1. Product and Service Strategy and Brand Management
Chapter 5
Product and Service Strategy and Brand Management

2. In this chapter, you will learn about…
The Offering Portfolio
The Offering Concept
The Offering Mix
Modifying the Offering Mix
Additions to the Offering Mix
New-Offering Development Process
Life-Cycle Concept
Modifying, Harvesting, and Eliminating Offerings

3. In this chapter, you will learn about…
Positioning Offerings
Positioning Strategies
Repositioning
Making the Positioning Strategy Decision
Brand Equity and Brand Management
Creating and Valuing Brand Equity
Branding Decisions
Brand Growth Strategies

4. Importance of the Offering
The ultimate profitability of an organization depends on its product or service offering(s) and the strength of its brand(s).

5. Basic Offering-Related Decisions
Modifying the Offering Mix
Positioning Offerings
Branding Offerings

6. The Offering Concept What is an “offering”? It consists of:
Tangible product or service
Related services (e.g., delivery and setup)
Brand name(s)
Warranties or guarantees
Packaging

7. The Offering Mix (Portfolio)
The totality of a company’s offerings is known as its product or service offering mix or portfolio
Consists of distinct offering lines (product line width)
Each line consists of individual offers or items (product line depth)

8. The Offering Portfolio
Bundling – enhancing the offering mix by providing two or more product or service items as a “package deal”
McDonald’s “value meal”
Travelocity’s vacation packages
IBM hardware, software, and maintenance contracts

9. Modifying the Offering Mix Major Decisions
Should the offering mix be modified?
If yes, what should be added, modified, harvested, or eliminated?

10. Modifying the Offering Mix Additions to the Offering Mix
How consistent is the new offering with existing offerings?
Does the organization have the resources to adequately introduce and sustain the offerings?
Is there a viable market niche for the offering?

11. Modifying the Offering Mix Additions to the Offering Mix
How consistent is the new offering with existing offerings?
Cannibalization (Kodak cameras)
Fit with sales and distribution strategies (Metropolitan Life Insurance)
Consistency with target markets

12. Modifying the Offering Mix Additions to the Offering Mix
Does the organization have the resources to adequately introduce and sustain the offerings?
Financial strength – outlays for research, development, and marketing (Gillette)
Market Growth (Miller Lite)
Competitive response (RC Cola)

13. Modifying the Offering Mix Additions to the Offering Mix
Is there a viable market niche
for the offering?
Is there a relative advantage over existing competitive offerings?
Does a distinct buyer group exist that is not being satisfied with current offerings?

14. Modifying the Offering Mix New-Offering Development Process
Idea generation/idea screening employees, buyers, competitors
Business analysis forecasting sales, costs, profitability
Market testing laboratory or field market tests
Commercialization full-scale introduction of offering to market

15. New-Offering Development Process Idea Generation & Screening
Does the offering have a relative
advantage?
Is the offering compatible with buyers’
use or consumption behavior?
Is the offering simple enough for buyers to
understand and use?
Can the offering be tested on a limited
basis prior to actual purchase?
Are there immediate benefits from the
offering, once it is used or consumed?

16. New-Offering Development Process Business Analysis
Sales Forecasts
Profitability Analysis
Investment requirements
Breakeven analysis
Payback period
Return on investment (ROI)

17. New-Offering Development Process Test Marketing
Generate benchmark data for assessing sales volume
Relative effectiveness of alternative marketing programs can be examined
Incidence of offering trial by potential buyers, repeat-purchasing behavior, and quantities purchased
Results in a competitive response

18. Modifying the Offering Mix Life-Cycle Concept
A life cycle plots sales of an offering or a
product class over a period of time.
There are FOUR main stages:
Introduction
Growth
Maturity (Saturation)
Decline

19. Modifying the Offering Mix Life-Cycle Concept
Sales
Sales
Profits
Introduction
Growth
Maturity
Decline

20. Modifying the Offering Mix Life-Cycle Concept
The sales curve can be viewed as
being the result of offering trial and
repeat-purchasing behavior.
Sales volume = (number of triers x average purchase amount x price) + (number of repeaters x average purchase amount x price)

21. Modifying the Offering Mix Modification
Trading up
Improving the product and increasing the price
Trading down
Reducing the number of features or quality and reducing the price

22. Modifying the Offering Mix Harvesting
Harvesting should be considered when:
The market for the offering is stable
The offering is not producing good profits
Market share is becoming difficult to maintain
The offering provides other benefits to the organization

23. Modifying the Offering Mix Elimination
Elimination is appropriate when the answer to
the following questions is “very little” or “none”:
What is the future sales potential of the offering?
How much is the offering contributing to the overall profitability of the offering mix?

24. Modifying the Offering Mix Elimination
How much is the offering contributing to the sales of other offerings in the mix?
How much could be gained by modifying the offering?
What would be the effect on channel members and buyers?

