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    PRODUCT & BRAND

    MANAGEMENTLECTURE 3

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    Marketing Planning

    01-05-2012Mukesh Goyal, Prof. - Marketing, PIMSR

    2

    Marketing plan Contents (Summary) Executive summary

    Situation Analysis

    Competitor definition

    Category Analysis

    Competitor Analysis

    Customer Analysis Planning Assumptions

    Opportunity & Issue Analysis

    Objectives (Sales, M.S. Growth, Profitability, volumes, any other)

    Product/Brand Strategy

    Supporting Marketing Programs

    Financial Documents

    Monitoring & control Mechanism

    Contnigency Plans

    Role & Operation of ProductManagement

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    Customer

    Business run on customers

    Cos revenue comes from customers, notproducts

    Current customers

    Customers of competitors

    Potential customers Currently non-customers

    Customer Analysis

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    Customer Analysis

    Customer Analysis

    What we need to know about current and potentialcustomers:

    1. Who buys and uses the product?2. What customers buy and how they use it?

    3. Where customers buy?

    4. When customers buy?

    5. How do customers choose?6. Why customers prefer a product?

    7. How customers respond to marketing programs?

    8. Will customers buy it (again)?

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    1. Who buys & Uses the Product

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    1. Who Buys & Uses the productCustomer Vs Consumer: Buyers Vs Users Initiator

    Influencer Decider

    Purchaser

    User

    e.g. Cheetos with Tatoo

    Wedding Gown/Suit

    Situation is more applicable in industrial set-upe.g. Server purchase

    Customer Analysis

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    Who buys & Uses Products

    How do we define/identify customersSegmentation Variables for Consumer Markets

    Demographics

    Age, Gender, Geographic location

    Socio-graphics

    Income, education, occupation, social class

    Personality

    traits ambitious, extrovert

    Psychographics and Value

    lifestyle activities, interests, opinions

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    Lifestyle Typology

    Strivers

    Achievers

    Pressured

    Adapters

    Traditionalists

    Who buys & Uses Products

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    Value Typology Self-respect

    Security

    Warm relationship with others Sense of accomplishment

    Self-fulfillment

    Sense of belonging

    Respect for others Fun and enjoyment

    Excitement

    Who buys & Uses Products

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    Segmentation Variables for Business Markets Demographics

    Industry, company size, location

    Operating Variables

    Customer technology, use status, service

    Purchasing Approaches

    Structure, power, purchasing criteria

    Situational Factors

    Size of order, just-in-time delivery

    Personal Characteristics

    Attitude to risk, loyalty to supplier

    Who buys & Uses Products

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    2. What customers buy & use

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    Customers buy Benefits

    The Firm Produces Features BUT

    The Customer Purchases Benefits Technology Firms Sell benefits of technology (improve

    productivity, reduced cost, or user friendliness)

    Drill Manufacturer Sells holes, not drills

    Mgmt Inst, Bankers ??

    Product Manager Must understand thebenefits customers are seeking in the marketsegment

    What Customers Buy and Use

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    What Customers Buy and Use

    Distinction Between Features and BenefitsCar Laptop

    Features Benefits Features Benefits

    1600 cc Power, pick-upsuperior perf.

    16 LED

    ScreenBetter viewing

    experience

    Power Steering Bettermaneuvering

    4 GB RAM Fasterprocessing

    Climate Control Automatictemp. adj.

    640 GB HD GreaterStorage

    AutomaticTransmission

    Driving comfort 3 year warranty security, peaceof mind

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    What Customers Buy and Use

    Product Assortment

    Different Brands Purchased by the Customers for thecategory in the Segments

    It is important to know for marketers that customers switchbrands

    Create Switching Tables (Brand-Switch Matrix)

    Different Vendors used by Businesses for similar need

    Industrial products (e.g. courier service, transport)

    Share of Wallet

    Credit card spend

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    What Customers Buy and Use

    Use

    Sweets Festivals

    Gifts Birthdays/Anniversaries/Occasions

    Rainwear Rainy season

    Sunscreen Summer (although must also beused in winters)

    Customers find their own use

    Baking soda to deodorize drains

    Lime juice to clean cooking range

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    3. Where customers buy ?

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    Where Customers Buy

    Channels of DistributionCustomers Migrate to Other Channels

    Specialty retailer to Discount

    Discount to Department Store

    Neighborhood to Superstore

    Small Retailer to Large-Volume retailer

    Brick-and-Mortar to Internet

    This happens due to changing dynamics such as customer info,convenience of purchase, price difference, bundle offers, occasion

    etc.

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    4. When customers buy ?

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    When Customers Buy

    Timing Issue Merchandise - Sales

    Fast Food Breakfast, snack

    Woolens Winter Capital Equipment Near fiscal year end

    Cold Remedies Before and during winter

    Gold Ornaments Marriage, Festivals, Akshay Tritiya,

    Dhanteras

    White Goods Diwali, Dhanteras, New Year, Bonus Time

    Chicken/Non-Veg NOT BOUGHT in SHRAVAN

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    5. How customers choose aproduct ?

