BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 9A Brand Management and the Firm Selling the Project - 1 The Marketing Plan ALAN L. WHITEBREAD.

BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 9A Brand Management and the Firm Selling the Project - 1 The Marketing Plan ALAN L. WHITEBREAD

INTEGRATING NEW PRODUCTS
Numerous issues depending on the magnitude of the new product introduction. Brand new product family Apple I-phone Major new product line extension to a product family HP Color Laserjet to HP Printer Family Standard product line extensions Color Laserjet products with more or less performance Options Laptop computer case color, … Accessories Paper, toner, …

POSITIONING Creating the most favorable product position in the mind of the prospect or customer. Positioning helps you … spot gaps in the marketplace, see if you are launching into a crowded marketplace, identify your closest competitors, appreciate the most important criteria customers' use when positioning different brands in their mind, and establish competitive advantage.

POSITIONING CONSIDERATIONS
When you begin to evaluate positioning alternatives, you must be satisfied with the answers to many key questions. Is it credible? Can it capitalize on a competitor’s situation? SWOT analysis; competitive offering; competitive positioning; … Is the positioning both specific and distinctive? Is the positioning sustainable? Is the positioning difficult to imitate? Does the positioning leave room for alternatives in various situations? Does the positioning provide room for significant growth?

SELECT THE RIGHT COMPETITIVE ADVANTAGES FOR EFFECTIVE POSITIONING
Important Profitable Distinctive Affordable Superior Communicable Preemptive

POSITIONING and IMC: A Strategy Example
Target: Moms with kids 8-17 who purchase sports drinks at supermarkets. Desired Belief Gatorade is better than other sports drinks Message Gatorade is the only sports drink that is backed by years of research Current Beliefs All sport drinks are the same Desired Actions Buy Gatorade even when other brands are on sale Current Actions Buy whichever sport drink is on sale

POSITIONING DIMENSION CANDIDATES
Quality Application[s] Occasion[s] Lifestyle / image Attributes Competition Price Selection of the metric and its scale of measurement [preferably subjective] is a very difficult process.

POSITIONING: PERCEPTUAL MAPPING
Fashion Coverage Gap More Copy More Artwork C A Gap Channels? B Club Coverage

POSITIONING STRATEGIES
Against Competition Reposition a Competitor U C C C U Very little differentiation Probably low gross margins Very difficult Establish your position and move theirs

Find a Position Create a Position Gap U U C C C C C C C C Strong differentiation with obvious customer benefits is required. May achieve higher gross margins Ideal positioning if you can clearly identify a gap. Establish your position and strongly defend it from future attacks. May be a significant opportunity in revenue and profit.

Class: position Buick, Chevrolet, Oldsmobile, and Pontiac in words.
REPOSITION YOUR BRAND Competition -Intercompany -Interbrand -Intermodel Cannibalization Feb., 2009 GM reducing brands from 8 to 5 and models from 48 to 36. Chrysler to discontinue at least 7 models, but plans 24 introductions in the next 48 months. Class: position Buick, Chevrolet, Oldsmobile, and Pontiac in words.

BRAND MANAGE MENT AT GM: 2001 and beyond
CHEVROLET value-priced entry level SATURN one-price, customer-oriented service PONTIAC sporty, performance-oriented for young people OLDSMOBILE medium-priced cars BUICK premium and “near-luxury” cars CADILLAC top-of-the-line standard of luxury sporty sophistication and elegance

Broaden the Base C U C C C Some differentiation with some benefits Another competitive product in a competitive marketplace

Microsoft Business Solutions
MICROSOFT BRANDS IN 2003 MICROSOFT Commercial Consumer Windows Server System Microsoft Business Solutions Microsoft Visual Microsoft Office MSN XBOX

GETTING THE MARKETING MIX RIGHT
Product We will assume you have the existing products/services correct. Place You must have appropriate channels of distribution to access the market . Promotion You must know the needs and wants of your customers and have cleanly defined target market segments to maximize the effectiveness of your IMC. Value [price] You must clearly establish superior customer value relative to the anticipated price point[s].

