brand management and new product development section 11b brand management and the firm brands:...

BRAND MANAGEMENT AND NEW PRODUCT DEVELOPMENT

SECTION 11BBrand Management and the Firm

Brands: Pricing Strategies, Tactics, and Laws

ALAN L. WHITEBREAD

THE PRICE-SETTING PROCESS*

• • Estimated demand and its price elasticity• Examine the cost-volume relationship• Examine competitive prices and strategies for

comparable and functionally similar products• Set the price schedule

PRICE STRATEGIES-COMPETITION BASED-

GOING – RATEBased on what competitors

are charging

GOING – RATEBased on what competitors

are charging

SOLE SOURCESOLE SOURCE

EQUAL TOPRODUCT LEADER

ALCOA, metals

EQUAL TOPRODUCT LEADER

ALCOA, metals

PRICE STRATEGIES-NEW PRODUCT*-

MARKET PENETRATIONInitial low price for volume

Wal-Mart

MARKET PENETRATIONInitial low price for volume

Wal-Mart

STAIRSTEPPlanned reductions

Computers

STAIRSTEPPlanned reductions

Computers

MARKET SKIMMINGInitial high price followed

by price decreases -

MARKET SKIMMINGInitial high price followed

by price decreases -

PRICE STRATEGIES-PRODUCT MIX-

PRODUCT LINE*Steps between items in line

Consumer electronics

PRODUCT LINE*Steps between items in line

Consumer electronics

CAPTIVE PRODUCT*

CAPTIVE PRODUCT*

PRODUCT BUNDLE*Season tickets

PRODUCT BUNDLE*Season tickets

BY-PRODUCTPlastic lumber

BY-PRODUCTPlastic lumber

OPTIONAL PRODUCT*Auto accessories

OPTIONAL PRODUCT*Auto accessories

PRICE ADJUSTMENT STRATEGIES

• Adjusting Prices for a Psychological Effect

• Price as a Quality Indicator

• Reference Prices [buyer’s perspective Clothing]

• Odd & Even •

• Price Lining*

• Prestige Pricing •

Psychological Pricing

PSYCHOLOGICAL PRICING

Price lining Prestige pricing

Units sold Units sold

Price

per

unit

Price

per

unit

Demand is inelastic over range: appliances

Labor; Chia Pet

$395

$349


• Adjusting Prices for a Psychological Effect

• Loss leader [milk]

• Temporary reductions

• Coupons*

Promotional Pricing


• Adjusting Prices to Account

for the Geographical Location of Customers

• Zones (UPS)

• FOB

Geographical Pricing*

PRICE ADJUSTMENT STRATEGIES [PRICE FLEXING]

Discount & AllowanceReducing Prices to Reward

Customer Responses such asPaying Early or Promoting

the Product.

Discount & AllowanceReducing Prices to Reward

Customer Responses such asPaying Early or Promoting

the Product.

Cash DiscountCash Discount

Quantity DiscountQuantity Discount

Functional DiscountFunctional Discount

Seasonal DiscountSeasonal Discount

Trade-In AllowanceTrade-In Allowance

Promotional AllowancePromotional Allowance

Segmented*Adjusting Prices to Allow

for Differences in Customers,Products, and Locations.

Segmented*Adjusting Prices to Allow

for Differences in Customers,Products, and Locations.

CustomerCustomer

Product-FormProduct-Form

Location*Location*

Time* Fed ExTime* Fed Ex

Channels* StanleyChannels* Stanley

PRICE STRATEGIES-PRICE ADJUSTMENT-

UNIT PRICING-By size, ounce

Detergents

UNIT PRICING-By size, ounce

Detergents

COST-PLUS PRICING

• PROVIDES A SET MARKUP OR MARGIN– Must understand cost structure in depth– Seller perceives price fairness– Seller perceives less price competition– Unrelated to market conditions– No customer orientation– No confidence in acceptance rate– Dangerous volume assumptions

$

QUANTITY

BREAK-EVEN ANALYSIS

2

4

6

8

10

12

200 400 600 800 1,000

Total Revenue

Total Cost

Target Profit($2 million)

Sales Volume in Units (thousands)

Co

st i

n

Do

llar

s (m

illi

on

s)

Fixed Cost

Variable Cost

COMPETITIVE RESPONSE

Hold Current Price;Continue to MonitorCompetitor’s Price.

Hold Current Price;Continue to MonitorCompetitor’s Price.

Reduce PriceReduce Price

Raise PerceivedQuality

Raise PerceivedQuality

Improve Quality& Increase PriceImprove Quality& Increase Price

Launch Low-Price“Fighting Brand”

Launch Low-Price“Fighting Brand”

Has Competitor CutPrice?

Has Competitor CutPrice?

Will Lower Price Negatively Affect Our

Market Share & Profits?

Will Lower Price Negatively Affect Our

Market Share & Profits?

Can/ Should EffectiveAction be Taken?

Can/ Should EffectiveAction be Taken?

