Presentation on theme: "BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 9A Brand Management and the Firm Selling the Project - 1 The Marketing Plan ALAN L. WHITEBREAD."— Presentation transcript:
1 BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 9A Brand Management and the Firm Selling the Project - 1 The Marketing Plan ALAN L. WHITEBREAD
2 INTEGRATING NEW PRODUCTS Numerous issues depending on the magnitude of the new product introduction.Brand new product familyApple I-phoneMajor new product line extension to a product familyHP Color Laserjet to HP Printer FamilyStandard product line extensionsColor Laserjet products with more or less performanceOptionsLaptop computer case color, …AccessoriesPaper, toner, …
3 POSITIONINGCreating 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, andestablish competitive advantage.
4 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?
5 SELECT THE RIGHT COMPETITIVE ADVANTAGES FOR EFFECTIVE POSITIONING ImportantProfitableDistinctiveAffordableSuperiorCommunicablePreemptive
6 POSITIONING and IMC: A Strategy Example Target: Moms with kids 8-17 who purchase sports drinks at supermarkets.Desired BeliefGatorade is better than other sports drinksMessageGatorade is the only sports drink that is backed by years of researchCurrent BeliefsAll sport drinksare the sameDesired ActionsBuy Gatorade even when other brands are on saleCurrent ActionsBuy whichever sport drink is on sale
7 POSITIONING DIMENSION CANDIDATES QualityApplication[s]Occasion[s]Lifestyle / imageAttributesCompetitionPriceSelection of the metric and its scale of measurement [preferably subjective] is a very difficult process.
9 POSITIONING STRATEGIES Against CompetitionRepositiona CompetitorUCCCUVery little differentiationProbably low gross marginsVery difficultEstablish your position and move theirs
10 POSITIONING STRATEGIES Find a PositionCreate a PositionGapUUCCCCCCCCStrong differentiation with obvious customer benefits is required.May achieve higher gross marginsIdeal 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.
11 Class: position Buick, Chevrolet, Oldsmobile, and Pontiac in words. REPOSITION YOUR BRANDCompetition-Intercompany-Interbrand-IntermodelCannibalizationFeb., 2009GM 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.
12 BRAND MANAGE MENT AT GM: 2001 and beyond CHEVROLET value-priced entry levelSATURN one-price, customer-oriented servicePONTIAC sporty, performance-oriented for young peopleOLDSMOBILE medium-priced carsBUICK premium and “near-luxury” carsCADILLAC top-of-the-line standard of luxurysporty sophistication and elegance
13 POSITIONING STRATEGIES Broaden the BaseCUCCCSome differentiation with some benefitsAnother competitive product in a competitive marketplace
14 Microsoft Business Solutions MICROSOFT BRANDS IN 2003MICROSOFTCommercialConsumerWindows ServerSystemMicrosoft Business SolutionsMicrosoft VisualMicrosoft OfficeMSNXBOX
15 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].
16 BUILDING THE VALUE EQUATION DIFFERENTIATIONBENEFITSVALUEEQUATIONCORPORATEBRANDASSETVALUECOMPETITIVEPOSITION
17 THE BRAND VALUE CHAIN CREATING ADDITIONAL BRAND VALUE VALUE STAGESMarketingProgramInvestmentCustomerMindsetMarketPerformanceShareholderValueInvestorSentimentMarket[s]GrowthRisk/RewardContributionMULTIPLIER / ENHANCER
18 PRICE AND VALUEPrice is the numerical amount charged for a product or service.Value isFUTUREPAST
19 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.
20 VALUE AS PICTURED BY THE CONSUMER List priceLess: DiscountsQuantitySeasonalCash / couponPromotionLess: AllowancesTrade-inPRODUCT +ServiceQualityBrand / WarrantyRepairPackagingCredit / FinancingDelivery / AvailabilityIncentives=
21 VALUE AS PICTURED BY THE RESELLER List priceLess: Volume discountsQuantitySeasonalCash / couponSpecialLess: AllowancesTrade-inPRODUCT +ProductServiceQualityBrand / WarrantyRepair / MaintenanceDelivery / AvailabilityInventoryPromotional activity=
22 VALUE AND THE PRODUCT CONCEPT 1-Product Value“Technical value derived fromproviding a source of supply”2-Service Value“Provided by the services thatSurround the product”3-“Wow” Value“Enhanced service, to makeyour customer successfulrather than just satisfied”“Value Chains Versus Supply Chains, Andrew Feller, Dan Shunk, and Tom Callarman , 2006.
