1. 7 C H A P T E R Developing A Product/Brand Strategy:
- Setting Objectives
- Choosing a Marketing Strategy

2. Quick Review Ch.2: Boundary of your business domain
Chs. 3-5: Analysis of Major Stakeholders
Ch. 6: Your prediction about future
 Potential and Forecasting
Ch. 7: Strategy (to achieve your objectives)
 Targeting (Competitor & Customer)
 Positioning (Value Proposition)
Your Strengths and capabilities

3. Key Topics of Ch. 7 Strategy as an Action Plan
Elements of a Product Strategy**
Making Sense of a “Strategy Jungle”
Research In Progress: Kim and Lim

4. Action Plan Where are we heading to?  How will we get there?* 
What will we do? 

5. A Successful Strategy:
Helps achieve coordination among functional areas of the organization.
Defines how resources are to be allocated.
Leads to a superior market position.

6. Key Elements of a Product Strategy**
Statement of the objective(s) the product should attain*
Selection [Consideration] of strategic alternative(s)
Selection of customer targets
Choice of competitor targets
Statement of the core strategy*
Description of supporting marketing mix.
Description of supporting functional programs

7. Hierarchy of Objectives
Company mission/vision
Level 0
Corporate objectives
Level I
Corporate strategies
Divisional objectives
Level II
Divisional strategies
Product/brand objectives
Level III
Brand strategies
Program objectives
Level IV
Tactics

8. 1. Setting Objectives Characteristics of Good Objectives
Quantified standards
Challenging
Have Milestones
Two Major Decisions
Which Objective to Pursue?
How High it should be?

9. 2. Consideration of Strategic Alternatives
Corporate Objectives
Two Major Paths
Increasing Sales/Market Share*
Market Development Strategy
Market Penetration Strategy
Increasing Profitability
Decreasing Inputs
Increasing Outputs
- 2X2 matrix on growth strategy*
Corporate: stock price, business mix, ROI

10. Strategic Alternatives
Long-term profits
Growth in sales or market share
Efficiency, short-run profits
Market development
Market penetration
Reduce costs
Decrease inputs
Improve asset utilization
Increase price
Increase outputs
Improve sales mix
New segments
Existing customers
Convert nonusers
Competitors’ customers
New product development

11. Criteria for Evaluating Strategic Alternatives
Size/growth of the segment
Opportunities for obtaining competitive advantage  Know Yourself
Resources available to penetrate the segment

12. 3. Targeting and Positioning
Choice of Customer Targets: Single or Multiple*
Choice of Competitor Targets
Statement of the Core Strategy =Value Proposition*
Economic (cost/price) Advantage
Functional Advantage
Psychological Advantage

13. Ex) Target Segments for Handspring

14. 3. Targeting and Positioning (cont’d)
Five Areas of Differentiation
Quality*
Convenience and Service
Status and Image
Branding*
Distribution Channels
 Combination of the Above

15. Joint Space for Colas • Diet Noncola Fresca Diet Pepsi • Tab Segment 3
RC Cola
Segment 2
Nondiet
Cola
Dr Pepper
7-Up
Segment 1
Coke
Diet Rite •

16. Positioning Decision Steps
1. Identifying alternative positioning themes
2. Screening alternatives according to whether they are
meaningful to and believable by customers
feasible given the firm and product resources
competitively sensible
helpful for meeting the product objective

17. Positioning Decision Steps (Contd.)
3. Selecting the position that best satisfies these criteria
4. Implementing programs consistent with the product position selected

18. Total Product Concept Potential product Generic product
Expected product
Augmented product

19. Managing Brand Equity Reduced marketing costs Trade leverage
Attracting new customers
Create awareness
Reassurance
Time to respond to competitive threats
Anchor to which other associations can be attached
Familiarity-liking
Signal of substance/ commitment
Brand to be considered
Provides value to customer by enhancing customer’s:
Interpretation/ processing of information
Confidence in the purchase decision
Use satisfaction
Brand loyalty
4. Brand loyalty
1. Brand awareness
Brand equity

20. Brand Equity (cont’d). Brand loyalty Brand equity Reason-to-buy
Differentiate/position
Price
Channel member interest
Extensions
Brand loyalty
3. Perceived quality
Provides value to firm by enhancing:
Efficiency and effectiveness of marketing programs
Brand loyalty
Prices/margins
Brand extensions
Trade leverage
Competitive advantage
Help process/ retrieve information
Reason-to-buy
Create positive attitude/feelings
Extensions
Brand loyalty
2. Brand associations
Brand loyalty
Other proprietary brand assets
Competitive advantage

21. 3. Targeting and Positioning (cont’d)
Different Values Being Sought by Customers (by Rackham)
Transactional Sales: Intrinsic Value
Consultative Sales: Extrinsic Value
Enterprise Sales: Strategic Value
Relationship Life Cycle and Strategy
Customer Acquisition
Customer Retention
Customer Expansion
Customer Deletion*

22. Making Sense of A “Strategy Jungle”
Strategy at different levels
Corporate or Business Level: Porter’s Generic Strategy
Cost Leadership: Fixed Cost and Variable Cost
Differentiation: Supply side and Demand side
Focus: Segmentation and Targeting
Functional Level Strategies:
Relationship Life Cycle-based Strategy
Product Life Cycle-based Strategy:*
First mover advantage vs. Second mover advantage

23. Strategy Over the Life Cycle
Ex) Pharmaceutical industry (patent expiration in 20 years)

24. 4. Supporting Marketing Mix & Programs
Product and Brand Program: Product feature & brand meaning
Pricing Program: price points
Marketing Channels Program: Level, intensity, and ownership/function
Communication Program: ex) Advertising and Sales Promotion (Incentives)*

25. Multiple Effects of Consumer Promotions on New Car Sales by Steve Kim and J. Lim
Firm performance
Consumer promotions
Car Sales Change
- Immediate
Total
Advertising
Incentives
H1 & H2
H3 & H4
Product
Quality
Product variable

26. Effects of Advertising and Incentives on Car Sales
t-test
Immediate
effect
.013
.108 **
Fluctuation
Until stabilization
.002
-.059
Total Effect
.014
.049

27. Effects of Incentives Under Different Quality
Effect for Low quality
Effect for
High quality
T-test
Immediate
effect
.102
.116
Fluctuation
Until stabilization
-.069
-.046
Total Effect
.034
.07 **

28. Effects of Advertising Under Different Quality
Effect for Low quality
Effect for
High quality
T-test
Immediate
effect
.028
-.008 **
Fluctuation
Until stabilization
.003
.001
Total Effect
.031
-.007

29. Illustration: Handspring’s Product Strategy
Objective:
To capture 15 percent of the PDA market by the end of year 2
Customer Targets:
Price-conscious professionals
Nonbusiness professionals
Nonprofessionals
Competitive Targets:
Palm
Sharp
Core Strategy:
Simplicity/convenience
Low price
Expandability (via expansion slot)