BUILDING THE VALUE EQUATION
DIFFERENTIATION BENEFITS VALUE EQUATION CORPORATE BRAND ASSET VALUE COMPETITIVE POSITION

THE BRAND VALUE CHAIN CREATING ADDITIONAL BRAND VALUE
VALUE STAGES Marketing Program Investment Customer Mindset Market Performance Shareholder Value Investor Sentiment Market[s] Growth Risk/Reward Contribution MULTIPLIER / ENHANCER

PRICE AND VALUE Price is the numerical amount charged for a product or service. Value is FUTURE PAST

PRICE AND VALUE Value can be understood by asking three key questions.
Who is the customer? What benefits do they value? Relatively speaking, how much are those benefits worth to them? If the value proposition is valid, price is not a problem to a qualified prospect —because the perceived value exceeds the price.

VALUE AS PICTURED BY THE CONSUMER
List price Less: Discounts Quantity Seasonal Cash / coupon Promotion Less: Allowances Trade-in PRODUCT + Service Quality Brand / Warranty Repair Packaging Credit / Financing Delivery / Availability Incentives =

VALUE AS PICTURED BY THE RESELLER
List price Less: Volume discounts Quantity Seasonal Cash / coupon Special Less: Allowances Trade-in PRODUCT + Product Service Quality Brand / Warranty Repair / Maintenance Delivery / Availability Inventory Promotional activity =

VALUE AND THE PRODUCT CONCEPT
1-Product Value “Technical value derived from providing a source of supply” 2-Service Value “Provided by the services that Surround the product” 3-“Wow” Value “Enhanced service, to make your customer successful rather than just satisfied” “Value Chains Versus Supply Chains, Andrew Feller, Dan Shunk, and Tom Callarman , 2006.

SOURCES OF VALUE* VALUE IS PERCEPTION – PERCEPTION IS VALUE
Differentiation* Positioning* Experience Brand / Image from IMC Perceived quality Service[s] or service levels* Proof [from collateral material / use] USP*

AREAS OF DIFFERENTIATION
Product Form – Features Performance – Durability Reliability Service Reparability PERCEPTION Image Style – Design - Quality People Most B2B Often higher margin retailers

UNIQUE SELLING PROPOSITION [USP]
THREE TESTS SPECIFIC MEASUREABLE BENEFICIAL

USP “Hot delicious pizza delivered in 30 minutes or less, or its yours free.” – Dominos Pizza WHICH WORDS ARE … SPECIFIC? MEASUREABLE? BENEFICIAL?

CRITERIA FOR BRAND ELEMENTS
Memorability Meaningfulness Likability Transferability Adaptability Protectability

PLUS …Timeless Versatile Positive
BRAND NAME SELECTION Distinctive [Compounds, Arbitrary, Fanciful] Lack Poor Foreign Language Meanings Suggestive [Suggest Product Qualities/Benefits] Descriptive [Suggest Product Benefits] Easy to: Pronounce Recognize Remember PLUS …Timeless Versatile Positive

BRAND HIERARCHY Brand family Individual brand Product lines
Individual product

TYPES OF BRANDS GENERIC CORPORATE / FAMILY INDIVIDUAL / PRODUCT
Pharmaceuticals, Vegetables CORPORATE / FAMILY Nike, IBM, GE, RCA TYPES OF BRANDS INDIVIDUAL / PRODUCT Huggies, P&G soaps, Crest COMBINATION HP Deskjet, DuPont Stainmaster CO-BRANDING Post Oreo O’s cereal, Disney SUV PRIVATE LABEL Kenmore, Craftsman, Die-Hard BRAND LICENSE Disney

BRAND ISSUES Consistency Perceived Quality & Value Attributes
Identification Advantages of Brand Names Brand Equity Defense Against Competition Loyalty Credibility Awareness

Should all products be branded?
BRAND DECISIONS Brand- Repositioning Decision Reposi- tioning No reposi- Brand Selection Decision Brand- Sponsor Decision Manu- facturer brand Distribu- tor (private) Licensed Brand- Name Decision Individual brands Blanket family name Separate names Company- individual Brand- Strategy Decision Line extension Brand Multi- brands New Cobrands Brand No brand Should all products be branded?

