New Product Strategy and Brand
Management
Ananda Sabil Hussein, PhD
INNOVATION AND NEW PRODUCT STRATEGY
• Innovation as a Customer Driven Process
• New Product Planning
• Idea Generation
• Screening, Evaluating, and Business Analysis
• Product and Process Development
• Marketing Strategy and Market Testing
• Commercialization
• Variation in the Generic New Product
Planning Process
INNOVATION FEATURE
Managing Google’s Idea Factory
As director of consumer Web products Marissa Mayer is a champion of
innovation. She favors new product launches that are early and often.
She joined Google in early 1999 as a programmer when the workforce
totaled 20. By 2007 Google had 5,700 employees with expected sales of
$16 billion.
How Google Innovates
The search leader has earned a reputation as one of the most innovative
companies in the world of technology. A few of the ways Google hatches
new ideas:
 FREE (THINKING) TIME
Google gives all engineers one day a week to develop their own pet
projects, no matter how far from the company’s central mission. If
work gets in the way of free days for a few weeks, they accumulate.
Google News came out of this process.
FINDING CUSTOMER VALUE OPPORTUNITIES
Customer value analysis
Objective is to identify needs for:
1. New products
2. Improvements to existing
products
3. Improvements in production
processes
4. Improvements in supporting
services
TRANSFORMATIONAL
Break-through innovation
Digital photography
NEW PRODUCT CATEGORY
Dell
Printers
Nike
Apparel
Golf clubs
LINE EXTENSION
New color/package/style
INCREMENTAL IMPROVEMENTS
Software updates
Characteristics of Successful Innovators
Creating an
Innovative Culture
Leveraging
Capabilities
Making Resource
Commitments
STRATEGIC
INITIATIVES
Selecting the
Right
Innovation
Strategy
Developing and
Implementing Effective
New Product Processes
NEW PRODUCT PLANNING PROCESS
Customer
Needs
Analysis
Idea
Generation
Screening
and
Evaluation
Business
Analysis
Marketing
Strategy
Development
Product
Development
Testing
Commercialization
Achieving Cross-Functional Interaction and Coordination
R&D
Operations
Marketing
Finance
IDEA GENERATION
•
•
•
•
•
•
Idea search: targeted or open-ended?
How extensive and aggressive?
What specific sources are best for generating a
regular flow of new product ideas?
How can new ideas be obtained from
customers?
Where will responsibility for the new product
ideas search be placed?
What are potential threats from alternative (or
disruptive) technologies?
SCREENING, EVALUATING, AND BUSINESS ANALYSIS
IDEA GENERATION
SCREENING
(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS
Business Analysis
•
Revenue Forecasts
•
Preliminary Marketing Plan
•
Cost Estimation
•
Profit Projections
•
Other Considerations
PRODUCT AND PROCESS DEVELOPMENT
NEW
PRODUCT
CONCEPT
PRODUCT
DEVELOPMENT
AND USE
TESTING
MARKETING
STRATEGY
DEVELOPMENT
MARKET
TESTING
LAUNCH
MARKETING STRATEGY AND MARKET TESTING
 Marketing Strategy Decisions
• Market Targeting
• Positioning Strategy
 Market Testing Options
• Simulated Test Marketing
• Scanner – Based Test Marketing
• Conventional Test Marketing
• Testing Industrial Products
• Selecting Test Sites
• Length of the Test
• External Influences
COMMERCIALIZATION
The Marketing Plan
• Complete marketing strategy
• Responsibilities for execution
• Cross – functional approach
Monitoring and Control
• Real – time tracking
• Role of the Internet
• Include product performance metrics with performance
targets
Marketing Strategy
Market Target(s)
Objectives
Marketing
Program(s)
A brand 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.
American Marketing Association
A compelling logic has been proposed that the
distinction between goods and services should be
replaced by a view that services are the dominant
perspective in the 21st century, consisting of both
tangible and intangible components.*
*Stephen LVargo and Robert F. Lusch, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, January 2004, 1-17.
Brand Management Challenges*
Internal and external forces create hurdles for product
brand managers in their brand building initiatives:
Intense Price and Other Competitive Pressures
Fragmentation of Markets and Media
Complex Brand Strategies and Relationships
Bias Against Innovation
Pressure to Invest Elsewhere
Short-Term Pressures
*David A. Aaker, Building Strong Brands, 1996, 26-35.
Responsibility for Managing Products
Product/Brand Management

