Market-Based
Management, 4th
edition
Product Positioning, Branding,
and Product-Line Strategies
Chapter Seven
Product Positioning,
Branding, and Product Line
Strategies
Chapter Seven
– Product Positioning and Product
Positioning Strategies
– Product Differentiation
– Brand Name, Brand Equity, and Branding
Strategies
– Product Line Expansion
7-2
Product Positioning
• What is product positioning?
• Why is it important to determine a product
positioning strategy?
• What is the goal of a positioning strategy?
• How does the positioning strategy affect market
share?
Market
Share
=
Product
Position
X
Marketing
Efforts
7-3
Product Positioning Strategies
7-4
Product Positioning Strategies
• Price Leadership vs.
Product Differentiation
• When is price
leadership appropriate? Product
Differentiation
• When is differentiation
appropriate?
Service
Differentiation
• Types of
Differentiation
Product
Benefits
Customer
Value
Service
Benefits
Price
Brand
Benefits
Transaction
Costs
Brand
Differentiation
7-5
Differentiation
Dimensions of Product Quality
1. Quality
1 Killers
2. Quality Drivers
Reliability
Performance
Conformance
Durability
3. Quality Enhancers
4. Quality Aesthetics
Features
Appearance
Serviceability
Reputation
7-6
Differentiation
Dimensions of Service Quality
1. Quality Killers
2. Quality Drivers
Reliability
Performance
Assurance
Responsiveness
3. Quality Enhancers
4. Quality Aesthetics
Extended Services
Appearance
Customer Empathy
Reputation
7-7
Brand Differentiation
• What is the
importance/value of a
brand name? (enhance
positioning and differential advantage)
– Rational vs. Emotional
• What is brand identity?
• How do firms develop
brand identity?
• What is brand encoding?
• How are products
positioned with brand
differentiation?
(Marriot, Kellogg, Hitachi)
• What are brand
extensions? (Coca-Cola)
– Flanker vs. Umbrella
7-8
Brand Encoding Strategies
•
•
•
•
•
•
•
Company and Brand Name
Brand and Sub-Brand Name
Company and Product Name
Company, Brand, and Product Name
Company Name, Brand Name, and Number
Brand Name and Benefit
Brand Name Only
7-9
Brand Name Development
•
Four ways in which
new brand names
are created:
1. Functional or
Descriptive Names
2. Invented Names
Customer
Problem
Company/
Product
Solution
Customer
Benefits
Descriptive
Words
Brand Name
Candidates
3. Experiential Names
4. Evocative Names
Brand Name
Tests
7-10
Brand Assets and Liabilities
• Brand Assets:
• Brand Liabilities:
– Brand Awareness
– Customer Dissatisfaction
– Market Leadership
– Environmental Problems
– Reputation for Quality
– Product or Service Failures
– Brand Relevance
– Lawsuits and Boycotts
– Brand Loyalty
– Questionable Business
Practices
How are Brand Assets and Liabilities Measured?
7-11
Brand Equity
7-12
Broad Vs. Narrow Product
Line
7-13
Product Line Development
• How do firms expand
their product line?
– Flanker Brands
– Umbrella Brands
– New Brands
• How do flanker brands
benefit from umbrella
brands?