BRAND Brand Insistence Values the Brand Brand Preference
No Brand Loyalty (customer will change) Satisfied Customer (no reason for the customer to change) Satisfied & Switching Cost Values the Brand (brand as friend) Brand Preference Devoted to Brand Brand Insistence Brand Awareness

BRAND NAME LEVELS Combine parent and acquired companies names
Parent heavy Equally weighted Parent leads but is minor Acquired firm with a verbal link to the parent Acquired firm with a passive print link to the parent

WHAT SHOULD I BRAND? Company Division Product line [family] Product

USPTO http://www.uspto.gov
U.S. Patent and Trademark Office Advice and filings Copyrights Trademarks and servicemarks TESS online search capability Patents Patent search capability

BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 9B Brand Management and the Firm Selling the Project - 1 New Product Forecasting / Using IMC to Drive Customer Value ALAN L. WHITEBREAD

FORECASTING OBJECTIVES
MARKET POTENTIAL MARKET FORECAST

FORECASTING TECHNIQUES
Judgmental Methods [existing or new products] Jury of executive opinion Sales force composite Quantitative [existing products] Time Series Analysis Autoregression, Box-Jenkins Analysis Causal / Regression Modeling Neural Networks Customer / Market Research Pre-market testing

Continual reforecasting on a regular basis.
PROJECTION ESTIMATES High Medium Low Weeks Continual reforecasting on a regular basis.

USING IMC TO DRIVE CUSTOMER VALUE
A planned, comprehensive, integrated approach is required to maximize customer value Prospect or Customer Current Brand Knowledge

IMC A strong IMC program will
Deliver messages that allow consumers to accurately form desired perceptions Allow consumers to create their own sense of value of the product/service Assist in building the brand over an extended period of time Evolve to brand preference or brand insistence

IMC – COMMUNICATION VEHICLES
POINT OF PURCHASE TRADE PROMOTIONS CONSUMER PROMOTIONS MEDIA ADVERTISING EVENTS PUBLIC RELATIONS PACKAGING & LABELING COLLATERAL INTERNET ADVERTISING PLACE ADVERTISING DIRECT MARKETING SALES AIDS

THE COMMUNICATION PROCESS FEEDBACK
Sender Encoding Message via Media Decoding Receiver Customer Feedback Response

INTEGRATION WITH THE SALES ORGANIZATIONS
Work with top sales managers to refine the program. Determine the sales support needs. Schedule major new product launch meetings with all the sales organizations.

SALES SUPPORT MATERIALS
Sales training materials Sales support materials Customer support materials Literature Specifications …

CREATING SUCCESSFUL SALES TRAINING AND SALES MATERIALS
Sales training materials Quickly and easily convey key information Product fit and strategy Target market[s] and keys to success Product FAB’s Sales support materials Customer support materials Follow AIDA Simple, easy to read and understand Drawings and pictures [if necessary] Maximize white space for non-technical pieces

QUICK CHECKLIST Be sure … Product need is real
Product fits the corporate strategy Product can be made and sold profitably Product meets the corporate goals There is a simple plan of key events shows no major issues Implementation is well planned and execution should go smoothly

BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 10A Brand Management and the Firm Brands: Supply Chain Management, Channel Management, and Value Chain Management ALAN L. WHITEBREAD

TODAY’S MANAGEMENT SETTING
Large variety of products Rapid change / product life cycle stages Demand forecasting difficulties Critical lead times / commitments Increasing storage and transportation costs

