1. Offering (Product & Service) Strategy and Brand Management
Key Learning Points
Defining & Segmenting the Product-market
Product Life Cycle and Product & Brand Strategies
Modifying The Offering Concept & Positioning Strategies
Forecasting New Product Sales

2. Product/Service Offering Positioning Communicate & Capture Value
Marketing Process
SWOT Analysis
Company
Customers
Competitors
Collaborators
Context
Market Segmentation
Selection & Targeting
Product/Service Offering Positioning
Create Value
Communicate & Capture Value
Sustain Value
Product/Service Offering
Place/ Channel
Promotion/ Communication
Pricing
Customer Relationship Management
Customer
Acquisition
Customer Retention/Expansion
Revenue & Profits

3. Segmentation, Targeting, Positioning
Selection
Targeting
Acquisition vs.
Retention & Expansion
Positioning
Break market into segments that respond differently to elements of the marketing mix. Identify segment(s) that will respond most positively (i.e., profitably) to firm’s offerings. Concentrated vs. Differentiated targeting. Determine how to best acquire, retain & expand purchases by the most profitable segments. Design, price, place, & promote offering so it occupies a distinct & valued place in target customer’s mind relative to competitive offerings.

4. Defining & Segmenting the Product Market
Define & segment the Product Market by:
type of customers served (who),
particular needs of those customers (what),
the means or technology used to satisfy those customer needs (how), &
geography of the market served (where).
New
New
Channels/ Geographies
Customers
New
Current
Products/Technology

5. Product Market Competition: Packaged Confection Product Class
All food & beverage
Cakes & Pastries
Breads & Scones
Gum
Candy
Candied Nuts
Dark Chocolate

6. Four Levels of Product Market Definition
Implies Different Tasks for each Level:
Product form competition: focus marketing activities on immediate customers & competitors; e.g., Montreaux’s dark chocolates w/fruit are the best.
Product category competition: convince customers that your product form/offering is best in the category; e.g., dark chocolate is much healthier than sugary candies.
Generic competition: convince customers of the superiority of your product (category) offering’s ability to satisfy needs over other (category) offerings; e.g. packaged candies are the most convenient snack on the run.
Budget competition: convince customers of the superiority of your company’s portfolio of products; e.g.,Apollo’s line of snacks & confections are the highest quality.
Where Should the Focus Be?
Be sure to identify the most relevant level of competition in each case.

7. Product Market Competition: Higher Education
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Law courses
Engineering courses
Marketing courses
Entrepreneurship courses
Finance courses
Core Biz Classes

8. Product Market Definition & Positioning
Product form competition: focus positioning & marketing activities on immediate customers & competitors.
For Cox MBA students, MKTG 6201 is a core class that, unlike other foundational classes (e.g., Accounting, Economics, OB, Finance), emphasizes the company’s boundary-spanning activities that focus on customers, downstream collaborators, and competitors.
companies create and capture value from customers and downstream collaborators.
will help you understand how
For Cox MBA students, Marketing is a concentration that, unlike Finance, Management, or Strategy, prepares you for a successful career in Brand Management, Marketing Consulting, and Marketing Analytics.
and Marketing
Good positioning statements focus on:
one or two benefits that resonate with the target market.

9. Product category competition: convince customers that your product form/offering is best in the category.
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Generic competition: convince customers of the superiority of your product (category) offering’s ability to satisfy needs over other (category) offerings.
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10. (% Agree or Strongly Agree)
Positioning K&P
Formulating positioning strategy requires knowing:
The importance of each value dimension to customers
How the brand & the competition compare on each dimension
Exhibit 4 - Attribute Ratings for the 5 oz. Stand-up Pouch with Healthy Messaging Concept
How much would you agree with the statements made about this product?
Product Attribute
(% Agree or Strongly Agree)
Would be better for me than other chocolates 87
Would be high quality 85
Would taste great 84
Would come in varieties I like 78
Would be a good way in indulge myself 74
Would be good for any time of the day 61
Would taste better than other dark chocolates 54
Would be good for everyday use 42
Would be an all-natural snack option 38
Would be a good value 33

11. Partial Marketing-Mix Comparison Personal Computers
IBM was positioned as a brand-centric differentiator with no objective or perceived advantage. PCs  Lenovo; IBM  customer-centric.
Gateway’s positioning: customer intimacy emphasizing customization (i.e., user compatibility & configurability).
Dell was positioned as a product leader with the best perceived technology.

