Product and Brand Management - Session 2

8/2/2019 Product and Brand Management - Session 2

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Product and Brand

ManagementSession 2

Category, Competitor and Customer Analysis

Francis Rodrigues


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Scope

Topics Covered:

Introduction to Product Management

Role and Operations of Product Managers in

Marketing Product Analysis Category/Customer/Competitor

Brand Vs. Product, Brand Elements

Brand Identity

Brand Equity

Brand Building Strategies


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Category Attractiveness Analysis


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Aggregate category factors

Category Size

Category Growth

Stage in product Life Cycle Sales Cyclicity

Seasonality

Profits


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Attractiveness of Market Variables

Attractiveness

High Low

Market Size + -

Market Growth + -

Sales Cyclicity - +

Sales Seasonality - +Profit Level + -

Profit Variability - +


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Category Attractivenessover the Product Life Cycle

Stage ofproductlife cycle

Categorysize

Categorygrowth

Categoryattractiveness

Introduction

Small

Low

Low

Growth

Moderate

High

High

Maturity

Large

Low

Low/high

Decline

Moderate

Negative

Low

Sales

Time

Introduction

GrowthMaturity

Decline


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Category Factors

Threat of new entrants

Bargaining power of buyers

Bargaining power of suppliers

Current category rivalry

Pressure from substitutes Category capacity


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Five Forces Analysis

Rivalry

New Entrants

Suppliers Buyers

Substitutes

Michael Porters Five Force Model


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Industry Concentration Measures

1. The share of the largest firm

2. The combined shares of the three largest firms

3. The number of firms with at least x percent of themarket (e.g., 1 percent)

4. The share of the largest firm divided by the share of thenext three largest competitors

5. Herfindahl-Hirschman Index (HHI):

- The Sum of Squared Shares of the Firms in the

Industry- Use Thresholds: below 1000; 1,000 to 1,800; above

1,800


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Buyer Bargaining Power is High When:

Product bought is a large percentage ofthe buyers cost.

Product bought is undifferentiated

Buyers earn low profits

Buyer threatens to backward integrate

Buyer has full information

Substitutes exist for the sellers product orservice


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Supplier Bargaining Power is High When:

Suppliers are highly concentrated, that is,dominated by a few firms

There is no substitute for the product supplied

Supplier has differentiated its product or built inswitching costs

Supply is limited


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Major Characteristic of Categories

Exhibiting Intensive Rivalries

Many or balanced competitors

Slow growth

High fixed costs

Lack of product differentiation

Personal rivalries


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Impact of Category Factorson Attractiveness


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Environmental Factors

Technological

Political

Economic Regulatory

Social


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Typology of Technical Developments

* Includes agronomic and biomedical developments.


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Conceptualizing Political Risks


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Business Implications of SocialChanges

The Shrinking Day

Connected Individual

Body + Soul


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Category to Competitor Analysis

Define the competitive set Boundary

Industry Analysis Macro level

Competitor Analysis Micro level


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Competitor Analysis System

What are they going to

do?

Differential

competitor

advantage analysis

i.e. Who has thecompetitive product

advantage?

Key questions:

- Who are they?

- What are the

competing product

features?

- What do they

want?

- What is their

current strategy?

Primary dataSecondary data


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Key Questions to Ask

Do you know?

What are the Capabilities of competitors?

What are the Competitors Objectives?

What are the Current Strategies being usedand how successful have they been?

What are their likely Future Strategies?


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Secondary Sources of CompetitorInformation

Secondary data

Customer

communications

Internal

sources

Local newspapers

Annual reports

Patent filings

Business press

GovernmentElectronics

databasesNews releases

Trade associations

Promotional literature

Internet

Trade press

Consultants


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Primary Sources of CompetitorInformation

Primary data

Consultants/

Specialized

Firms

Investment

bankers

Employees

Customers

Suppliers

Sales force


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Other Sources of Information

Help-Wanted Ads

Reverse Engineering

Monitoring Test Markets

Hiring Key Employees

Plant Tours


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Information Sources with EthicalConsiderations

