PRODUCT STRATEGY AND
BRANDING
Professor Chip Besio
Cox School of Business
Southern Methodist University
WHAT ARE PRODUCTS AND SERVICES?
GOODS, SERVICES, AND IDEAS

Product

Good
• Nondurable
Goods
• Durable
Goods

Services

Ideas
WHAT ARE PRODUCTS AND SERVICES?
PRODUCT ITEMS, LINES, AND MIXES

Product Item
• Stock Keeping Unit (SKU)

Product Line

Product Mix
10-3
WHAT IS A PRODUCT?
Augmented Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core Features
Benefit
or
Design
Service
AfterSale
Service
Actual Product
Warranty
Source: Prentice Hall
Core Product
How stages of the product life cycle relate to a
firm’s marketing objectives and marketing mix
actions
Stages of the product life cycle and its total
industry sales and total industry profit
How stages of the product life cycle relate to a
firm’s marketing objectives and marketing mix
actions
CHARTING THE PRODUCT LIFE
CYCLE
INTRODUCTION STAGE

Primary Demand

Selective Demand

Skimming Strategy

Penetration Pricing
Product life cycle for the stand-alone fax machine
for business use: 1970-2012
CHARTING THE PRODUCT LIFE CYCLE
GROWTH STAGE

Rapid Sales Growth

More Competitors

Repeat Purchasers

New Features

Broad Distribution
CHARTING THE PRODUCT LIFE CYCLE
MATURITY STAGE

Industry/Product
Sales Slow

Profit Declines

Product Differentiation

Fewer Competitors
CHARTING THE PRODUCT LIFE CYCLE
DECLINE STAGE

Industry/Product
Sales Drop

Environmental Changes

Deletion

Harvesting
CHARTING THE PRODUCT LIFE CYCLE
FOUR ASPECTS

Length of the Product Life Cycle

Shape of the Product Life Cycle
• Generalized Life Cycle
• High-Learning
Product
• Fashion
Product
• Low-Learning
product
• Fad
Product
Alternative product life cycle curves based on
product types
CHARTING THE PRODUCT LIFE CYCLE
FOUR ASPECTS

The Product Level: Class and Form
• Product Class
• Product Form
Prerecorded music product life cycles by product
form
CHARTING THE PRODUCT LIFE CYCLE
FOUR ASPECTS

The Life Cycle and Consumers
• Diffusion of Innovation
 Innovators
 Late Majority
 Early Adopters
 Laggards
 Early Majority
Five categories and profiles of product adopters
(diffusion of innovation)
CHARTING THE PRODUCT LIFE CYCLE
FOUR ASPECTS

The Life Cycle and Consumers
• Barriers to Adoption
 Usage
 Value
 Risk
 Psychological
11-19
MANAGING THE PRODUCT LIFE CYCLE
ROLE OF A PRODUCT MANAGER

Product/Brand Manager Responsibilities
• Product Life Cycle
• New Product Development
• Marketing Program Implementation
• Data Analysis
 CDI
 BDI
11-20
MANAGING THE PRODUCT LIFE CYCLE
MODIFYING THE PRODUCT OR MARKET

Product Modification
• Product
Bundling

• New
Characteristics
Market Modification
• Finding New
Customers
• Increasing a
Product’s Use
• Creating a New
Use Situation
11-21
MANAGING THE PRODUCT LIFE CYCLE
REPOSITIONING THE PRODUCT

Product Repositioning

Reacting to a Competitor’s Position

Reaching a New Market

Catching a Rising Trend
11-22
The Milk Processor Education Program
What factor triggered its repositioning?
11-23
MANAGING THE PRODUCT LIFE CYCLE
REPOSITIONING THE PRODUCT

Changing the Value Offered
• Trading Up
• Trading Down
• Downsizing
11-24
BRANDING AND BRAND MANAGEMENT

Branding

Brand Name
• Logotype (Logo)

Trade Name

Trademark
®
™
• Product Counterfeiting
11-25
BRANDING AND BRAND MANAGEMENT
BRAND PERSONALITY AND BRAND EQUITY

Brand Personality

Brand Equity
• Provides a Competitive Advantage
• Consumers Willing to Pay a Premium
11-26
GATORADE: QUENCHING
THE ACTIVE THIRST WITHIN YOU
Göt2b Hair Products and Degree Deodorant
What are their brand personalities?
The customer-based brand equity pyramid
BRANDING AND BRAND MANAGEMENT
BRAND PERSONALITY AND BRAND EQUITY

