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1 Product Strategies for the Asia Pacific Asia-Pacific Marketing Federation Certified Professional Marketer Copyright Marketing Institute of Singapore.

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Presentation on theme: "1 Product Strategies for the Asia Pacific Asia-Pacific Marketing Federation Certified Professional Marketer Copyright Marketing Institute of Singapore."— Presentation transcript:

1 1 Product Strategies for the Asia Pacific Asia-Pacific Marketing Federation Certified Professional Marketer Copyright Marketing Institute of Singapore

2 2 Outline Product Hierarchy Product Hierarchy Product-Mix Decisions Product-Mix Decisions Product-Line Strategies Product-Line Strategies New product development in ASPAC New product development in ASPAC Positioning & Repositioning Positioning & Repositioning Brand decisions Brand decisions

3 3 Introduction Product (or service) is the main element of the marketing mix Product (or service) is the main element of the marketing mix Therefore, need to determine the Product Strategies before deciding on the remaining marketing mix Therefore, need to determine the Product Strategies before deciding on the remaining marketing mix

4 4 7-Levels of Product Hierarchy Product needto satisfy a need e.g. feet protection Product needto satisfy a need e.g. feet protection Product classa family of products having similar function e.g. all shoes Product classa family of products having similar function e.g. all shoes Product linea group of products with closely related functions e.g. sports shoes Product linea group of products with closely related functions e.g. sports shoes Product typeproducts within a line having similar form e.g. basket-ball shoes Product typeproducts within a line having similar form e.g. basket-ball shoes Branda name representing a product or line e.g. Nike Branda name representing a product or line e.g. Nike Item (Stock Keeping Unit)a unit item e.g. one pair of Nike basket-ball shoe Item (Stock Keeping Unit)a unit item e.g. one pair of Nike basket-ball shoe

5 5 Product-Mix Decisions Decisions on the product mix (the number of product lines and items in each line) that the company may offer A single product A single product Most firms started off as a single-product company Most firms started off as a single-product company Multiple products Multiple products e.g. Creative Technology markets sound cards as well as MP3 players e.g. Creative Technology markets sound cards as well as MP3 players A systems of products A systems of products e.g. Nikon sells camera, lenses, filters & other options e.g. Nikon sells camera, lenses, filters & other options

6 6 Product-Line strategy How many product lines should we have? How many product lines should we have? Example: Delft Sensor Systems offer a comprehensive range of products, including portable and platform mounted night vision systems and thermal imaging systems, head- and helmet mounted displays, laser rangefinders and fire control systems ( Example: Delft Sensor Systems offer a comprehensive range of products, including portable and platform mounted night vision systems and thermal imaging systems, head- and helmet mounted displays, laser rangefinders and fire control systems (Source:

7 7 Product-Line strategy (contd) How many product items in each line? How many product items in each line? Example: Both Gardenia and Bonjour launched new flavors in January 1999 to nibble away at each others market share of a loaf estimated to be worth about $80 million Example: Both Gardenia and Bonjour launched new flavors in January 1999 to nibble away at each others market share of a loaf estimated to be worth about $80 million (Source: ST, Home, Jan29/99)

8 8 Expanding the Product Line 1. Product line extension: add an item to the existing product line Many FMCG companies introduced various sizes of the same product e.g.mini-packs for travelers, extra-large size for hospital Many FMCG companies introduced various sizes of the same product e.g.mini-packs for travelers, extra-large size for hospital 2. Product category extension: add a new item or line of items for a company e.g. P&G have Vidal Sassoon, Head & Shoulders, Rejoice, and Panthene in the same category P&G have Vidal Sassoon, Head & Shoulders, Rejoice, and Panthene in the same category

9 9 Expanding the Product Line (contd) 3. Brand extension: Product category extension that uses an existing brand name e.g. Cerebos introduced Brands Essence of Chicken with TangKwei targeting women Cerebos introduced Brands Essence of Chicken with TangKwei targeting women Nestle extended its Bear Brand condensed milk in Thailand by introducing Bear Brand with Honey Nestle extended its Bear Brand condensed milk in Thailand by introducing Bear Brand with Honey