SUPPLY CHAINS VS. VALUE CHAINS: AN HISTORICAL PERSPECTIVE
The connected set of all value-added business entities and flows that perform or support the logistics function required for production. Focus on upstream supplier and producer processes, efficiency, and waste reduction. LOGISTICS All discrete and Interrelated activities [regardless of ownership] that seek to enhance firm performance VALUE CREATION in every single event, process, and/or system from raw materials through customer satisfaction. Focus was on downstream value creation for the Customer. VALUE CHAIN

SUPPLY CHAIN EXAMPLE Detergent manufacturer Grocery chain
or third party DC Supermarket Customer wants detergent and goes to their local supermarket Chemical manufacturer Plastic Producer Packaging Producer Notes: Supply chain involves everybody, from the customer all the way to the last supplier. Key flows in the supply chain are - information, product, and cash. It is through these flows that a supply chain fills a customer order. The management of these flows is key to the success or failure of a firm. Give Dell & Compaq example, Amazon & Borders example to bring out the fact that all supply chain interaction is through these flows. Chemical manufacturer Paper Manufacturer Timber Industry

INTERNAL SUPPLY CHAIN C-LEVEL MARKETING RESEARCH AND DEVELOPMENT
OPERATIONS LOGISTICS C-LEVEL FINANCE AND ACCOUNTING SUPPLY CHAIN MANAGEMENT INFORMATION TECHNOLOGY HUMAN RESOURCES

SUPPLY CHAINS ARE INTERDEPENDENT
SUPPLIERS’ SUPPLIERS SUPPLIERS MARKET Consumers: Customers Prospects Suspects CUSTOMERS CUSTOMERS’ CUSTOMERS

SUPPLY CHAINS MAXIMIZE VALUE AT EVERY OPPORTUNITY FOR ALL YOUR STAKEHOLDERS [PUBLICS]. Value exists in -products -services -exceeding expectations -unexpected benefits

SUPPLY CHAIN MANAGEMENT [SCM]
A network of facilities and distribution options that perform the functions of: Procurement buyer, purchasing, materials management, … Transformation of materials into intermediate and finished products Storage and management of inventories Distribution of finished products to customers at all levels

A SUPPLY CHAIN FLOWS AND PROCESSES FLOWS PROCESS INTEGRATION Suppliers
Upstream or Backward Integration Focal firm Internal Integration Customers Downstream or Forward Integration Complete End-to-End Integration

THE SUPPLY CHAIN AT WORK
Toyota builds more than 600,000 cars per year in Europe utilizing ~200 1ST TIER suppliers with more than 400 factories. The number of suppliers grows exponentially as you go to the 2ND and 3RD TIER suppliers. STEEL COMPANY 3RD TIER UPSTREAM SUPPLIER 2ND TIER FASTENERS DIRECT SUPPLIER 1ST TIER Manage all other tiers. RADIATORS FORD, GM CHRYSLER OEM VEHICLES DEALERS CONSUMERS RENTAL AGENCIES BUSINESS CONSUMERS FLEETS SPECIAL VEHICLES Raw materials, semi-finished, and component products

SUPPLY CHAIN CYCLE VIEWPOINT
Supplier cycle SUPPLIERS Manufacturing cycle MANUFACTURER Replenishment cycle RESELLERS Customer order cycle CUSTOMERS

SUPPLY CHAIN INVENTORY GAINS
150 days of inventory SUPPLIER 30 days MANUFACTURER 30 days raw materials 30 days finished products RESELLER 30 days wholesale 30 days retail 80 days of inventory SUPPLIER 15 days MANUFACTURER 15 days raw materials 20 days finished products RESELLER 20 days wholesale 10 days retail The 70 day reduction in inventory makes cash available for many other uses – programs, investment, more NPD, …

SCM COMPONENTS Facility Location Customer Service Order Processing
Demand forecasting Production Scheduling Facility Management Material Handling Inventory & Control Transportation Purchasing Packaging Standards Warehousing Return Goods Handling Salvage and scrap disposal L O G I S T C