23 SOURCES OF VALUE* VALUE IS PERCEPTION – PERCEPTION IS VALUE Differentiation*Positioning*ExperienceBrand / Image from IMCPerceived qualityService[s] or service levels*Proof [from collateral material / use]USP*
24 AREAS OF DIFFERENTIATION ProductForm – FeaturesPerformance – DurabilityReliabilityServiceReparabilityPERCEPTIONImageStyle – Design - QualityPeopleMost B2BOften higher margin retailers
25 UNIQUE SELLING PROPOSITION [USP] THREE TESTSSPECIFICMEASUREABLEBENEFICIAL
26 USP“Hot delicious pizza delivered in 30 minutes or less, or its yours free.” – Dominos PizzaWHICH WORDS ARE …SPECIFIC? MEASUREABLE? BENEFICIAL?
27 CRITERIA FOR BRAND ELEMENTS MemorabilityMeaningfulnessLikabilityTransferabilityAdaptabilityProtectability
28 PLUS …Timeless Versatile Positive BRAND NAME SELECTIONDistinctive[Compounds,Arbitrary,Fanciful]Lack PoorForeignLanguageMeaningsSuggestive[SuggestProductQualities/Benefits]Descriptive[SuggestProductBenefits]Easy to:PronounceRecognizeRememberPLUS …Timeless Versatile Positive
32 Should all products be branded? BRAND DECISIONSBrand-RepositioningDecisionReposi-tioningNoreposi-BrandSelectionDecisionBrand-SponsorDecisionManu-facturerbrandDistribu-tor(private)LicensedBrand-NameDecisionIndividualbrandsBlanketfamilynameSeparatenamesCompany-individualBrand-StrategyDecisionLineextensionBrandMulti-brandsNewCobrandsBrandNo brandShould all products be branded?
33 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 CostValues the Brand(brand as friend)Brand PreferenceDevotedto BrandBrand InsistenceBrand Awareness
34 BRAND NAME LEVELS Combine parent and acquired companies names Parent heavyEqually weightedParent leads but is minorAcquired firm with a verbal link to the parentAcquired firm with a passive print link to the parent
35 WHAT SHOULD I BRAND?CompanyDivisionProduct line [family]Product
36 USPTO http://www.uspto.gov U.S. Patent and Trademark OfficeAdvice and filingsCopyrightsTrademarks and servicemarksTESS online search capabilityPatentsPatent search capability
37 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
39 FORECASTING TECHNIQUES Judgmental Methods [existing or new products]Jury of executive opinionSales force compositeQuantitative [existing products]Time Series AnalysisAutoregression, Box-Jenkins AnalysisCausal / Regression ModelingNeural NetworksCustomer / Market ResearchPre-market testing
40 Continual reforecasting on a regular basis. PROJECTION ESTIMATESHighMediumLowWeeksContinual reforecasting on a regular basis.
41 USING IMC TO DRIVE CUSTOMER VALUE A planned, comprehensive, integrated approach is required to maximize customer valueProspect or Customer Current Brand Knowledge
42 IMC A strong IMC program will Deliver messages that allow consumers to accurately form desired perceptionsAllow consumers to create their own sense of value of the product/serviceAssist in building the brand over an extended period of timeEvolve to brand preference or brand insistence
43 IMC – COMMUNICATION VEHICLES POINTOFPURCHASETRADEPROMOTIONSCONSUMERPROMOTIONSMEDIAADVERTISINGEVENTSPUBLICRELATIONSPACKAGING& LABELINGCOLLATERALINTERNETADVERTISINGPLACEADVERTISINGDIRECTMARKETINGSALESAIDS
44 THE COMMUNICATION PROCESS FEEDBACK SenderEncodingMessage via MediaDecodingReceiverCustomerFeedbackResponse
45 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.
