Product, Services, and Branding Strategies

Chapter 9

Product Strategy
Product strategy begins with a strategic vision that states where

a company wants to go,

how
why

it will get there, and

it will be successful.

What is a Product?

Products, Services, and Experiences

Market

offerings, pure tangible goods, pure services, experiences

Levels of Product and Services

Core

benefit, actual product, and augmented product

Product Classifications
Typical products are of two types: * Consumer products * Industrial products
And we will concentrate mostly on consumer products here.

Types of Consumer Products

Convenience Shopping Specialty Unsought

Frequent purchases bought with minimal buying effort and little comparison shopping Low price Widespread distribution Mass promotion by producer

Product Classifications (contd.)

Types of Consumer Products

Convenience Shopping Specialty Unsought

Less frequent purchases requiring more shopping effort and price, quality, and style comparisons. Higher than convenience good pricing Selective distribution in fewer outlets Advertising and personal selling by producer and reseller

Product Classifications (contd.)

Types of Consumer Products

Convenience Shopping Specialty Unsought

Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity High price Exclusive distribution Carefully targeted promotion by producers and resellers

Product Classifications (contd.)

Types of Consumer Products

Convenience Shopping Specialty Unsought

Little product awareness and knowledge (or if aware, sometimes negative interest) Pricing varies Distribution varies Aggressive advertising and personal selling by producers and resellers

Product and Service Decisions Key Decisions

Product attributes
Quality,

Individual Product Product Line Product Mix

features, style and design

Branding Packaging Labeling Product support services

Product and Service Decisions (contd.)

Key Decisions

Product line length

Line

Individual Product Product Line Product Mix

stretching: adding products that are higher or lower priced than the existing line Line filling: adding more items within the present price range

Product and Service Decisions (contd.)

Key Decisions

Product line width:

Individual Product Product Line Product Mix

number of different product lines carried by company Number of different versions of each product in the line

Product line depth:

Product line consistency

Branding

Brand is something emotional, psychological having an added dimension created over the years often with the help of creative and imaginative advertising. brands are not just products, but creating, maintaining, protecting, and enhancing products. A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. Marketing is at its peak when powerful brands are created

Brand Equity is the positive differential effect that the brand name has on customer response to the product or service. Provides:

More brand awareness and loyalty Basis for strong, profitable customer relationships

Services?
Any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.

Services are a form of products.

Services: Features
Intangibility

Consumers look for service quality signals Inseparability Services cant be separated from providers Heterogeneity Difficult to standardize, harder to control Design, Production and Delivery Perishability Services cant be inventoried for later sale

Service Marketing Pyramid

Company
In (E tern na al bl M in ar g Pr keti om ng ise s)

1. External Marketing:
Making Promises by Company to Customers Traditional Elements: Providers Advertising, Sales promotions Expansion: Communicate the Promise to Customers: Training of Service Employees Design & decor of facility offered Service Process

3. Interactive Marketing:
Keeping Promises by Providers (employees or third-party) to Customers Occurs when: Customers interacts with company and the Service is produced & consumed Crucial from Customers point of view!

g i i s) ) tin s) e e ke ses ar ar m s ar mis M om o al Pro P P rn er i er i te king Ex ak a ak ( ( (M

Technology

Customers Interactive Marketing (Keeping Promises)

2. Internal Marketing:
Enabling promises. A company effort to providers ensuring proper: Skills, Abilities, Tools, and

Motivation to deliver

New-Product Development & Product Life-Cycle Strategies

Chapter 10

15

Strategic Reason for Product Development

In a competitive market where businesses have easy access and profits are worth while pursuing, the market will be lively & active but at the end of the day the profit will decline and the market will be less attractive also consumers have different and ever-changing tastes & habits that can quickly change the demand for a product to overcome these, like any other businesses banks need to continuously develop products, through either of the ways:
adding

new services to the range and repackaging services or extending existing services

recombining modifying some

combination of the above

New Product Development

Development of original products, product improvements, product modifications, and new brands through the firms own R&D efforts.

New Product Development Strategy New products can be obtained via acquisition or development. New products suffer from high failure rates. Several reasons account for the failure.

Usual Process of Product Development

Stage 1: Idea Generation

Internal idea sources:

R&D Customers, competitors, distributors, suppliers

External idea sources:

Stage 2: Idea Screening

Product development costs increase substantially in later stages. Ideas are evaluated against criteria; most are eliminated.

Stage 3: Concept Development and Testing

Product concepts provide detailed versions of new product ideas. Concept tests ask target consumers to evaluate product concepts.

Usual Process of Product Development

Stage

4: Marketing Strategy Development Strategy statements describe:

The target market, product positioning, and sales, share, and profit goals for the first few years. Product price, distribution, and marketing budget for the first year. Long-run sales and profit goals and the marketing mix strategy.

Stage 5: Business Analysis Sales, cost, and profit projections

Stage 6: Product Development Prototype development and testing Stage Stage

7: Test Marketing 8: Commercialization

Product Life-Cycle Strategies

The Typical Product Life Cycle (PLC) Has Five Stages
Sales and Profits (Tk.) Sales

Profits

Time Product Development Losses/ Investments (Tk.) Introduction Growth Maturity Decline

But NOT all products follow this cycle!!

Product Life-Cycle Strategies (contd.) PLC Stages

Product development Introduction Growth Maturity Decline

Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative

Product Life-Cycle Strategies (contd.) PLC Stages

Product development Introduction Growth Maturity Decline

Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition

Marketing Strategies: Introduction Stage

Product Offer a basic product Price Use cost-plus basis to set Marketing Objectives Create product awareness and trial Distribution Build selective distribution Advertising Build awareness among early adopters and dealers/resellers Sales Promotion Heavy expenditures to create trial

Product Life-Cycle Strategies (contd.)

PLC Stages

Product development Introduction Growth Maturity Decline

Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition Product/services are fine-tuned

Marketing Strategies: Growth Stage

Product Offer product extensions, service, warranty Price Penetration pricing Marketing Objectives Maximize market share Distribution Build intensive distribution Advertising Build awareness and interest in the mass market Sales Promotion Reduce expenditures to take advantage of consumer demand

Product Life-Cycle Strategies (contd.) PLC Stages

Product development Introduction Growth Maturity Decline

Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline

Marketing Strategies: Maturity Stage

Product Diversify brand and models Price Set to match or beat competition Marketing Objectives Maximize profit while defending market share Distribution Build more intensive distribution Advertising Stress brand differences and benefits Sales Promotion Increase to encourage brand switching

Product Life-Cycle Strategies (contd.)

PLC Stages

Declining sales

Product development Introduction Growth Maturity Decline

Low cost per customer

Declining profits Laggards are targeted Declining competition

Marketing Strategies: Decline Stage

Product Phase out weak items Price Cut price Marketing Objectives Reduce expenditure and get the most out of the brand Distribution Use selective distribution: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyalists Sales Promotion Reduce to minimal level