1. Product Strategy

2. Product Strategy Defines what the organization does and why it exists
A product offering’s real value comes from its ability to deliver benefits that enhance a customer’s situation or solve a customer’s problems.
Products fall into two general categories
Consumer products – for personal use and enjoyment
Business products – for resale, use in making other products, or use in a firm’s operations

3. Types of Consumer Products
Convenience Products
Shopping Products
Specialty Products
Unsought Products

4. Types of Business Products
Raw Materials
Component Parts
Process Materials
Maintenance, Repair, and Operating Products
Accessory Equipment
Installations
Business Services

5. The Product Portfolio Product Line Product Mix or Portfolio
A group of closely related product items
Product Mix or Portfolio
The total group of products offered by the firm
Strategic Decisions
Variety – number of product lines offered
Assortment – depth of each product line

6. P&G’s Portfolio of Household Care Products

7. Potential Benefits of Offering a Large Product Portfolio
Economies of Scale
Package Uniformity
Standardization
Sales and Distribution Efficiency
Equivalent Quality Beliefs

8. Consider the number of product choices available in the U. S
Consider the number of product choices available in the U.S. consumer market. In virtually every product category, consumers have many options to fulfill their needs.
Are all of these options really necessary? Is having this many choices a good thing for consumers? Why or why not?
Is it a good thing for marketers and retailers that have to support and carry all of these product choices? Why or why not?

9. The Challenges of Service Products
Balancing supply (capacity) with demand
Time and place dependency of demand
Difficulty of evaluating service quality prior to purchase
Inconsistency of service quality
Difficulty in tying offerings to customers’ needs (i.e., the need is not always apparent to customers)

10. Unique Characteristics of Services
Intangibility
Simultaneous Production and Consumption
Perishability
Heterogeneity
Client-Based Relationships

11. Developing New Products
A vital part of a firm’s effort to sustain growth and profits
Depends on the firm’s ability to create a differential advantage for the new product
Customer perception of newness is critical

12. Strategic Options for Newness of a Product
New-to-the-World Products (Discontinuous Innovations)
New Product Lines
Product Line Extensions
Improvements or Revisions of Existing Products
Repositioning
Cost Reductions

13. New Product Development Process
Idea Generation
Screening and Evaluation
Development
Test Marketing
Commercialization

14. Branding Strategy
Involves selecting the right combination of name, symbol, term, or design that identifies a product
Brands have two parts
Brand name – words, letters, and numbers that can be spoken
Brand mark – symbols, figures, or a design
Critical to product identification and the key factor in differentiating a product from its competition
Makes it easier for customers to find and buy products
Firms must protect brand names and brand marks from trademark infringement by other firms

15. Good Brands Answer Questions for Customers
Where can I find information quickly?
Where can I get a quick meal and make my kids happy?
Where can I buy everything I need, all at decent prices?
Where can I get the best deal on car insurance?
How do I find a value-priced hotel in midtown Manhattan?

16. Consider the notion that a truly effective brand is one that succinctly captures the product offering in a way that answers a question in the customer’s mind. Now, consider these brands (or choose your own): Coca-Cola, Disney, Marlboro, American Express, and Ford. What questions do these brands answer? Why are these effective brands?

17. Potential Brand Attributes (Exhibit 7.1)

18. Strategic Issues in Branding
Corporate Branding
Equally as important as product-related branding
Aimed at a variety of stakeholders
Designed to build and enhance the firm’s reputation
Basic Branding Decisions
Manufacturer vs. private-label brands
Individual vs. family branding
Strategic Brand Alliances
Cobranding
Brand licensing
Brand Value
Brand loyalty
Brand equity
Packaging and Labeling

19. The Strongest and Weakest U.S. Corporate Reputations (Exhibit 7.2)

20. Advantages of Branding
Product Identification
Comparison Shopping
Shopping Efficiency
Risk Reduction
Product Acceptance
Enhanced Self-Image
Enhanced Product Loyalty

21. Basic Branding Decisions
Manufacturer vs. Private-Label Brands
Private-label brands are owned by the merchants that sell them (Gap, Craftsman, Sam’s Choice)
Private-label brands are more profitable for the retailer
Manufacturer brands have built-in demand
Individual vs. Family Branding
Individual branding – when a firm gives each of its product offerings a different brand name
Family branding – when a firm uses the same name or part of the brand name on every product

22. Manufacturer (Name) Brands versus Private-Label Brands (Exhibit 7.3)

23. Strategic Brand Alliances
Cobranding
The use of two or more brands on one product
Leverages the image and reputation of multiple brands to create distinctive differentiation
Brand Licensing
A contractual agreement where a company permits an organization to use its brand on non-competing products in exchange for a licensing fee
Licensed brands typically have instant recognition among consumers

24. Brand Value Brand Loyalty Brand Equity
A customer-centric view of brand value
A positive attitude toward a brand that causes customers to have a consistent preference for the brand
Three degrees:
Brand recognition
Brand preference
Brand insistence
Brand Equity
A firm-centric view of brand value
The marketing and financial value associated with a brand’s position in the marketplace

25. The World’s Twenty-Five Most Valuable Brands (Exhibit 7.4)

26. Compare the corporate reputation scores in Exhibit 7
Compare the corporate reputation scores in Exhibit 7.2 with the brand valuations in Exhibit 7.4. Why does Apple sit at the top of both lists? How has the company used good branding and positioning strategy to achieve this result? How is it that Wells Fargo can have a very high brand valuation, but a very low corporate reputation score?

