1. Product Strategies, Product Modification, Brand Management and Brand Equity Session 4 By: - Neeraj Gupta

3. Developing Product Strategies On what basis the company’s products have to be developed so that it focuses on only those customers whom it is going to target. These strategies can be as follows: -  Time-to-market  Low Product Cost  Low Development Cost  Product performance, Technology & innovation  Quality, Reliability, Robustness  Service, Responsiveness & Flexibility

4. Developing Product Strategies Time-to-market: -This is typical of companies involved with rapidly changing technology or products with rapidly changing fashion. Pursuit of this strategy will typically will lead to tradeoffs in optimizing product performance, cost and reliability. Low Product Cost: -This orientation typically will require additional time and development cost to optimize product cost and the manufacturing process. Low Development Cost: -While this orientation is not as common as the other orientations, it occurs when companies are developing products under contract for other parties, where a company has severely constrained financial resources, or where a "stealth" development effort is being undertaken on a "shoestring".

5. Developing Product Strategies Product Performance, Technology & Innovation: -This orientation focuses on having the highest level of product performance, the highest level of functionality or functions and features, the latest technology or the highest level of product innovation. Quality, Reliability, Robustness: -This orientation is typical of industries requiring high quality because of the significant costs to correct a problem (e.g., recalls in the automotive or food processing industries), the need for high levels of reliability (e.g., aerospace products), or where there are significant safety issues (e.g., medical devices, pharmaceuticals, commercial aircraft, nuclear plants, etc.). Service, Responsiveness & Flexibility: -This orientation requires additional resources (and their related costs) to provide this service and responsiveness.

6. Stages in PLC

7. Product Life Cycle

8. Product Development Developing a new product is a major task which considers various factors. In other words, the aim of product development is : -  Production of goods to meet market demand  Adjusting with the variation in quantity required  Right pricing of the products. Categories of Product Development: -  Introduction of new products  Improvement of existing products

9. Stages of Product Development Find Consumer Desire Analysing Feasibility Design Selection of Process and Production systems Process Development

10. NEW PRODUCT DEVELOPMENT 17-10

11. 17-11 THE NEW-PRODUCT-DEVELOPMENT DECISION PROCESS

12. I. IDEA GENERATION DuPont-takes around 3000 raw ideas to produce just two winning commercial products.

13. 17-13 TECHNIQUES FOR IDEA GENERATION Attribute Listing Forced Relationship Morphological Analysis Reverse assumption analysis New contexts Mind mapping

14. 17-14 II. IDEA SCREENING This is an important stage at which ‘Go’ or ‘Drop’ decisions/errors are made.

15. 17-15 IIIA. CONCEPT DEVELOPMENT & TESTING Consumers do not buy product ideas; they buy product concepts PRODUCT IDEA: To produce a powder to add to milk to increase its nutritional value and taste. This is a product idea. A product idea can be turned into several concepts. The first question is: Who will use this product? The powder can be aimed at infants, children, teenagers, young or middle-aged adults, or older adults. Second, what primary benefit should this product provide? Taste, nutrition, refreshment, energy? Third, when will people consume his drink? Breakfast, midmorning, lunch, mid afternoon, dinner, late evening? By answering these questions, a company can form several concepts: Concept 1: An instant breakfast drink for adults who want a quick nutritious breakfast without preparing a breakfast. Concept 2: A tasty snack drink for children to drink as a midday refreshment. Concept 3: A health supplement for older adults to drink in the late evening before they go to bed.

16. 17-16 IIIB. CONCEPT TESTING Concept testing involves presenting the product concept to appropriate target consumers and getting their reactions. The concepts can be presented symbolically or physically. Cover Girl Outlast all day lip Color (P&G): 30,000 women went under “Torture Tests” Consumer respond to : Communicability & believability, need level, gap level, perceived value, purchase intention, user targets, occasion and purchasing frequency etc.