10 10 More on Product Line Extension Downward stretch by introducing lower range of the products e.g. Downward stretch by introducing lower range of the products e.g. In 1989 the Shangri-La, a chain of deluxe hotels and resorts in Asia established the Traders Hotels, a sister brand to deliver high value, mid-range, quality accommodation to the business traveler In 1989 the Shangri-La, a chain of deluxe hotels and resorts in Asia established the Traders Hotels, a sister brand to deliver high value, mid-range, quality accommodation to the business traveler Mercedes introduced the baby Merz to cater to the upper class mid-sized range of the market Mercedes introduced the baby Merz to cater to the upper class mid-sized range of the market Upward stretch by entering the high end of the market e.g. Upward stretch by entering the high end of the market e.g. Toyota introduced the Lexus and Nissan introduced the Infiniti Toyota introduced the Lexus and Nissan introduced the Infiniti

11 11 Product Line Extension (contd) Two-way stretch by filling the whole line e.g. Two-way stretch by filling the whole line e.g. Toyota has the Starlet at the lower end; the Corolla in the executive range; the Camry in the upper-management range and the Lexus in the luxury range Toyota has the Starlet at the lower end; the Corolla in the executive range; the Camry in the upper-management range and the Lexus in the luxury range

12 12 New Product Strategy New products are critical to survival New products are critical to survival New-product development (NPD) is essential for companies seeking growth New-product development (NPD) is essential for companies seeking growth It should be an on-going, well organized NPD process having top-management support It should be an on-going, well organized NPD process having top-management support What is a new product? (see next slide) What is a new product? (see next slide) From a firm's perspective, a new product is a product that it is unfamiliar in any way From a firm's perspective, a new product is a product that it is unfamiliar in any way

13 13 Definition of Product Newness 1. Products new to the world; usually revolutionary products resulting from product innovation e.g When Creative Technology first introduced the Sound-blaster When Creative Technology first introduced the Sound-blaster When disposable cameras were first introduced When disposable cameras were first introduced When Seiko introduced the Seiko Kinetic Relay, a watch that can go into suspended animation

14 14 Definition of Product Newness (contd) 2. Products new to the firm Improvements to existing products e.g. Improvements to existing products e.g. In 1960 Kao introduced shampoo liquid and in 1970 introduced Kao Merit shampoo (anti- dandruff) In 1960 Kao introduced shampoo liquid and in 1970 introduced Kao Merit shampoo (anti- dandruff) Additions to existing lines e.g. Additions to existing lines e.g. In 1965 Kao introduced the Kao Tender hair conditioner In 1965 Kao introduced the Kao Tender hair conditioner Costs reductions and re-positionings Costs reductions and re-positionings

15 15 Example of NPD--Logitech Logitech, the world's biggest maker of computer mice, has come up with a mouse that allows the user to feel what is seen on the screen. This mouse [is] called the iFreeMouseManLogitech, the world's biggest maker of computer mice, has come up with a mouse that allows the user to feel what is seen on the screen. This mouse [is] called the iFreeMouseMan AP (August 22, 2000)

16 16 Product Convergence First coined by Creatives Sim W H who was referring to the marriage between the PC and home entertainment Creative Multi-Speaker Surround (CMSS) uses seven audio channels Creative Multi-Speaker Surround (CMSS) uses seven audio channels Source: Computer Times, 1997

17 17 Positioning Positioning refers to placing a brand in that part of the market where it will have a favorable reception compared to competing brands Subash Jain Positioning refers to placing a brand in that part of the market where it will have a favorable reception compared to competing brands Subash Jain A products position is the place the position occupies in consumers minds relative to competing products. A products position is the place the position occupies in consumers minds relative to competing products. Philip Kotler Philip Kotler