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    Customers Compare Alternatives

    Information

    Media Advertisements

    In-store personnel

    Word-of-Mouth

    Internet

    Decision Process (depending on product category) Emotional

    Impulse

    Rational

    How Customers Choose

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    How Customers Choose

    Multi-attribute Model

    The process of how customers makedecisions

    Attributes used by customer to define the product

    Perceptions amount of attributes possessed byeach brand or product in the category

    Importance Weights weights given by customerfor each attribute

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    How Customers Choose

    Attributes

    Identifying the relevant set is not easy

    Managerial judgment alone can causemisestimates

    Collect information:

    Focus-Groups

    Survey/Questionnaire Open-ended or close-ended

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    How Customers Choose

    Perceptual or Positioning Map Bank

    UncourteousStaff

    CourteousStaff

    Convenienceof Branchlocation

    InconvenientBranch

    location

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    How Customers Choose

    Importance Weights

    Direct Questioning

    On a scale of 1-to-5 with 5 being very importantand 1 not important, how important is the

    attribute .. in your

    purchase decision

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    How Customers Choose

    Decision Making by Manager for EachBrand

    Segment 1 Segment 2

    Attribute A Weight x Rating = Score

    Attribute B

    Attribute C

    Attribute D

    Segment Score Score a+ScoreB+ScoreC

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    How Customers Choose

    Rules Available to the Product Manager

    Compensatory Rule Multivariate Model

    All attributes are considered and weakness in onecan be compensated for by strength in another

    A product manager needs to find and decide

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    How Customers Choose

    Lexicographic Rule

    Compares the products on the mostimportant attributes alone and eliminatesthose which are not at the top

    Product Manager needs to frame questions

    and infer from responses

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    How Customers Choose

    Conjunctive Rule

    Assumes the customer sets minimum

    cut-offs on each dimension and rejects aproduct if it has any attributes below thecut-off

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    Conjoint Analysis An alternative to weights, conjoint analysis permits the product

    manager to infer the importance of different product attributes interms of importance given by customer

    e.g.

    Mobile Phone: important attributesBattery Life

    Weight & Dimensions

    Price

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    We further know that there is a range of feasiblealternatives for each of these features, for instance:

    Weight Battery Life Price Rs.

    100 gm 3 d 1000

    200 gm 2 d 2000

    300 gm 1 d 3000

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    Obviously, the markets ideal phone would be

    Weight Battery Life Price Rs.

    100 gm 3 d 1000But the ideal phone from a cost of manufacturingperspective would be:

    Weight Battery Life Price Rs.300 gm 1 d 3000

    * assuming that it costs less to produce a phone that hasshort battery life and more weight.

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    The real issue for Marketer

    Will be very tough to sell 1st mobile

    Customer would not buy last mobile

    Most viable ball both from customer & marketerpoint of view would be something in-between

    Conjoint Analysis helps us find that

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    - A traditional research project might start byconsidering the rankings weight & battery life

    Rank Weight Rank Battery life

    1 100 gm 1 1d

    2 200 gm 2 2d

    3 300 gm 3 3d

    This type of information doesnt tell us anything that wedidnt already know about which ball to produce

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    Now consider the same two features takenconjointly

    3 Days 2 Days 1 day

    100 gm 1 2 4

    200 gm 3 5 6

    300 gm 7 8 9

    3 Days 2 Days 1 day

    100 gm 1 3 6

    200 gm 2 5 8

    300 gm 4 7 9

    Battery Life

    Weight

    Battery Life

    Buyer 1

    Buyer 2

    Weight

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    3 Days 2 Days 1 day

    50 25 0100 gm 1 2 4

    100 150 125 100

    200 gm 3 5 6

    60 110 85 60300 gm 7 8 9

    0 50 25 0

    Buyer 1 Battery Life & Points

    Weight

    & Points

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    Rs. 3 Days 2 Days 1 day

    1000 1 4 7

    2000 2 5 8

    3000 3 6 9

    3 Days 2 Days 1 day

    50 25 0

    1000 1 4 7

    30 80 55 30

    2000 2 5 8

    10 60 35 10

    3000 3 6 9

    0 50 25 0

    Buyer 1 Battery Life & Points

    Price

    & Points

    Buyer 1 Battery Life

    Price

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    Weight Points Battery Life Points Price Points

    100 gm 100 3 d 50 1000 30

    200 gm 60 2 d 25 2000 10300 gm 0 1 d 0 3000 0

    Weight 200 gm 100 gm

    Battery Life 2 d 2 d

    Price Rs. 1000 2000

    But possibility of manufacturing profitably are:

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    How Customers Choose

    Conjoint Analysis Mobile Phone

    Scores for the two options are

    Choice is obvious for customer & marketer

    Weight 200 60 100 100

    Life 2 d 25 2 25

    Price 1000 30 2000 10

    Total Utility Value 115 135

    Light MobileLong Lasting Mobile

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    6. Why customers prefer a product ?

