1. Developing Product and Brand Strategy
Mrs. Wonder

2. Introduction Existing and proposed products.
Product strategy is critical to the success of the overall marketing strategy.
Value is captured in two key areas:
Product Strategy
Existing and proposed products.
Branding
Value enhancement through awareness and image.

3. Product Strategy Product value is derived from Features, and
Benefits received
Products can be tangible goods, services, places, ideas, organizations, or people.

4. Designing a Service Tangible Activities People Processing
Item Processing
Health care
Hotels
Mass transit
Delivery service
Janitorial service
Parking garage
Intangible Activities
Mental Processing
Information Processing
Entertainment
Management consulting
Local phone service
Banking
Legal services
Accounting services

5. Features and Benefits
Features: Specific attributes that enable a product or service to perform its function. Benefits:.

6. Mass Customization
Mass Customization: Creating products, on a large scale, with features tailored to the needs of individual customers.
Offerings should be analyzed, feature by feature, to help understand the benefits and value derived by the target customers. Try to avoid “feature bloat”.

7. Sample Needs, Features and Benefits
Product
Targeted Segment
Need
Feature
Benefit
Cordless drill
Do it yourselfers
Drill holes without electricity
Extra battery pack included
Drill can be used for long periods of time
Mortgage loan
First-time home buyers
Obtain money to buy a home
Low down payment
Less money needed up front to buy a home
Laser printer
Small business owners
Print documents economically
Draft-quality printing mode uses less toner
Toner cartridge lasts longer, saving money

8. Quality Basic functionality is only the price of entry.
Quality: Put simply, how well the product satisfies customers.
Basic functionality is only the price of entry.
Superior quality attracts business.
Poor quality can lead to negative word-of-mouth.

9. Design
Design: Quality comes from design, components/ingredients and processes.
At the forefront of many categories.
Includes “emotional quality” – the impact of design on how it makes the customer feel.
6-9

10. Packaging Keeps products safe.
Helps companies burnish their brand imagery and highlight points of differentiation.
6-10

11. Labeling
Communicates product contents, uses and warnings. Conforms to national, regional and local laws and requirements mandating warnings, allowable use of certain phrases, and even the size and type of words used. Helps attract attention, stand out from retail clutter.
6-11

12. The Product Life Cycle 6-14
Marketers must carefully monitor the environment to determine where their industry or product may be among the following stages of the PLC:
Introduction
Growth
Maturity
Decline
Let’s look at product strategy from the perspective of the Product Life Cycle…
6-14

13. Product Strategy and the Product Life Cycle
Introduction
Growth
Maturity
Decline
Launch the new product.
Support launch with marketing mix programs to build customer awareness, make product available, and encourage trial.
Enhance product (new features, improved quality, added services, new packaging).
Support rising sales with expanded channel coverage, pricing for market penetration, and communications to start and reinforce customer relationships.
Add brand or line extensions.
Defend market share through competitive pricing, channel expansion, communicating differentiation, and promotion to reinforce customer loyalty.
Reposition, reformulate, or cut struggling products.
Manage profitability through careful pricing, pruning channel outlets, and minimal or highly targeted communications.
6-15

14. Product Mix and Product Lines
Product Mix: The overall assortment of all product or services offered. Product Lines: A group of products that are all similar in some way. Product Mix Width: Number of lines offered. Product line Depth: Number of products in a line.
6-16

15. Line Extensions & Brand Extensions
Line Extension: Putting an established brand on a new product and adding it to an existing product line.
A low fat version of Lay’s potato chips.
Brand Extension: Putting an established brand on a new product in a different category for a new customer segment.
E.g., Snicker’s brand ice cream.
6-17

16. Product Line and Mix Decisions
RESULT
New product
Lengthens product line
Line extension
New line
Widens product mix
Brand extension
Product deletion
Shortens product mix
Line deletion
Narrows product mix
6-18

17. Planning Branding 6-19 Company name and individual brand.
Branding gives a product a distinct identity and differentiates it from competitive products using: words, designs, and symbols.
In terms of branding, a product may carry:
Company name and individual brand.
Courtyard by Marriott
Individual name.
Gap, Old Navy
Private-label brand.
Wal-Mart
Multiple Brands (co-branding, ingredient branding).
Dell PC with Intel computer chips
6-19

18. Brands Should Be….
Meaningful. Recognizable and memorable. Capable of being legally protected. Suitable for international markets.

19. Branding and Positioning
Branding not only identifies a particular product, but it sets it apart from the competition (both direct and indirect). Positioning: What the target group perceives about your brand relative to how they perceive the competition.
6-20

20. The Power of Brand Equity
Brand Equity: the extra value customers perceive that enhances their long-term loyalty to a brand.
Can insulate a company against competitive threats.
Can help new products achieve acceptance.
The Value of Strong Brands:
Encourages brand loyalty.
Boosts customer lifetime value.
The total amount that a customer spends on a brand or with a company during the life of their relationship.
6-21

21. Pyramid of Brand Equity
Resonance
Judgments
Feelings
Performance
Imagery
Salience
6-22

22. IKEA Case Study anD Questions
IKEA is now Sweden’s best-known export. There are more than 226 IKEA stores in thirty-three countries. IKEA is long been known for providing good quality products at low prices, appealing to a wide customer base, but only focusing on the products IKEA feels meet the trend and pricepoint requirements for their customers. However, an important issue for IKEA to address is the overwhelming individuality of U.S. consumers. American consumers are very demanding and tend to reward marketers that go out of their way to address individual tastes and needs. Expansion into the U.S. market will require IKEA to adapt its offerings and stores to local tastes—a marketing strategy that is much more expensive to deliver and contrary to IKEA’s cost- conscious design. IKEA’s franchised structure is well suited to this task. This allows IKEA to get closer to customers by hiring local employees that represent the same values, cultures, and lifestyles of the local area. IKEA’s U.S. expansion is expected to move fairly slowly. The company does not have the financial resources and marketing experience to roll out a large number of products and stores simultaneously. In addition, IKEA will slowly adapt its promotional strategy to U.S. standards. For example, most of IKEA’s current commercials are considered too “edgy” for American television. Despite any adaptations it might make in its marketing program, the IKEA vision is consistent throughout the world.

23. The Assignment
You are the new Product Manager for the US IKEA Office, congrats on your new job! You have been asked by your boss to develop a product strategy for the US stores, as they do differ from the European market stores that IKEA has serviced for decades. You are to complete the following questions in at least one paragraph per question. Use what you have learned today, along with your general understanding of what people your age and older like and dislike about IKEA.
Why are the styling and design of IKEA products so popular (for photographs, go to Does IKEA’s blend of style and pricing have appeal to mainstream U.S. consumers?
What should IKEA do in the United States with more customers having more individualized tastes in furniture. Should they use the same strategy they use in other international markets? Why or Why not?
Think back to the lecture we had with Mr. Wonder on product differentiation – can you think of other companies that have had to re-think their strategy when they entered into foreign markets? Why did they have to make changes to their product or pricing?