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Õ Product Hierarchy
Õ Product-Mix Decisions
Õ Product-Line Strategies
Õ New product development in ASPAC
Õ Positioning & Repositioning
Õ Brand decisions

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Õ Product (or service) is the main
element of the marketing mix
Õ Therefore, need to determine the
Product Strategies before deciding on
the remaining marketing mix

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Õ Product needȄto satisfy a need e.g. feet protection
Õ Product classȄa family of products having similar
function e.g. all shoes
Õ Product lineȄa group of products with closely related
functions e.g. sports shoes
Õ Product typeȄproducts within a line having similar
form e.g. basket-ball shoes
Õ BrandȄa name representing a product or line e.g. Nike
Õ Item (Stock Keeping Unit)Ȅa unit item e.g. one pair of
Nike basket-ball shoe

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Decisions on the product mix (the number of
product lines and items in each line) that the
company may offer
Õ A single product
Õ Most firms started off as a single-product company
Õ Multiple products
Õ e.g. Creative Technology markets sound cards as well as
MP3 players
Õ A systems of products
Õ e.g. Nikon sells camera, lenses, filters & other options







Õ How many product lines should we have?
Õ 0
 A company offering a multi-
security solution offer a comprehensive range
of products, including portable and platform
mounted night vision systems and thermal
imaging systems, head- and helmet mounted
displays, laser rangefinders and fire control

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Õ How many product items in each line?
Õ Example: Both Œ
 and 
launched new
flavors in January 1999 to nibble away at each
otherǯs market share of a loaf estimated to be worth
about $80 million.

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1. Product line extension: add an item to the existing
product line
Õ Many FMCG companies introduced various sizes of
the same product e.g.mini-packs for travelers, extra-
large size for hospital
2. Product category extension: add a new item or line of
items for a company e.g.
Õ P&G have Vidal Sassoon, Head & Shoulders, Rejoice,
and Pantene in the same category


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3. Brand extension: Product category extension that
uses an existing brand name e.g.
Õ Nestle extended its Bear Brand condensed milk in
Thailand by introducing Bear Brand with Honey
Õ Kellogs thrives on Live extensions in India




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Õ Downward stretch by introducing lower range of the
products e.g.
Õ Sony & Aiwa
Õ Mercedes introduced the Dzbaby Merzdz to cater to the
upper class mid-sized range of the market
Õ Upward stretch by entering the high end of the
market e.g.
Õ Toyota introduced the Lexus and Nissan introduced the
Infiniti ( Not all are successful Ȃ Grand Vitara)

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Õ Two-way stretch by filling the whole line e.g.

Õ Toyota has the Starlet at the lower end; the Corolla
in the executive range; the Camry in the upper-
management range and the Lexus in the luxury
range

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Õ New products are critical to survival
Õ New-product development (NPD) is essential for
companies seeking growth
Õ It should be an on-going, well organized NPD
process having top-management support
Õ What is a new product? (see next slide)
Õ From a firm's perspective, a new product is a product
that it is unfamiliar in any way

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1. Products new to the world; usually revolutionary
products resulting from product innovation e.g
Õ When Creative Technology first introduced the
Sound-blaster
Õ When disposable cameras were first introduced
Õ When Seiko introduced the Seiko Kinetic Relay, a
watch that can go into suspended animation

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2. Products new to the firm
Õ Improvements to existing products e.g.
Õ Clini + introduced shampoo liquid and in later
introduced 6 
  
 shampoo
Õ Additions to existing lines e.g.
Õ Later it introduced the 6 
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hair
conditioner based shampee
Õ Costs reductions and re-positionings

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‰Logitech, the world's biggest maker of computer
mice, has come up with a mouse that allows the
user to feel what is seen on the
screen. This mouse [is] called the
iFreeMouseMandz

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First coined by Creativesǯ Sim W H who was referring

to the marriage between the PC and home
entertainment
Õ Creative Multi-Speaker Surround (CMSS) uses
seven audio channels

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Õ Branding is the process of creating that identity.
Õ Buyers respond to branding by making repeat
purchases because they identify the item with the
name of its producer.
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 name, term, sign, symbol, design, or some
combination that identifies the products of a firm
while differentiating them from the competitionǯs

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  Consumer awareness and
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  :
identification of a brand.