12. Positioning Formulating positioning strategy requires knowing:
The importance of each value dimension to customers
How the brand & the competition compare on each dimension
Implementing the positioning strategy requires programs that communicate a brand’s differential advantage on:
Attribute/benefit, price/quality
User or Use/Application
Product class or competitors

14. Positioning Formulating positioning strategy requires knowing:
The importance of each value dimension to customers
How the brand & the competition compare on each dimension
Implementing the positioning strategy requires programs that communicate a brand’s differential advantage on:
Attribute/benefit, price/quality
User or Use/Application
Product class or competitors
To determine a Product’s Position:
Ask customers to rate a firm’s brand, the competitor’s brands, and the “ideal” brand on a number of dimensions.
Plot ratings in 2 dimensions to represent the competitive “space” - typically called a perceptual map.

15. Hybrid Car Perceptual Map

16. Product & Brand Decisions
Many Product & Brand Decisions are Related to the Product Life Cycle (PLC), Technology Diffusion, & Long-Term Expectations for Product Category Evolution
The PLC sketches the sales history of a product category – or perhaps a product form – over time.
Strategy and segmentation options and the importance of marketing mix variables vary across each stage of the PLC.
Not all product categories follow the standard PLC curve across time in a linear manner.

18. Cumulative Five-Year Purchase Volume for Various Mobile Technologies
Source: Morgan Stanley
%s represent five-year predicted penetration rate for tablets & 2011 penetration rates for other technologies

21. The Product (Category) Life Cycle -- Context
Two Critical Inflection Points
Greatest Customer Complexity
Greatest Competitor Complexity
Key Segment
Early Market
First-time Purchase
Early Majority/
Pragmatists
Mainstream
Repurchase
Strategic Emphasis
Product Differentiation
Customer Acquisition
Brand Differentiation/Customer Intimacy  Cost
Customer Retention & Expansion Leadership

22. Marketing Strategies Over the Product Life Cycle
PLC Stages
Market size small and growth rate is increasing.
Product: disruptive technology that creates new product category.
Pricing: skimming targets innovators/visionaries & LT Product (quality-based) differentiation
Advertising: product category advantages.
Distribution & Selling : PUSH
Introduction
Growth
Maturity
Decline

23. Marketing Strategies Over the Product Life Cycle
PLC Stages
Moving Mainstream
Increasing competition
Market segmentation
Positioning for LT advantage
Continue to emphasize Product differentiation (innovation & quality) & market growth or niche of maturing market
Begin shift to brand differentiation/ customer intimacy with incremental product improvements, proliferation as market matures (i.e., late growth)
Introduction
Growth
Maturity
Decline

24. Product & Brand Strategies…
In the Growth Stage or in Hi-Tec, Turbulent Categories with Rapid Cycles & Permanent Growth:
Product Line Strategies focus on Product Innovation that replaces (i.e., cannibalizes) current offerings
Branding strategies deemphasize specific products/features and focus on organizational competencies & differentiation (i.e., multiproduct or corporate branding)
Consistent with Innovation or Product Differentiation

25. Intel’s Co-branding Efforts
After the “Intel Inside” branding campaign began 1991, the company received over $3 billion worth of advertising exposure showing the Intel Inside logo. The logo appears in POP displays too.

26. Marketing Strategies Over the Product Life Cycle
Fully Mainstream
Oligopoly market structure
Well-defined segments with sophisticated consumers
Positioning for advantage
Emphasize brand differentiation/ customer intimacy, incremental product improvements, proliferation, intangibles (e.g., branding, service, advertising) or
Emphasize operational efficiencies to establish Cost Leadership advantage in fully mature market.
Innovator attempts to jumpstart new cycle of Growth (Apple).
PLC Stages
Introduction
Growth
Maturity
Decline

27. Product & Brand Decisions…
In the Maturity/Decline Stage:
Product Line Strategies focus on Product Proliferation that extends current offerings to:
Eliminate competitors &/or erect entry barriers
Provide one-stop shop for downstream collaborators
Satisfy increasingly segmented customer base
Branding strategies emphasize distinct product brands and features (i.e., multibranding), sometimes applied to entire lines.
Consistent with Brand-centric differentiation or Customer Intimacy

28. P&G’s Product Proliferation & Multibranding Strategy
P&G Controls Over 60% Market Share in the Laundry Care Category
Key Management Challenge: How to organize, manage & market all the brands?