SOURCING DECISION FACTORS
Capability and quality of vendor Extensive corporate access

LOGISTICS Right Goods - Right Place - Right Time - Right Cost – Right Configuration – Right Sequence

SCM ISSUES SUPPLIER SELECTION SUPPLIER CERTIFICATION
Contract or partnership Setting requirements Continuous improvement SUPPLIER CERTIFICATION

SCM ISSUES SUPPLIER LOGISTICS Orders Scheduling and revising schedules
Pickup and Delivery

SCM ISSUES SUPPLIER INVOLVEMENT Design Standardization Customization
Modularization Performance testing Change management strategies Flexibility

SCM ISSUES SUPPLIER INVOLVEMENT Vendor managed inventories
The natural inflation of orders as each firm in the supply chain evaluates its situation based on current inventory, safety stock level, internal and supplier lead times. Which is further affected by less than instantaneous information flows. Changing customer demand

CYCLE TIME Cycle frequency, time [duration], and magnitude 1 2
Simple min-max system Unscheduled production downtime Excess lead times: production decides to increase inventory Poor delivery performance Poor quality of raw materials 1 2 Cycle frequency, time [duration], and magnitude [stockout, minimum, maximum, average, safety stock]

DEMAND PULLS ALL PRODUCT!
B2C B2B Suppliers Manufacturers Warehouses or Distribution Centers Resellers B2B or B2C Consumers

Level loaded

SCM ISSUES SUPPLIER INVOLVEMENT Vendor managed inventories
Changing customer demand Complex product offering New versus existing products

SCM ISSUES SUPPLIER INVOLVEMENT Vendor managed inventories - continued
Component management Just-in-time [JIT] Frequent, small and consistent deliveries Co-location or in customer plant location

DIRECT SHIPMENTS PLANT FULL EMPTY SUPPLIER D SUPPLIER A SUPPLIER B
SUPPLIER E SUPPLIER C SUPPLIER F

MILK RUN SHIPMENTS PLANT [Level loaded] EMPTY PARTIALLY FULL
SUPPLIER D EMPTY PARTIALLY FULL PLANT [Level loaded] SUPPLIER E PARTIALLY FULL FULL SUPPLIER F

SCM ISSUES SUPPLIER INVOLVEMENT Flexible Business Relationships
Purchasing agreements / contracts Single sources Alliances

SCM ISSUES SUPPLIER INVOLVEMENT Systems coordination and development
Integration Coordination of efforts Evaluation and feedback System variation over time Quality drivers

SUPPLY CHAIN QUALITY DRIVERS
QUALITY OF PROCESS coordinated information and material flows INFORMATION sharing of clean [uninflated] data RELATIONSHIPS development of upstream and downstream collaborative commercial relationships TECHNIQUES continuous improvement systems throughout to drive competitive advantage

SCM ISSUES SUPPLIER INVOLVEMENT Infrastructure compatibility
Packaging [at all stages] Customer

SCM ISSUES SUPPLIER INVOLVEMENT Target costing approach Component
Product Administrative efficiencies

The Supply Chain Organization of discrete yet interrelated activities that enable firm performance Firm Infrastructure (Financing, planning, investor relations) Human Resource Management (Recruiting, training, compensation system) Support Activities Technology Development (Product design, testing, process design, market research, material research) M A Procurement (Raw materials, advertising space, health services) R G Inbound Logistics Operations Outbound Logistics Marketing and Sales After-Sale Service I N Primary Activities (Data collection, material storage, customer access) (Component molding, branch operations, underwriting) (Order processing, warehousing, report preparations) (Sales, proposal writing, advertising, trade shows) (Installation, customer support, repair) Competitive Advantage, Michael E. Porter

BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 10B Brand Management and the Firm Brands: Supply Chain Management, Channel Management, and Value Chain Management: Maximizing Channel Leverage and Participation ALAN L. WHITEBREAD