17. IV. MARKETING STRATEGY

18. 17-18 V. BUSINESS ANALYSIS ESTIMATING TOTAL SALES First Times Sales Replacement Sales Repeat sales ESTIMATING COSTS AND PROFITS

19. Beta Testing and Market Testing To produce a physical prototype or mock-up to test the product and its packaging in typical usage situations by conducting focus group customer interviews or introductions at trade show etc.

20. 17-20 VI. PRODUCT DEVELOPMENT The job of translating target customer requirements into a working prototype is helped by a set of methods known as quality function deployment (QFD). This methodology takes the list of desired customer attributes (CAs) generated by market research and turns them into a list of engineering attributes (EAs) that the engineers can use. Alpha testing means testing the product within the firm to see how it performs in different applications. After refining the prototype further, the company moves to beta testing, enlisting customers to use the prototype and give feedback on their experiences. Beta testing is most useful when the potential customers are heterogeneous, the potential applications are not fully known, several decision makers are involved in purchasing the product, and opinion leadership from early adopters is sought.

21. 17-21 Consumer testing can take a variety of forms, from bringing consumers into a laboratory to giving them samples to use in their homes. In-home placement tests are common with products ranging from ice cream flavors to new appliances. For example, when DuPont developed its new synthetic carpeting, it installed free carpeting in several homes in exchange for the homeowners’ willingness to report their likes and dislikes about the carpeting. Sales Wave Research: -working with consumers who intially try the product at low cost and when the product is offered at slightly reduced prices. Simulated test Marketing- qualified shoppers by inducing them to buy the new brand and asking them to give comparitive feedback Controlled Test marketing: -engaging the number of stores that will carry the new product for a fee. Market Testing

22. 17-22 TEST MARKETING Before going out to sell products, it is important for the company to test-market them to see if there is a demand for it. Otherwise firm might end up investing time and resources on something that few customers are keen to buy. Test market is a geographic region or demographic group used to gauge the viability of a product or service in the mass market prior to a wide scale roll-out.

23. Technical Implementation Including new program initiation, resource estimation, requirement publication, engineering operations planning, department scheduling, supplier collaboration, logistics plan, resource plan publication, program review and monitoring, contingency planning, what-if planning.

24. 17-24 VIII. COMMERCIALIZATION major decisions during this stage include: When (timing). Marketing timing is critical. If a firm learns that a competitor is nearing the end of its development work, it can choose: first entry (being first to market, locking up key distributors and customers, and gaining reputational leadership; however, if the product is not thoroughly debugged, it can acquire a flawed image); parallel entry (launching at the same time as a rival may gain bothproducts more attention from the market); or late entry (waiting until after a competitor has entered lets the competitor bear the cost of educating the market and may reveal problems to avoid). Where (geographic strategy) To whom (target-market prospects). How (introductory market strategy).

25. 17-25 Adopter Categorization on the Basis of Relative Time of Adoption of Innovation

26. STAGES IN THE ADOPTION PROCESS 17-26 1.Awareness. In this stage the consumer is aware of the new product but lacks further information about it. 2. Interest. The consumer is motivated to seek information about the new product. 3. Evaluation. The consumer determines whether or not to try the new product. 4. Trial. The consumer tries the new product on a small scale to test its efficacy in meeting his or her needs. Trial can be imagined use of the product in some cases. 5. Adoption. The consumer decides to make use of the product on a regular basis.

27. Factors Influencing adoption process Readiness to try new product Characteristics of the innovation Organization’s readiness to adopt new innovation.

28. Product Life Cycle Strategies for different Stages

29. Marketing Strategies During Introduction Stage

30. Skimming Penetration

31. Growth Strategies Two Different Kinds Of marketing behavior: -  Early Growth  Late Growth Strategies relate to product’s position also based on whether product is a: -  Leader can choose to fight, keep its leadership position, or to flee, i.e. cedes market share to another product.  Follower depends on the strength of leader, its own strength, and market conditions, can exit quickly, invest in some other product having long term potential, or to leapfrog the competition.

