Product Development

PROJECT REPORT ON BRANDING STRATEGY & PRODUCT DEVELOPMENT PRODUCT What Is a Product ? Products can be considered . . . Tangible – physical entity or service Extended – tangible product plus a whole cluster of services that accompany it Generic – the essential benefits the buyer expects to receive from the product A product is anything that can be offered to a market to satisfy a want or need. Products that are marketed include physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

BRAND What is Brand? A brand represents the holistic sum of all information about a product or group of products. This symbolic construct typically consists of a name, identifying mark, logo, visual images or symbols, or mental concepts which distinguish the product or service. It is useful for the marketer to think of this as a set of aligned expectations in the mind of its stakeholders -- from its consumers, to its distribution channels, to the people and companies who supply the products and services. It is a name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is

trademark. A brand may identify one item, a family of items, or all items of that seller. A brand is a product from a known source or organization. The name of the organization can also serve as a brand. The brand value reflects how a product's name, or company name, is perceived by the marketplace, whether that is a target audience for a product or the marketplace in general (clearly these can have different meanings and therefore different values). It is important to understand the meaning and the value of the brand (for each target audience) in order to develop an effective marketing mix, for each target audience.

PRODUCT DEVELOPMENT AND RELATED BRANDING STRATEGIES A good marketing strategy helps the product attain the market position that the management desires. A complete statement of marketing strategy for a product consists of seven parts: a) Statement of objective b) Selection of strategic alternatives c) Selection of target customers d) Choice of competitor targets e) Statement of the core strategy f) Description of supporting marketing mix. g) Description of supporting functional programs Hierarchy of Objectives: Company mission/vision Corporate Objective Corporate Strategies Divisional Objectives Divisional Strategies Product/Brand Objectives Brand Strategies

Program Objectives Tactics Branding Strategies and Product Brand Strategies go hand in hand and are based on the company’s vision and strategic decision. The product is developed keeping in mind the objectives, vision, mission and strategic intent of the company. And to supplant and supplement the growth of the product, the branding strategy is carried out accordingly. An organization has a variety of objectives with mission or vision and ranging from corporate to product. It’s rare that managers employ a growth objective without some consideration of its impact on the product’s profits. One of the important objectives set for a product is cash flow. But this is dependent on the market share and market penetration. These requirements in turn are dependent on the way consumer associate themselves with the product or in other words, there is minimum noise between product identity and product image. Now, what plays an instrumental role in the achievement of this during the product development is the “branding strategy”.

Igor Ansoff Strategy PRODUCTS

MARKETS

Present Present

New

Market Penetration

Market Development

New Product Development

Diversification

The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the Branding strategy with respect to the product. And branding strategy depends on many variables which are described below: Market penetration Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. Market penetration seeks to achieve four main objectives: • Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling • Secure dominance of growth markets • Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors • Increase usage by existing customers – for example by introducing loyalty schemes A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Market development Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy, including: • New geographical markets; for example exporting the product to a new country • New product dimensions or packaging: for example

• New distribution channels • Different pricing policies to attract different customers or create new market segments Product development Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.

The Product Life Cycle and Related Decisions STAGES Introduction

Growth

Maturity

Decline

Sales Volume

Should the product be introduced

Should the product strategy be changed

Should the product be deleted

Each stage in a product life cycle calls for a different kind of strategy. The points below throw light on the relevance of various factors during the four stages introduction, growth, maturity and decline.

Introduction Stage of the PLC Summary of Characteristics, Objectives, & Strategies

Sales

Low sales

Costs

High cost per customer

Profits

Negative

Marketing Objectives

Create product awareness and trial

Product Strategy

Offer a basic product

Price Strategy

Use cost-plus

Distribution Strategy

Build selective distribution

Advertising Strategy

Build product awareness among early adopters and dealers

As we can see in the introduction stage, the product strategy is to offer the basic product using cost plus aspect. The strategy for distribution is selective and the company aims to build product awareness among early adopters and dealers for the product to get well registered with the targeted segment.

Growth Stage of the PLC Summary of Characteristics, Objectives, & Strategies

Sales

Rapidly rising sales

Costs

Average cost per customer

Profits

Rising profits

Marketing Objectives

Maximize market share

Product Strategy

Offer product extensions, service, warranty

Price Strategy

Price to penetrate market

Distribution Strategy

Build intensive distribution

Advertising Strategy

Build awareness and interest in the mass market

In the growth stage, the product strategy is to offer product extensions, service and warranty to reward existing customers. Similarly the price is such that it helps the product penetrate deeper into the market and establish itself. The advertising people aim at building awareness and interest mass market.

Maturity Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales

Peak sales

Costs

Low cost per customer

Profits

High profits

Marketing Objectives

Maximize profit while defending market share

Product Strategy

Diversify brand and models

Price Strategy

Price to match or best competitors

Distribution Strategy

Build more intensive distribution

Advertising Strategy

Stress brand differences and benefits

The idea here is brand and model diversification. The company tries to match its competitors in terms of price. The distribution is made more and more intensive. The advertising department stresses brand differences and benefits to make its products stand out in the market. This is also a stage where the company can make maximum profit out of its product.

Decline Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales

Declining sales

Costs

Low cost per customer

Profits

Declining profits

Marketing obj

Reduce expenditure and milk the brand

Product Strategy

Phase out weak items

Price Strategy

Cut price

Distribution Strategy

Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers

Advertising Strategy

During the decline phase, the company gradually phases out the weak items and cuts price. Distribution too is selective. The company gets rid of all unprofitable outlets and focuses on the remaining profitable ones to generate whatever income it can. The company, through advertising, comes down to the level which is needed to retain hard core loyal customers.