TYPES OF CHANNELS International Vertical Marketing Systems [VMS]
Corporate Subsidiary Or JV Contractual Resellers Licensees [Franchisees] Administered -Open- No agreement International Vertical Marketing Systems [VMS] More Less

DIRECT DISTRIBUTION Pros Cons Close to customers
Active market development Greater control over strategies More uniform implementation of policies Increased market knowledge Cons Difficult to manage if not familiar with new market Time consuming Expensive Costly to maintain without volume

INDIRECT DISTRIBUTION
Pros Simple Inexpensive Small start-up costs Intermediaries usually represent several clients Cons Lose marketing control in target market Depend on performance of intermediary Possible reseller conflict of interest Bargaining power of intermediary

SEGMENTATION AND TARGETING
Requires maximum similarity within each group and differences between groups Knowing which segments to avoid is just as important as knowing which to target Internal factors and existing channels What value-added services are demanded?

CHANNEL POSITIONING Designing the channel to meet the market segment's demands What is optimal channel performance? Select the best type of distribution channel based on its characteristics

REASONS FOR ESTABLISHING NEW CHANNELS
Changes in target markets Successful channels usually take years to build.

REASONS FOR REFINING EXISTING CHANNELS
Changes in target markets Changes in channel performance Changes in the nature of competition

IMPLEMENTATION Channel experience Size Financial status
Identifying and minimizing conflicts Channel coordination

MARKET SEGMENTS AND VERTICAL CHANNELS
Manufacturer Medical equip. distributors ESD distributors 25 General line distributors Grainger, McMaster-Carr Electrostatic Discharge Product Market Segments Unsophisticated customers Sophisticated customers – large facilities Sophistical medical equip. customers

THE ECONOMY AND NAICS Manufacturing 31-33 Services Public
Administration 92 Wholesale 42 Information 51 Professional Services 54 Agriculture 11 Retail 44-45 Finance 52 Management Companies 55 Mining 21 Real Estate 53 Arts / Enter. 61 Utilities 22 Health 62 Accommodation 72 Construction 23 Other Services 81 Transportation 48-49 Educational 71 Administration Waste Mgt. 56

B2B CHANNEL SELECTION Wholesale http://www. census
TOP 10 GENERAL LINE DISTRIBUTORS REVENUE [$billions] Employees Headquarters 1. Ferguson Enterprises 6.00 15,800 Newport News, VA 2. W.W. Grainger 5.00 15,500 Lake Forest, IL 3. Hughes Supply 4.42 8,900 Orlando, FL 4. Motion Industries 2.52 5,000 5. Airgas 2.40 10,000 Radnor, PA 6. Applied Industrial Technologies 1.61 4,323 Cleveland, OH 7. Hagemeyer NA Holdings 1.50 4,900 Charleston, SC [Netherlands] 8. Fastenal Company 1.24 7,946 Winona, MN 9. Wilson Industries 1.18 2,059 Houston, TX 10. McJunkin Corporation 1.10 1,400 Charleston, WV

B2B CHANNEL SELECTION Wholesale http://www. census
TOP 10 ELECTRICAL DISTRIBUTORS REVENUE [$billions] Employees Headquarters 1. Rexel, Inc. 8.20 21 Paris, France 2. Sonepar 7.00 19,700 Berwyn, PA 3. Graybar Electric Company 4.00 7,190 Clayton, MO 4. WEXCO Distribution 3.70 5,350 Pittsburgh, PA 5. Anixter, Inc. 3.28 5,600 Glenview, IL 6. Hughes Supply, Inc. 4.42 8,900 Orlando, FL 7. Hagemeyer NA Holdings 2.60 4,900 Charleston, SC [Netherlands] 8. GE Supply 2.00 ? Shelton, CT 9. W.W. Grainger 5.00 15,500 Lake Forest, IL 10. Consolidated Electrical Dist. 5,000 Westlake Village, CA

