MKT4806 Product and Brand Management Session 6 Developing Product Strategy References : Chapter 8 Pr

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MKT4806Product and Brand Management Session
6Developing Product Strategy References
Chapter 8Product Management, By Lehmann
Winerand other books Presentation by Polboon
Nuntamanop
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Why Product Strategy?

• Successful product strategy leads to
• Coordination among functional areas of the
  organization.
• Efficient allocation of resources.
• Superior market position.

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New Product Development Process

• Idea generation
• Concept development
• Feasibility screening
• Concept testing
• Product development
• Product testing / Market testing
• Commercialization (Go-no-go decision)

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Developing a Product Strategy
1. Set the objective (s)
2. Identify strategic alternatives.
3. Select customer targets
4. Identify competitor targets
5. Set a core strategy
6. Identify marketing mix
7. Identify supporting marketing programs
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Setting objective (s)

• Hierarchy of Objectives
• Level 0 Company Vision and Mission
• Level 1 Corporate Objectives
• Corporate Strategies
• Level 2 Divisional Objectives
• Divisional Strategies
• Level 3 Brand / Product Objectives
• Brand Strategies
• Level 4 Program Objectives
• Operational Tactics

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1. Set a marketing objective of the product.

• Characteristics of good objectives
• Quantified standards of performance
• Ambitious enough to be challenging.
• Realistic
• Timeframe.

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General Marketing Objectives - Examples

• Examples of marketing objectives.
• Increase market share (sales volume or value)
• Increase sales volume (quantity of products)
• Increase sales value ( the value)
• Increase consumer base ( numbers of users)
• Increase profitability (margin)
• Increase profit ( margin X volume)

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Brand Objective - Examples

• Brand Objectives
• Build brand awareness to cover
• Strengthen brand awareness among
• Increase users of brand, regardless products,
  from to within .. Year/month.
• Increase brand loyalty, from to .. Within
  year.
• Note There may be one or several products under
  a brand.

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Product Objective Example

• The Marketing objective of a product
• Increase sales volume (from to units)
• Increase sales value
• Increase consumer base or number of new
  consumers.
• Increase profitability
• Enhance brand image in a specific aspect.

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2. Identifying and Selecting of Strategic
Alternatives

• To achieve a marketing objective of a product ,
  there are several ways.
• Alternatives of strategies depend on
• Objectives
• Resources available and ability to obtain new
  resources.
• Capabilities.
• Competitive position.
• Brand status

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Alternatives of strategiesExample

• Objectives To increase market share.
• Alternatives
• Increase loyal users, converting brand switchers.
• Increase users, converting trials to users.
• Increase usage among current users.
• Introduce new applications to increase uses among
  current users or to convince new users.
• Convert non-users in existing market or new
  market.
• Enter new segments.
• Sharing from competitor by offering higher value
  product, supported with communication.
• Grow the total market by increasing category
  product awareness and conviction.

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Alternatives of strategiesExample

• Objectives To increase profit
• Alternatives
• Increase sales volume
• Sharing from competitors.
• New product development
• New market development
• Reduce costs
• Decrease inputs.
• Improve efficiency in production and/or
  operation.
• Increase outputs.
• Decrease other costs.
• Improve product portfolio management.

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Potential customers
Unaware
Aware
Accepting willing to use
Attracted positive attitude
Active buy the product
Advocate buy, loyal, actively encourage others
to buy
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3. Choose target customers

• ? Segment of customers.
• Things to be considered
• Size and growth of the segment.
• Opportunities for obtaining competitive
  advantages.
• Resources availability.

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Major Segmentation Variables for Consumer Markets

• Geographic
• Region, city, density, climate
• Demographic
• Age, gender, family size, income, occupation,
  education, religion, race, nationality,
• Psychographic
• Social class, lifestyle, personality
• Behavioral
• Occasions, benefits, user status, usage rate,
  loyalty status, attitude towards product,.

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Major Segmentation Variables for Business
Markets

• Demographic
• Industry, company size, location
• Operation variables
• Technology, user/non-user status, capabilities
• Purchasing approaches
• Purchase-function organization, power structure,
  Nature of existing relationship, general
  purchasing policies, purchasing criteria.
• Situation Factors
• Urgency, specific application, size of orders
• Personal Characteristics
• Buyer-seller similarity, attitude towards risks,
  loyalty

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What we need to know about customer

• Who buy and use the product
• What consumers buy and how they use it.
• Where consumers buy
• When consumers buy
• How consumers choose
• Why the prefer a product
• How they respond to marketing programs
• Will they buy it (again)?

