Strategic Marketing Lecture 5: Product & Service Decisions PDF

STRATEGIC MARKETING MK42009E - MK42025E Lecture 5: Product and Service Decisions ASST. PROF. ISMAIL ERZURUMLU AGENDA 1. Product / service decisions a. Branding 2. Product Portfolio Decisions 2 Product and Services Product & Service Decisions 3 MARKETING STRATEGY - MK42082E What is a product? IERZURU...

STRATEGIC MARKETING MK42009E - MK42025E Lecture 5: Product and Service Decisions ASST. PROF. ISMAIL ERZURUMLU AGENDA 1. Product / service decisions a. Branding 2. Product Portfolio Decisions 2 Product and Services Product & Service Decisions 3 MARKETING STRATEGY - MK42082E What is a product? IERZURUMLU A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. 4 Differences between products and services Intangibility Variability Inseparability Perishability 5 Product and Service Decisions Product / Service Attributes Features, Quality, Style and Design 6 Product and Service Decisons Branding “Brand is the name, term, sign, or design—or a combination of these—that identifies the maker or seller of a product or service” 7 Product and Service Decisons Branding Products exist on shelves, but brands exist in..... 8 Product and Service Decisons Branding …minds. 9 Branding Branding Brand Equity (Positive) differential effect that knowing the brand name has on consumer response to marketing actions 11 MARKETING STRATEGY - MK42082E Brand Equity IERZURUMLU 87,6 12 Associative Network Memory Model of Brand Equity …describes how brands work. …argues that the human mind is a network of nodes and connecting links. The key characteristics of a brand, which influence its brand equity, are captured as nodes and linkages. Brand awareness or familiarity, which reflects the customer’s ability to identify a brand, is indicated by the size or strength of the node for that memory. Brand image, or customers’ perceptions and associations with the brand, are represented by the links of the brand name node to other informational nodes in the model. 13 Associative Network Memory Model of Brand Equity In the network memory model, brand strategy involves first building awareness to provide an anchor point, then building linkages to positive, unique memory nodes to establish an identity that matches target customers’ needs in a cost-efficient manner. 14 MARKETING STRATEGY - MK42082E IERZURUMLU Associative Network Memory Model of Brand Equity Words in blue represent marketing strategies designed to build memory networks Sophisticated Ultimate driving machine Movie placement Advertising James Bond Ladies’ man Athletic Grandpa’s car Node size reflects ease of recall BMW Yuppie Product design Line thickness reflects tie strength between nodes Product attributes German 15 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which Brand is This? “Our brand is so strong that it can be identified from any square inch of any of our ads!”  Manager of a famous U.S. brand 16 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which brand is this? 17 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which brand is this? 18 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which brand is this? 19 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which brand is this? 20 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which brand is this? 21 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which brand is this? 22 MARKETING STRATEGY - MK42082E IERZURUMLU AWARENESS - Which brand is this? 23 Brand Equity Advantages of High Brand Equity 1. High loyalty 2. Price insensitivity 3. Strong associations – clear meaning 24 Branding Steps in building a brand 25 Brand Positioning by ………… benefits attributes 26 Brand Positioning by ………… beliefs 27 How to Build Strong Brands Brand Name Selection Desirable qualities May suggest benefits and qualities Easy to pronounce, recognize, and remember Distinctive Extendable Translatable for the global economy Capable of registration and legal protection 28 How to Build Strong Brands Brand Name Selection 29 MARKETING STRATEGY - MK42082E IERZURUMLU 30 Brand Development Strategy Product Category Existing Brand Name Existing New New Line Extension Brand Extension Multibrands New Brands 31 MARKETING STRATEGY - MK42082E IERZURUMLU 32 Levis’s brand extension- Levis Tailored Classics- did not work. Why? 33 Brand extension Advantages Leveraging existing brand awareness Reduced advertising expenditure Lower risk for consumers Enhancement of the core brand 34 Brand extension Advantages Leveraging existing brand awareness Reduced advertising expenditure Lower risk for consumers Enhancement of the core brand 35 Brand Development Strategy Risks RISKS OF LINE EXTENSIONS: – Brand name losing its meaning – Consumer confusion / frustration – Cannibalize other items in the line RISKS OF BRAND EXTENSIONS: – Dilute value of the brand – Confuse image/positioning of the main brand – A failed extension harming attitudes towards other products of the same brand – Threaten associations with the original brand 36 Brand Development Strategy Risks RISKS OF LINE EXTENSIONS: – Brand name losing its meaning – Consumer confusion / frustration – Cannibalize other items in the line RISKS OF BRAND EXTENSIONS: – Dilute value of the brand – Confuse image/positioning of the main brand – A failed extension harming attitudes towards other products of the same brand – Threaten associations with the original brand 37 MARKETING STRATEGY - MK42082E IERZURUMLU Brand Architecture Spectrum Single Master Brand Many Independent Brands House of Brands Endorsed Brands Sub-brands Branded House Many independent brands Many individual brands are linked to an endorsing brand to produce a supportive foundation Sub-brands have a closer link to the parent brand than do endorsed brands but behave similarly Single master brand used for all products P&G’s Tide, Cheer, All, Ariel, and Purex Courtyard by Marriott; Polo by Ralph Lauren Sony Walkman; Nestle Kit Kat GE’s airplane engines, appliances, and financing 38 Product & Service Decisions Packaging “Packaging involves designing and producing the container or wrapper for a product” Why would firms like to have unique or different packaging? 39 40 Product & Service Decisions Product Support Services Take care of customers and keep them happy, before, during, and after the sale. 41 Product Portfolio Decisions Product hierarchy Need Family Refreshment or thirst-quenching Product Family Drinks Product Class Soft Drinks Product Line Product Type Cola Item 43 Product Portfolio Decisions Product Portfolio (Product Mix) “Product portfolio (mix) consists of all the products and items that a particular seller offers for sale” 44 Product Mix Decisions Product Line “Product line is a group of products that are closely related” Baby, Feminine and Family Care Hair and Personal Care Health and Grooming Fabric and Home Care 45 Product Portfolio Decisions Product Portfolio Width “The number of product lines a company markets” Product Portfolio Length “The number of brands within each product line” Product Portfolio Depth “The number of versions offered for each product in the line” 46 MARKETING STRATEGY - MK42082E P&G Baby Care Width of the product mix Deodorants Hair Care Household Cleaners Oral Care Cosmetics …. Length of the product lines Laundry IERZURUMLU 47 Product Portfolio Decisions Benefits of Multiple Product Lines (Width) Diversifies risk Capitalizes on established reputations Increased growth and profits Economical resource usage Benefits of Greater Product Portfolio Length Increases sales/profits by further market segmentation Capitalizes on economies of scale Evens out seasonal sales patterns 48