46 SALES SUPPORT MATERIALS Sales training materialsSales support materialsCustomer support materialsLiteratureSpecifications…
47 CREATING SUCCESSFUL SALES TRAINING AND SALES MATERIALS Sales training materialsQuickly and easily convey key informationProduct fit and strategyTarget market[s] and keys to successProduct FAB’sSales support materialsCustomer support materialsFollow AIDASimple, easy to read and understandDrawings and pictures [if necessary]Maximize white space for non-technical pieces
48 QUICK CHECKLIST Be sure … Product need is real Product fits the corporate strategyProduct can be made and sold profitablyProduct meets the corporate goalsThere is a simple plan of key events shows no major issuesImplementation is well planned and execution should go smoothly
49 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
50 TODAY’S MANAGEMENT SETTING Large variety of productsRapid change / product life cycle stagesDemand forecasting difficultiesCritical lead times / commitmentsIncreasing storage and transportation costs
51 SUPPLY CHAINS VS. VALUE CHAINS: AN HISTORICAL PERSPECTIVE The connected set of allvalue-added businessentities and flows thatperform or support thelogistics functionrequired for production.Focus on upstreamsupplier and producerprocesses, efficiency,and waste reduction.LOGISTICSAll discrete andInterrelated activities[regardless of ownership]that seek to enhancefirm performanceVALUE CREATIONin every single event,process, and/or systemfrom raw materialsthroughcustomer satisfaction.Focus was on downstreamvalue creation for theCustomer.VALUE CHAIN
52 SUPPLY CHAIN EXAMPLE Detergent manufacturer Grocery chain or third partyDCSupermarketCustomer wantsdetergent and goesto their localsupermarketChemicalmanufacturerPlasticProducerPackagingProducerNotes: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.ChemicalmanufacturerPaperManufacturerTimberIndustry
53 INTERNAL SUPPLY CHAIN C-LEVEL MARKETING RESEARCH AND DEVELOPMENT OPERATIONSLOGISTICSC-LEVELFINANCE AND ACCOUNTINGSUPPLY CHAIN MANAGEMENTINFORMATION TECHNOLOGYHUMAN RESOURCES
54 SUPPLY CHAINS ARE INTERDEPENDENT SUPPLIERS’SUPPLIERSSUPPLIERSMARKETConsumers:CustomersProspectsSuspectsCUSTOMERSCUSTOMERS’CUSTOMERS
55 SUPPLY CHAINSMAXIMIZE VALUE AT EVERY OPPORTUNITY FOR ALL YOUR STAKEHOLDERS [PUBLICS].Value exists in-products-services-exceeding expectations-unexpected benefits
56 SUPPLY CHAIN MANAGEMENT [SCM] A network of facilities and distribution options that perform the functions of:Procurementbuyer, purchasing, materials management, …Transformation of materials into intermediate and finished productsStorage and management of inventoriesDistribution of finished products to customers at all levels
57 A SUPPLY CHAIN FLOWS AND PROCESSES FLOWS PROCESS INTEGRATION Suppliers Upstream or Backward IntegrationFocal firmInternal IntegrationCustomersDownstream or Forward IntegrationCompleteEnd-to-End Integration
58 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.STEELCOMPANY3RD TIERUPSTREAMSUPPLIER2ND TIERFASTENERSDIRECTSUPPLIER1ST TIERManage all other tiers.RADIATORSFORD, GMCHRYSLEROEMVEHICLESDEALERSCONSUMERSRENTALAGENCIESBUSINESSCONSUMERSFLEETSSPECIALVEHICLESRaw materials, semi-finished, and component products
60 SUPPLY CHAIN INVENTORY GAINS 150 days of inventorySUPPLIER30 daysMANUFACTURER30 days raw materials30 days finished productsRESELLER30 days wholesale30 days retail80 days of inventorySUPPLIER15 daysMANUFACTURER15 days raw materials20 days finished productsRESELLER20 days wholesale10 days retailThe 70 day reduction in inventory makes cash available for many other uses – programs, investment, more NPD, …
