market.
E.g:- Apple, Sony, Samsung
Pricing Strategies
83
•
Market Penetration Pricing
•
set a low initial price in order to
penetrate
the market
quickly and deeply—to attract a large number of
buyers quickly and win a large market share.
•
Eg:- Wal-Mart, Karbon, Spice Mobiles
•
The high sales volume results in falling costs, allowing
the company to cut its price even further.
•
Several conditions must be met for this low-price
strategy to work:- High Sensitive Market, low
production & distribution costs.
•
Price advantage may be temporary many a times
•
E.g:- Dell
Price Adjustment Strategies
84
•
Companies usually adjust their basic prices to account for
various customer differences and changing situations.
•
Discount and Allowance Pricing
•
A
quantity discount
•
A
functional discount
(also called a
trade discount
)
•
A
seasonal discount
•
Allowances (Promotional money paid by
manufacturers to retailers in return for an agreement
to feature the manufacturer's products in some way.)
Price Adjustment Strategies
85
•
Segmented pricing
•
Selling a product or service at two or more prices,
where the difference in prices is not based on
differences in costs
•
Several forms of segmented pricing:-
•
customer-segment
pricing
•
product-form pricing
•
location pricing
•
time pricing
•
The market must be segmentable, and the segments
must show different degrees of demand.
•
Competitors should not be able to undersell the firm
in the segment being charged the higher price
Price Adjustment Strategies
86
•
Psychological Pricing
•
A pricing approach that considers the psychology of
prices and not simply the economics; the price is used
to say something about the product.
•
sellers consider the psychology of prices and not
simply the economics
•
consumers usually perceive higher-priced products as
having higher quality
•
But when they cannot judge quality because they lack
the information or skill, price becomes an important
quality signal. Caselet: Smirnoff
•
Another aspect of psychological pricing is reference
prices
Price Adjustment Strategies
87
•
Promotional Pricing
•
Temporarily pricing products below the list price, and
sometimes even below cost, to increase short-run
sales.
•
Supermarkets and department stores will price a few
products as loss leaders
•
Sellers will also use special-event pricing in certain
seasons to draw more customers
•
Manufacturers will sometimes offer cash rebates to
consumers
•
Some manufacturers offer low-interest financing,
longer warranties, or free maintenance to reduce the
consumer's "price."
Response to Price changes
88
•
Has competitor cut the price?
•
Will lower price negatively affect our market share and
profits?
•
Can/ should effective action be take?
•
If the answer is no to the above questions, it is better to
hold the current price and monitor the competitior’s price
•
If the answer is yes, then you have the following actions:-
•
Reduce Price
•
Raise Perceive Quality
•
Improve Quality and increase price
•
Launch low-price fighting brand
Response to Price changes
89
Marketing /Distribution Channels
90
•
A company's channel decisions directly affect every other
marketing decision.
•
Many companies have used imaginative distribution
systems to gain a competitive advantage.
•
E.g:- FedEx, Dell Computer, Charles Schwab &
Company etc.
•
Distribution channel decisions often involve long-term
commitments to other firms
•
Why do producers give some of the selling job to channel
partners?
•
Members of the marketing channel perform many key
functions.
•
Information, Promotion, Contact, Matching,
Negotiation etc.
Channel Levels
91
•
Channel levels are defined as layer of intermediaries that
performs some work in bringing the product and its
ownership closer to the final buyer.
•
Number of Channel Levels
•
Channel 1: direct marketing channel
•
Channel 2: indirect marketing channels
•
Multichannel Distribution Systems
•
hybrid marketing channels
•
single firm sets up two or more marketing channels to
reach one or more customer segments.
•
E.g:- Charles Schwab, IBM
•
Changing Channel Organization
•
Develop new channel opportunities
Channel Design Decisions
92
•
In designing marketing channels, manufacturers
struggle between what is ideal and what is practical.
•
For maximum effectiveness, however, channel
analysis and decision making should be more
purposeful
•
Designing a channel system includes:-
•
Analyzing consumer needs
•
Setting channel objectives
•
Identifying major channel alternatives
•
Evaluating major channel alternatives
Channel Design Decisions
93
•
Analyzing consumer needs
•
finding out what target consumers want from the
channel
•
Do consumers want to buy from nearby locations or
are they willing to travel to more distant centralized
locations?