Yes

No

No

No

Yes

Yes

PRICING CHALLENGES

• Economic Value-Added [EVA]– After-tax operating profit – capital*cost of capital

– Positive number indicates you are increasing shareholder value

• Pricing innovative products

• Pricing in rapidly growing markets

• Pricing in mature markets

• Appealing to all four customer price/value segments

CONSUMER PRICE/VALUE SEGMENTS

Value of differentiationLow

Low

High

High

Pain

Of

Expenditure

Price SensitiveSegment

LoyalSegment

Value-SeekingSegment

Convenience-SeekingSegment

THE LEGAL SIDE OF PRICING

Price Fixing-restraint of trade

(Sherman Act 1890)


(Sherman Act 1890)

Price Discrimination-Exclusives; Tying(Clayton Act 1914)

-resellers(Robinson-Patman Act (1936)

Price Discrimination-Exclusives; Tying(Clayton Act 1914)

-resellers(Robinson-Patman Act (1936)

ROBINSON-PATMAN ACT [1936]

• Case law and code law• Predatory Pricing […per se…]•

– • Section 2(a) Price Discrimination [p. 21]

– Dealing with purchasing– Different prices to different customers

• difficult, potentially illegal– Different prices for different quantities

• – Different prices for different customer classes

• airlines, seniors, …

THE LEGAL SIDE OF PRICING

Deceptive Practices

Deceptive Practices


(Sherman Act 1890)


(Sherman Act 1890)

Price Discrimination-exclusive; tying

(Clayton Act 1914)-resellers

(Robinson-Patman Act (1936)

Price Discrimination-exclusive; tying

(Clayton Act 1914)-resellers

(Robinson-Patman Act (1936)


SECTION 12Brand Management and the Firm

Brands: Integrated Marketing Communications

ALAN L. WHITEBREAD

INTEGRATED MARKETING COMMUNICATIONS [IMC]*

The concept under which the company has careful integration and coordination of all communication

channels to deliver a clear, consistent, and compelling message about the organization and /

or its products.

IMC – COMMUNICATION VEHICLES*

MEDIAADVERTISING

COLLATERAL

DIRECTMARKETING

INTERNETADVERTISING

PACKAGING& LABELING

PUBLICRELATIONS

PLACEADVERTISING

IMC [B2B] – GETTING THROUGH THE NOISE!

MEDIAADVERTISING

COLLATERAL

DIRECTMARKETING

INTERNETADVERTISING

PACKAGING& LABELING

PUBLICRELATIONS

TRADEPROMOTIONS

PLACEADVERTISING

DEVELOPING THE PROMOTION MIX

• PUSH STRATEGY– Through channels to consumers

Manufacturer Reseller(s) Consumers

Advertising & promotion

DEVELOPING THE PROMOTION MIX

• PULL STRATEGY– To consumers and back through channels

Manufacturer Reseller(s) Consumers

Advertising & promotion

SETTING THE PROMOTION MIX

PROMOTION

Short-term incentivesto stimulate sales

PUBLIC RELATIONS

Relating to various publicsby utilizing favorable messages

ADVERTISING

Any paid formof non-personal advertising

by a paid sponsor

SETTING THE PROMOTION MIX

PROMOTION-Incentives to buy

-Short-lived

PUBLIC RELATIONS-Believable-Effective

-Economical

ADVERTISING-Extensive reach

-Expressive-Impersonal

SETTING THE IMC BUDGET

AFFORDABLEMETHOD

Total cost basis

OBJECTIVE-&-TASK METHOD

Planned & measured

COMPETITIVE-PARITY METHOD

Meet competition

PERCENT-OF-SALES METHOD

Revenue basis

SETTING ADVERTISING OBJECTIVES-An objective for every target market-

Informative Advertising*

New productsMajor product changes

“Coldwater Tide”

Informative Advertising*

New productsMajor product changes

“Coldwater Tide”

Persuasive Advertising

“Buy brand X”

Persuasive Advertising

“Buy brand X”

Comparison AdvertisingCompares Brand A to B

Features & benefits

Comparison AdvertisingCompares Brand A to B

Features & benefits

Reminder AdvertisingKeeps Consumers Thinking

About a Product

Reminder AdvertisingKeeps Consumers Thinking

About a Product

ADVERTISING’S 5 M’S

Mission

Salesgoals

Advertisingobjectives

Money*

Factors toconsider:

Stage in PLC

Market shareand consumer

base

Competitionand clutter

Advertisingfrequency

Productsubstitutability

Message*Message generation

Message evaluationand selection

Message execution

Social-responsibilityreview

Media*Reach, frequency,

impactMajor media types

Specific mediavehicles

Media timingGeographical

media allocation

Measure-ment

Communicationimpact

Salesimpact

DEVELOPING EFFECTIVE COMMUNICATIONS

Identify target audience[s]Identify target audience[s]

Set communication objectivesSet communication objectives

Designing the message[s]*

• Content• Emotional, moral, rational

• Structure• Conclusions, argument type and order

• Format• Layout, words, sound, language

• Source• Congruity, expertise, trustworthiness

•

Designing the message[s]*

• Content• Emotional, moral, rational

• Structure• Conclusions, argument type and order

• Format• Layout, words, sound, language

• Source• Congruity, expertise, trustworthiness

•

MESSAGE EXECUTION STYLES*[Advertising appeals]

TestimonialEvidence

TestimonialEvidence Slice of LifeSlice of Life

ScientificEvidence

ScientificEvidence LifestyleLifestyle

TechnicalExpertise

TechnicalExpertise FantasyFantasy

Musical(Song or theme)

Musical(Song or theme)

PersonalitySymbol

PersonalitySymbol

Mood or Image(Humor, sex, fear)

Mood or Image(Humor, sex, fear)

USPUSP




Designing the message[s]Designing the message[s]

Choosing the media*Choosing the media*

MEDIA COVERAGE - GOOD

DD

CC

BB

AA

MEDIA COVERAGE - BAD

AA

BB

DD

CC

ADVERTISING CATEGORIES*

National (global) brand advertisingNational (global) brand advertising

Retail (local) advertisingRetail (local) advertising

Directory advertisingDirectory advertising

Institutional advertisingInstitutional advertising

Business-to-business advertisingBusiness-to-business advertising

Direct response advertisingDirect response advertising

Public service advertisingPublic service advertising

SELECTING ADVERTISING MEDIA

1. Decide on Reach, Frequency, and Impact 1. Decide on Reach, Frequency, and Impact

Step 2. Choosing Among Major Media TypesMedia Habits of Target Consumers / Segments