– Brand Awareness
– Known Quality
– Market Reach
– Product Mix
7-14
Product Line Extensions and
Enhancements
•
•
•
•
Vertical Brand-Line Extensions
Horizontal Brand-Line Extensions
New Product-Market Brand Extensions
Co-Branding
• Product Bundling
• Product Unbundling
• Effects of all product-line enhancements
– Scale
– Substitution
7-15
Takeaways/Review
• Product Positioning
• Brand Name Development
• Product Differentiation • Brand Equity
– Quality
– Service
– Brand
• Product Line Enhancements
• Effects of Enhancing
Product Line
• Brand Encoding
Strategies
7-16
Marketing Performance
Tools
Impact of Product Line Substitution
Price
Core Brand
Flanker A
Flanker B
Core Brand
Multi-Grain
Reduced Fat
$3.49
$2.99
$1.49
$0.99
$0.49
$0.00
Product Line
7-17
Marketing Performance
Tools
Impact of Product Line Substitution
From - To
Core Brand
Flanker A
Flanker B
Um brella
X
0.1
0.25
Flanker A
0.05
X
0.2
Flanker B
0.1
0.05
X
7-18
Marketing Performance
Tools
Impact of Product Line Scale Effects
Area of
Core
Multi-
Reduced
Product
Perform ance
Brand
Grain
Fat
Line
50,000,000
10,000,000
20,000,000
Volum e
Prim ary Dem and
Core Brand
32,500,000
5,000,000
12,500,000
500,000
7,500,000
2,000,000
Reduced Fat
2,000,000
1,000,000
17,000,000
Net Volum e
35,000,000
13,500,000
31,500,000
Multi-Grain
Wholesale Price per Unit
80,000,000
80,000,000
$1.95
$1.95
$1.95
$1.95
$68,250,000
$26,325,000
$61,425,000
$156,000,000
Variable Cost per Unit
$0.95
$1.00
$1.05
$1.00
Margin per Unit
$1.00
$0.95
$0.90
$0.95
$35,000,000
$12,825,000
$28,350,000
$76,175,000
Sales
Total Contribution
7-19
Marketing Performance
Tools
Impact of Product Line Scale Effects
Area of
Core
Multi-
Reduced
Product
Perform ance
Brand
Grain
Fat
Line
50,000,000
20,000,000
10,000,000
80000000
Volum e
Prim ary Dem and
Core Brand
32,500,000
5,000,000
500,000
7,500,000
2,000,000
Reduced Fat
2,000,000
1,000,000
17,000,000
Net Volum e
35,000,000
13,500,000
31,500,000
Multi-Grain
Wholesale Price per Unit
Sales
Variable Cost per Unit
Margin per Unit
Total Contribution
12,500,000
80,000,000
$1.95
$1.95
$1.95
$1.95
$68,250,000
$26,325,000
$61,425,000
$156,000,000
$0.95
$1.00
$1.05
$1.00
$1.00
$0.95
$0.90
$0.95
$35,000,000
$12,825,000
$28,350,000
$76,175,000
Manuf acturing Overhead
$17,500,000
$6,750,000
$15,750,000
$40,000,000
Gross Profit
$17,500,000
$6,075,000
$12,600,000
$36,175,000
Fixed Marketing Expenses
$4,375,000
$1,687,500
$3,937,500
$10,000,000
Variable Brand Expenses
$3,412,500
$789,750
$1,842,750
$6,045,000
Total Marketing Expenses
$7,787,500
$2,477,250
$5,780,250
$16,045,000
Net Marketing Contribution
$9,712,500
$3,597,750
$6,819,750
$20,130,000
Marketing ROS
14.2%
13.7%
11.1%
12.9%
Marketing ROI
124.72%
145.23%
117.98%
125.46%
7-20
Marketing Performance
Tools
Assessing Brand Assets
Brand Assets
Below
Somewhat
About
Somewhat
Top
Brand
Average
Below
Average
Above
Performer
Asset
0
5
10
15
20
Score
Brand Aw areness
0
Market Leadership
0
Reputation for Quality
0
Brand Relevance
0
Brand Loyalty
0
Total Brand Assets
0
7-21
Marketing Performance
Tools
Assessing Brand Liabilities
Brand Liabilities
Below
Somewhat
About
Somewhat
Average
Below
Average
Above
0
5
10
15
Top
Brand
Performer Liability
20
Score
Customer Dissatisfaction
0
Environmental Problems
0
Product Failures/Recalls
0
Law suits and Boycotts
0
Questionable Practices
0
Total Liabilities Assets
0
7-22