•
Would they rather buy in person, over the phone,
through the mail, or via the Internet?
•
Do they value breadth of assortment or do they
prefer specialization?
•
Do consumers want many add-on services
Channel Design Decisions
94
•
Setting Channel Objectives
•
Which segments to serve and the best channels to
use?
•
Minimize the total channel cost of meeting customer
service requirements.
•
Channel objectives are also influenced by the nature
of the company, its products, its marketing
intermediaries, its competitors, and the environment.
•
To use same or different channels which the
competitors use.
•
Environmental factors may affect channel objectives
and design.
Channel Design Decisions
95
•
Identifying major channel alternatives
•
Types of Intermediaries (Company sales force,
Manufacturer’s agency, Industrial Distributors)
•
Number of Marketing Intermediaries
•
Intensive distribution (Coca-Cola, Kraft etc)
•
Exclusive distribution (Bentley)
•
Selective distribution (Whirlpool, GE, kitchenAid)
•
Responsibilities of Channel Members
•
The producer and intermediaries need to agree on
the terms and responsibilities of each channel
member
Channel Design Decisions
96
•
Evaluating major channel alternatives
•
Each alternative should be evaluated against
economic, control, and adaptive criteria.
•
Using intermediaries usually means giving them some
control over the marketing of the product, and some
intermediaries take more control than others
•
Company compares the likely sales, costs, and
profitability of different channel alternatives.
•
company wants to keep the channel flexible so that it
can adapt to environmental changes
Channel Management Decisions
97
•
Channel management decisions involve:-
•
selecting, managing, and motivating individual
channel members and evaluating their performance
over time.
•
Selecting Channel Members
•
Some producers have no trouble signing up channel
members.
•
Some producers have to work hard to line up enough
qualified intermediaries
•
company should determine what characteristics
distinguish the better ones
Channel Management Decisions
98
•
Managing and Motivating Channel Members
•
practice strong
partner relationship management
(PRM)
to forge long-term partnerships
•
must convince distributors that they can succeed
better by working together as a part of a cohesive
value delivery system
•
Caselet: General Electric
•
Evaluating Channel Members
•
regularly check channel member performance against
standards such as sales quotas, average inventory
levels, customer delivery time, treatment of damaged
and lost goods, etc.
•
manufacturers need to be sensitive to their dealers
Promotion Mix
99
•
A company's total marketing communications mix also
called its promotion mix consists of the specific blend of
the following categories that the company uses to pursue
its marketing objectives:-
•
Advertising
•
Sales promotion
•
Public relations
•
Personal selling
•
Direct-marketing
•
Each category involves specific tools
•
communication goes beyond these specific promotion
tools
Integrating the Promotion Mix
100
•
Checklist for integrating firm's marketing communications:-
•
Analyze trends—internal and external—that can affect
your company's ability to do business
•
Audit the pockets of communications spending
throughout the organization
•
Identify all contact points for the company & its brands
•
Team up in communications planning
•
Create compatible themes, tones, and quality across all
communications media
•
Create performance measures that are shared by all
communications elements
•
Appoint a director responsible for the company's
persuasive communications efforts
Promotion Mix Strategy
101
•
Marketers can choose from two basic promotion mix
strategies
•
Push promotion:- A promotion strategy that calls for using
the sales force and trade promotion to push the product
through channels. The producer promotes the product to
wholesalers, the wholesalers promote to retailers, and the
retailers promote to consumers.
•
Pull promotion:- A promotion strategy that calls for
spending a lot on advertising and consumer promotion to
build up consumer demand.
•
Case Study: P&G
Developing an Advertising Program
102
•
Marketing management must make four important
decisions when developing an advertising program:-
•
Setting advertising objectives
•
Setting the advertising budget
•
Developing advertising strategy
•
Evaluating advertising campaigns.
Developing an Advertising Program
103
•
Setting advertising objectives
•
These objectives should be based on past decisions about
the target market, positioning, and marketing mix
•
Informative advertising is used heavily when introducing a
new product category
•
Persuasive advertising becomes more important as
competition increases.