: Consumer reliance on previous

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experiences with a product to choose that product
again.

   Consumer refusals of

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alternatives and extensive search for desired
merchandise.

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 : item characterized by plain
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label, with no advertising and no brand name
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brand name owned by a manufacturer or other
producer

: brand name placed on products
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marketed by wholesalers and retailers

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 national brands that are sold
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exclusively by a retail chain

: brand name that identifies several
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related products
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: unique brand name that
identifies a specific offering within a firmǯs product
line and that is not grouped under a family brand

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   added value that a respected, well-
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known brand name gives to a product in the
marketplace.
Õ Brand equity increases the likelihood that consumers
will recognize the firmǯs product when they make
purchase decisions
Õ A strong brand equity can contribute to buyersǯ
perceptions of product quality
Õ Branding can also reinforce customer loyalty and
repeat purchases

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 : Marketing professional charged with
planning and implementing marketing strategies and
tactics for a brand

 

 Product management

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 :
system in which a category managerȄwith profit and
loss responsibilityȄoversees a product line.

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 part of a brand consisting of words
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or letters that form a name that identifies and
distinguishes a firmǯs offering from those of its
competitors
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symbol or pictorial design that
identifies a product
 
: branded name that has become a
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generically descriptive term for a class of products
(e.g., nylon, aspirin, kerosene, and zipper)

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legal protection which confers the
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:
exclusive right to user brand name, trade mark, and
any slogan or product name abbreviation

 visual cues used in branding to create

Õ 
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an overall look
Õ The distinctive shape of Philips light bulbs and the
McDonaldǯs arches provide an example of trade dress

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Õ Potentially an acute problem for international
marketers
Õ An excellent brand name or symbol in one country
may prove disastrous in another
Õ Trademarks that are effective in their home countries
may fare less well in other cultures

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Õ A package serves three major objectives:
Õ Protection against damage, spoilage, and pilferage
Õ Assistance in marketing the product
Õ Cost effectiveness

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Õ Label
Õ Universal Product Code (UPC)

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  application of a popular
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brand name to a new product in an unrelated
product category

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   refers to new sizes, styles, or
related products

  practice allowing other

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 :
companies to use a brand name in exchange for
a payment

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Õ As a firmǯs offerings enter the maturity and decline
stages of the product life cycle, it must add new items
to continue to prosper
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Õ %   : consumersǯ perceptions of a
productǯs attributes, uses, quality, and advantages
and disadvantages in relation to those of competing
brands

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: a loss of sales of the current

product due to competition from a new product in
the same line

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Õ    : Stages that consumers go
through in learning about a new product, trying it,
and deciding whether to purchase it again.
Õ Awareness
Õ Interest
Õ Evaluation
Õ Trial
Õ Adoption or rejection

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 : People who purchase new
products almost as soon as the products reach the
market

: Process by which new goods

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or services are accepted in the marketplace

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Õ Categories of Adopters Based on Relative Times of
Adoption

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Õ Substantial benefits may be obtained by locating the
likely first buyers of new products (innovators and
early adopters)
Õ Suggestions for modifying the product may be
obtained from these individuals
Õ Acceptance or rejection of the innovation by
innovators and early adopters can help forecast
sales

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Õ Characteristics of a product innovation that
influence its adoption rate include:
Õ Relative advantage
Õ Compatibility
Õ Complexity
Õ Possibility of trial use
Õ Observability

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Õ New-Product Committees

Õ New-Product Departments

Õ Product Managers

Õ Venture Teams
Õ Task forces

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Õ New product development process: six stages through
which new product ideas progress before being
introduced to the overall market

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New product ideas come from many sources
including:
Õ Sales force, Customers, Employees, R&D specialists,
The competition, Suppliers, Retailers, Independent
inventors

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Screening separates ideas with commercial
potential from those that cannot meet company
objectives
Õ Checklists of development standards can be helpful
at this stage