Nature of the ProductType of Message

Cost

Step 2. Choosing Among Major Media TypesMedia Habits of Target Consumers / Segments

Nature of the ProductType of Message

Cost

Step 3. Selecting Specific Media VehiclesSpecific Media Within a Given Type, i.e. TV’s ER.Must Balance Media Cost Against Media Factors:

Audience Quality & Attention, Editorial Quality

Step 3. Selecting Specific Media VehiclesSpecific Media Within a Given Type, i.e. TV’s ER.Must Balance Media Cost Against Media Factors:

Audience Quality & Attention, Editorial Quality

Step 4. Deciding on Media TimingScheduling of Advertising Over the Course of a Year

Pattern of Ads: Continuity or PulsingMedia Schedule

Step 4. Deciding on Media TimingScheduling of Advertising Over the Course of a Year

Pattern of Ads: Continuity or PulsingMedia Schedule

COLLATERAL MATERIALS

• Consumer– – Auto brochures– Catalogs– …

• The B2B world is totally different*– http://www.geplastics.com/gep/en/Home/Home/home.html then to

• Literature and tools• Solution Area: Products & Services – Industry Applications

– http://www2.dupont.com/DuPont_Home/en_US/index.html then to • Plastics – Fluoropolymers – Teflon PFA

http://www.geplastics.com/gep/en/Home/Home/home.html

http://www2.dupont.com/DuPont_Home/en_US/index.html

AD AGENCY

Develops Campaign’s

Strategy for Client

Develops Campaign’s

Strategy for Client

Creative ServicesDreams Up and Produces

the Ads / Materials

Creative ServicesDreams Up and Produces

the Ads / Materials

Media PlanningDetermines Effective

Communication Vehicles /Media Schedule

Media PlanningDetermines Effective

Communication Vehicles /Media Schedule

Collect and Analyze Information to

Help Develop a Strategy

Collect and Analyze Information to

Help Develop a Strategy




Designing the message[s]Designing the message[s]

Collecting feedbackCollecting feedback

Choosing the mediaChoosing the media

CONSUMER PROMOTION

Consumer-Promotion Objectives

Increase Short-Term SalesIncrease Short-Term Sales

Build Long-Term MarketShare

Build Long-Term MarketShare

Retailers to Carry New Items Retailers to Carry New Items

Sales Force Support forCurrent or New Products

Sales Force Support forCurrent or New Products

Consumer Relationship Building

Consumer Relationship Building

Point-of-PurchaseDisplays

Point-of-PurchaseDisplays

PremiumsPremiums

Price PacksPrice Packs

Cash RefundsCash Refunds

CouponsCoupons

SamplesSamples

Consumer-Promotion Tools

PatronageAwards

PatronageAwards

AdvertisingSpecialties

AdvertisingSpecialties

TRADE PROMOTIONRetailers and Wholesalers

Trade-Promotion Objectives

Persuade Retailers or Wholesalers to Carry a Brand

Persuade Retailers or Wholesalers to Carry a Brand

Give a Brand Shelf SpaceGive a Brand Shelf Space

Promote a Brand in Advertising

Promote a Brand in Advertising

“Push” a Brand to Consumers“Push” a Brand to Consumers

Specialty Advertising

Items

Specialty Advertising

ItemsContestsContests

Free GoodsFree Goods

Buy-BackGuarantees

Buy-BackGuarantees

AllowancesAllowances

Price-OffsPrice-Offs

Trade-Promotion Tools

DiscountsDiscounts

DisplaysDisplays

PremiumsPremiums

TRADE PROMOTIONIndustrial Customers

Business-Promotion Objectives

Generate Business LeadsGenerate Business Leads

Stimulate PurchasesStimulate Purchases

Reward CustomersReward Customers

Motivate SalespeopleMotivate Salespeople

Business-Promotion Tools

Specialty AdvertisingPrograms

Specialty AdvertisingPrograms

Initial StockBuy-Back

Initial StockBuy-Back

AdvertisingAllowances

AdvertisingAllowances

Discounts orFree Goods

Discounts orFree Goods

DisplaysDisplays

PUBLIC RELATIONS OBJECTIVES

Introducing New Products toManufacturers

Introducing New Products toManufacturers

Introducing New Products to Consumers

Introducing New Products to Consumers

Influencing Government Legislation

Influencing Government Legislation

Enhancing the Image of a City, Region, or Country

Enhancing the Image of a City, Region, or Country

Calling Attention to a Firm’sInvolvement with the Community

Calling Attention to a Firm’sInvolvement with the Community

PUBLIC RELATIONS TOOLS

Strong PR FirmStrong PR Firm

Press releases / stories(Firm and it products)

Press releases / stories(Firm and it products)

Public Affairs(Community relations)

Public Affairs(Community relations)

Development & MiscellaneousDevelopment & Miscellaneous

DEVELOPING A COMPREHENSIVE IMC PLAN

• Complete list of items, timing, and budget for all audiences– Literature schedule– Media schedule– Coverage ratios– Introduction and training– Trade shows– All other items

IMC CHALLENGES

• FLOW

• TIMING

• ACCURACY

• COORDINATION

• CONTROL

• MEASUREMENT

E-COMMERCE OBJECTIVES

• Complement and synergize with all other programs

• Clear and concise direction

• Consistent approach and image

• Extremely user-friendly

INTEGRATING E-COMMERCE STRATEGY AND ACTIVITY

• In-depth examination of all of the 4-P’s– Be especially sensitive to issues with