•
Reminder advertising is important for mature products
•
Setting the Advertising Budget
•
A brand's advertising budget often depends on its stage in
the product life cycle
•
How does a company know if it is spending the right
amount?
Developing an Advertising Program
104
•
Developing Advertising Strategy
•
Advertising strategy consists of two major elements:
•
Creating advertising messages and
•
Selecting advertising media.
•
Message Strategy
•
Message Execution
•
Selecting Advertising Media
•
deciding on
reach, frequency,
and
impact
•
choosing among major
media types
•
selecting specific
media vehicles
•
deciding on
media timing
Developing an Advertising Program
105
•
Evaluating Advertising Campaigns
•
evaluate both the communication effects and the sales
effects of advertising regularly.
•
copy testing
•
compare past sales with past advertising expenditures
•
More complex experiments could be designed to include
other variables, such as difference in the ads or media used
Sales Promotion Tools
106
•
Consumer Promotion Tools
•
Samples
•
Coupons
•
Cash refund offers
•
Price Packs
•
Premiums
•
Advertising Specialities
•
Patronage rewards
•
Point-of-purchase promotions
•
Contests, sweepstakes and games
Sales Promotion Tools
107
•
Trade Promotion Tools
•
Contests,
•
Premiums
•
Displays
•
Price-off
•
Allowance
•
Business Promotion Tools
•
same tools used for consumer or trade promotions
•
Other major tools:- conventions and trade shows,
Sales contests.
Develop Sales Promotion Program
108
•
Marketer must decide on the size of the incentive
•
The marketer also must set conditions for participation.
•
marketer must then decide how to promote and distribute
the promotion program itself.
•
The length of the promotion is also important
•
Evaluation is also very important.
•
Surveys can provide information on how many consumers
recall the promotion
•
Marketer must define the sales promotion objectives,
select the best tools, design the sales promotion program,
implement the program, and evaluate the results
Public Relation
109
•
Public Relation Tools
•
News
•
Speeches
•
Special events
•
Written material
•
Audio Visual material
•
Corporate identity material
•
Public service activities
•
The firm's public relations should be blended smoothly with
other promotion activities within the company's overall
integrated marketing communications effort.
•
Case Study: Pepsi: Promoting Nothing (Water Wars)
Thank You
110
This comprehensive guide covers various aspects of product management, including product classifications, product decisions, new product development strategies, and steps in the product development process. Explore the importance of defining new products, acquiring products, and overcoming challenges in innovation to achieve success in the market.
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Presentation Transcript
Overview of Product Management 1
Product and Major Classifications What is a Product? Tangible goods Vs Service Levels of Product and Services Core Product Formal Product Augmented Product Product and Service Classifications Consumer Products Industrial products 2
Product Decisions Product Line Decisions A product line is a group of products that are closely related Product line length is the number of items in the product line. The line can be lengthened by:- Product line stretching Product-line filling 3
Product Decisions Product Mix Decisions A product mix (or product assortment) consists of all the product lines and items that a particular seller offers for sale. A company s product mix can be described in terms of the following through which the company can increase its business:- Width Length Depth Consistency 4
New Product Development Strategy Defining a New Product. A product that has been introduced in the market place for the very first time. A product that is new to the company. The product can be a radical innovation which is entirely new in its category or a minor/ major upgrades to the existing products in terms of features/ packaging/ marketing. Eg:- Ipad, Ipod Classic, Ipad2, Ipod Nano, Crocin Advance etc. Why develop new products? 5
New Product Development Strategy Two ways to obtain new products by the organization:- Acquisition Eg:- Microsoft acquisition of Nokia Facebook acquisition of Instagram & WhatsApp New Product Development Eg:- Ipad, Ipod, 3D TV, IBM Mainframes, Sewing Machines, Microsoft Windows Operating System. Innovation can be very risky. Why? How to overcome difficulties and pitfalls is to identify successful new products? 6
New Product Development Strategy Various Steps in New Product Development Process Idea Generation Idea Screening Concept Development and Testing Marketing Strategy Development Business Analysis Product Development Test Marketing Commercialization 7
New Product Development Strategy Idea Generation (Stage 1) Systematic search for new product ideas Idea Vs Commercialization Sources for new product ideas:- Internal sources, customers, competitors, distributors, suppliers and others in the distribution chain Idea Screening (Stage 2) One of the most important step in the overall strategy companies must proceed only with product ideas that will turn into profitable products 8