MEXICO BEARING INDUSTRY - 2000
$1.00 $1.25 $1.56 $1.95

COMPLEX DISTRIBUTION CHANNELS IN JAPAN
Automobile makers affiliated parts makers Independent parts makers Repair parts makers 1 1 2 Automobile makers Wholesalers Special agents 1 2 Dealers Cooperative sales firms 2nd-level wholesalers 3 3 2 4 3 Sub-dealers Retailers 4 Large users Automobiles repair shops Gasoline stations 5 5 6 End users

COMPETITIVE ADVANTAGE THROUGH CHANNEL DESIGN
Simplify and shorten channels Build strong long-term relationships Strong interactive programs Listen to the channel members

ROLES OF CHANNEL INTERMEDIARIES
Entity Role Broker Bring buyers and sellers together No Manufacturer’s representative Represents several manufacturers goods Sales agent Negotiates on the producer’s behalf Manufacturer Products finished goods or components for sale Yes OEM Manufacturers and assembles products into a final unit Distributor or Wholesaler Provides goods to other resellers Dealer or Retailer Carries goods for purchase by consumers

CHANNEL ROLES AND EXPECTATIONS
MANUFACTURER “M” Expects of RESELLER “R” RESELLER “R” Expects of MANUFACTURER “M” PRODUCT Inventory for _____________ Large inventory—__________ out of stock PRICE Market price ______________ Volume _____________ PLACE Field ______________ Expert assistance when ___________ PROMOTION Training of _____________ Collateral such as _____________ PROFITABILITY _________________________ ____________________

CHANNEL CONTROL The ability to manage the efforts of channel members

PROMOTION & INCENTIVES
TERMS OF SALE EXAMPLE ACCOUNT TYPE PAYMENT TERMS DELIVERY TERMS SPECIAL TERMS PROMOTION & INCENTIVES ITEMS TO THE RIGHT ARE AVAILABLE TO YOU IN THEIR CATEGORY Net n days Prompt pay discount There is a separate price schedule for each distribution level FOB [Ex works] Time Special charges Shipping fees Drop ship Inventory adjustment Minimum order size None Co-op advertising Sales promotions Master Distributor / Regional Distributor Net 45 days 2 % 10 days FOB M.D. warehouse Drop ship large orders in territory Truckload minimum order 2 Inventory Adjustments per year 5% Co-op Advertising Distributor Net 30 days 1% 10 days FOB Mfg. DC 10 pallets minimum order 1 Inventory Adjustment per year Retailer 1 pallet minimum Dealer Consumer Cash with order Shipping and Handling – cash with order

CHANNEL PROGRAMS AND INCENTIVES
Sales contests Training programs Marketing programs Sales Incentives

CHANNEL COORDINATION Channels should tie to target markets
Channel conflict should be minimized

MANAGING RELATIONSHIPS
Supplier Relationships Customer Relationships

BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 11A Brand Management and the Firm Brands: Maximizing Value ALAN L. WHITEBREAD

PRICE FACTORS AND OBJECTIVES STRATEGIES – TACTICS - LAWS
CONCEPTUAL FRAMEWORK Value-based vs. cost-based pricing Price as viewed by the consumer Price as viewed by the reseller FACTORS AND OBJECTIVES Factors Objectives Cost STRATEGIES – TACTICS - LAWS Price – Quality Strategies Competition – New Product – Product Mix Pricing Tactics – Adjustments – Issues - Laws

BASIC PRICE PHILOSOPHIES VALUE-BASED VS.
MARKET [SEGMENT] CUSTOMERS VALUE PRICE COST & PROFIT PRODUCT PLACE PROMOTION PRODUCT PLACE PROMOTION COST & PROFIT PRICE VALUE MARKET [SEGMENT] CUSTOMERS

BUILDING THE VALUE EQUATION
DIFFERENTIATION BENEFITS CORPORATE BRAND ASSET VALUE CUSTOMER VALUE PROPOSITION COMPETITIVE POSITION

PRICE AND VALUE Price is Value is
If the value proposition is valid, price is not a problem to a qualified prospect because the perceived value exceeds the price.

