Brand Mgt

Chapter-12

Brand Decisions

Monitoring Brands

Brands evaluated on the following parameters:

- Extent to which customer feels connected - Perceived popularity - Quality perception - Uniqueness of the brand - Value for money - Repurchase intent

Connect with the consumerDesign, produce and market cutting edge

products.These products need to be relevant to

price points in different market segments.Able to create aspirational brand image

across all market segments.

InnovationsThey are the corner stone of growth

strategies.New product introductions are a must for

growth.A dearth of innovations will lead to a

decline in the brand equity.

Consistent Brand Values

It is extremely important that the brand maintains its core values.

All media communication should also bear this in mind

Perceive competitive differentiation

The customer must be able to differentiate the brand from the rest.

Technological advancement and innovations gives your brand an edge.

Consistency in Communications

All mediums of communications that the brand uses must be consistent.

The brand represents the goodwill of the firm. It is a powerful differentiator in the market place. It provides credibility and respect among its

peers. A strong brand means a higher market share

and hence higher shareholder value. Strong brands attract the best talent and respect

among industry professionals.

Post 1995 Lessons from New Product Introductions

• Understanding local culture and the product adaptation.• In a price sensitive market like India, value for money is a

good positioning slot available to marketers• Make the product available in the lanes and by-lanes of the

country• International brand can make the firm gain an entry but

cannot guarantee success• Segmentation is a key to successful new product launches

in the Indian market too• For most consumer goods the Indian market has

leapfrogged several decades, and is today a mature market

11.2

Defining New ProductsNew to

Organization(30%)

……………

10% new to the world

20% new product lines

Changes within existing product line 70%

26% addition to existing product lines

26% revisions orimprovements

11% repositioning

7% cost reductions

11.3

What is a New Product?

• A new product which is perceived by the

customer as being new. It may be repositioning

of existing products or offering the existing

products at low prices or making improvements

in the existing product or adding new product

items to the existing product line.

• Only 10% of the new products arising out of

technological breakthroughs, can be really

termed as new, as they are the ones to which

market is not exposed.

Factors Contributing To New Product Development

• Most factors are related to external environmental

variables

• Most important internal factor is surplus capacity

that the firm may have at a given point of time.

• Changing Customer Lifestyles,leading towards a

change in the customers preferences and

expectations.

• Technological Changes in the industry and the

market.

• Government Policy11.4

New Product Development ProcessIdea Generation

Identifying Prospective Customers/Defining Target Market

Concept Development and Testing

Feasibility Analysis

Product Development

Test Marketing

Commercialization 11.5

New Product Development Stages• Idea Generation – The first stage is search for new ideas.

A casual search, spelling out the corporate mission & objectives for new products.

• Common Sources of New Product Ideasa) Changing customer needs & trends in consumer marketsb) Competitorsc) R & D scientistsd) Laboratoriese) Foreign markets @ mediaf) Employeesg) Trade channelsh) Top managementi) Developments in the marketj) Changes in demographics,geographic & psycho graphic

characteristics.

New Product Development Stages

• Stage II is identifying prospects or target customer groups.

• Stage III is of developing product concepts & testing them. The three key terms to understand this stage are –

a) Product Idea – A possible product that the company might offer to the market.

b) Product Concept – An elaborated version of the idea expressed in meaningful consumer terms.

c) Product Image – The particular picture that consumers acquire of an actual or potential product.

• Stage IV- Feasibility study involves –

a) Estimation of demand in the target market at different price levels.

b) Forecasting sales based on demand estimation & competitive analysis

c) Estimating the cost of serving the market segment.

d) Based on the cost & anticipated sales revenue,calculate break even price and sales volume.

New Product Development Stages

• Stage V – the product ideas in this stage now moves from the concept and design boards to R &D & manufacturing for physical development.

• Stage VI – Test Marketing is done on four parameters – trial,first purchase,adoption (repeat purchase), frequency & the volume bought each time.

• Stage VII –The launch plan must consider – timing,place, strategy

Internet and New Product Development

• The internet and web work especially well for online products as the net allows for quick sampling and feedback from customers.

• Use of internet for new product development requires:

a) Flexibility

b) Modular approach

c) Rapid feedback

11.6

Branding Decisions

a) Important strategy for differentiating a product from its competitors

The brand decisions a firm has to take are -

a) Manufacturer’s name, i.e., whether to have its own name

on all products; or

b) Marketing organization/ Distributors brand name; or

c) Adopt a combination of the two.

11.7

Manufacturer’s Brand Policy

• Issues(a) Family brand name

1. Useful when family name conjures positive image.

2. Costs of introduction can be reduced.

(b) Independent brand name

1. Help penetrate different market segments.

2. Ensure firm does not lose its original position.

11.8

Distributor’s or Store Brand Policy

• Useful for firms with no strength in marketing• For firms lacking financial resources to build a

brand, &• Competition for retail shelf is high• Distributor credible & enjoy customer

confidence

Risks in the strategy-Loss of control -Product premium may go to

distributor

-Cherry picking behaviour

-Lack of desired marketing

support.

11.9

Positioning

• Positioning “ is the act of communicating company’s offer so that it occupies a distinct and valued place in the customer’s mind.”

Ways to position the brand• Use situations• Tangible benefits• Linking to uses• Head on competitive positioning• Life style positioning• Benefits offered 11.10

Four Major Positioning Errors

1. Under Positioning: Buyer knows much less about the brand

2. Over Positioning: Too narrow perspective of the brand

3. Confused Positioning: Because of frequent changes in positioning statements

4. Doubtful Positioning: Buyers doubt the veracity of the claims made by the firm

11.11

How to Position the Brand

Perceptual Mapping involves the following:

(a) Study the ideal product perception

(b) Get the customers to rank these attributes in the order of importance to them

(c) Customers knowledge of the competitors brands

(d) How do the competitors brands fare on the ideal product map

11.12

Diffusion of an Innovation

Customers can be grouped as:

1. Innovators-2.5% of the total market

2. Early adopters-13.5% of the total market

3. Early majority and Late majority-68% of the total market

4. Laggards-16% of the total market11.13

Attributes:

Innovators: High on risk taking, open to change

Early adopters: Same characteristics as innovators, but take a little more time to buy and adopt a new product

Early majority and late majority:They wait for positive recommendations from innovators and early adopters

Laggards: Are averse to risk taking. Loyal to existing brands and products

11.14

Organization of New Products• There are various organizational alternatives to new product

development –• Formation of Venture Groups – People from different functions come

together to develop a new product. Such groups are called as venture groups.

• Marketing department – It is the task of product management group within the marketing group of the organization to develop new product.

• R &D Department – In some firms new product development is the responsibility of R & D.

• Planning Department• Internet and New Product Development- Companies that have used

the internet for new product development have compressed the time frame by following ideas-

• Flexibility• Modular approach• Rapid Feedback