33. Maturity Strategies In maturity the sales curve has flattened out and relatively few new buyers enter the market. While some untapped market potential usually remains, it is difficult and/or expensive to reach.

34. Maturity Strategies

36. Decline Strategies

37. Product Modification Product Modification is an attempt by companies to extend the length of the Product Life Cycle by making small, or big changed to a product to keep customers interested in the product, or cause them to buy accessory items to keep the product popular.

38. Forces causing companies to continuously make modifications in their products The intensity of competition The continued advances in technology The Economic Environment The Social/Cultural Environment Two aspects of the markets for product modification information:  The manner in which retention and conquesting modifications affect competition between downstream firms, and  The optimal selling and pricing policies for a vendor who markets product

39. NEW PRODUCT DECISIONS Product features Product design Branding NewBrands Multi brands Brand Extension LineExtension

40. Product Line Extension A product line extension is the use of an established product's brand name for a new item in the same product category. The following seven important factors make companies pursue line extensions as a significant element of their marketing strategies.  Customer segmentation- can identify and target finer segments more effectively than ever before.  Consumer desires-Used to maintain brand loyalty  Pricing breadth-Managers often tout the superior quality of extensions and set higher prices for these offerings than for core items.  Excess capacity-capacity encourages the introduction of line extensions

41. Product Line Extension Short term gain -line extensions represent the most effective and least imaginative way to increase sales quickly and inexpensively. Competitive intensity- managers often see extensions as a short- term competitive device That increases a brand's control over limited retail shelf space and, its overall demand for the category for new branded or private- label competitors and to drain the limited resources of third and fourth place brands. Trade pressure-Line Extensions occur when a company introduces additional items in the same product category under the same brand name such as new flavors, forms, colors, added ingredients, package sizes. Maggi Noodles, Maggi Atta Noodles, Maggi Rice Noodles Sunsilk Dry hair, Sunsilk Oily Hair, Sunsilk anti-dandruff Clinic plus, clinic all clear etc. Tide, Tide Jasmine

42. Brand Extension Three types: -  Product Related Extensions-also known as “line extensions”. Typically a product or flavour variant. Nirma detergent extending into cake and Frooti extending into other variants besides the mango variant  Image-Related Extensions –Cinthol moving into talcs from toilet soaps and Maggi moving into soups, sauces etc.  Unrelated Extensions- Godrej appearing on soaps, safety locks, almirahs, typesetters, hair-dyes, refrigerators etc.

43. LINE EXTENSION Fair & Lovely Fairness Cream-1978 Fair & Lovely Ayurvedic Fairness Cream-2001 Fair & Lovely Fairness Cream with extra brightness -2003 Fair & Lovely Menz Active-2006’ Fair & Lovely Winter Fairness Cream-2009 AXE Deodorant-1999 Tagline “The Axe Effect” Portrayed as a ‘weapon of seduction’ Five Fragrance: Dimension, Java, Phoenix, Pulse and Voodoo

44. BRAND EXTENSION Existing brand names are extended to new or modified product categories. 16-44

45. MULTIBRANDS New brand names are introduced in the same product category. HUL: Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, Rexona Cannibalization

46. NEW BRANDS New Brands New Brands New brand names in new categories are introduced

47. CO-BRANDING NDTV Kingfisher

48. Brand and Brand Management "A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.“ Three aspects of the Brand: -  'What', of the brand.  What the brand 'does'.  Finally, a brand becomes an asset or property which only the owner has the right to use. Brands do not exist for the sake of identification and differentiation.