WHY BRANDING STRATEGY IN PRODUCT DEVELOPMENT?  Provides a framework for properly selecting markets and product ideas and

targeting the customer accordingly  Customers and potential customers are identified  Map company position against competitors in various dimensions to provide insights and help develop strategy  Work with the executive team to assess markets, competition, competitive strengths, and product lines and design the communication accordingly and use integrated communication. Dimensions of Branding Strategy Product Positioning The idea of 'positioning' a product or service emerged in the early 1970's when Al Ries and Jack Trout wrote a series of articles called 'The Positioning Era' for Advertising Age. “….positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect.” Placing a brand in the market where it will have a favorable reception compared to competing products. It is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind. "Positioning is the attempt to control the public's perception of a product or service as it relates to competitive products."

Generic Positioning Strategies  Our product is unique  e.g. Raffles Hotel (oldest hotel); Westin Hotel (tallest hotel)  Our product is different  Listerine (kills germs)  Amex Blue credit card (6-month rate of 15.9% vs the market rate of 24%)

 Our product is similar Approaches to Positioning  By attributes  e.g. Singapore Airlines (first class comfort)  By benefits  e.g. Citibank Credit Card (7/24 availability)  By price/quality e.g. Proton  By usage or application e.g.100Plus (fluid replenishment in sports)  By users e.g. Johnson Baby Shampoo; J&J Affinity Shampoo (hair conditioner for women)  By product class  e.g. Camay soap (with bath oils—not just soap)  By competitors e.g. Avis against Hertz

Competing Brands      

Company competes with its own brand Multiple brands overall sales has higher market share than one brand Cannibalism can occur New brand is improved product Old brand dies e.g. Gillette Atra, Sensor, Mach 3 after new brand is established

Private label  Product manufactured under another firm’s brand name  House brands owned by wholesaler or retailer

Strategic Branding in Product Development A Brand is more than just a product name: a brand is a covenant with the consumer. It must convey a series of expectations, a certain predictability which we call "Brand Character." Developing a brand strategy can be one of the most difficult steps in the marketing plan process. It's often the element that causes most businesses the biggest challenge, but it's a vital step in creating the company identity. Your brand identity will be repeatedly communicated, in multiple ways with frequency and consistency throughout the life of your business. To begin the development of your brands strategy you must have an understanding of these four marketing components: • Primary Target Customer and/or Client • Competition • Product and Service Mix • Unique Selling Proposition By identifying these components of your marketing plan you have created the basis for crafting your brand strategy. An effective branding process will create a unique identity that differentiates you from the competition. That is why it's often deemed as the heart of a competitive strategy. The Delphi Process: This process of branding a product was outlined by Jacques Chevron in 1985. Our branding approach is based on a 4 step process: • Determine the Brand's character • Organize for character consistency • Develop a brand strategy • Implement the strategy

Products may change, advertising can evolve, but brand character must remain steady for a long period of time to have a chance to be recognized. For this reason it is essential that the brand's character be rooted in the values and beliefs of the corporation and of its long term players. The objective of this first step is to discover the perennial temperament and character traits that will provide continuity to the brand and to elaborate a Brand Character Statement that will embody what the brand stands for. Writing a Brand Character Statement is more art than science, includes more shades of gray than black and white, and owes more to the compromises of diplomacy.

This step is also essential to the success of the project: There needs to be a procedure to ensure that the brand's character is understood and respected around the world by anyone who speaks for the brand. This is accomplished by the institution of a well publicized review and approval process which will verify that the brand's messages consistently conform to the brand's character statement. This process is led by a senior corporate officer who acts as the "Brand Parent." The Brand Parent will also have the overall responsibility for explaining what the Brand Character Statement is and for training people on its use. The Brand Parent should preferably not be the senior marketing executive: It is important that his role be separate from that of reviewing the brand's strategies and tactics. This is a very difficult position. While we look at the institution of a Brand Character Statement as an instrument of guidance which defines parameters of freedom, one should expect some resentment from local executives and their advertising agencies. The Brand Parent must be apt at, and prepared for playing this role of diplomatic enforcement.

During this step, the Brand Parent begins to play his role of apostle of the Brand Character: He should organize several regional conferences to explain the role and the purpose of brand character, and train local marketing staff on its use and on the review and approval procedure to ensure it is respected. Part of the training and of the selling process consists of helping the local marketing staff do a local brand character evaluation and determine the gap that exists between the intended global character and local reality. They will then be asked to develop a strategy to bring the local character more in line with the one in the Brand Character Statement.

Management strategies

It is important that the implementation of the Brand Strategy be thought through from the beginning of the process. Ways to measure the progress made in establishing Brand Character should be agreed to from the onset Incentives should be given for reaching the goals agreed to before starting, etc.

CONCLUSION In an increasingly competitive world market, a key component of a healthy product line is often the brand that accompanies it. As valuable assets of a business organisation, they realistically demand the same level of attention as the equipment in a factory or the money placed in lucrative investments. While branding programmes are industry and product specific, the basic steps necessary to sustain underlying marks demonstrate some consistency. An overall brand strategy should only be implemented with full recognition that the brand may traverse numerous different product lines and geographic regions. Effective brand management strategies also necessitate emphasis on ensuring consistency between the brand licensing strategy and the enterprise’s overall business goals. Efforts should be undertaken to ensure that the brand reflects positively on the company, does not detract from other product lines and remains profitable with other parts of company. Companies should be active – and not static –when undertaking efforts to integrate the brand strategy into product development and launch activities. A clear and proactive strategy is likely to generate the most reward. Business organisations must respect the brands that support products and services as dynamic assets worthy of attention from top management. While the priorities may shift among the foregoing recommendations from time to time, they all play a role in developing sand sustaining a successful strategy.