CREATING CUSTOMER VALUE
Benefits Innovation Quality Delivery Cost Flexibility

SOURCES OF VALUE VALUE IS PERCEPTION – PERCEPTION IS VALUE
Product and/or Service Experience Brand / Image from IMC Perceived quality Proof

SOURCES OF VALUE VALUE IS PERCEPTION – PERCEPTION IS VALUE
The sales force is trained to use FAB*’s People do not buy products; they buy benefits!

FABS Features are anything that draw attention to you product.
Brand name, dimensions, ergonomics, esthetics, materials, patented, performance, service level, trademark [logo], … Advantages provide the consumer information about what the feature does. Brand name = less risk, dimensions = smaller size, larger print, ergonomics = comfortable use, esthetics = modern, sleek design, … Benefits provide value by answering a key question. What’s in it for me? Brand name = dependability, long life, dimensions = fits my size needs, …

FEATURES, ADVANTAGES, BENEFITS [FABS] [Pens exercise]
Specific attributes Describes what it does Value Color Ingredients Packaging Explanation

VALUE PROPOSITION ANALYSIS*
ALL BENEFITS FAVORABLE POD’s RESONATING FOCUS Consists of: All benefits from a market offering Of your offering relative to the next best choice 1 or 2 POD’s that deliver the greatest value Answers the customer question: Why should our firm purchase your offering? Why should our firm purchase your offering instead of your competitor’s? What is most worthwhile for our firm to keep in mind about your offering? Requires: Knowledge of own market offering Knowledge of own market offering and next best choice How own market offering delivers superior value compared with the next best choice Has the potential pitfall: Benefit assertion [no real value to that customer] Value presumption [assume value] Requires customer value research “Customer Value Propositions in Business Markets”, James C. Anderson, James A. Narus, and Wouter van Rossum, [Harvard Business Review, March, 2006], p. 93.

VALUE AS PICTURED BY THE CONSUMER
NET PRICE List price Less: discounts Quantity Seasonal Cash / coupon Promotion Less: Allowances Trade-in value PRODUCT BENEFITS + Service Quality Brand / warranty Repair Packaging Credit / financing Delivery / availability Incentives <

VALUE AS PICTURED BY THE RESELLER
NET PRICE List price Less: Volume discounts Quantity Seasonal Cash / coupon Special Less: Allowances Trade-in value PRODUCT BENEFITS + Product Service Quality Brand Availability Inventory Promotional activity <

WHAT AFFECTS PRICE? Marketing Objectives Marketing-Mix Strategy
Internal Factors External Factors WHAT AFFECTS PRICE? Marketing Objectives Marketing-Mix Strategy Cost Factors Organizational Considerations

MARKETING OBJECTIVES INFLUENCE ON PRICE DECISIONS
Survival Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business Current Profit Acceptance Level Maximum Current Profit, Cash Flow or ROI, Volume level Market Share Leadership Price to Become the Market Share Leader Product Quality Leadership High Prices to Cover Higher Performance Quality and R & D

MARKETING MIX AND PRICE
Product Design Distribution Promotion Non-Price Factors [Profiles]

COST FACTORS AND PRICE Fixed Costs [(Overhead) Variable Costs
Costs that do not vary with sales or production levels. Executive Salaries, Rent Variable Costs Costs that do vary directly with the level of production. Total Costs Sum of the Fixed and Variable Costs for a Given Level of Production

WHAT AFFECTS PRICE? Internal Factors External Factors Market and
Demand Competitors’ Costs, Prices, and Offers, Substitute products Other External Factors Economic Conditions Reseller Needs Government Actions Social Concerns

BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 9A Brand Management and the Firm Selling the Project - 1 The Marketing Plan ALAN L. WHITEBREAD.

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BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 9A Brand Management and the Firm Selling the Project - 1 The Marketing Plan ALAN L. WHITEBREAD.

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