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					Product and Brand

      Product Management
      – Key Concepts

1. Product Life Cycle

2. The mature stage:
        Is there a way out?

       Product Life Cycle
         Based on four (simple) assertions:
   Products have a limited life.

   Product sales pass through different stages, each posing
    different challenges and opportunities.

   Profits rise and fall at different stages.

   Products require different marketing and other
    strategies in each stage of the life cycle.           3
Product Life Cycle

    Examples of a Basic Product Shift
      (signals end of the life cycle)
   Beta video format to VHS video

   Records (78” to 45” or 33”); CDs; DVDs;
    MP3; ____?

   Entirely new materials and mfg. methods for

 Strategies to Extend
     the Product Life Cycle                   (Cont‟d)

New uses.

   Stimulate users to use in different ways

Increase amount used on each use occasion.

New users (segments)
  Stimulate nonusers to use it.
  Stimulate light users to use more of it.

Strategies Used to Prevent Commodization
   (Avoiding or extending Mature Stage of the PLC)

 1. Value-added strategy
 •   Continue to search for benefits that you can provide that
     will differentiate you from competitors (often these are
     services to augment your products).
     •   Key question: Can we afford to do this or can we increase price
         to make these service increments profitable?

 2. Market-focus strategy
     •   Focus on segments who do not view the product as a commodity
         due to:
          • low knowledge

          • particular needs

         Strategies Used to Deal with
         Commoditization / Mature Stage

Two low cost/price strategies:

3. Price compression
    •   Offer your benefits at lower prices or offer lower-priced
        versions of your product
    •   Often need to find process innovations to cut costs

4. Service compression
    •   Strip away services to lower costs and, hence, price
    •   Customers may not need or be willing to pay for service

•   Also see list on page 337 of Kotler text
 Brand Management
Brand Management: 3 Key Concepts:
  1. Brand Equity
  2. Brand Extensions
  3. Product Positioning

     Brand Equity
   Firms pursuing a differentiation strategy to
        achieve a SCA must build strong brands

   A good brand name is a valuable strategic

   Brand equity is a set of brand assets and
       liabilities linked to a brand’s name
       and symbol
       add to or subtract from the objective and perceived
        value provided by a product or service to a firm
        and/or that firm’s customers.
         Brand Equity …                (Contd.)

   Financial community recognizes the strategic asset
    value of brands.
       For example, Kraft was purchased for nearly $13 billion,
        more than 600% over its book value because of the
        value of the brand names it controls.

   Brand equity generates value to the customer
       that can emerge as:
       price premium
       enhanced brand loyalty.

       One Investing Philosophy:
Buy Low P/E Stocks with High Brand Equity
                              PE Ratio, Trailing 12 Months

                              0          10          20         30             40   50      60

         Krispy Kreme, US                                                                53.2
            Starbucks, US                                                           47
           L'Oréal, France                                              31.9
               Gillette, US                                  25.3
            Coca-Cola, US                                   24.1
              PepsiCo, US                                 22.4
        Nestlé, Switzerland                       15.7
 Heineken, The Netherlands                        15.2
    Richemont, Switzerland                        15.2
  Cadbury Schweppes, GB                          14.7
                                  Source: Bloomberg Financial Markets

     Brand Equity: Awareness

 The ease with which customers can recognize
  and recall the brand name.
 Provides many competitive advantages
   A sense of familiarity
   A signal of presence, commitment and substance.

 High Brand Awareness is a necessary but not
     sufficient condition for success
   Anyone with sufficient $s and creativity can gain high
                   Brand Loyalty
- Reduces marketing costs
- Creates barriers to competitors
- Provides trade leverage
-   Creates switching costs for consumer
-   Affects the brand image
    -   (“Used by …”

- Provides time to respond to competitive
         threats   (“give them another chance?”)   18
        Brand Equity:
           Brand Identity
   Sum of the associations attached to brand
       and its firm by customers.

   Brand association is anything that is directly
       or indirectly linked in memory to a brand.
       What comes to mind

   Most common associations are
       product attributes or consumer benefits.
   What comes to mind when you think of

   What about Burger King?

   What about Sony?