61 SCM COMPONENTS Facility Location Customer Service Order Processing Demand forecastingProduction SchedulingFacility ManagementMaterial HandlingInventory & ControlTransportationPurchasingPackagingStandardsWarehousingReturn Goods HandlingSalvage and scrap disposalLOGISTC
62 SOURCING DECISION FACTORS Capability and quality of vendorExtensive corporate access
63 LOGISTICSRight Goods - Right Place - Right Time - Right Cost – Right Configuration – Right Sequence
67 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
68 CYCLE TIME Cycle frequency, time [duration], and magnitude 1 2 Simple min-max systemUnscheduled production downtimeExcess lead times: production decides to increase inventoryPoor delivery performancePoor quality of raw materials12Cycle frequency, time [duration], and magnitude[stockout, minimum, maximum, average, safety stock]
69 DEMAND PULLS ALL PRODUCT! B2CB2BSuppliersManufacturersWarehouses or Distribution CentersResellersB2B or B2C Consumers
77 SCM ISSUES SUPPLIER INVOLVEMENT Systems coordination and development IntegrationCoordination of effortsEvaluation and feedbackSystem variation over timeQuality drivers
78 SUPPLY CHAIN QUALITY DRIVERS QUALITY OFPROCESScoordinated information and material flowsINFORMATIONsharing of clean [uninflated] dataRELATIONSHIPSdevelopment of upstream and downstream collaborative commercial relationshipsTECHNIQUEScontinuous improvement systems throughout to drive competitive advantage
81 The Supply ChainOrganization of discrete yet interrelated activities that enable firm performanceFirm Infrastructure (Financing, planning, investor relations)Human Resource Management (Recruiting, training, compensation system)Support ActivitiesTechnology Development (Product design, testing, process design, market research, material research)MAProcurement (Raw materials, advertising space, health services)RGInbound LogisticsOperationsOutbound LogisticsMarketing and SalesAfter-Sale ServiceINPrimary 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
82 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
83 TYPES OF CHANNELS International Vertical Marketing Systems [VMS] CorporateSubsidiaryOr JVContractualResellers Licensees [Franchisees]Administered-Open-No agreementInternational Vertical Marketing Systems [VMS]MoreLess
84 DIRECT DISTRIBUTION Pros Cons Close to customers Active market developmentGreater control over strategiesMore uniform implementation of policiesIncreased market knowledgeConsDifficult to manage if not familiar with new marketTime consumingExpensiveCostly to maintain without volume
85 INDIRECT DISTRIBUTION ProsSimpleInexpensiveSmall start-up costsIntermediaries usually represent several clientsConsLose marketing control in target marketDepend on performance of intermediaryPossible reseller conflict of interestBargaining power of intermediary
86 SEGMENTATION AND TARGETING Requires maximum similarity within each group and differences between groupsKnowing which segments to avoid is just as important as knowing which to targetInternal factors and existing channelsWhat value-added services are demanded?
87 CHANNEL POSITIONINGDesigning the channel to meet the market segment's demandsWhat is optimal channel performance?Select the best type of distribution channel based on its characteristics