18 18 Generic Positioning Strategies Our product is unique Our product is unique e.g. Raffles Hotel (oldest hotel); Westin Hotel (tallest hotel) e.g. Raffles Hotel (oldest hotel); Westin Hotel (tallest hotel) Our product is different Our product is different e.g. Seng Choon eggs (low in cholesterol) e.g. Seng Choon eggs (low in cholesterol) Listerine (kills germs) Listerine (kills germs) Amex Blue credit card (6-month rate of Amex Blue credit card (6-month rate of 15.9% vs the market rate of 24%) 15.9% vs the market rate of 24%) Our product is similar Our product is similar e.g. Thai fragrant rice e.g. Thai fragrant rice

19 19 Approaches to Positioning By attributes By attributes e.g. Singapore Airlines (first class comfort) e.g. Singapore Airlines (first class comfort) By benefits By benefits e.g. Citibank Credit Card (7/24 availability) e.g. Citibank Credit Card (7/24 availability) By price/quality e.g. Proton By price/quality e.g. Proton By usage or application e.g.100Plus (fluid replenishment in sports) By usage or application e.g.100Plus (fluid replenishment in sports) By users e.g. Johnson Baby Shampoo; J&J Affinity Shampoo (hair conditioner for women) By users e.g. Johnson Baby Shampoo; J&J Affinity Shampoo (hair conditioner for women) By product class By product class e.g. Camay soap (with bath oilsnot just soap) e.g. Camay soap (with bath oilsnot just soap) By competitors e.g. Avis against Hertz By competitors e.g. Avis against Hertz

20 20 Product Positioning Using Perceptual & Preference Maps Marketing managers use a Mapping technique to help them visualize the competitive structure of the market before they develop differentiation and positioning strategies

21 21 Positioning Statement For [a target segment], the [concept] is [the primary claim] because [it is the single most important factor]. Example: For Seng Choon eggs, the low cholesterol level is the only healthy alternative because it is safe for frequent consumption

22 22 Example of a 2D Perceptual Map for Laptop Slow-speed Light-weight Value Style Brand A Brand B Appearance Performance

23 23 Repositioning Why reposition? Competitors position next to you Competitors position next to you Consumer preferences changed Consumer preferences changed New consumer preference cluster New consumer preference cluster Original mistake Original mistake

24 24 Repositioning (contd) Repositioning among existing customers Repositioning among existing customers e.g. Cerebos repositioned BRANDS from a traditional therapeutic and recuperative tonic to one for preventative health maintenance e.g. Cerebos repositioned BRANDS from a traditional therapeutic and recuperative tonic to one for preventative health maintenance APB repositioned Tiger Beer as a beer for all time APB repositioned Tiger Beer as a beer for all time Repositioning among new users Repositioning among new users BRANDS essence of chicken for students BRANDS essence of chicken for students Repositioning for new uses Repositioning for new uses Repositioning BRANDS as a base for double-boil cooking Repositioning BRANDS as a base for double-boil cooking

25 25 Product-Overlap Strategy This strategy refers to a situation in which a company decides to compete against its own brand by using: Competing brands Competing brands e.g. Gillette Atra, Sensor, Mach 3 e.g. Gillette Atra, Sensor, Mach 3 Private labeling Private labeling e.g. Sin Sin Chilli Sauce, Watson Vitamins e.g. Sin Sin Chilli Sauce, Watson Vitamins OEM OEM e.g. IBM selling magneto-resistance (MR) heads to OEM disk drive developers/manufacturers e.g. IBM selling magneto-resistance (MR) heads to OEM disk drive developers/manufacturers

26 26 Product-Elimination Strategy When a products performance is falling short of expectations and continued support is no longer justified, its time to pull it out of the marketplace When a products performance is falling short of expectations and continued support is no longer justified, its time to pull it out of the marketplace How? How? Harvesting, line-simplification, total-line divestment Harvesting, line-simplification, total-line divestment

