Product Differentiation
and Branding
Toby Boss
ESU 6
Essential Questions
• Why do firms seek to differentiate their
products?
• How does advertising and branding apply to
differentiation?
• What are some examples of personal
branding?
Objectives
• Discuss Differentiation
• Discuss social media as a branding tool
Products
• Goods and Services
• Some products are identical
• Examples
– Produce
– Electricity
– Propane
– Air Travel?
Prices
• If goods are truly identical (electricity,
propane) the only difference between goods
would be the price.
• The sellers are price takers – if they raise the
price; they will sell 0
• If they lower the price they will not sell any
more units.
• Take the price set by the market
Perfectly Competitive Markets
•
•
•
•
•
Many small firms
Identical products
Price takers
Easy entry and exit
Most firms break even
Product Differentiation
• Firms seek to set their products apart from
the rest so as to charge a different price.
• Typically they use the following:
– Packaging
– Quality or functions
– Service
– Advertising
• Branding sends a consistent message that is
identifiable.
Advertising
• Sunk fixed cost
• Sunk:
– Once you invest there is no asset to sell later
– Compare to equipment – if a firm invests in a
building; they could potentially sell it later
• Fixed Cost:
– Doesn’t change with the level of output.
– A commercial doesn’t cost more or less depending
on how many units a firm produces
Advantages
• Big firms had an advantage in advertising
• They can spread the fixed costs over many
units
• There is always a risk – remember “New
Coke”?
Branding
Logos
• What comes to mind when you see each of
these brands?
Super Bowl
• $4 million for 30 second spot
• What do the stats say?
Super Bowl Stats
• 82,586 football fans watched Super Bowl
XLVIII at MetLife Stadium in East Rutherford,
New Jersey
• 100 million football fans watched Super Bowl
2014 for almost 3.5 hours in four quarters plus
a half time on the Fox broadcast television
network.
Super Bowl Stats
• based on YouTube's data, football fans
watched Super Bowl ads more than 265
million times for over 3.2 million hours –
which is the equivalent of watching 914,285
Big Game broadcasts.
• Based on YouTube's pre-game data for 2014,
it looks like the online views of this year's
Super Bowl commercials are running about
2.2 times above last year.
Super Bowl Stats
• And the top five in views are:
• Budweiser Super Bowl XLVIII Commercial -- "Puppy
Love" with 37 million views.
• Duracell: Trust Your Power - NFL's Derrick Coleman,
Seattle Seahawks with 16 million views.
• Hyundai Elantra | Big Game Ad | "Nice" with 12 million
views.
• 2014 Volkswagen Game Day Commercial: Wings with
11 million views.
• Sorry, Coke and Pepsi. (Uncensored) with 10 million
views.
Personal Branding
• Some examples
Wikipedia
• Personal branding is, for some people, a
description of the process whereby people
and their careers are marked as brands.
• the creation of an asset that pertains to a
particular person or individual… leading to an
indelible impression that is uniquely
distinguishable.
Example
• Celebrity real-estate mogul Donald Trump
uses his last name extensively on his buildings
and on the products he endorses (e.g., Trump
Steaks).
• What are some other celebrity brands?
Differentiation
• So what sets you apart?
– Skills
– Education
– Experience
– Vision
Social Media
• What do you want your message to include?
• Your digital tattoo – make sure your image is
what you want to convey.
• “Times Square” Analogy
Social Media
• How can you use these to convey your brand?
– Twitter
• Tweet retweeted 3 times will reach 100,000 people
• Hashtags
– Web 2.0 tools – blogs, Google
• Everyone can publish
• What will you say?
Pinterest Board
• Ideas on personal branding
• http://pinterest.com/lynneherr1/personalbranding/
Daily Infographic
• How to Brand Yourself
Reflection
• What do you want your personal brand to
say?