• Channels• Prices• Promotions

• Eliminate or minimize conflicts

• Overall integrated approach to the various market segments

WEB SITE*

• Extremely user friendly– Navigation, graphics, white space– Logically organized– Easy to read [quicky]

• Valuable and timely information

• Interactive

• Security, tracking, automation

• Very fast response time



Selling the Project -2The Business Plan

ALAN L. WHITEBREAD

BUSINESS PLAN CONTENTS

• Executive Overview

• Marketing Opportunity– USP, FABs

• Product Development– Cost, time, risk analysis, other issues

• Go to Market Strategy–

• Detailed Financial Analysis

PRODUCT DEVELOPMENT

• Summary of issues

•

• Remaining items

SUCCESS MEASURES

• CUSTOMER / PRODUCT ACCEPTANCE– Acceptance rate– Revenue forecast – Unit volume– Market share– Quality guidelines

• FINANCIAL PERFORMANCE– Product cost– Margins– Break-even point– Time to break-even– Profitability

• IRR, ROI, NPV, …

MARKETING

• Customer Analysis – the need, the value, anticipated response

• Competitive Analysis

• Company Analysis

• Market segments and target markets

• The Marketing Mix

•

• Summary of benefits

ROLL-OUT PLAN

• Detailed introduction to the market– Possibly in stages– Gantt chart[s]

• Department agreement

• Remaining special concerns

THE MARKETING BUDGETGantt Chart

CAMPAIGN TIMELINE: SMALLER COMPANY

Week Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 LAUNCHRESEARCHCustomer/Prospect Research

CAMPAIGN CREATION & MANAGEMENTBrainstormingCreationPresentation to Top ExecsMeeting and AssignmentsOngoing Weekly Status Meetings

ADVERTISING: PRINTCreate Media Plan (Print and Online)Buy Print MediaDesignPhotography and/or illustrationProductionCopywriting and ReviewFinal Negatives, Insertion OrdersShip Negatives and Orders to Publications

FINANCIAL ANALYSIS

• Comprehensive set of financials– Statements

• Line item detail• Possible stage evaluation and review

– – Human resources– Project analysis

•

BUDGETING

• Top-down or bottom-up approach– – Expected revenues and sources– – Estimated average standard costs– Marketing expenses

• Line item detail by area• Implementation • Timing issues and other schedules

– Projected pre-tax income

PROFIT MEASUREMENTS

• Operating profit is defined as the amount of money pre-tax, a company makes from its ongoing business.

• Pre-tax profit is the sum of operating profits plus or minus gains and losses from other activities.– Investments, interest expense, royalties, and

other financing activities

Profit and Loss Statement

Cost CategorySalesCost of GoodsGross ProfitG & AOperating ProfitNon-operating cost

(interest expense)Profit before taxTaxes [50%]Profit after tax

(000’s) $20,000

(12,500) 7,500

(2,500) 5,000

(1,250) 3,750

(1,875) $1,875

37.5% GM

18.75%

CASH FLOW

• Cash flows into a company when it receives payment for sales or on receivables, borrows money, sells stock, issues bonds, collects royalties, interest, or some other items.

• Cash flows out of a company when it acquires plant and equipment, purchases materials, produces goods, markets goods, repays investors, or repays debt, or spends money on anything.

• The finance area is concerned with both the total amount of these flows and their timing.

Income Statement and Cash Flows

• While the income statement shows a pretax profit of $160,000, the statement of cash flows shows that we would not have enough cash to finance operations if it had to be justified on a fully-loaded cost basis.

• Managing cash flows and pre-tax profit are critical for long term survival.

FINANCIAL DECISION TOOLS

• Present Value [PV]

• Discounted Cash Flow [DCF]

• Future Value [FV]

• Net Present Value [NPV]

• Economic Value-Added [EVA]

PRESENT VALUE [PV]

• The value of a fixed amount n time periods expressed in today’s currency.

• Assume you are making $100,000 [$S] per year. Your employer offers you a five-year contract [n=5] that will increase your annual salary to $150,000 per year in the fifth year. Assuming a 9% [r] inflation rate, will this be worth more or less than you are currently making?– The formula is PV = S * [1/[1+r]n]– Build a spreadsheet and calculate the answer.– Did you find that the $150,000 in year five was worth only

$97,489.71 in today’s money?

DISCOUNTED CASH FLOW [DCF]

• This is the process of valuation by finding the present value [PV] of some amount of cash flows at some time in the future.

FUTURE VALUE [FV]

• The value of a fixed amount n time periods in the future.

• Assume you start your career making $35,000 per year [S]. Also assume you never change jobs but keep up with the average rate of inflation [r = 4%] for your entire 42-year career [n=42]. What would you be making when you retired.– The formula is FV = S * [1+rn]– Build a spreadsheet and calculate the answer.– Did you get $181,747.40?

Net Present Value

• Time-Value-of-Money Concept– $1 today is worth more than $1 in the future

• Discounts future cash flows in terms of present value to determine the net value added to the company by a project.

• Considers:– Forecasts of revenues and costs– Expected life cycle or products and

technology– Industry Trends

Net Present Value

• The greater the NPV, the better the investment• Negative NPVs represent projects that do not

breakeven

NPV = PV of future cash inflows – PV of future cash outflows – initial cost

ECONOMIC VALUE-ADDED [EVA]

• EVA shows you how much money the company makes from operations after taxes, less the cost of capital for the money tied up to make the product.

