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Offering (Product & Service) Strategy and Brand Management

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Presentation on theme: "Offering (Product & Service) Strategy and Brand Management"— Presentation transcript:

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
All self improvement 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. For working professionals in North Texas seeking career advancement, the Cox PMBA is a part-time MBA program that, unlike other programs in the area, offers a small, private-school environment and a strong, professional network. Generic competition: convince customers of the superiority of your product (category) offering’s ability to satisfy needs over other (category) offerings. For ambitious people seeking continuing/higher education, SMU is a private university that, unlike other universities, will shape you into a world changer.

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

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