product management core product - principal benefit offered tangible product - packaging, features,...
TRANSCRIPT
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PRODUCT MANAGEMENT
Core product - Principal benefit offered
Tangible product - Packaging, features, style, brand name, quality
Augmented product - Delivery, credit, warranty, service, installation
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Types of Consumer Goods
Convenience - frequently purchased, minimum effort, low priced
Staples - bread, gasoline, milkImpulse - chewing gum, snacks, soft
drinksEmergency - medicines, toothpaste
Shopping - Purchased after comparison shoppingClothing, furniture, appliances, shoes
Speciality - Unique characteristics, buyer makes special effort
Porsche cars, Carter watchesUnsought goods - Insurance, cemetery plots
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Types of Industrial Goods
Supplies -
Maintenance - brooms, bulbs
Repair - nuts, nails, screws
Operating - oil, electricity, gas
Raw Materials - Steel, chemicals corn (Kelloggs)
Components - Crankshafts, wheels
Accessory Equipment - Typewriters, computers, handtools
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Types of products
• Durable goods
• Nondurables
• Services
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PRODUCT LIFE CYCLE (PLC)
Theory applies to products, not brands.
4 Stages: Introduction, growth, maturity, & decline
Introduction: e.g., Caller ID service
- slow sales growth
- near zero profits
- heavy expenses in educating the customer
Price High: If volumes are small, production costs high, R&D costs high, high tech.
Price Low: Low tech product, no patent protection, high volumes.
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• Growth: e.g., mobile phones
- Rapid growth in acceptance
New product features - expand market
- Increase in sales and profits
Increase distribution
Improve quality
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• Maturity: - Sales growth slows down Differentiate your product - Increase in competition/decrease in profits Modify market, product, mix - Exit of weak companies• Decline: e.g., oatmeal, video arcade games - Sales falling off quickly and profits decline Sell off business - Exit from market Reduce product line. Drop markets, segments,
channels. Reposition.Some studies show PLC applies to brands, fashions, and fads. Similar to BCG analysis in some aspects.
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PRODUCT QUALITY
What is quality?- Consists of attributes and superiority on these attributes.
AND
- Also the ability to perform as specified (i.e., it
depends on perception of the customer).
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How to communicate quality:- signs and product cues (fine coats - lining)- price- packaging, distribution, advertising, promotion.- association with manufacturer (IBM), with countries (Japanese automobiles, Italian clothing).
Does higher quality lead to higher profitability?Strategic Planning Institute found a significant
positive relationship.
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Product features:
Can be standard or “extras”
Cars
Cameras
What features to add?
Balance customer value to cost.
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Product Design:
Much neglected. Differentiate using design (e.g., Olivetti).
Style: Appearance of product
Design: Functionality, aesthetics, human factors, ease of service, costs.
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Product line length, width, and depth
WIDTH
Detergent Toothpaste Soaps Diapers
L Bold Gleem Ivory Pampers
E Cheer Crest Zest Luvs
N Tide Coast
G Oxydol Camay
T
H
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Branding:
Know what is meant by:
• brand
• brand name
• brand mark
• trademark
• copyright
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To brand or not?Generics: 30-50% cheaper
- threat to established brands- sell better where perceived quality difference is less.
How did companies react?- increase quality, segment markets (e.g., Ralston Purina)- introduce cheaper line (e.g., P&G “Banner” line
of paper products)- cut prices- open special shops (Ralph Lauren, Benneton)- demonstrate superiority (Kraft taste tests)
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Advantages of branding:
- Easy to process orders and track problems
- Legal protection
- Attract loyal and profitable set of cusotmers
- Helps in segmentation
- Distribution leverage
- Signal of quality
- Leads to innovation through generating competition
- Premium price
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Types of brands:
• Manufacturer’s brands: – Campbell, Heinz, Kellogg, Goodyear
• Private brands:– Sears, J.C. Penney
• Licensed Brands:– Christian Dior, Pierre Cardin, Coca Cola clothing
Battle of the Brands: between manufacturer and middleman
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Categories of branding:
• Individual brand names (e.g., Tide, Cheer, Camay, Folgers)
Adv: Does not tie company’s reputation to one brand.
Disadv: Dilute your company’s resources such as advertising. No brand may be dominate.
• Blanket family name: (e.g., Heinz, Campbell)
Adv: Costs less to introduce new products, no
“name” research required.
• Separate family brand names for each product.e.g., Diehard, Craftsman, Kenmore
• Combination of 1 and 2.e.g., Kelloggs Raisin Bran
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Brand Strategy decisions
• Line extensions
• Brand extensions
• Multibrands
• New brands
• Co-brands
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Desirable qualities for brand name:
- could convey product benefits: Coldspot, Coppertone, Craftsman
- could convey product qualities such as action or color Sunkist, Firebird
- easy to pronounce, recognize and remember 7-Up, Puffs
- distinctive Kodak, Exxon
- translate easily Enco - Standard Oil
- pronunciation problems - EZ
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Tests done before deciding on a name
Association tests: what images come to mind?
Learning tests: how easily is the name pronounced?
Memory tests: how well remembered?
Preference tests: which one preferred?
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Name lab and interbrand: top consulting firms (Acura, Compaq)
Good brand becomes associated with the product category eg:
Problem: can be made common names eg:
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BRAND EQUITY: It is the “added value” that a
brand endows a product (“that something extra”).
How do you measure that “value”?
It depends upon which perspective one is considering.
1. Firm perspective -• Brand equity is the incremental cash flow from the
association of the brand with the product.
Sources: Increased market share
Premium pricing
Reduced promotional expenses
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*Brand equity also imparts a differential advantage over competitors from a loyal customer base.
Sources: Platform for new products and extensions
Momentum to carry through difficult periods
Resistance from competitive attack
2. Trade perspective -
*Brand equity gives brand leverage over other products in a category.
Sources: Easier acceptance and wider distribution
Ability to negotiate better terms
Protection against private labels
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3. Customer perspective -
*Brand equity is the increase in attitude strength a customer has for a product using the brand.
How do you get brand equity?
Build: begin with a quality product
develop accessible attitudes
maintain a consistent image
Borrow: line extensions (different favor, form,
application)
category extension (same core benefit,
usage situation, customer base)
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Brand Extensions:
Adv: Instant recognition Low ad costs e.g., Honda lawn mower
Disadv: can fail and hurt original name e.g., BiC pantyhose, Life Savers gum
may be inappropriate and may dilute image
Buy: License Acquire
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BRAND LOYALTY: Attitude + repeat purchase
Three levels of loyalty:- Brand recognition
- Brand preference- Brand insistence
Why multibrand:- Combined sales higher- Get greater shelf space- Helps brand switchers- Motivates organization - Can target different segments
Problems: small shares for each, none may be profitable
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Packaging: – primary – secondary
Earlier function- to contain and protect product.
Other functions -
- as a sales tool (attract, inform, persuade)
- instant recognition
- convenience
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Labelling:
Functions - identify, grade, describe, promote
Fair Packaging and Labeling Act 1966
• Unit pricing
• Open dating
• Nutrition labeling
Other social issues:
• Excessive cost
• Scarce resources
• Pollution