• EVA provides a longer-term perspective on whether a project is generating or destroying value.

• EVA provides a more in-depth understanding of a decision than Net Present Value because it also includes the timing of cash flows and the cost of capital tied up in accounts receivable, inventory, and related assets.

EVA = Operating Profit – Taxes – [Total Capital Employed * Company’s Cost of Capital]



International Intellectual Property:Protecting Your Brands and Creations

ALAN L. WHITEBREAD

INTELLECTUAL PROPERTY

• The U.S. leads the world in technology—it is something everyone wants.

• IP

• IP

WORLD TRADE ORGANIZATION [WTO] http://www.wto.org/english/thewto_e/thewto_e.htm

• ORIGINALLY GATT [1948 – tariffs]

• CURRENTLY INVOLVED IN– INTELLECTUAL PROPERTY– – SUBSIDIES

•

– SAFEGUARDS•

http://www.wto.org/english/thewto_e/thewto_e.htm

WORLD TRADE ORGANIZATION [WTO] http://www.wto.org/english/thewto_e/thewto_e.htm

– INFRASTRUCTURE • CHINA:

– ACCOUNTING [chose British System 2007]–

– DISPUTE RESOLUTION

– http://www.wto.org/english/tratop_e/region_e/region_e.htm is a map of risk assessment.

http://www.wto.org/english/thewto_e/thewto_e.htm

http://www.wto.org/english/tratop_e/region_e/region_e.htm

INTELLECTUAL PROPERTY &THE MARKETING MIX

• PRODUCT DECISIONS– May be dependent upon patents for

• Designs• Production processes, …

– The brand is often more important than the product itself.

• PROMOTION DECISIONS– Slogans, songs, or visual communications

that become part of the product image need to be protected.

INTELLECTUAL PROPERTY

• DISTRIBUTION DECISIONS– Ownership, use, and rights– Who is allowed to do what?– What approval[s] are needed?

• PRICING DECISIONS– Driven by competition and the market

• IP protection may reduce competition for a limited time.

– Price can be used as a weapon to gain share or open up new market segments. Be careful, this can be dangerous.

ELEMENTS OF INTELLECTUAL PROPERTY

• COPYRIGHT

• TRADEMARK• SERVICE MARK

• PATENT•

•


• COPYRIGHT [ © ]– a guarantee of control of an original work– for the original way the idea is expressed– you have no more than six months to claim

copyright protection.

– any type of• artistic, dramatic, digital, literary or musical work

ELEMENTS OF INTELLECTUAL PROPERTY IPO http://www.wipo.org/about-ip/en/trademarks.html • TRADEMARK [ TM ® ]

– a guarantee of control of a work of some item used to uniquely identify the product [or service in some countries]

– it could be a• word, logo, package design, slogan, or other

identifying mark

http://www.wipo.org/about-ip/en/trademarks.html

DOMAIN NAMES

• Internet addresses [domain names] are bought and sold – sometimes for large amounts of money.

• If a domain name infringes on a registered trademark, the domain name will be suspended immediately if challenged by the trademark owner.


• SERVICE MARK [ SM ® ]– some item used to uniquely identify a service

[available only in some countries]

– it could be a• word, logo, package design, slogan, or other

identifying mark

TRADEMARKS & SERVICE MARKS

• Available in approximately 200 of 270 political entities.

• There are different filing methods and requirements.

• The safe route is – – U.S. CASSIS System for searching marks– See the USPTO website for detailed information.

• The level of protection varies by country and trademark treaty signatories.

TRADEMARK TREATIES

• THE PARIS CONVENTION– extends national resident treatment of US

citizens in member nations for patents, trademarks, and service marks.

– – The mark must be registered in each country. – You must file for the mark within six months of

the U.S. filing date.

TRADEMARK TREATIES

• THE MADRID AGREEMENT– provides a central filing procedure through the

World Intellectual Property Organization [WIPO].

– A central application will be filed and the designated countries will process the application based on local trademark rules.

– This requires two filing fees—one for the home country and one for the central filing. The U.S. is not a member. U.S. companies can file as a member if they use a subsidiary in a member country.

TRADEMARK SYSTEMS

• COMMON LAW– is where trademark rights are acquired

through use.– A trademark can not be preregistered. – The first user has the rights to the protection.

TRADEMARK SYSTEMS

• FIRST TO FILE OR STRICT REGISTRATION– – The rights are awarded only by registration

application. – Whoever files first gets the mark protected

even though it may never have been used. – Within this group is the “Famous Mark

Exception” which, in some countries, protection can be provided based upon international reputation.

TRADEMARKS & SERVICE MARKS

• Available in approximately 200 of 270 political entities.

• A Service Mark [SM] is not permitted in many countries.

• Using a registered trade mark symbol [®] is a felony in a few countries.

• The EUROPEAN COMMUNITY TRADE MARK ACT [ ] for 15 nations has one filing.

TRADEMARK ISSUES

• Dilution – occurs when a mark loses its significance in the

market. This was first addressed legislatively in the United States in 1995 and is an issue in countries around the world.

• Kleenex tissues, Scotch Tape, Xerox[ing], Aspirin, …

• Losing your mark– In most countries, the lack of use of the mark over a

consecutive three to five year period can make your mark invalid and someone else could claim it.

TRADEMARK PROTECTION• EXHAUSTION

or “first sale” determines when the trademark owner may or may not have rights

-This varies by country-Interstate or intrastate in the U.S.

• UNIVERSALITY [or trade identity]states a trademark is not only an identification of the source of a product but remains as a part of the product.

• TERRITORIALITYstates a trademark holder has the right to control the distribution of the trademarked product.


