product & brand marketing
TRANSCRIPT
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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