New Product Development Strategy Concept Development and Testing (Stage 3) Concepts may take on several forms Identifying attractiveness of each concept to consumer Testing the concepts with a group of target consumers New ways to make product concepts more real to concept-test subjects Caselet: DaimlerChrysler's 9
New Product Development Strategy Marketing Strategy Development (Stage 4) Designing an initial marketing strategy A marketing strategy statement should be produced which consists of three parts:- Target market product's planned price, distribution, and marketing budget for the first year planned long-run sales, profit goals, and marketing mix strategy 10
New Product Development Strategy Business Analysis (Stage 5) Review of the sales, costs, and profit projections and the break even point for a new product Ensuring the projections are in line with the company objectives Survey for the market opinion To estimate sales, the company might look at the sales history of similar products and conduct surveys of market opinion 11
New Product Development Strategy Product Development (Stage 6) Developing the product concept into a physical product Investment is paramount at this stage This stage can be time consuming and multiple versions of the product concept could be developed Prototypes must have the required functional features and convey the intended psychological characteristics Caselet: Gillette 12
New Product Development Strategy Test Marketing (Stage 7) Product and marketing program are introduced into more realistic marketing settings Objective:- To test the product itself in real markets The effort in the stage varies with each new product Costs can be high during this stage for the company Approaches used by consumer product companies:- Standard test markets Controlled test markets Simulated test markets 13
New Product Development Strategy Standard Test market Identification of Test Cities conducting a full marketing campaign Drawbacks:- Costs and lengthy period Eg:- Clorox vs P&G Controlled test markets uses controlled panels of stores that have agreed to carry new products for a fee. Less costly than the earlier procedure Takes less time period than standard test markets 14
New Product Development Strategy Simulated Test market Less expensive and requires short time period simulated test markets are as accurate or reliable as larger, real-world tests. Still, simulated test markets are used widely, often as "pretest" markets Example: Mistake by McDonalds: McLean Deluxe 15
New Product Development Strategy Commercialization (Stage 8) This step is introducing a new product into the market Full scale implementation promotional strategies Decisions related to timing and place for the launch of products is decided and implemented. Launch in the global markets could be done in the initial launch or in a phased approach. E.g.:- Most of the foreign players introduce new mobile phones in developed countries and then later on launch them in developing countries. of advertising and 16
Consumer Adoption Process Adoption is defined as the decision by an individual to become a regular user of the product Adoption Process was described by Bourne in 1959 This process is a type of decision making and occurs over a period of time. It is during this adoption process the consumer decides to become a new customer or not. The stages in the consumer adoption process become the set of rules for the consumer at the beginning of new product. There are 5 stages in the consumer adoption process 17
Consumer Adoption Process Stages in the Adoption Process Awareness (Stage 1) Trial (Stage 4) Interest (Stage 2) Evaluation (Stage 3) Adoption (Stage 5) Different Adopter Categories Innovators The late majority Laggards Early adopters The early majority 18
Consumer Adoption Process Influence of Product Characteristics on Rate of Adoption Superiority (Innovation s relative advantage ) Values and Experience (Innovation s compatibility ) Ease of use (Innovation s complexity ) Limited basis trial (Innovation s divisibility ) Results being observed or described to others (Innovation s communicability ) Other factors/ characteristics such as costs, risk, uncertainty, social approval, customs and behaviour may affect the rate of adoption. 19
Product Life Cycle and Strategies Each product seems to go through a life cycle Two major challenges of PLC Problem of new-product development Problem of product life cycle strategies The product life-cycle (PLC) is the course of a product s sales and profits over its lifetime The PLC has become one of the central topic to Marketing and is utilized by many firms as a part of their forecasting process. 20
Product Life Cycle and Strategies Product Life Cycle involves five distinct stages The product development Stage The introduction stage The growth stage The maturity stage The decline stage 21