          Brand Identity             (Cont‟d)

A brand's associations are       assets that can:
     differentiate brand
     provide reasons to buy,
     instill confidence and trust
     affect feelings toward the product and the
             use experience
     provide the basis for brand extensions
      Brand Equity allows
         Brand Extensions
Using an existing brand name for
     new product

     40% of all new products
     2/3 of all successful new supermarket products

    Different types of
       Brand Extensions
1. Same product in different form (Liquid Tide)
2. Companion product (Bose CD Player) 3.
3. Customer franchise (LL Kids, Clothes „R‟ Us)
4 . Benefit, attribute, feature
          (Nike dress shoes are cool?)
          (LL Bean Camping Guides are experts)

Brand Extension Strategies

   Line extension
       extends existing brand name in
                                same category

       Most “new products” are line extensions
          Courtyard by Marriott

          Kleenix scented tissues

          Euro-Disney

          Pentium Zeon

    Brand Extension Strategies

   Franchise or brand extension
       existing brand name in a new category

           Pillsbury Microwave Popcorn
           Sunkist Vitamin C tablets

           Sunkist fruit rolls (more risky)

           ESPN – The Magazine

           CBS Sportsline

Non-Brand Extension Strategies

    Flanker brand
        new brand in an existing category for the firm
             Procter & Gamble Strategy
             Gap and Old Navy
        Also NOT an extension strategy

    Best Situations for
Successful Brand Extensions

   Strong brand associations exist.

   These associations provide a point of
    differentiation and an advantage for the

   Extension may help the core brand by
       reinforcing the key associations
            (e.g., Sunkist Vitamins)
       Add to name recognition
        for Brand Extensions
When a parent brand name only provides
 recognition and a perceived quality umbrella:
     Do not extend.
          Extension will be vulnerable to
          competition AND parent brand name
           will become diluted.

         Product Positioning
•   Market Segmentation =
    • benefits desired by customer segment

•   Product Differentiation =
    •   superiority / uniqueness relative to competition

•   Product Positioning =
    •   combination of product differentiation with market segmentation

    •   designing the product to fit in predetermined position in
        market and mind of targeted consumer
“The two most fundamental decisions that have to be made
  are the targeting decision and the positioning
  decision. If (these) decisions are made correctly, the
  other things will follow. If they’re made incorrectly,
  nothing good will follow.”

                    Philip Kotler, Northwestern Univ.
                    Quoted in Counter Intuitive Marketing
                    by Clancy and Krieg, 2000

     Reis and Trout (1981),
     Positioning: The Battle for your Mind
“Positioning is not what you do to a product. Positioning is what
  you do to the mind of the prospect… You concentrate on the
  perceptions of the product. Not on the realities of the

The basic approach of positioning is not to create something
  new and different. But to manipulate what’s already up there
  in the mind. To retie the connections that already exist…

The most difficult part of position is selecting that one specific
  concept to hang your hat on. Yet you must, if you want to cut
  through the prospect’s wall of indifference.

     Positioning Statement
   For …      (target market)           , this brand is …
            (key differentiating claims)       because …
            (rationale for claims)         .

   Example: Avis
        For     business people who rent cars,
        Avis is the company who gives the best service
        because the employees own the company.

   Previously: For business people who rent cars,
               Avis tries harder (to give good service)
               because we are (only) #2.
 Another Example: Palm Pilot
“For busy professionals who need to stay organized.

Palm Pilot lets you carry your address book, schedule,
and notepad in your pocket. It is superior to other

because only Palm Pilot allows you to back up your files
on your PC with the touch of a button. This feature saves
time and ensures the availability of a backup copy of
important information.”

                  Acuvue Advance
       Another Example:

           Brand Contact Lenses
   For people who want to see well yet still feel

   Acuvue Advance lenses are the most comfortable
    (“feel nothing, yet see everything”)

   Because they are the only lenses made of
    HYDRACLEAR, a moisture rich material that is
    more like your own eye
What is the proper positioning
 statement for South West

   For      (target market)        , this brand is
          (key differentiating claims) because
          (rationale for claims)        .

    Common Bases
      for Positioning
   Consumer benefits or problems solved
       Crest
       Viagra
       Volvo
       Prudential Insurance
       Charmin

   Use or application
       Gatorade is for football games or for after
         tough workouts
       Vaseline has 100s of uses

        Common Bases for
           Positioning (Cont‟d)
   User category or type
       Marlboro man
       Wheaties
       Pepsi
       Miller Beer
       Harley Davidson
       ESPN, the magazine vs. Sports Illustrated

        Common Bases for
          Positioning (Cont‟d.)
   Against another brand
    (either direct competition or as a reference point for comparison)
       Avis (vs. Hertz)

       Pepsi (vs. Coke)
           taste tests
           who uses the product
       Fox News vs. CBS et al
    Common Bases
       for Positioning               (Cont‟d.)