27. Packaging and Labeling
Goes hand-in-hand with branding in developing a product, its benefits, its differentiation, and its image
Includes issues such as color, shape, size, convenience
Often used to reposition the product or give it new and improved features
Vital to helping customers make proper product selections
Can have important environmental and legal consequences

28. Differentiation and Positioning
Creating differences in the firm’s product offering that set it apart from competing offerings
Positioning
Creating a mental image of the product offering and its differentiating features in the minds of the target market
Relative Position
A product’s position vis-à-vis the competition
Addressed through two tools
Perceptual mapping
Strategy canvas

29. Hypothetical Perceptual Map of the Automotive Market (Exhibit 7.5)

30. Hypothetical Strategy Canvas for the Book Retailing Market (Exhibit 7

31. Bases for Differentiation
Branding is the most important tool of differentiation.
Other important bases for differentiation
Product Descriptors (see Exhibit 7.7)
Product features – factual descriptors of the product and its characteristics
Advantages – performance characteristics of how the product behaves
Benefits – positive outcomes or need satisfaction
Customer Support Services
May be the best way to overcome commoditization

32. Using Product Descriptors as a Basis for Differentiation (Exhibit 7.7)

33. Look back at the Top 10 brands in Exhibit 7. 4
Look back at the Top 10 brands in Exhibit 7.4. What bases do these brands use for differentiation? What strategies do they use to create a relative position in their respective markets? Why do these brands hold so much value?

34. Positioning Strategies
Strengthen the Current Position
Constantly monitor customer perceptions, needs, and wants
Raise the bar of customer expectations
Repositioning
Often requires a fundamental change in one or more marketing program elements

35. Managing Brands over Time
The product life cycle is a useful tool for addressing brand and product strategy over time.
Limitations of the product life cycle
Most new products never get past development
Most successful products never die
Life cycles really refer to industries, not products or brands
The length of each stage depends on the actions of other firms
The product life cycle forces managers to consider the future of their industry and their brand.

36. Stages of the Product Life Cycle (Exhibit 7.8)

37. Strategic Considerations During the Product Life Cycle (Exhibit 7.9)

38. The Product Life Cycle: Development Stage
No sales revenue during this stage
Components of the product concept
An understanding of desired uses and benefits
A description of the product
The potential for creating a complete product line
An analysis of the feasibility of the product concept
Customer needs should be discerned before developing marketing strategy
Test marketing is conducted in this stage.

39. The Product Life Cycle: Introduction Stage
Begins when development is complete and ends when customers widely accept the product
Marketing strategy goals during this stage
Attract customers by raising awareness and interest
Induce customers to try and buy
Engage in customer education activities
Strengthen or expand channel and supply chain relationships
Build on availability and visibility through trade promotion
Set pricing objectives

40. The Product Life Cycle: Growth Stage
Be ready for sustained sales increases and the rapid increase in profitability early in the growth stage
Length depends on nature of product and competitive reactions
Two main priorities during growth
Establish a strong, defensible marketing position
Achieve financial objectives that repay investment
Marketing strategy shifts from customer acquisition to customer retention and building brand loyalty.

41. Marketing Strategy Goals During the Growth Stage
Leverage the product’s perceived differential advantages
Establish a clear brand identity
Create unique positioning
Maintain control over product quality
Maximize availability of the product
Maintain or enhance the product’s profitability to partners
Find the ideal balance between price and demand
Keep an eye focused on the competition

42. The Product Life Cycle: Maturity Stage
Typically, no more firms will enter the market
Still an opportunity for new product features and variations
Typically the longest stage in the product life cycle

43. Goals and Strategies During the Maturity Stage
Four general goals during the maturity stage
Generate cash flow
Hold market share
Steal market share
Increase share of customer
Four strategic options to achieve these goals
Develop a new product image
Find and attract new users to the product
Discover new applications and uses for the product
Apply new technology to the product

44. The Product Life Cycle: Decline Stage
Two options during the decline stage
Attempt to postpone the decline
Accept the inevitability of decline
Harvesting
Divesting
Factors to be considered during this stage
Market segment potential
The market position of the product
The firm’s price and cost structure
The rate of market deterioration