Product Life Cycle and Strategies The product development Stage Starts with a a new-product idea sales are zero company s investment costs mount 22
Product Life Cycle and Strategies The Introduction Stage Product is new and available for purchase Profits are negative or low Lower number of sales (with exceptions, eg: Apple products) High distribution costs Prices tends to be high (Again depends on the pricing strategy of the company) Higher Promotion & Advertising costs (to improve awareness level) 23
Product Life Cycle and Strategies The Introduction Stage Usually few competitors More focus on buyers (Early adopters) Low market size (Until the awareness level improve) High investment costs Market Growth Rate will be highest (over a course of time) Company can have the 1st mover advantage if the strategy is executed properly 24
Product Life Cycle and Strategies The Growth Stage In this stage product s sales start climbing quickly Word of Mouth, advertising and promotional strategies result in increased sales at this stage New competitors may enter the market place Entry of paratroopers with same or enhanced features Market expansion takes place Competition may result in a price war Advertising and promotion budget increases 25
Product Life Cycle and Strategies The Growth Stage Profits will increase, due to higher sales. Firm would trade off between high market share and high current profit Growth rate would be high At this stage the company may want their current subscribers to purchase the new product E.g.:- Amazon promoting Kindle Paper white Apple exchanges iPhone 4/4s for iPhone 5 26
Product Life Cycle and Strategies The Maturity Stage Sales growth slows or levels off Hunt for new users and segments Introduction of loyalty programs to retain existing customers Reposition of the brand to appeal a larger segment E.g:- Repositioning strategy by Moov Product modification may happen Marketing mix modifications to sustain growth Market players consolidation 27
Product Life Cycle and Strategies The Maturity Stage No. of competitors remain stable Market growth rate will be low Profits start to decrease or remain stagnant every quarter Market size would be largest Investment would remain stable Continued reduction in costs of product due to economies of scale and improvement in production mechanisms over time 28
Product Life Cycle and Strategies The Decline Stage Product sales and profit figures decline Market share would also decline Companies need to pay more attention to their aging products Carrying the product may impact the company Companies look towards other manufacturing options to lower the cost or will be willing to exit the market place. 29
Product Life Cycle and Strategies The Decline Stage Management may decide to maintain its brand without change in the hope that competitors will leave the industry Management may decide to reposition or reformulate the brand. Eg:- Frito-Lay s Cracker Jack brand 30
Product Life Cycle and Strategies Does PLC curve remains same for all the products ? Not all products follow the S-shaped PLC The PLC can describe a product class, a product form, or a brand The PLC can also be applied to styles, fashions, and fads 31
Product Life Cycle and Strategies Difficulties with PLC Trouble identifying which stage of the PLC the product is in Difficult to forecast the sales level of the PLC stage, the length of each stage, and the shape of the PLC curve PLC concept to develop marketing strategy can also be difficult because strategy is both a cause and a result of the product s life cycle 32
Case Study Red Bull: Waking a New Market 33
Branding Introduction:- Branding started to develop and came to the picture in USA around early 20th century Brand was a guarantee of homogeneity and a signal of product quality Definition of Brand Aaker (1991), Keller (1998) Kotler (1994) & Lovelock (1999) defines brand as Distinguishing name and/or symbol intended to identify and differentiate . 34
Branding Definition of Brand Peter Doyle of Warwick University has given a comprehensive definition: A name, symbol, design, or some combination which identifies the product of a particular organization as having a substantial, differentiated advantage Development Of Branding Brands can also reduce the risk consumers face Consumerisation increases the focus changes from the primitive selling to the advanced concept of brand 35
Branding Development Of Branding Peter Doyle has classified this development of brand management in six eras namely:- Stage 1: Unbranded Goods Stage 2: Brand As Reference Or Awareness Stage 3: Brand As Bundle Of Ideas, Thoughts And Images Or Personality Stage 4: Brand As Icon Or An Identity Stage 5: Brand As A Position Stage 6: Brand as Policy 36
Branding Stage 1: Unbranded Goods Goods are treated as commodities Goods are not branded Demand is more, supply is less Rarely seen in developed economies Stage 2: Brand As Reference Or Awareness competitive pressures stimulate producers to differentiate their goods Changes in physical product attributes 37