49. Brand and Brand Management

50. Evolution of a Brand

51. Characteristics of Brands Generic- Basic level product that can satisfy a need that a person has.

52. Brand Management Brand Management is the application of marketing techniques to a specific product, product line, or brand. It seeks to increase the product's perceived value to the customer and thereby increase brand franchise and brand equity. A good brand name should:  be protected (or at least protectable) under trademark law  be easy to pronounce  be easy to remember

53. Brand Management  be easy to recognize  be easy to translate into languages in markets where brand will be used  attract attention  suggest product benefits (e.g.: Easy-Off) or suggest usage (note the tradeoff with strong trademark protection)  suggest the company or product image  distinguish the product's positioning relative to the competition  be super attractive  stand out among a group of other brands < like that one compared to the others.

54. Selecting a Brand Name Criteria for choosing brand name: -  Easy for customers to say, spell and recall (inc. foreigners)  Indicate products major benefits  Should be distinctive  Compatible with all products in product line  Used and recognized in all types of media  Single and multiple words Bic, Dodge Grand Caravan, IBM PC (letters), or a combination Mazda RX7  Availability, already over 400 car "name plates", this makes it difficult to select a new one.  Use words of no meaning to avoid negative connotation, Kodak, Exxon  Can be created internally by the organization, or by a consultancy.

55. 16-55 BRAND NAME Based on persons name Based on persons name Example: Ford, Khaitan, Bajaj, Honda etc. Based on locations Based on locations Example: Indian, Lloyds Other bases Other bases Example: Nirma, Mercedes Searching for a brand name is like search for a husband—there are lots of choices but the best ones have already been taken.

56. 16-56 SELECTING BRAND NAME Name communicating functions Name communicating functions Example: Boost, Aquaguard, Wipro-Jyothishi Name communicating specialty Name communicating specialty Example: Opel, Ikon, Lancer Use of Acronyms Use of Acronyms Example: BPL, MRF, AMUL, FIAT Use of Company mane Use of Company mane LG, Samsung, Sony Brand Name Company as brand name E.g. Philips Strong Company Endorsement Cadbury’s Dairy Milk Weak Company Endorsement Kit Kat (Nestle) Individual Brand Name Ariel, Tide

57. Brand name selection Separate family Brand Name meeting: -  Company.  Individual Name.  Separate brand family names  Contribution of company name and Product Name Maruti Zen, Hero Honda CBZ, Fiat Palio.  Durables quality of Brand Name

58. Qualities of Brand Name Name should be suggestive of some product benefit fair and handsome cream, fair glow, roohafza. Name should b suggestive of product or service category e.g. Himalya Ayurvedic concepts business world etc. Name should be suggestive of suggestive imagery that projects qualities, such as gillette Mach 3, Nike etc. Name should be disticntive. Name should not suggest any negative associations in other languages and countries.

59. Branding challenges and Opportunities Savvy Customers Brand proliferation: -Using brand name to introduce newer extensions of brand. Media Fragmentation: -the emergence of interactive and non traditional media, promotion and other communication alternatives. Increased Competition Increased costs- cost of introducing a new product has increased. It makes it difficult to match the investment and level of support that brands were able to receive in previous years. Greater Accountability-

60. What is Branding? Branding is the business process of managing your trademark portfolio so as to maximize the value of the experiences associated with it, to the benefit of your key stakeholders, especially current and prospective:  Employees  Customers  Stock/share holders  Suppliers  Intermediaries  Opinion leaders  Local communities  Purchasers and licensees

61. Branding Challenges Reactive Approach to Brand Development Branding Initiatives Lack Accountability (Return on Branding Investment, ROBI) Can't Bring Branding Initiatives to Conclusion "Who are we Today" Syndrome Competition "Stole" the Business away from Us "We're in a Commodity Business“: -Due to competitors using price-cutting tactics essentially to buy market share, perceived value is being driven out of the business.

62. Branding Challenges "Branding Doesn't Work in Our Industry“- This statement is often paired with, "Branding is a necessary evil.“ "Everybody Knows Us.“: -"What do people THINK about you?“ Unrealistic Expectations "Nobody Knows Us“ "We Don't Have the Budget."