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    Why Customers prefer a Product

    The central point is Customer Value

    Concept of Customer Value is Critical Component of CustomerAnalysis

    Customer Value

    Depends on Benefit offered(from Customers perspective)

    Cost involved

    (in terms of price, maintenance)

    A small & cheap product may solve big problem of the customer andvice-versa (e.g. spare parts)

    Customer Value concept is very important inPricing

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    Why Customers prefer a Product

    Customer value of a BRAND is composedof 3 basic elements

    Importance of usage situation

    Effectiveness of the product/category in the situation

    Effectiveness of the BRAND in the situation

    Provides 2 notions of value

    Category value

    Relative Brand value

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    Why Customers prefer a Product

    Sources of Customer Value

    Economic Fundamental source: What economic benefit the customer

    derives by using the product

    More important in B2B segment

    Functional Derived from functional or utility aspect of the product

    E.g. Truck with more loading space

    E.g. Mobile with large screen for better viewing

    Psychological Derived from feel& look, ownership of the product

    E.g. LED TV, VIRTU mobile phone, D&G clothes

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    Why Customers Prefer a Product

    Manifestation of Customer Value Price

    firms assessment of the products value

    Price Sensitivity

    sales change with price

    Satisfaction

    Indicated in surveys used as standard practice

    Complaints and Compliments Number

    Word-of-Mouth

    Difficult to track

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    Why Customers Prefer a Product

    Manifestation of Customer Value contd

    Margin/Profit Contribution

    Higher margins

    Sales

    Value assessed by the market

    Competitive Activity

    New-product introductions

    Repeat Purchase Rate

    High loyalty indicates high brand value

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    Why Customers Prefer a Product

    Assessing Value of the Product Category

    Determine the uses of the product

    Estimate the importance of the uses

    List competing products for the uses

    Determine the relative effectiveness of the

    product category in each usage situation

    Wh C t P f P d t?

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    Why Customers Prefer a Product?

    Assessing the Value of the Brand/Product/ Service

    Assessing the total value of a brand can be

    done indirectlyA high-value brand has:

    High Market Share

    High Repeat Purchase Rate Low Elasticity with respect to Price

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    Why Customers Prefer a Product?

    Using customer responses to estimate thevalue of a brand directly:

    Ratings for competing products

    Constant sum ratings across brands

    Graded paired comparisons

    Conjoint analysis

    Wh C P f P d ?

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    Why Customers Prefer a Product?

    Customer Response

    Sensitivity and Preference Varies byCustomer:

    To Price (including means of payment )

    Distribution and Availability (including the effect ofdirect marketing)

    Advertising

    PromotionService

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    7. How Customers Respond toMarketing Programs?

    How Customers Respond to

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    How Customers Respond to

    Marketing Programs?

    Assessing Sensitivity

    Expert Judgment

    using knowledge of managers, sales-force

    Customer Survey including both direct questioning and more subtle

    approaches as conjoint analysis

    Experiments

    both controlled settings and actual market segments

    Analyses of Past Data

    across market segments or individual customer records

    How Customers Respond to

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    How Customers Respond to

    Marketing Programs?

    Decision to Purchase

    Critical Issue

    whether new or current customer will purchase the

    product in the future

    Quality Program

    satisfy and retain customers

    Relationship Marketing

    long-term, lifetime, value of a customer

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    8. Why customers buy it (again) ?

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    Why Customers Buy It (Again?)

    Quality - Satisfaction Quality is ultimately measure in terms of customer

    satisfaction

    Satisfaction has a strong relative component to quality

    Are customers of the product category more or lesssatisfied than those of a different but potentiallysubstitutable one?

    Are customers of the companys product more or less

    satisfied than customers of a competitors?

    Wh C B I (A i ?)

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    Why Customers Buy It (Again?)

    Measurement of Satisfaction

    Three Key Aspects

    Expectations of Performance/Quality

    Perceived Performance/Quality

    The Gap between Expectations and Performance

    Why Customers Buy It (Again?)

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    Why Customers Buy It (Again?)

    Indirect Measures

    Word-of-Mouth Comments

    Compliments

    Complaints

    Repeat purchase or lack thereof

    Wh C t B It (A i ?)

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    Why Customers Buy It (Again?)

    Why Satisfaction is important?

    Leads to Loyalty

    Customer Retention

    Intention to Purchase

    Wh C t B It (A i ?)

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    Why Customers Buy It (Again?)

    Interesting situations (both repeat purchase/no)

    Satisfied but No Repurchase

    Due to Poor Product Supply

    Variety Seeking or Multiple Sourcing

    Large Promotional Deals

    Unsatisfied but Continue to Purchase

    Monopoly

    Convenience