   Relating to a product class
       Seven-Up
       Sports Illustrated
       Honeywell
       “Dried Plums” (not prunes)
       Zima
          Not a beer
          Not liquor
Common Bases
  for Positioning           (Cont‟d.)

   Specific usage occasions
       Michelob
     Schaeffer
     Miller

     Hallmark greeting cards

     FED EX

Figure 11.1: Perceptual Map

Positioning Strategy Examples:
Southern California Theme Parks
   Theme park‟s positioning possibilities:
        Attribute positioning
        Benefit positioning
        Use or application positioning
        User positioning
        Competitor positioning
        Product category positioning
        Quality or price positioning

   Which Positioning to Promote?
        Theme Park Positions
   Attribute positioning
       Disney is the largest park.
   Benefit positioning
       Knott‟s Berry Farm delivers fantasy experience of being
                                                  in old west.
   Use or application positioning
       Japanese Deer Park is for the tourist who only has 1 hour
   User positioning
       Magic Mountain is best one for “thrill seekers”.
               Theme Park Positions                        (Cont‟d.)

   Competitor positioning
       Lion Country Safari has a wider variety of animals than
                                           Japanese Deer Park
   Product category positioning
       Marineland is not a theme park, but an “educational
   Quality or price positioning
       Busch Gardens is the “best value” for the money.

           The CRUDE Test for
           Effective Positioning
Brand’s position must be:
                   Easy to
         Potential Errors
            in Positioning
   Under positioning
       buyers have only a vague sense of what the
        brand offers
            Crystal Pepsi
            Cingular

   Over positioning
       too narrow an image of the brand
            Tiffany‟s
        Potential Errors
           in Positioning                    (Cont‟d)

   Confused positioning
       too many changes or brand claims
            Burger King

   Doubtful positioning
       brand‟s claims are hard to believe
            Cadillac Cimarron (compete with BMW, Audi?)
Proper Positioning is
   often subtle
   Gablinger‟s Beer
   Miller Lite
   Bud Lite
   Coors Lite

   “Brown” (UPS) vs. FED EX

    Examples of
       Very Good Positioning
Which computer is easy to use?

What bathroom tissue is the softest?

Which bar soap is pure, clean and natural?

Which frozen food is nutritious, low-fat,
                              and low calorie?
Which plastic bag is the strong one?
     TWA‟s “Next Flight Out” (NFO)
     Package Air Delivery Service
   1989 --- Virtually the same as Delta Dash
        and another airline‟s Sprint services
   Package delivery system (ground to air to
        ground to recipient)
   Flies on passenger flights
   Can be put on plane almost every hour on
        shuttle flights
   Question:
       “How to position this product?”
     Position on Benefits?
   It‟s fast.
   It‟s convenient and easy.
   It‟s reliable.
   Other?

(TWA policy: All ads end with TWA Slogan:
  “Try us to see how good we are”)
    Position Relative to
       Another Product Class?
Fast Fax                                      Slow
           NFO   FedEx            U.S. Mail

Positioning Slogan in Advertising Copy?
#1. “When it’s too big to fax
    and it has to be there today!”

     Position Relative to
        Another Product Class?
Fast Fax                             U.S. Mail
            NFO   FedEx

#2. “If it’s too big to fax, too urgent to
    wait, too important to bungle,
                call us!”

Text: “Even for documents, there are times when an
  original is necessary….For legal purposes, you
  may need same day delivery of an original
  document …”                                    56
    Position Relative to
       Another Product Class?
Fast Fax                                     Slow
           NFO   FedEx           U.S. Mail

#3. (after showing a small bundle of
     non-paper materials)
           “Try Faxing This!”

   Position against
      a Competitor?
Fast Fax                                Slow
           NFO   FedEx      U.S. Mail

#4. “Sometimes Overnight is
    Absolutely, Positively Too Late!”

   Position against
      a Competitor?         (Cont‟d.)

Fast Fax                                  Slow
           NFO   FedEx        U.S. Mail

#5. “Upset because your package
    isn’t on FedEx tonight ?
    Relax, call TWA’s Next Flight Out
    and it’ll still get there tomorrow.”