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The business analysis consists of assessing the new
productǯs market potential, growth rate, likely
competitive strengths, and compatibility of the
proposed product with organizational resources
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Õ 
Converting an idea into a physical product
Õ Requires interaction among many of the firmǯs
departments
Õ Prototypes may go through many changes

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Test marketing: Introduction of a trial version of a new
product supported by a complete marketing campaign
to a selected city of television coverage area
Õ Some firms skip this stage, moving directly to full-scale
commercialization

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In this stage, the firm establishes marketing strategies,
and funds outlays for production and marketing
Õ The sales force, marketing intermediaries and potential
customers are acquainted with the new product

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  responsibility of
Õ % 

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manufacturers and marketers for injuries and
damages caused by their products

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Õ {
  - all products sold under a brand
Õ {
   -set of all brands and brand lines
a company offers in a product category; used to
maximize equity (BR, Gap, ON)
Õ %   - products similar in price, TA, or
distribution
Õ %   - all product lines
Õ {
  - all brand lines

 

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Õ Aggregate market factors - size, growth, stage, profits
Õ Category factors - competition, bargaining power of
buyers & suppliers
Õ Environmental factors - technological, economic,
political, social

 


  

 
   


 


Luxury (MB, Lexis) Jaguar, LRover
Up-market (BMW,Cad) Volvo, Lincoln,
Astin Martin
Mid-price (HTN, GM, Ford, Mercury,
Chrysler) Mazda


 
Õ Flankers - to create stronger POP with competition so
flagship brand keeps desired position (Philip Morrisǯ
use of discount Basic to protect Marlboro hi $)
Õ Cash cow - milked till dead (Trac II)
Õ Low end entry or hi end prestige - sub brands used to
leverage on basis of price or quality (BMW Z3, 700
series)
 
Õ Corporate - GM
Õ Family - Buick
Õ Individual - Park Avenue
Õ Modifier (model) - Ultra


Õ %  
 - individual positioning (P&Gs Ariel, Tide,
Dash detergents)
Õ
 
 - cross branding (Renault)
Õ 
 
 - one name for a group (Green Giant
vegetables)
Õ ½ 

 - one brand for products in many
markets (Canon copiers, cameras, equipment)
Õ   
 - family with different names (Calvin Kline
perfume, clothing lines)
Õ 0  
 - diverse products & brands (General
Motors cars)
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1. Common product attributes, benefits (Quality,
innovation)
2. People and relationships (customer orientation)
3. Values and programs (social resp)
4. Corporate credibility (expertise, trust, likeability)
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corporate brands (Kellogg)
house brands (Frosted Flakes
  

duel brands (equal prominence)
endorsed brands (Chevy Blazer)
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mono brand (Absolute)
furtive brand (identity secret; Turning Leaf)

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1. Single entity: Federal Express
2. Brand dominance: Marlboro (PM)
3. Equal dominance: Nissan Maxima
4. Mixed dominance: Bosch/ Blaupunikt
5. Corporate dominance: Xerox


 
 





 


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Characterize Mercedesǯ Benz brand hierarchy. How
would you improve the companyǯs branding strategy?
Characterize Nissanǯ hierarchy. How does their strategy
differ from that of MBZ?
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1. New brand name
2. Apply existing brand name (TracIII)
3. Combination of new with existing brand name
(brand extension)
Õ " - new flavor, Absolute citron
Õ

#" - Swiss Army luggage
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Crayola crayons paint, clay kid craft
Swiss Army knife luggage adventure
Mont Blanc pens watches luxury
Billabong surfboard snow & all sports
skate boards

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Owning an association in the consumerǯs mind: Band-Aid,
Alka-Seltzer, Jell-O, Crayola, Vaseline
Difficult to extend directly to other product categories.
Directions for leveraging master brands are:
 "
 to give new element (DuPont Stainmaster
carpet)
  "
 adds improved element (Everready
Energizer batteries)
# {
  fortifies master w/co-branding
$ {
   to new category
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Honda lawn mowers
Visa travelerǯs checks
Harley Davidson wine coolers
Kissan Leather accessories