25. Positioning Offerings
The act of designing an organization’s offering and image so that it occupies a distinct and valued place in the target customer’s mind relative to competitive offerings.

26. Positioning Offerings Positioning Strategies
By attribute or benefit
By price and quality
By use or application
By user
By product or service class
Against competition

27. Example of Positioning by Attributes
Toothpaste Attributes
Market Segments
Children
Teens, Young Adults
Family
Adults
Flavor 
Color
Whiteness of teeth
Fresh breath
Decay prevention
Price
Plaque prevention
Stain prevention
Principal Brands
Aim, Stripe
Ultra Brite, McCleans
Colgate, Crest
Topol, Rembrandt

28. Positioning Offerings Repositioning
Necessary when the initial positioning
is no longer competitively sustainable
or profitable, or when better positioning
opportunities arise
St. Joseph’s aspirin for babies to “Low Strength Aspirin” for adults
Carnival Cruise Lines vacation alternative for older people to a “Fun Ship” for younger adults and families

29. Positioning Offerings
Making the Positioning Strategy Decision
What position do we want to own?
What competitors must be outperformed if we are to establish the position?
Do we have the marketing resources to occupy and hold the position?

30. Brand Equity & Brand Management
Brand Name
Any word, “device” (design, sound, shape,
or color), or combination of these
used to identify an offering
and set it apart from competing offerings.
Brand Equity
The added value a brand name bestows on a
product or service beyond the functional
benefits provided.

31. Brand Equity & Brand Management Creating and Valuing Brand Equity
Develop positive brand awareness and name-product association (Gatorade, Kleenex)
Establish a brand’s meaning in the minds of consumers (Nike)
Elicit the proper consumer responses to a brand’s identity and meaning (Michelin)
Create a consumer-brand resonance (Harley-Davidson, Apple, eBay)

32. Customer-Based Brand Equity Pyramid
Relationships: What about you and me?
Intense, active loyalty
Consumer Brand Resonance
Response: What about you?
Positive, accessible reactions
Consumer Judgments
Consumer Feelings
Meaning: What are you?
Strong, favorable, and unique brand association
Brand Performance
Brand Imagery
Identity: Who are you?
Deep, broad brand awareness
Brand Salience

33. Brand Equity and Brand Management Branding Decisions
Assign one brand name all of the organization’s offerings (GE, Sony) OR
Assign one brand name to each line of offerings (Sears, Craftsman Tools)
Assign individual names to each offering (P&G, Unilever)

34. Brand Equity & Brand Management Branding Decisions
Using a single brand name…
Advantage
Easier to introduce new offerings when the brand name is familiar to buyers
Disadvantage
Can have a negative effect on existing offerings if a new offering fails
Sub-branding… …combining a family brand with a new brand

35. Brand Equity & Brand Management Branding Decisions
Decide whether or not to supply an intermediary with its own brand name.
What are the costs/revenues?
Is there excess capacity?
If we don’t manufacture the brand, will a competitor produce it?

36. Brand Equity & Brand Mgmt Brand Growth Strategies
New
products
Existing
products
New Brand Strategy
Fighting/Flanker Brand Strategy
New Brand
Brand Extension Strategy
Line Extension Strategy
Existing Brand

37. Brand Equity & Brand Mgmt Line Extension Strategy
Adding offerings with the same brand in a product class that an organization currently serves…
Respond to customers’ desire for variety
Eliminate gaps in the product line
Lowers advertising and promotion costs
Consider possibilities of product cannibalism and proliferation of offerings (Coke and Vanilla Coke)

38. Brand Equity & Brand Mgmt Brand Extension Strategy
The practice of using a current brand name to enter a completely different product class
Reduced risk due to brand equity
Success depends on perceptual fit with the original product class
e.g., Yamaha makes motorcycles, sound equipment, computer peripherals, and musical instruments

39. Brand Equity & Brand Mgmt Brand Extension Strategy: Co-branding
Pairing two brand names of two manufacturers on a single product
e.g., General Mills and Hershey Foods’ Reese’s Peanut Butter Puffs

40. Brand Equity & Brand Mgmt New Brand Strategy
Involves the development of a new brand
and often a new offering for a product
class that has not been previously
served by the organization.
Most challenging strategy
Most costly
e.g., Lexus by Toyota

41. Brand Equity & Brand Mgmt Flanker/Fighting Brand Strategy
Flanker Brand Strategy
Involves adding a new brand on the high or low end of a product line based on a price-quality continuum (Marriott Hotels).
Fighting Brand Strategy
Involves adding a new brand whose sole purpose is to confront competitive brands in a product class being served by an organization. (Frito-Lay’s Santitas used to fight regional tortilla chip brands).