88 REASONS FOR ESTABLISHING NEW CHANNELS Changes in target marketsSuccessful channels usually take years to build.
89 REASONS FOR REFINING EXISTING CHANNELS Changes in target marketsChanges in channel performanceChanges in the nature of competition
90 IMPLEMENTATION Channel experience Size Financial status Identifying and minimizing conflictsChannel coordination
91 MARKET SEGMENTS AND VERTICAL CHANNELS ManufacturerMedical equip. distributorsESD distributors25General line distributorsGrainger, McMaster-CarrElectrostatic Discharge Product Market SegmentsUnsophisticated customersSophisticated customers – large facilitiesSophistical medical equip. customers
92 THE ECONOMY AND NAICS Manufacturing 31-33 Services Public Administration92Wholesale42Information51ProfessionalServices54Agriculture11Retail44-45Finance52ManagementCompanies55Mining21Real Estate53Arts / Enter.61Utilities22Health62Accommodation72Construction23Other Services81Transportation48-49Educational71AdministrationWaste Mgt.56
93 B2B CHANNEL SELECTION Wholesale http://www. census TOP 10 GENERAL LINE DISTRIBUTORSREVENUE [$billions]EmployeesHeadquarters1. Ferguson Enterprises6.0015,800Newport News, VA2. W.W. Grainger5.0015,500Lake Forest, IL3. Hughes Supply4.428,900Orlando, FL4. Motion Industries2.525,0005. Airgas2.4010,000Radnor, PA6. Applied Industrial Technologies1.614,323Cleveland, OH7. Hagemeyer NA Holdings1.504,900Charleston, SC [Netherlands]8. Fastenal Company1.247,946Winona, MN9. Wilson Industries1.182,059Houston, TX10. McJunkin Corporation1.101,400Charleston, WV
94 B2B CHANNEL SELECTION Wholesale http://www. census TOP 10 ELECTRICAL DISTRIBUTORSREVENUE [$billions]EmployeesHeadquarters1. Rexel, Inc.8.2021Paris, France2. Sonepar7.0019,700Berwyn, PA3. Graybar Electric Company4.007,190Clayton, MO4. WEXCO Distribution3.705,350Pittsburgh, PA5. Anixter, Inc.3.285,600Glenview, IL6. Hughes Supply, Inc.4.428,900Orlando, FL7. Hagemeyer NA Holdings2.604,900Charleston, SC [Netherlands]8. GE Supply2.00?Shelton, CT9. W.W. Grainger5.0015,500Lake Forest, IL10. Consolidated Electrical Dist.5,000Westlake Village, CA
95 MEXICO BEARING INDUSTRY - 2000 $1.00$1.25$1.56$1.95
96 COMPLEX DISTRIBUTION CHANNELS IN JAPAN Automobile makers affiliated parts makersIndependent parts makersRepair parts makers112Automobile makersWholesalersSpecial agents12DealersCooperative sales firms2nd-level wholesalers33243Sub-dealersRetailers4Large usersAutomobiles repair shopsGasoline stations556End users
97 COMPETITIVE ADVANTAGE THROUGH CHANNEL DESIGN Simplify and shorten channelsBuild strong long-term relationshipsStrong interactive programsListen to the channel members
98 ROLES OF CHANNEL INTERMEDIARIES EntityRoleBrokerBring buyers and sellers togetherNoManufacturer’s representativeRepresents several manufacturers goodsSales agentNegotiates on the producer’s behalfManufacturerProducts finished goods or components for saleYesOEMManufacturers and assembles products into a final unitDistributor or WholesalerProvides goods to other resellersDealer or RetailerCarries goods for purchase by consumers
99 CHANNEL ROLES AND EXPECTATIONS MANUFACTURER “M” Expects of RESELLER “R”RESELLER “R” Expects of MANUFACTURER “M”PRODUCTInventory for _____________Large inventory—__________ out of stockPRICEMarket price ______________Volume _____________PLACEField ______________Expert assistance when ___________PROMOTIONTraining of _____________Collateral such as _____________PROFITABILITY_____________________________________________
100 CHANNEL CONTROLThe ability to manage the efforts of channel members