Creating Brand Equity
• Develop Positive Brand Awareness
• Establish a Brand’s Meaning
• Elicit the Proper Response
• Create Intense Brand Loyalty
BRAND EQUITY
 The value your customers perceive to be uniquely
associated with your brand
= Awareness + Associations
 Awareness
– Recall
– Recognition
 Associations
– Perceived Quality
– Image
BRAND AWARENESS
RECOGNITION
BRAND AWARENESS
RECOGNITION
Free publicity in the
Wall Street Journal
BRAND AWARENESS
RECALL
 Essential for memory-based choice and
customer-initiated contact
35%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
30%
25%
20%
15%
10%
5%
0%
Recalled Recalled Recalled Recalled Recalled
1st (top 2nd or
4th or
6th or
8th or
of mind)
3rd
5th
7th
9th
Seen before recall
Seen after recall
Percent seeing film after
Percent seeing film before
Order of Recall
(movie data)
Source:
Wes
Hutchinson
BRAND ASSOCIATIONS
PERCEIVED QUALITY
Profitability (ROI):
PERCEIVED RELATIVE QUALITY
RELATIVE
MARKET
SHARE
high
medium
low
inferior
21%
14%
7%
moderate
27%
20%
13%
superior
38%
29%
20%
SOURCE: PIMS (Profit Impact of Market Strategies; based on 2,200 business units)
Future Profitability (Stock Price):
Stock Price = f(ROI, perceived quality)
* ROI and perceived quality exert approximately equal effects *
SOURCE: Aaker, D. A. and R. Jacobson (1994; based on daily measures of NYSE, AMEX, and NASDAQ).
BRAND ASSOCIATIONS
IMAGE
 Brand image is the integration of all experiences
with and information about a brand as perceived
and remembered by customers
The whole is more than the sum of its parts
 Brand image is relative easy to create, but almost
impossible to change!
BRAND EQUITY
BRAND LOYALTY
Brand loyalty - the probability of choosing a brand given that
you are a user of that brand - can result from:
 Inertia: the general tendency to repeat previous purchases
due to high switching costs, convenience, or habit
 Preference: an enduring preference for a brand over and
above what would be expected based on the benefits
derived from the product or from a long-term relationship
with the brand
BRAND LOYALTY
AN EXAMPLE
 In 1983, six people in Chicago died of cyanide
poisoning from tampered TYLENOL capsules.
J&J reacted quickly and appropriately
withdrawing all capsules from the market. Tylenol
shared dropped only from 37% to 35% and
eventually recovered completely.
BRAND EQUITY
BETTER BUSINESS RESULTS
Brands
Price
Price
Premium
Market
Share
Share
Premium
Crest
$2.19
$ .44
27.2%
17.3%
Colgate
$2.19
$ .37
21.8%
12.2%
Aqua-fresh
$2.19
$ .24
15.1%
6.6%
Close-Up
$2.14
$ .27
16.5%
8.0%
Toothpastes (6 oz.)
SOURCE: Park, C. S. and V. Srinivasan (1994; based on survey results)
BRAND EQUITY
BETTER BUSINESS RESULTS
Brands
Mouthwashes (24 oz.) Price
Scope
$3.83
Price
Premium
$ .47
Market
Share
31.2%
Share
Premium
13.7%
Listerine
$3.79
$ .42
26.8%
11.1%
Close-Up
$5.02
$ .23
2.3%
.8%
Plax
$4.29
$ .26
10.3%
3.4%
Colgate
$5.22
$ .10
1.4%
.2%
SOURCE: Park, C. S. and V. Srinivasan (1994; based on survey results)
BRANDING AND BRAND MANAGEMENT
BRAND PERSONALITY AND BRAND
EQUITY

Valuing Brand Equity
• Provides a Financial Advantage
• Brand Licensing
BRANDING AND BRAND MANAGEMENT
PICKING A GOOD BRAND NAME

Should Suggest Product Benefits

Should Be Memorable and Positive

Should Fit the Company or Product Image

Should Have No Legal or Regulatory Restrictions

Should Be Simple and Emotional
ALTERNATIVE BRANDING STRATEGIES
BRANDING AND BRAND MANAGEMENT
BRANDING STRATEGIES

Multiproduct Branding
(Family or Corporate Branding)
• Product Line Extensions
• Subbranding
• Brand Extension
• Co-Branding
BRANDING AND BRAND MANAGEMENT
BRANDING STRATEGIES

Multibranding
• Fighting Brands

Private Branding (Private Labeling or
Reseller Branding)

Mixed Branding
BRANDING STRATEGY
Brand Name
Product Category
Currently Served
New
Existing
Line
Extension
Brand
Extension
New
Multi-brand
New
Brand
Source: Prentice Hall
BRANDING STRATEGY
Line Extension
– Existing brand names extended to new forms, sizes,
and flavors of an existing product category
Brand Extension
– Existing brand names extended to new product
categories
Multi-brands
– New brand names introduced in the same product
category
New Brands
– New brand names in new product categories
Source: Prentice Hall
Kimberly-Clark’s Huggies
What branding strategy is used?
Black & Decker and DeWalt Tools
What branding strategy does each use?
INDIVIDUAL PRODUCT STRATEGY
DECISIONS
 Attributes
 Packaging
 Labeling
 Product Support
PRODUCT ATTRIBUTES WHERE DO THEY
COME FROM?
Quality
Design
Source: Prentice Hall
Features
PACKAGING AND LABELING PRODUCTS
CREATING CUSTOMER VALUE AND
COMPETITIVE ADVANTAGE

Packaging

Label

Communication Benefits

Functional Benefits

Perceptual Benefits
PACKAGING
Competitive
Advantages
Sales
Tasks
Packaging
Product
Safety
Identifies
Labeling
Promotes
Describes
Source: Prentice Hall
“?” and Heinz Ketchup
What are the packaging benefits for each?
Lay’s STAX, Pringles and Celestial Seasonings
What are the packaging benefits for each?
PACKAGING AND LABELING PRODUCTS
PACKAGING AND LABELING
CHALLENGES AND RESPONSES

Connecting with Customers

Environmental Concerns

Health, Safety, and Security Issues
• Shelf Life

Cost Reduction
BRANDING AND BRAND MANAGEMENT

Warranty
• Express Warranties
• Limited Coverage Warranties
• Full Warranties
• Implied Warranties
PRODUCT MIX
Variety - number of
different product
lines
Product Mix all the product
lines offered
Assortment number of items
within product lines