• PATENT– A guarantee of a set of rights to control the

use of an invention– Protects the original idea and the way it is

implemented [in some countries]– Generally 14-20 years protection based on

country and type of patent–

Primary Requirements for a Patent

• The new invention must be:– Novel

• not known or used in the country [sometimes anywhere in the world] and

• not published [or sometimes discussed] anywhere–

– Non-obvious • cannot be an obvious way to do something, e.g., a

simple extension of a principle

– Useful • • See Wacky Patents and similar sites for many examples.

ELEMENTS OF U.S. INTELLECTUAL PROPERTY

• UTILITY PATENT [20 YEARS]

– Covers processes, machines, manufacture or composition of matter, plus new and useful improvements

– protects the way an article is used and works

• DESIGN PATENT [14 YEARS]

– Covers the appearance or ornamental design of an article– protects the way an article looks

• PLANT PATENT [20 YEARS]

– discovered and asexually reproduced a distinct and new variety of plant, other than a tuber propagated plant or a plant found in an uncultivated state

MAKING SURE THE PATENT HAS VALUE

• DESIGN PATENT– Design patents are frequently of little or no value

because they are so limited in what they protect. – They should be written as broadly [i.e., cover as many

extensions] as possible [similar to a utility patent] and still have a very good chance of being granted, and be defendable.

• UTILITY PATENT– These should be written as broadly [i.e., cover as

many extensions] as possible and still have a very good chance of being granted, and be defendable.

MAKING SURE THE PATENT HAS VALUE

• Employ a specialized patent law firm or a large law firm with full-time specialized patent attorneys.

• File for as much protection as possible domestically and internationally. Follow the international patent application sequence.

CHALLENGING A PATENT

• There are two ways to invalidate some or all of a patent that has been granted.– –

• The two most common ways to invalidate a patent are to [1] clearly show there was prior art or [2] prove the examination was faulty.

PATENT COOPERATION TREATYSee http://www.wipo.int/pct/en/texts/articles/atoc.htm for complete text.

• PCT is a procedure for filing patent applications internationally. One filing results in a single search which is accompanied by a written opinion. You can also get a preliminary examination. An full examination required by national law must to done to receive a patent in each application country.

• No “international patent” exists. • Find a map of PCT countries on the web.• Find a list of PCT member nations on the web.

http://www.wipo.int/pct/en/texts/articles/atoc.htm


• TRADE SECRETS

– Process(es) •

– Controls– Documentation– Security– Awareness–

KNOWLEDGE MANAGEMENT

• A newly emerging business field of all aspects of knowledge within a firm.

– Information– Combined with experience– Context of use– Interpretation– And its place in the context of the firm

KNOWLEDGE MANAGEMENT

• Intellectual property

• Knowledge within the firm– Processes [manufacturing, …]– Systems [order entry, …]– Methods [product testing, …]– Market knowledge

• Customer / prospect lists• Databases


• NEW HORIZONS [the U.S. is leading the way in most categories]

– Software– Sounds

• Examples?

– Colors• Examples?

– Scents • Examples?



Sales: Ethics, Organizations and Integrating Sales Activities

ALAN L. WHITEBREAD

SALES RESPONSIBILITIES

• – Feedback about client developments– Feedback about your company– Feedback about competitors

• – Implement the marketing plan– Communicate your company policies and/or positions– Not an agent

•

SALES RESPONSIBILITIES:INFORMATION DISSEMINATION

• TO CUSTOMERS AND PROSPECTS– STANDARD COMMUNICATION– NEW PRODUCTS AND PROGRAMS

• TO THE COMPANY– CUSTOMER AND PROSPECT REACTIONS– COMPETITIVE INFORMATION

• SIGNIFICANT EVENTS

SALES RESPONSIBILITIES:CUSTOMER & PROSPECT CARE• BUILDING A RELATIONSHIP

– TRUST–

• DELIVERING AS ADVERTISED– INFORMATION– FOLLOW-UP AND FOLLOW-THROUGH–

UNDERSTANDING THE SALES FIT IN THE MARKETING ORGANIZATION• Markets and market segments• Target market segments• Channels of distribution• Types of sales organizations• Sales approaches to be used• Understanding the sales cycle• Understanding sales support• Sales trends

TYPES OF SALES ORGANIZATIONS*

FIELD

DIRECT SALES

NATIONAL ACCOUNTS

OEM

GOVERNMENT

HOUSE

DIRECT MARKETING

TELESALES

DIRECT MAIL

CATALOG

INTERNET

RESELLER PARTNERSHIPS

MANUF. REP’S

FRANCHISES

LICENSEES

JOINT VENTURES

STRATEGIC ALLIANCES

Copyright A. Whitebread, 2001-2008.

Small organizations need to focus on multiplicative sales efforts!

MAJOR SALES APPROACHES

• TRADITIONAL– Product oriented—profit through sales volume

• – Problem-solving—profit through problem solving

• – Understand their business—profit through strategic

relationships, customer loyalty and satisfaction

• TEAM– Integrate organizations—profit through sales volume

MANAGING THE PROSPECT FUNNEL AND THE SALES CYCLE

PROSPECT

APPROACH & QUALIFY

PRESENT

DEMONSTRATE

HANDLE OBJECTIONS

CLOSE

FOLLOW-UP

CUSTOMER !

