innovation management product and brand strategy kevin o’brien
TRANSCRIPT
Innovation Management
Product and Brand Strategy
Kevin O’Brien
Learning Objectives
Appreciate the importance of product and brand strategy in competitive markets
Identify alternative product strategies Examine the concept of product
platforms Introduce issues of product portfolio
management
Marketing Strategies
Strategy Product Price Distribution Promotion
Undifferentiated Standardised Low Intensive Mass
Differentiated Different for each market segment
What the market will bear
Extensive Targeted by segment
Concentrated Customised Premium Highly selective
Direct
Product-Based Competition
Five basic strategies: Product proliferation (e.g. Sony, Honda)
Many new products simultaneously or in close succession
Market response determines support Cover all segments & block new entrants
Value (e.g. Toyota/Lexus) New quality/cost trade-off curves Continuous improvement/re-engineering Re-thinking the business system
(Deschamps & Nayak, 1995)
Product-Based Competition
Design (e.g. Braun, Harley-Davidson) Aesthetics, touch, ease of use etc. Engineering design + aesthetic design
Innovation (e.g. Canon, 3M, Merck) Technological & marketing innovation Market pioneers/fast-followers Radical/incremental innovation
Service (e.g. Otis Elevators, SAS) Customer relations, physical distribution, after-
sales service
(Deschamps & Nayak, 1995)
Product Differentiation
Form size, shape, physical
structure Features
supplements basic function
e.g. car CD player, trim level, child seats
Performance quality appropriate to target
market and competitor performance levels
Conformance quality each product identical,
meets the promised specification & performance
Durability expected operating life balanced with
technological obsolescence
Reliability probability of
malfunction/failure Repairability
ease of repair, cost, technical support
Style aesthetics – look and feel distinctive and difficult to
copy
(Garvin, 1987)
Product Planning
What are the strategic goals for new products? What product development projects will be
undertaken? What will be the portfolio of projects?
New product platforms Derivatives of existing platforms Incremental improvements to existing products Fundamentally new products (discontinous)
What will be the timing and sequence of projects? What will be the balance of risk? Considers opportunities from marketing, R&D,
customers, project teams, competitor analysis etc….. Regularly updated to reflect competitive environment
Differentiation vs Standardisation
Key questions: How to deliver distinctive products to market whilst
building on core capabilities and conserving development, production and marketing resources?
How to balance the needs of high volume manufacturing/service delivery with the needs of individual customers?
Product platforms: Shared components, production processes,
knowledge, people & relationships Brand platforms:
Brand extensions, products conform to brand strategy
(Robertson & Ulrich, 1998)
Product Platforms
Research &technologyactivities
Platform A
Platform B
B1
B2
B3
Competitorproduct
Competitorproduct
Productpositioning
Competitorproduct
Competitorproduct
Time
Internal organisational activities External market
Development ofProduct platforms
Derivativeproductdevelopment
(Trott, 2005, p358)
Product Platforms
ProductPrice
Generic StrategyOverall cost leadership Differentiation
Low
High
Skoda Oktavia
Seat Leon
VW Golf
Audi A3
Audi TT
VAG Inter-firm Product Platform Development
Product Platforms
The benefits of product platforms include: Increased product variety and ability to serve
multiple market segments (mass customisation) Greater speed to market Improved management of demand and uncertainty Accommodating differential technology change Reducing production costs Supports late-stage differentiation of products Reduces service infrastructure requirements Greater speed and efficiency in technological
learning and knowledge creation
(Sanchez, 1999)
Brands and Products
Product item
africa mirage java tempest oriental nevada
Body spray
Shower gel
Aftershave
Roll-on deodorant
Deodorant stick
Aftershave gel
The Lynx brand
Fragrance
Portfolio Management
Low Market Newness High Market Newness
Low Product
Newness
Improvements to existing products
(35%)
Additions to existing product lines
(20%)
Medium Product Newness
Cost reductions
(20%)
New product lines
(15%)
High Product
Newness
Repositioning
(6%)
New-to-the-world products
(4%)
Strategic portfolio model for one SBU in Exxon Chemical:
(Adapted from Cooper et al., 1997)
Portfolio Management
Enhancements
Next generation/platform
Breakthrough
L
A
H K
G F
J
BI E
C D
Extent of Product ChangeLarge Small
Ext
ent
of
Pro
cess
Ch
ang
e
Small
Large
Portfolio diagram used by a division of Hewlett-Packard:
Size of bubble = size of project (Englund & Graham, 1999)
Product Replacement Strategies
No change
Remerchandising RelaunchConspicuoustechnologicalsubstitution
Intangiblerepositioning
Tangiblerepositioning
Neo-innovation
FaceliftInconspicuoustechnologicalsubstitution
Product
Mar
keti
ng
Remix
No change
Nochange
New/marketsegment
Technologychange
Modified
(Saunders & Jobber, 1994)
Product Turnover
Evidence from innovative industry (laser printers): High levels of competition speed product exit and
delay product entry Firms with high market share keep products on the
market for longer than those with lower share Innovative firms bring products to market more
frequently but withdraw products at average rates Firms with strong brands tend to introduce few
products and withdraw their products slowly
(Figueiredo & Kyle, 2006)
Product Turnover
Entry: AverageExit: Average
STAGNATOR
Entry: LowExit: Slow
MARKETER
Entry: HighExit: Average
INNOVATOR
Entry: HighExit: Slow
PRODUCTPROLIFERATOR
No Yes
No
Yes
Firm with strong brand?
Inn
ova
tive
firm
?
(Figueiredo & Kyle, 2006)
References
Cooper, R.G., Edgett, S.J. and Kleinschmidt, E.J. (1997) Portfolio management for new products, Hamilton Ontario: McMaster University.
Deschamps, J-P. and Nayak, P.R. (1995) Product Juggernauts, Boston: Harvard Business School Press.
Englund, R.L. and Graham, R.J. (1999) From experience: linking projects to strategy, Journal of Product Innovation Management, 16(1), 52-64.
Figueiredo, J.M de and Kyle, M.K. (2006) Surviving the gales of creative destruction: the determinants of product turnover, Strategic Management Journal, 27, 241-264.
Garvin, D.A. (1987) Competing on the eight dimensions of quality, Harvard Business Review, Nov-Dec, 101-109.
Robertson, D. and Ulrich, K. (1998) Planning for product platforms, Sloan Management Review, Summer, 19-31.
Sanchez, R. (1999) Modular architectures in the marketing process, Journal of Marketing, 63 (Special Issue), 92-111.
Saunders, J. and Jobber, D. (1994) Product replacement strategies: occurrence and concurrence, Journal of Product Innovation Management, 11(5), 433-450.
Trott, P. (2005) Innovation management and new product development, Harlow: FT Prentice Hall.