Branding Stage 3: Brand As Bundle Of Ideas, Thoughts And Images Or Personality Differentiation becomes exceedingly difficult marketers begin to give their brands personalities value of the brand becomes self-expression Stage 4: Brand As Icon Or An Identity brand is "owned by consumers Consumers use brands it to create their self-identity 38
Branding Stage 5: Brand As A Position This stage marks the change to modern marketing Brand has a complex identity and has complex interaction with the consumer Stage 6: Brand as Policy Few companies to date have entered this stage Distinguished by an alignment of company with Ethical, Social And Political Causes 39
Branding From Products to Brands Lewis has suggested that a product becomes a brand through a process of formalization. Formalization creates between the product and customer. Involves conscious effort by the company to categorically detail out rational & emotional features of a brand Brand Equity is value the brand generates to a product. This value effort is the output of the entire branding effort emotional interphase Case Studies: a) Dr. Batra s Postive Health Clinic Ltd b) Navratna Oil 40
Branding Build Strong Brands Brands as the major enduring asset of a company The brand is more valuable than the totality of all these assets Brands are more than just names and symbols Brands reside in the minds of consumers A powerful brand has high brand equity Brand valuation is the process of estimating the total financial value of a brand Apple is $98 billion, Coca-Cola is $79 billion, Microsoft is $59 billion, and IBM is $78 billion (Interband.com, 2013) 41
Branding Build Strong Brands Branding poses challenging decisions to the marketer major brand strategy decisions involve brand positioning, brand name selection, brand sponsorship, and brand development 42
Branding Brand Positioning Defined as the Distinct Space a Brand occupies in the customers mind. This can be done at any of three levels: Product attributes. Name association with a desirable benefit. Positioned on beliefs and values A brand can be better positioned by associating its name with a desirable benefit. Volvo (safety), Hallmark (caring), Harley- Davidson (adventure) 43
Branding Brand Name Selection finding the best brand name is a difficult task. Begins with a careful review of the following:- product and its benefits, the target market and proposed marketing strategies Desirable qualities for a brand name include:- Name suggesting the product's benefits and qualities. E.g:- Ujala, Hajmola . Easy to pronounce, recognize, and remember Examples: Tide, Crest, Lux, Bata, Airel etc. should be distinctive, extendable and easily transferable into foreign languages. Eg: cinthol, Amazon, Oracle 44
Branding Brand Sponsorship A manufacturer has four sponsorship options:- Manufacture s Brands, Private Brands, Licensing andCo-Branding Increasing number of retailers and wholesalers have created their own private brands Eg: Sears, Walmart and Future group Private brands can be hard to establish and costly to stock and promote. Private brands generally have higher profit margins. 45
Branding Licensing Creating a brand name is time consuming Some companies license names or symbols previously created by other manufacturers, names of well-known celebrities, or characters from popular movies and books Apparel and accessories sellers pay large royalties to adorn their products Almost half of all retail toy sales come from products based on television shows and movies The fastest-growing licensing category is corporate brand licensing, E.g:- Coca-Cola 46
Branding Co-Branding Co-branding occurs when two established brand names of different companies are used on the same product. Kellogg & ConAgra Co-branding offers many advantages Co-branding also allows a company to expand licensing its Healthy Choice brand to Kellogg, ConAgra entered the breakfast segment with a solid product Co-branding also has limitations (complex legal contracts and licenses) 47
Branding CO-BRANDING four choices when it comes to developing brands namely:- Line Extensions Brand Extensions Multibrands New Brands 48
Branding Line extensions:- A company might introduce line extensions as a low-cost, low-risk way products in order to:- Meet consumer desires for variety. Meet excess manufacturing capacity. Simply command more shelf space. Risks include:- An overextended brand might lose its specific meaning. Can cause consumer frustration or confusion. The extension could be at the expense of other items in the line. of introducing new 49
Branding Brand Extensions:- Existing brand names are extended to new or modified product categories. Helps a company enter new product categories Aids in new product recognition. Saves on high advertising cost. Drawbacks:- The extension may confuse the brand image. The brand name may not be appropriate for a particular new product. The brand name may be because of special positioning in the mind of the consumer. 50