REAL, FALSE, STALLS

HOT PROSPECTTRIAL & ACTUAL

CLOSE

EFFECTIVENESS

NEEDS &

VALUE

QUALIFIED !FAB

COGNITIVE DISSONANCE

MARKETING DEPARTMENT

LEADS VS. COLD CALLS


A

A

D

I

SALES TRAINING SALES SUPPORT

SALES TRENDS

• TEAM SELLING TO LARGE ACCOUNTS

• TECHNOLOGY AND THE NUMBER OF SALES PERSONNEL– DIRECT SALES– MANUFACTURER’S REPRESENTATIVES– INTEGRATION OF ALTERNATIVE SALES ENTITIES

• INSIDE / OUTSIDE SALES FORCE MIX

• SALES FORCE AUTOMATION [SFA]

SALES MANAGEMENT ISSUES

1. Organization, strategy, and structure

2. Implementation and orchestration

3. Recruiting and selecting

4. Training and developing

5. Compensation

6. Direct, supervise, and motivate individuals

7. Evaluation

8. Retention

SALES MANAGEMENT

• 1-ORGANIZATION STRATEGY

AND STRUCTURE

• CHANNELS OF DISTRIBUTION STRONGLY INFLUENCE DECISIONS

– Customer / market orientation

• • SALES FORCE SUPPORT REQUIREMENTS

– Marketing resources, collateral, customer services, …

• SALES FORCE STRUCTURE AND SIZE– TERRITORY, PRODUCT, CUSTOMER, COMPLEX

TYPES OF SALES FORCES

FIELD

DIRECT SALES

NATIONAL ACCOUNTS

OEM

GOVERNMENT

HOUSE

DIRECT MARKETING

TELESALES

DIRECT MAIL

CATALOG

INTERNET

ALTERNATIVE

RESELLER PARTNERSHIPS

MANUF. REP’S

FRANCHISES

LICENSEES

JOINT VENTURES


SALES FORCE ORGANIZATION ISSUES

SALES

TYPECONTROL COST

EFFEC-

TIVENESS

LEARNING

CURVE

FIELD ?

SMALL GROWING /

DECLINING

? ? ? ?

DIRECT

MKTG.

PRIMARILY SMALL

ACCOUNTS

ALTER-

NATIVE

? ? ? ?

GEOGRAPHIC STRUCTURE

VP Marketing

Product Manager Group A

Product Manager Group B

Eastern Region Sales Manager

Western Region Sales Manager

Marketing Communications

Manager

Advantages of this structure include

1. simple

2. low cost of sales and administration

3. direct customer interaction

Disadvantages to this structure include

1. no specialization

2. controlling how the sales force spends its time

3. selling all the products

PRODUCT STRUCTURE

VP Marketing



Sales ManagerProduct Group A

Sales Manager Product Group B


Manager


1. driven by product purchases

2. specialized sales force knowledge for specialized products

3. helps forecasting and production scheduling


1. duplication of sales effort selling two very different product groups

2. higher administrative costs

3. problem with accounts wanting to buy both product groups

FUNCTIONAL STRUCTURE

CEO

Marketing and Sales

OperationsFinance and Accounting

Information Technology

Human Resources

List three advantages to this structure below.

1. 2. 3.


1. 2. 3.

MARKET / CUSTOMER STRUCTURE

VP Marketing



National Sales Manager

Major Accounts Manager


Manager

National Accounts OEM AccountsFederal

Government


1. driven by type of customer and is close to the customer

2. sales management controls field sales and how they spend their time

3. improved feedback throughout the organization


1. higher selling and administrative costs

2. multiple sales forces compete for product management’s time

3. account assignment to the appropriate sales organization is critical to the

success of this approach

COMPLEX STRUCTURE

VP Marketing

Product Management

Group


Direct Marketing Manager



Manager

National Accounts

OEM AccountsFederal

GovernmentTelesales Manager

Direct Sales Managers

Reseller Sales Managers

Internet Sales Manager


1. driven by type of customer and is close to the customer

2. multiple levels of sales skills based on the customer type

3. very difficult for competitive analysis

Issues of this structure include

1. classification and reclassification of accounts

2. price strategies

3. consistent program implementation

Disadvantages of this structure include

1. requires a lot of coordination

2. Information is widely spread over the organization and hard to consolidate

3. very heavy work load on marketing communications

COMPLEX STRUCTURE

VP Marketing

Product Management

Group





Manager

National Accounts

OEM AccountsFederal

GovernmentTelesales Manager

Direct Sales Managers

Reseller Sales Managers

Internet Sales Manager

THIS BECOMES EVEN MORE COMPLEX WITH

-MANUFACTURER’S REPRESENTATIVES

-CUSTOMER SERVICES

-TECHNICAL SALES SUPPORT

-

WHERE SHOULD CUSTOMER SERVICES SHOULD REPORT? WHY?

INTERNATIONAL STRUCTURE - 1

CEO orVP Marketing

NorthAmerica

Central andSouth America

Europe, Africa,and the

Middle East

Asia and thePacific

Export


1. 2. 3.

List three disadvantages to this structure below.

1. 2. 3.

INTERNATIONAL STRUCTURE - 2

VP Marketing

Product Management

Group




Marketing Communication

s Manager

Customer Services

Technical Sales Support

This is a typical U.S. marketing structure for a large organization. At this size it could look like an international structure at the higher level.

This provides you detail of some of the organizational issues larger firms face every day.

THE SALES ORGANIZATIONS

• 2-IMPLEMENTATION / ORCHESTRATION

–

– COMMON GOALS

– SIMILAR STRATEGIES AND TACTICS

– TEAMWORK

SALES MANAGEMENT

• 3-RECRUITING AND SELECTING

• SEARCH AND SEARCH COSTS– % AVERAGE TURNOVER– HOW?—WHERE?—WHO CAN HELP?–

• SELECTION PROCESS– TEST FOR SALES APTITUDE AND / OR FIT?