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4. Identify competitor targets

• Who should be targeted competitors.
• Which level of competition
• Level 1 Direct competitor. Has the same or
  very similar product form which consumer can
  perceive.
• Level 2 Competitors in the same product
  category.
• Level 3 Generic competition. The products
  which are in the same or different category but
  can serve the same purposes of use. They are
  substitutes.
• Level 4 Other alternative to consuming a target
  product due to budget constraints.

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Levels of Competition
An Example
Beers
Ice cream
Tea
Regular colas
Diet lemon limes
Diet-Rite cola
Wine
Product form competition Diet colas
Diet Pepsi
Diet Coke
Juices
Fast food
Product category competition Soft drinks
Fruit flavored colas
Video rentals
Lemon limes
Bottled water
Generic competition Beverages
Coffee
Baseball cards
Budget competition Food and entertainment
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5. Set a core strategy

• From alternative strategies, chose the one which
• Serve more than one objective.
• Fit best to chosen target customers.
• Unique compared to core competitors.
• Most efficient, require least resources.
• Easy to implement
• Best chance to succeed within the set timeframe.
• Less risks.

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Key Characteristic of Effective Marketing
Strategy.

• Unique
• Competitors cannot do
• Competitors will choose not to do
• Competitor would be disadvantage if they do it.
• An example of brands marketing strategy
• Samsung uses pricing strategy to enter electronic
  and digital products markets.
• Direct competitor (Level 1) with similar
  attributes was SONY.

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6. Identify marketing mix
Marketing Mix
Consumer Values (Product)
Cost to consumers (price)
Product Concept
Convenient (Place or Distribution)
Communication (Advertising and Promotion)
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Product Concept

• Product concept is a summary of what the product
  is all about. It is derived from understanding
  market environment, consumers attitude and
  behaviors, and identified consumer insights.
• Product concept identifies selected targeted
  market segment, targeted consumers, consumers
  values of the products, product benefits and
  reasons to support the claim. Overall it spells
  out the differential advantages of the product.

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Product concept
Example Growing up children like to drink other
tasty beverage other than milk. They like it a
little sweet and like colors. Parents prefer
that any food and beverage is healthy for their
child. To children 3-9 years old, XXX is a
between meals beverage which they can drink
anytime. It is specially made for children,
healthy, and tasty. It contains real fruit juice
and vitamins which help promote children growth.
XXX comes in 3 choices of taste and colors pink
strawberries, yellow banana and cookies, and
light green melon.
Product Concept
Consumer Insights
Target consumer
Target market (segment)
Consumer values
Product benefits
Reasons why
Key product features.
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An exampleFrom Product Concept to Marketing Mix

• Growing up children like to drink other tasty
  beverage other than milk. They like it a little
  sweet and like colors. Parents prefer that any
  food and beverage is healthy for their child.
• To children 3-9 years old, XXX is a between
  meals beverage which they can drink anytime. It
  is specially made for children, healthy, and
  tasty. It contains real fruit juice and vitamins
  which help promote children growth. XXX comes in
  3 choices of taste and colors pink
  strawberries, yellow banana and cookies, and
  light green melon.

Product design / consumer values Healthy tasty
drink for children, For healthy growth.
Price Competitive? or premium? to other children
Beverage
Distribution places where milk is sold or where
parents normally purchase milk
Communication build awareness Among parents of
3-9 years old, And also directly to the
children.
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7. Identify supporting marketing programs

• Things to consider
• Marketing Objective (s).
• Strategies.
• Product Concept.
• Targeted consumers to reach
• Product differential advantages.
• Communication strategy
• ? Marketing Programs

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Marketing Programs

• Objectives of marketing programs
• Building brand and product awareness.
• Building positive attitude towards the product
  and the brand.
• Encouraging product trial.
• Reassuring positive attitudes after trials.
• Encouraging repeat purchase.
• Building brand and product loyalty

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Marketing Programs

• Types of marketing programs ( Examples)
• Mass media advertising
• Direct advertising
• Customer communication brochures
• Sampling (for trials)
• Promotion to encourage trials.
• Promotion to encourage repeat purchase.
• Promotion to encourage volume purchase
• Promotion to build continuous purchase.

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New Product Development Process

• Idea generation
• Concept development
• Feasibility screening
• Concept testing / product design
• Product development
• Product testing / Market testing
• Commercialization (Go-no-go decision)