    Position against other Same-
    Day Delivery Services?    (Cont‟d.)

 Fast Fax                                 Slow
            NFO   FedEx       U.S. Mail

#6. “TWA’s next flight out is carrying
    87 passengers, nine crew
    members, … and
        the most important proposal
           of your career. …
      Next time, try Next Flight Out. ”

   Position via
      Your Users?        (Cont‟d.)

Fast Fax                               Slow
           NFO   FedEx     U.S. Mail

#7. (various User Testimonials)
       “I love Next Flight Out.
       It …”
        Dijourno pizza ---
              (frozen / heated up at home)
   How to position against other frozen and home
    delivery pizzas ?

   “I can’t believe it’s not delivered pizza!”

   Exaggerated scenes:
   “I know you’ve been out. You went out for a pizza!”

        Other positioning battles
   Visa
       “Don‟t bring your American Express, because
        they only accept Visa.”
   American Express
       Sign of distinction
       Accepted world-wide
   Master Card
       “… Priceless” campaign
       What does this say about MC and what MC stands for?
        Vodka ---
             the most popular liquor

   Absolut                Grey Goose
       Sweden                 France

   Ketel One              Finlandia
       Holland                Finland
                               In new Bond movie,
                                  instead of Schmirnoff
                                  (former brand of 007)

    Vodka           (Cont’d)

   Stolychnya

       “Why pay top dollar for a vodka that is not
        from Russia?

       “from Russia with Love”

        Vodka          (Cont’d)

   If Stolychnya pursues the “from Russia --- the
    vodka experts” strategy,

         What should the other premiums do in

       “Why drink „your father‟s drink‟
         (… Absolut & Stoly) ?”

                    New radio ad
                  for a New Vodka
   “Baru” vodka             (from Ireland)
     “Great taste”
     “Pure Vodka”

     “from Ireland”

   Possible positioning?:
       “From the land of the potato famine! ….
              and we know potatoes!”

      Big Brothers & Big Sisters
   Very positively perceived by public
   High quality organization
   BUT, potential volunteers hesitant to seek
       information or inquire
   Thought they had to be model citizens &
       all activities had to be “classy”
          Going to a museum
          Surrogate parent

        How should BB/BS Deal
             with this Problem?
   New ads feature situations in which adult
    volunteers lightheartedly challenge the children
    they mentor to playful contests

       TV ad depicts a Big Brother trying to impress his Little
        Brother with his business office;

       The adult discovers the best way to communicate with
        the boy is to show him how to throw pencils up into the
        ceiling, where they stick to the tiles.

    Big Brothers / Big Sisters
   Another ad shows a Big Sister and
    Little Sister in a bubble-gum-blowing contest;

   the volunteer blows a huge bubble, which is
    delightedly popped by her
    Little Sister.

     Web and Radio Ads
   "Big Brothers Big Sisters is looking for volunteers to be a
    guiding light for today's youth. Do you have the right
    qualifications? Let's find out.“

   Children then ask,
       "Have you ever tied someone's shoelaces together?
       Do you know what a noogie is?
       Have you ever started a pillow fight?“ …

 The announcer concludes, "Think being a Big
  means you have to act like a saint? Think again."
      Web and Radio Ads (Cont’d.)
   Although many people think "being a Big is a
    heavy-duty responsibility to go to museums and
    help with homework, it doesn't have to be that. “

   "Sometimes the best times are when you're fooling
    around. That's why we're showcasing the small,
    fun moments of human interaction."

     Big Brothers Ads (Cont’d.)
   "A lot of public service ads in this area tend to be
    instructional or saccharine. We want to have a
    smart, fun tone so people can see we have a
    sense of humor about ourselves.

   We want Big Brothers to seem as appealing as
    other products and services we advertise, so
    people will look at the commercials and say,
    'Hey, I can do that, I'd like to be part of that
    organization.„ "
    Positioning Your Brand(s)
   What is the proper positioning
    statement for the brand you work on
    for your company?

   For      (target market)        , this brand is
          (key differentiating claims)   because
          (rationale for claims)

Summary --- Biggest
Challenges for Brand Mgt.
   Managing the brand in the mature
      stage of the Product Life Cycle
       Avoiding commoditization

   Good brand positioning

   Proper management of brand equity
       and brand extensions
       about your company
   How well are brands managed in your firm?

   How well have you dealt with the threat of

   How is your brand positioned?
       Is it properly positioned?