» PERSONALITY» PERSEVERANCE

– –

SALES MANAGEMENT

• 3-RECRUITING AND SELECTING-continued

• SEEK THOSE WITH GOOD SKILLS– – AS PROMISED AND ON TIME– CRITIQUE CALLS– – PROFESSIONAL COURTESY

•

SALES MANAGEMENT

• 4-TRAINING & DEVELOPING

• BASIC SALES SKILLS– PSS OR EQUIVALENT– PRESENTATIONS–

• WHY SALES TRAINING?– STRONGER CUSTOMER RELATIONS– IMPROVED MORALE– INCREASED PRODUCTIVITY

SALES MANAGEMENT

• 4-TRAINING & DEVELOPING-continued

• KNOW YOUR CUSTOMERS

• TIME MANAGEMENT

• TERRITORY MANAGEMENT– TYPES OF ACCOUNTS

TYPES OF ACCOUNTS

PROBLEM !WHAT FUTURE ?

GROWTHBASE + GROWTH

STRONG WEAK

ACCOUNT POSITION

HIGH

LOW SPEND AS LITTLE TIME AS POSSIBLE

MAXIMIZE EFFORTS

THE DIRECT MARKETING ISSUE

NEED CLOSE EVALUATION


P

O

T

E

N

T

I

A

L

SALES MANAGEMENT

• 4-TRAINING & DEVELOPING-continued

• EXCELLENT PRODUCT & PROGRAM KNOWLEDGE

•

• BE PRODUCTIVE AND EFFICIENT

TIME MANAGEMENT

0%

5%

10%

15%

20%

25%

30%

Selling Phone Service Admin Travel

Sales

Manager

SALES MANAGEMENT

• 5-COMPENSATION

•OBJECTIVES

•IS THE SALESPERSON IN CONTROL?

•EQUITABLE –

SALES MANAGEMENT

• 5-COMPENSATION-continued

• WHAT IS THE JUSTIFICATION FOR

– BASE SALARY – COMMISSIONS– BONUS – EXPENSES LEVELS– AUTOMOBILE OR ALLOWANCE– THE COMPENSATION MIX TO MEET CORPORATE

OBJECTIVES

SALES MANAGEMENT


• TYPES OF PLANS

– SALARY & TRAVEL PAID » ELECTRONICS

– SALARY & BONUS OR COMMISSION & TRAVEL» COMMON

– STRAIGHT COMMISSION & TRAVEL » COST MINIMIZATION

– STRAIGHT COMMISSION » CORRUGATED, AVON

– PLAN DESIGN ISSUES

SALES MANAGEMENT


– PLAN DESIGN ISSUES

» Time period month, YTD, cumulative YTD …

» Territory size» »

SALES MANAGEMENT


• COST OF SALES ISSUES

• CALCULATING THE COST OF SALES– How many prospects?– Average number of calls made per day.– Average cost of a B-B sales call--$300+– Average cost of a telesales call--$25 est.

• UNDERSTANDING THE SALES CYCLE– Length– Key events–

COST OF SALES CALCULATIONS

• Method 1-Territory Coverage / Workload Approach

# prospects * avg. calls to close

(avg. calls / day) * 240 * 0.6

• Method 2-Profitability Approach

avg. cost / call * avg. calls to close

avg. GP margin

• Method 3-Available Budget Approach

budget / avg. cost of a salesperson


DOES NOT INCLUDE THE HIT RATIO.

SALES MANAGEMENT

• 6-DIRECT, SUPERVISE, & MOTIVATE INDIVIDUALS

– PLANNING AND IMPLEMENTING

– FORECASTING• TERRITORY POTENTIAL• SALES

– TRACKING & ACCOUNTABILITY

SALES MANAGEMENT

• 6-DIRECT, SUPERVISE, & MOTIVATE INDIVIDUALS

– BUDGETING AND EXPENSE CONTROL

– MOTIVATING AND COACHING• TWO DRIVING FORCES

– –

» HONORS, AWARDS» SALES INCENTIVE PROGRAMS [Trips, gifts]» SALES MEETINGS

SALES MANAGEMENT

• 7-EVALUATION

• THE ROLE OF QUOTAS

– OBJECTIVES– DESIRED RESULTS– DETERMINING A FAIR QUOTA–

SALES MANAGEMENT

• 7-EVALUATION-continued

• PROGRESS TO PLAN / QUOTA– GREAT YEAR– BAD YEAR – AGAIN!– GREAT YEAR – BAD YEAR–

• TIMLINESS– SALES REPORTS & CALL PLANS– TERRITORY INFORMATION– MEETING ADMINISTRATIVE REQUIREMENTS

SALES MANAGEMENT

• 7-EVALUATION-continued

• ATTITUDE

• LEADERSHIP POTENTIAL

• CAREER PLANNING– ADVANCE THROUGH SALES– ADVANCE THROUGH MARKETING– DEVELOP LEADERS AND PREVENT TURNOVER

SALES MANAGEMENT

• 8-RETENTION

TURNOVER COSTS– INTERIM TERRITORY COVERAGE– RECRUITING– INTERVIEWING & HIRING– ACCOUNT INTRODUCTIONS– PERSONAL & MOVING EXPENSES

GETTING THE SALES ORGANIZATION READY FOR THE LAUNCH

• Support materials

• Samples

• Sales training– Sales calls– Demonstrations

• Pre-launch sales

brand management and new product development section 11b brand management and the firm brands:...

Documents

monitorcompetitors price

lower price

price competitionunrelated

price elasticityexamine

price fairnessseller

psychological effect

pricing strategies

promotingthe product