Aerial Reconnaissance

Buying/Stealing Trash (Garbology)

Printers

Phony Want Ads


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Step1: Assess CompetitorsObjectives

Three Categories

Market share or profit

Issues to considerOwnership structure

Operating philosophy and procedures

Country of origin


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Step 2: Assess CompetitorsCurrent Strategies

Assess competitors Marketing Strategy

Target Market Selection

Core Strategy (Value-chain comparison)Implementation (Supporting Marketing Mix)

Pricing

PromotionDistribution

Product/Service Capabilities: Product Features Matrix


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Value Chain

Service

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Marketing

and Sales

Operations

Outbound

Logistics

Inbound

Logistics

Support

Activities

Primary Activities


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Step 2: Assess Current Strategies(Contd)

How to Assess Competitors Strategies

Two key elements of a strategy:

Segments appealed to

Core strategyFor Industrial Products: Sales literature

For Consumer Products: Media Tracking (SOV)

Marketing Mix variables: Ask Distributors, Salespeople,Customers


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Step 2: Assess Current Strategies (contd)

Assessing Competitors Technological Strategy

1. Technology selection or specialization

2. Level of competence

3. Sources of capability: internal versus external

4. R&D investment level

5. Competitive timing: initiate versus respond

6. R&D organization and policies


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Step 2: Assess Current Strategies (contd)

Four Basic Technological Strategies

1. First to Market

2. Second to Market

3. Late to Market or Cost Minimization

4. Market Segmentation


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Step 3: Assess Competitors

Capabilities

Ability to conceive and design

Ability to produce

Ability to market Ability to finance

Ability to manage

Wh t t d ith ll th i f ti ?


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What to do with all the information?(Differential Advantage Analysis)

Nerolac ICI AsianPaints

SherwinWilliams

Nippon

Commitment toPaints business 2 3 1 4 5

Financial strength

5 1 3 2 4

Brand awareness

3 2 1 4 5Management ability

3 2 1 5 4

Highest = 1

Lowest = 5

Market

Factors

Simplified Competitive Analysis: Paints (Indian Market)


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Step 4: Assess A Competitors Will and

Future Strategy

Questions to assess a competitors will

- How crucial is this product to them?

- How visible is the commitment to the market?

- Who is involved?

To Figure out Future Strategy

Forecast with historical data

Simulation with historical data

Game Theory


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A Competitive Conjecture Process

Our

total

outcome

Second period

First period

Should we cut price?


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In summary, you need to know

Major Competitors Objectives

Major Competitors Strategies

Target Market

Core Strategy

Major Competitors Capabilities


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Customer Analysis


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What we need to know

Who buy and use the product What consumers buy and how they use it. Where consumers buy

When consumers buy How consumers choose Why the prefer a product

How they respond to marketing programs Will they buy it (again)?


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What we need to know

Who Target for product development andcommunication

What Consumer values, product development Where Distribution strategy

When

Distribution and communication strategy How Product development, Communication andPromotion strategy

Why Product developing, product strategy,brand strategy.

How Communication, promotion strategy Will Brand equity, promotion programs.


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Who buy and use the product

Buyer VS users

Initiator who identify the need for product

Influencer who has informational or

preference inputs to the decision.

Decider who makes the final decisionthrough budget authorization.

Purchaser - who makes the actual purchase. Userwho actually use or consume the

product


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Buying Roles and Needs/Benefits

Sought


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Basis for describing consumers

1. Demographic (age, sex, geographicallocation, and stage of life cycle)

2. Socioeconomic ( income, education,

occupation, social class)3. Psychographic and values or Lifestyle (sports,

traveling, art, music, etc.

4. Personality


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Major Segmentation Variables forConsumer Markets

Geographic Region, city, density, climate

Demographic Age, gender, family size, income, occupation,

education, religion, race, nationality, Psychographic

Social class, lifestyle, personality Behavioral

Occasions, benefits, user status, usage rate, loyalty

status, attitude towards product,.