63. Brand Equity

64. Brands have equity because they have high awareness, many loyal consumers, a high reputation for perceived quality, proprietary assets such as access to distribution channels or to patents, or the kind of brand associations ( such as personality associations). Total accumulated value or worth of a brand.

65. Marketing observers also agree with following basic principles of branding and brand Equity Differences in outcomes arise from the "added value" endowed to a product as a result of past marketing activity for the brand. This value can be created for a brand in many different ways. Brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand.

66. Brand Equity

67. Brand adds value for both customer and marketer Value for Customer: -  It helps customer in information processing. Reduces chaos.  A brands assets enhance customer confidence in the purchase decision by making customers feel more confident.  It creates usage satisfaction. Value for Marketer: -  Effectiveness and efficacy of marketing programmes is increased by brand equity assets.  Brand equity dimensions allow a firm to have greater customer loyalty.  Allows a firm to charge premium.  Provides greater opportunity for growth.  Good source of achieving leverage in distribution channels.  Provider of competitive advantage.

68. Brand Equity at Different Hierarchical Levels

69. Brand Loyalty Brand loyalty is the biased behavioral response, expressed over time by some decision-making unit, with respect to one or more alternative brand out of a set of such brands, and is a function of psycholigical processes. Loyalty is at the heart of equity and a very important brand equity asset. 5 levels of brand loyalty according to Aaker: -  No Brand Loyalty  Satisfied but still change the brand without any reason  Satisfied with brand and doesn’t switch because switching involves high switching costs.  Customer values the brand and considers it a friend.  Customer is devoted to the brand with intense feelings.

70. Brand Awareness Brand awareness is the second brand equity asset. It includes brand recognition and brand recall. Brand recognition is the ability to confirm prior exposure (Yes, I've seen it earlier) and recall is the ability to remember the brand when a product category is thought about. This sort of awareness is essential for a brand to be able to take part in the decision process. Brand awareness may exist at three levels: brand recognition, brand recall and top-of-the-mind recall.

71. Perceived Quality The quality can be objective or perceived. The objective quality means the actual superiority of product or service. However, the perceived quality is perception of superiority of a product or service with respect to its intended function. Perceived quality is customer based.

72. Brand Associations Primary associations are qualities/equity inherently possessed by the brand i.e. utility they provide, performance, imagery (reputation of brand), judgment about its ability to compete. Secondary association: - More of a branding-marketing function. i.e. transferring the quality of one entity to other. TATA’s reputation of quality transferred to Salt. Some ways of adding Secondary associations: -  Company (Relating existing brands with company image)  Country of Origin or other Geographic Areas Like-Kashmiri Pashmina Shawls, Nagpuri Oranges, Kashmiri Apple etc.  Co-Branding: - Brand Alliance or Brand Building-two or more existing brands are combined into a joint product.  Licensing/Franchisee: -Mc Donalds, Pizza Hut etc.  Celebrity Endorsement: -Well known admired people to promote product is a wide spread phenomenon  Sporting, cultural or other event: -Like many award ceremonies cricketing events etc. are sponsored by companies to promote their brands

73. Brand Personality It is a comprehensive concept, which includes all the tangible and intangible traits of a brand, like, beliefs, values, prejudices, features, interests, and heritage. Brand Personality is a set of human characteristics associated with a brand. In general, it expresses how the brand behaves.  E.g. : - IBM is 'older' while Apple is 'younger'  India Today is 'old-fashioned' while Outlook is 'trendier'  Coke is 'conforming' while Pepsi is 'irreverent‘  In essence, it can be said that 'Personality traits are what the brand will live and die for'.

74. Brand Personality The concept of brand personality is useful because of following reasons. It:  Enriches understanding  Helps gain an in-depth understanding of consumer perceptions of and attitudes towards the brand  Can provide more insight than is gained by asking about attribute perceptions  Contributes to a differentiating identit  Can differentiate brands especially where brands are similar in product attributes  In fact, it can define not only the brand but the product class context and experience