29. P&G’s Product Proliferation Multibranding Strategy

31. Marketing Strategies Over the Product Life Cycle
PLC Stages
Many strategies for reviving mature product categories can be applied to those in decline; for example, product enhancements and line extensions for segments still buying category.
Sometimes product categories revive due to serendipity.
Being the “last iceman” in a truly dying market can be profitable… to a point.
Introduction
Growth
Maturity
Decline

32. Modifying the Offering Mix
How consistent is the new offering with existing offerings
Complementarities versus cannibalization
Does the organization have the resources & capabilities to introduce & sustain the offering?
Is there a viable market for the offering? What share is required?
What position do we currently own and do we want to own?
What type of branding strategy do we implement?
Multiproduct (family) or multibranding (individual)

33. Montreaux Chocolate USA
This case addresses a global CPG company’s attempt to develop optimal positioning for a new dark chocolate offering. Be sure to use the Montreaux spreadsheet to calculate trial rates, market share, and project contribution; review the Sales Projections assignment if you’re not sure how to conduct the analyses. And use the Montreaux Exhibits to identify Apollo’s (potential) competitive advantage and a positioning statement for Montreaux chocolates.

34. Paragraph #1 Paragraph #2 Paragraph #3 Topic Poor Fair Good Excellent
Launch Strategy
Brand Name & Branding Strategy (see K&P pp ) & First-year Brand Objective(s)
.25 .5
.75 1
Product-Market Strategy (see K&P Ex. 1.2) &
Targeting & Positioning Statement
Implementation and Fit
Recommended A&P budget and Quality Level to achieve intermediate objectives (Awareness, Distribution, Repeat)
Likelihood of achieving intermediate objectives given Company’s Resources & Capabilities
Likelihood of achieving intermediate objectives given external Opportunities & Threats (Customers, Competition, Collaborators, PLC)
Financial Evaluation
Year-1 Financial Analysis (key assumptions required to meet objective)
Financial Assessment of the Likelihood of meeting Year-2-3 objectives
Value-Adding Exhibits (e.g., SWOT, Comparative Analysis, Positioning Map)
Overall Presentation & Organization
Paragraph #1
Paragraph #2
Paragraph #3

35. Customer-Based Brand Equity Model
Consumer-
Brand
Resonance
4. RELATIONSHIPS =
What about you & me?
DEEP RELEVANCE
INTENSE, ACTIVE LOYALTY
Behavior/Affective Commitment
RATIONAL & EMOTIONAL REACTIONS
3. RESPONSE =
What about you?
Consumer Judgments
Value, relevance, differentiation
Consumer Feelings
Excitement, security, fun
POINTS-OF-PARITY & POINTS-OF-DIFFERENCE
2. MEANING =
What are you?
Brand
Performance
Characteristics, design, price
Brand
Imagery
Who uses, when, personality
1. IDENTITY =
Who are you?
DEEP, BROAD BRAND AWARENESS
Brand Salience
Recognition & Recall
Purchase/Consumption Consideration

36. Financial Analysis in Marketing K&P Chapter 2
Marketing Pro Formas
Breakeven Analysis
Customer Lifetime Value (CLV)
Sales Forecasts
Economic Value Analysis
Channel Margin Calculus
Demand Elasticity

37. Market Potential, Sales Potential, Sales Forecast
Estimating Market Potential:
Determine the potential buyers /users of the products.
Determine # of customers in each group of buyers.
Estimate the potential purchasing/usage rate.
Estimating Company Sales Potential
Multiply market potential by desired or “best” possible market share.
Sales Forecast: Estimate from Sales Potential…
Use purchase intention surveys/qualitative methods.
Forecasts for frequently-purchased items combine test market or early sales data with brand awareness, trial, repeat purchase, or usage rate data
(See Sales Forecast Final Exam Question)

38. Estimating Year-1 Sales Volume Using a Chain Ratio Model
Focus Group %
Adjusted
for Bias
Awareness %
Distribution
Penetration
Trial Rate
Definitely %
80%
Depends on
Probably %
30%
Consumer
Trade CRM/ × × × × = ×
% Trial Rate
# Households
Trial Households =
Trial Households
Repeat Rate %
Repeat Households
Excellent product (~38%)
From Above
Average product (~33%)
Mediocre product (~28%)
x Repeat Rate × =
Trial Households
Repeat Households
Repeat Purchase Rate
Total Units Sold + × =

39. Next Week Montreaux Chocolates
Review Questions
What are 4 levels of product market definition?
What are the key customer segments, growth strategies, and strategic emphases for each stage of the product life cycle?
What are the key questions to ask when making offering modification decisions?
What is the difference between market potential, sales potential, & sales forecast?
Next Week Montreaux Chocolates