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Major Segmentation Variables forBusiness Markets

Demographic Industry, company size, location

Operation variables Technology, user/non-user status, capabilities

Purchasing approaches Purchase-function organization, power structure, Nature of

existing relationship, general purchasing policies, purchasingcriteria.

Situation Factors Urgency, specific application, size of orders

Personal Characteristics Buyer-seller similarity, attitude towards risks, loyalty


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What customer buy and how theyuse it

Benefits:

Product benefits, consumer values.

Purchase pattern

Recency, Frequency, Monetary value Product assortment

Brand switching

Use

How, with what else?


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Potential customers

Unaware

Aware

Accepting willing to use

Attracted positive attitude

Active

buy the product

Advocate buy, loyal, actively encourage others to buy


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Where consumer buy

Things to consider:

Convenience

Price advantages

Reliability

Expected after sales service


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When consumer buy

Things to consider:

Seasonality

Needs

Purchasing power

Shelf-life of products

Consistency of supply

Price consistency or price expectation


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How Customers Choose

Finding how consumer choose a product (from manyproducts and brands) in a category?

Multiattribute Model Questions

1. Which attributes do customers use to define a product?

2. What are the perceptions of the products on theattributes?

3. What are the importance weights?

4. What decision rule is used to combine the information?

Compensatory Noncompensatory


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Bank Perceptual Map

Courteous

personnel

Convenient

ATM locations

A

D

B

C

E


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Why consumer prefer a product

Customer value of a brand composes of 3 basicelements:

1. Importance of the usage situation

2. Effectiveness of the product category in the situation

3. Relative effectiveness of the brand in the situation

Sources of Customer Value Economic

Functional

Psychological: Brand Equity


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Measuring Brand Equity

1. Awareness

2. Associations

3. Attitude

4. Attachment


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Manifestation of customer value

Signs of the value of a product.(NOTE: Value can more or less than price) Price Price sensitivity Satisfaction Complaints or compliments Word of mouth Margin or profit contribution

Sales Competitive activity Repeat purchase rate

A i h V l f h P d


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Assessing the Value of the ProductCategory

1. Determine the uses of the product

2. Estimate the importance of the uses

3. List competing products for the uses

4. Determine the relative effectiveness ofthe product category in each usagesituation

A i th V l f th


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Assessing the Value of theBrand/Product

Direct Ratings

Constant Sum Ratings

Graded Pair Comparison

Conjoint Analysis

P i d C i E l S ft


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Paired Comparison Example: SoftDrink Preference

H d t k ti


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How consumers respond to marketingprograms

Methods for assessing sensitivity:

1. Expert judgment

2. Customer survey-base methods.

3. Experiments; controlled setting or actualmarket observation.

4. Analyses of past data

Will b th d t


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Will consumers buy the product(again?)

To estimate expected repeat purchase in orderto forecast sales and design marketing mix.

2 major factors:

1. Satisfaction Expectation of performance / quality

Perceived performance / quality

The gap between expectation and performance

2. Intention


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Consumer Segmentation

Why?

Consumers are different. Each individual isunique.

Consumers can be grouped somehow, whohave something in common or who prefer similarthings.

Yet tailor made for individuals is too costly


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Desirable criteria for segments

1. Identifiable

2. Sizable

3. Reachable

4. Respond differently

5. Coherent

6. Stable


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Methods for Market Segmentation

Cluster analysis Collect data about descriptors and behaviors

variables from a sample of customers and then formgroups.

Tabular analysis Categorize based on consumer response.

Regression analysis

Use model, e.g. Usage = a + bX1 + cX2 + dX3

Latent class analysis Brand switching data


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Methods for market segmentation

Descriptive Purpose

Cluster Analysis

Tabular Analysis

Prescriptive Purpose

Regression Analysis: Individual-based

Latent Class Analysis: Segment-based

Cl A l i Ill i


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Cluster Analysis Illustration


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Summary : What we need to know

Who buy and use the product What consumers buy and how they use it. Where consumers buy

When consumers buy How consumers choose Why the prefer a product

How they respond to marketing programs Will they buy it (again)?

Product and Brand Management - Session 2

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