27 27 Value-Marketing Strategy Value-marketing strategy means delivering real product performance based on the following promises Value-marketing strategy means delivering real product performance based on the following promises Quality strategy Quality strategy Customer-service Customer-service Time-based Time-based Example: Example: Dell cuts the duration from order to delivery of most of its products to the minimum Dell cuts the duration from order to delivery of most of its products to the minimum

28 28 Brands A rose by any name smells as sweet. True or false? A rose by any name smells as sweet. True or false? Would you go vacationing on Hog Island? Would you go vacationing on Hog Island? Why are Coca-Cola, McDonalds and Kentucky Fried Chicken (KFC) successful? Why are Coca-Cola, McDonalds and Kentucky Fried Chicken (KFC) successful? Do you think Maikenji would be half as successful? Do you think Maikenji would be half as successful? Maikenji restaurant in Badaling, north of Beijing combines the Chinese Characters used in the names for McDonalds and KFC and offers a menu similar to KFC located 100 metres away (AP 11,Jul2001)

29 29 Brands (continued) Buildings age and become dilapidated. Machines wear out. Cars rust. But what lives on are brands. Sir Hector Laing United Biscuits, U.K. Source: The economist, Dec 24, 1988

30 30 What is a brand? Six levels of meaning: Attributes e.g. High resale value Attributes e.g. High resale value Benefits e.g. Safety Benefits e.g. Safety Values e.g. Brand loyalty Values e.g. Brand loyalty Culture e.g. organized and efficient Culture e.g. organized and efficient Personality e.g. serious Personality e.g. serious Type of users e.g. by occupation Type of users e.g. by occupation

31 31 Alternative Brand Strategies 1. No brand identity Small firms with unknown brands e.g. small tailoring outfits Small firms with unknown brands e.g. small tailoring outfits 2. Private brands Retailers with established brand names e.g. NTUC Fairprice Retailers with established brand names e.g. NTUC Fairprice 3. Corporate brands Family name e.g. This Fashion Family name e.g. This Fashion

32 32 Alternative Brand Strategies (contd) 4. Product line extension Create cost advantage e.g. Novenas collection of an extensive range of furniture at reasonable price Create cost advantage e.g. Novenas collection of an extensive range of furniture at reasonable price 5. Specific product Individual brand e.g In addition to the Novena brand, Novena Holdings also carry the Castilla brand of Italian designed furniture Individual brand e.g In addition to the Novena brand, Novena Holdings also carry the Castilla brand of Italian designed furniture 6. Combination e.g. Novena Holdings Novena Collection, Dickson Beech Collection and the White Collection; e.g. Novena Holdings Novena Collection, Dickson Beech Collection and the White Collection; Seikos Alba and Pulsar

33 33 The Branding Process From commodity to product From commodity to product e.g. air travel e.g. air travel From product to brand From product to brand e.g. Singapore Airlines e.g. Singapore Airlines From brand to experience From brand to experience e.g. Romance in the air e.g. Romance in the air From experience to the heart From experience to the heart e.g. A Great Way to Fly e.g. A Great Way to Fly

34 34 Branding on the Web Profile of Gen-N Profile of Gen-N How to harness the Internet for brand- building? How to harness the Internet for brand- building? By rewarding brand loyalty and updating your site etc. By rewarding brand loyalty and updating your site etc. Decision-influence factor Decision-influence factor Conventional branding => image Conventional branding => image Online branding => customer experience Online branding => customer experience The issue of trust in a brand The issue of trust in a brand (Source: Hi-Tech, Hi-Touch Branding by Temporal and Lee)

35 35 Old Brands Strategy Old brands survive due to emotional bond with the consumer Old brands survive due to emotional bond with the consumer For slow moving brands either revive it with marketing money or kill it For slow moving brands either revive it with marketing money or kill it Growing interest in old brands because brand names carry value that is getting more expensive and risky to create Growing interest in old brands because brand names carry value that is getting more expensive and risky to create When re-promoting old brands, do not ignore younger consumers When re-promoting old brands, do not ignore younger consumers Source: Selling, Fortune, April 28, 1986


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