Planning, managing, and coordinating the strategy for a specific
product or brand
Product Group/Marketing Management

Product director, group manager, or marketing manager
Product Portfolio Management


Chief executive at SBU
Team of top executives
Strategic Brand Management
Brand Identity Strategy
Identity Implementation
STRATEGIC
BRAND
ANALYSIS
Brand Strategy Over
Time
Managing the Brand
Portfolio
Leveraging the Brand
BRAND
EQUITY
MANAGEMENT
Product Life Cycle Analysis
Relevant issues in PLC analysis include:
•
•
•
Determining the length and rate of change of the PLC
Identifying the current PLC stage and selecting the
product strategy that corresponds to that stage
Anticipating threats and finding opportunities for altering
and extending the PLC
•
Product Performance Analysis

Management’s performance criteria

Strengths and weaknesses relative to portfolio
•
Brand Positioning Analysis

Perceptual maps for brand comparison

Buyer preferences
•
Other Product Analysis Methods

Information Services

Research studies

Financial analysis
BRAND EQUITY
Company/Customer Value
of Brand Name and
Symbol of
a Product
Determined by the
brand’s set of
assets (and liabilities)
Brand Equity
Effective strategic brand management requires that we
understand brand equity and evaluate its impact when
making brand management decisions:
“Brand equity is a set of brand assets
and liability linked to a brand, its name,
and symbol, that add to or subtract
from the value provided by a product or
service to a firm and/or to that firm’s
customers.*
* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15.
**Ibid, 102-120.
Measuring Brand Equity. Several measures are needed to
capture all relevant aspects of brand equity.**
* loyalty (price premium, satisfaction/loyalty),
* perceived quality/leadership measures (perceived
quality, leadership/popularity),
* associations/differentiation (perceived value, brand
personality, organizational associations),
* awareness (brand awareness), and
* market behavior (market share, price and
distribution indices).
These components provide the basis for developing
operational measures of brand equity.
BRAND IDENTITY STRATEGY
Brand identity is a unique set of brand associations
that the brand strategist aspires to create or
maintain. These associations represent what the
brand stands for and imply a promise to customers
from the organization members.*
Four Brand Identity Perspectives
Product
Organization
Person
Symbol
* David A. Aaker, Building Strong Brands, 1996, 68.
MANAGING BRAND STRATEGY
Proactive efforts
should be devoted to
managing each brand
over time.
Strategies for Improving Product Performance
Cost
reduction
Add
new
product(s)
Product
improvement
Product line
Strategy
Alter
marketing
strategy
Eliminate
specific
product(s)
Strategies for Brand Strength
 Brand-Building Strategies


• Developing the brand identification strategy
• Coordinate identity across the organization
Brand Revitalization
• Find new uses for mature brands
• Add products related to heritage
Strategic Brand Vulnerabilities
• Brand equity can be negative
• Retailer private brands compete with manufacturer brands
• Major shifts in consumer tastes
• Competitive actions
• Unexpected events
Product Mix Modifications
Motivation for changing the product mix:
• Increase the growth rate of the business
• Offer a more complete range of products to wholesalers and
retailers
• Gain marketing strength and economies in distribution,
advertising, and personal selling
• Leverage an existing brand position
• Avoid dependence on one product line or category
BRAND LEVERAGING STRATEGY
LINE
EXTENSION
BRAND
EXTENSION
Minor variants of a single
product are marketed under
the same brand name
Extensions of the brand
name to other product
categories
--Similar
--Dissimilar
CO-BRANDING
Co-branding (dual branding) involves two or more established
brands making a joint offer of their product brands —
The participant’s brand names
are identified on the good or
service.
Several different forms –
Component co-branding
(Volvo and Michelin)
Same company co-branding
Alliance co-branding
(Delta and American Express)
Ingredient co-branding
BRAND LEVERAGING EVALUATION CRITERIA
Brand Relevance/Differentiation
Capabilities/Perceived Value Match
Market/Segment Opportunity
Cannibalization Risks
Potential for Core Brand Damage
Clarity of Product Offerings
Estimated Financial Performance
Brand Equity Impact
SEVEN DEADLY SINS OF BRAND MANAGEMENT*
Failure to fully understand the meaning of the
brand.
Failure to live up to the brand promise.
Failure to adequately support the brand.
Failure to be patient with the brand.
Failure to adequately control the brand.
Failure to properly balance consistency and
change with the brand.
Failure to understand the complexity of brand
equity measurement and management.
*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.