101 PROMOTION & INCENTIVES TERMS OF SALE EXAMPLEACCOUNT TYPEPAYMENT TERMSDELIVERY TERMSSPECIAL TERMSPROMOTION & INCENTIVESITEMS TO THE RIGHT ARE AVAILABLE TO YOU IN THEIR CATEGORYNet n daysPrompt pay discountThere is a separate price schedule for each distribution levelFOB [Ex works]TimeSpecial chargesShipping feesDrop shipInventory adjustmentMinimum order sizeNoneCo-op advertisingSales promotionsMaster Distributor /Regional DistributorNet 45 days2 % 10 daysFOB M.D. warehouseDrop ship large orders in territoryTruckload minimum order2 Inventory Adjustments per year5% Co-op AdvertisingDistributorNet 30 days1% 10 daysFOB Mfg. DC10 pallets minimum order1 Inventory Adjustment per yearRetailer1 pallet minimumDealerConsumerCash with orderShipping and Handling – cash with order
102 CHANNEL PROGRAMS AND INCENTIVES Sales contestsTraining programsMarketing programsSales Incentives
103 CHANNEL COORDINATION Channels should tie to target markets Channel conflict should be minimized
105 BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT SECTION 11A Brand Management and the Firm Brands: Maximizing Value ALAN L. WHITEBREAD
106 PRICE FACTORS AND OBJECTIVES STRATEGIES – TACTICS - LAWS CONCEPTUAL FRAMEWORKValue-based vs. cost-based pricingPrice as viewed by the consumerPrice as viewed by the resellerFACTORS AND OBJECTIVESFactorsObjectivesCostSTRATEGIES – TACTICS - LAWSPrice – Quality StrategiesCompetition – New Product – Product Mix PricingTactics – Adjustments – Issues - Laws
107 BASIC PRICE PHILOSOPHIES VALUE-BASED VS. MARKET[SEGMENT]CUSTOMERSVALUEPRICECOST &PROFITPRODUCTPLACEPROMOTIONPRODUCTPLACEPROMOTIONCOST &PROFITPRICEVALUEMARKET[SEGMENT]CUSTOMERS
108 BUILDING THE VALUE EQUATION DIFFERENTIATIONBENEFITSCORPORATEBRANDASSETVALUECUSTOMERVALUEPROPOSITIONCOMPETITIVEPOSITION
109 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.
110 CREATING CUSTOMER VALUE BenefitsInnovationQualityDeliveryCostFlexibility
111 SOURCES OF VALUE VALUE IS PERCEPTION – PERCEPTION IS VALUE Product and/or ServiceExperienceBrand / Image from IMCPerceived qualityProof
112 SOURCES OF VALUE VALUE IS PERCEPTION – PERCEPTION IS VALUE The sales force is trained to useFAB*’sPeople do not buy products; they buy benefits!
113 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, …
114 FEATURES, ADVANTAGES, BENEFITS [FABS] [Pens exercise] Specific attributesDescribes what it doesValueColorIngredientsPackagingExplanation
115 VALUE PROPOSITION ANALYSIS* ALL BENEFITSFAVORABLE POD’sRESONATING FOCUSConsists of:All benefits from a market offeringOf your offering relative to the next best choice1 or 2 POD’s that deliver the greatest valueAnswers 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 offeringKnowledge of own market offering and next best choiceHow own market offering delivers superior value compared with the next best choiceHas 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.
116 VALUE AS PICTURED BY THE CONSUMER NET PRICEList priceLess: discountsQuantitySeasonalCash / couponPromotionLess: AllowancesTrade-in valuePRODUCTBENEFITS +ServiceQualityBrand / warrantyRepairPackagingCredit / financingDelivery / availabilityIncentives<
117 VALUE AS PICTURED BY THE RESELLER NET PRICEList priceLess: Volume discountsQuantitySeasonalCash / couponSpecialLess: AllowancesTrade-in valuePRODUCTBENEFITS +ProductServiceQualityBrandAvailabilityInventoryPromotional activity<
119 MARKETING OBJECTIVES INFLUENCE ON PRICE DECISIONS SurvivalLow Prices to Cover Variable Costs andSome Fixed Costs to Stay in BusinessCurrent Profit Acceptance LevelMaximum Current Profit, Cash Flow or ROI,Volume levelMarket Share LeadershipPrice to Becomethe Market Share LeaderProduct Quality LeadershipHigh Prices to Cover HigherPerformance Quality and R & D
120 MARKETING MIX AND PRICE Product DesignDistributionPromotionNon-PriceFactors[Profiles]
121 COST FACTORS AND PRICE Fixed Costs [(Overhead) Variable Costs Costs that do notvary with sales orproduction levels.Executive Salaries, RentVariable CostsCosts that do varydirectly with thelevel of production.Total CostsSum of the Fixed and Variable Costs for a GivenLevel of Production
122 WHAT AFFECTS PRICE? Internal Factors External Factors Market and DemandCompetitors’ Costs,Prices, and Offers,Substitute productsOther External FactorsEconomic ConditionsReseller NeedsGovernment ActionsSocial Concerns