product startegy
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Product Strategies for
the Asia PacificAsia-Pacific Marketing Federation
Certified Professional MarketerCopyright
Marketing Institute of Singapore
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Outline
Product Hierarchy
Product-Mix Decisions
Product-Line Strategies
New product development in ASPAC
Positioning & Repositioning
Brand decisions
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Introduction
Product (or service) is the mainelement of the marketing mix
Therefore, need to determine theProduct Strategiesbefore deciding onthe remaining marketing mix
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7-Levels of Product
Hierarchy
Product needto satisfy a need e.g. feet protection
Product classa family of products having similarfunction e.g. all shoes
Product linea group of products with closely relatedfunctions e.g. sports shoes
Product typeproducts within a line having similarform e.g. basket-ball shoes
Branda name representing a product or line e.g.Nike
Item (Stock Keeping Unit)a unit item e.g. one pairof Nike basket-ball shoe
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Product-Mix Decisions
Decisions on the product mix (the number ofproduct lines and items in each line) that thecompany may offer
A single product Most firms started off as a single-product company
Multiple products
e.g. Creative Technology markets sound cards aswell as MP3 players
A systems of products e.g. Nikon sells camera, lenses, filters & other
options
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Product-Line strategy
How many product lines should wehave?
Example:Delft Sensor Systemsoffer acomprehensive range of products, includingportable and platform mounted night visionsystems and thermal imaging systems,
head- and helmet mounted displays, laserrangefinders and fire control systems(Source: http://www.oip.be/press/brazil.htm)
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Product-Line strategy
(contd)
How many product items in each line?
Example:Both Gardeniaand Bonjour
launched new flavors in January 1999 tonibble away at each others marketshare of a loaf estimated to be worth
about $80 million(Source: ST, Home, Jan29/99)
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Expanding the Product Line
1.Product line extension: add an item tothe existing product line
Many FMCG companies introduced varioussizes of the same product e.g.mini-packsfor travelers, extra-large size for hospital
2.Product category extension: add a newitem or line of items for a companye.g. P&G have Vidal Sassoon, Head &
Shoulders, Rejoice, and Panthene in thesame category
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Expanding the Product Line
(contd)
3. Brand extension: Product categoryextension that uses an existing brand
name e.g. Cerebos introduced Brands Essence of
Chicken with TangKwei targeting women
Nestle extended its Bear Brandcondensed milk in Thailand byintroducing Bear Brand with Honey
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More on Product Line Extension
Downward stretch by introducing lower range ofthe products e.g. In 1989 the Shangri-La, a chain of deluxe hotels and
resorts in Asia established the Traders Hotels, a sisterbrand to deliver high value, mid-range, qualityaccommodation to the business traveler
Mercedes introduced the baby Merz to cater to theupper class mid-sized range of the market
Upward stretch by entering the high end of themarket e.g. Toyota introduced the Lexus and Nissan introduced the
Infiniti
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Product Line Extension (contd)
Two-way stretch by filling the wholeline e.g.
Toyota has the Starlet at the lower end;the Corolla in the executive range; theCamry in the upper-management rangeand the Lexus in the luxury range
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New Product Strategy
New products are critical to survival
New-product development (NPD) is
essential for companies seeking growthIt should be an on-going, well organized
NPD process having top-managementsupport
What is a new product? (see next slide)From a firm's perspective, a new product is
a product that it is unfamiliar in any way
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Definition of
Product Newness
1. Products new to the world; usuallyrevolutionary products resulting fromproduct innovation e.g
When Creative Technology firstintroduced the Sound-blaster
When disposable cameras were first
introduced When Seiko introduced the Seiko
Kinetic Relay, a watch that can go into
suspended animation
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Definition of Product
Newness (contd)
2. Products new to the firm Improvements to existing products e.g.
In 1960 Kaointroduced shampoo liquid and in1970 introduced KaoMeritshampoo (anti-dandruff)
Additions to existing lines e.g.
In 1965 Kao introduced theKao Tenderhairconditioner
Costs reductions and re-positionings
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Example of NPD--Logitech
Logitech, the world's biggest maker ofcomputer mice, has come up with a
mouse that allows the user to feelwhat is seen on thescreen. This mouse [is] called the
iFreeMouseManAP (August 22, 2000)
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Product Convergence
First coined by Creatives Sim W H who
was referring to the marriage betweenthe PC and home entertainment
Creative Multi-Speaker Surround
(CMSS) uses seven audio channels
Source: Computer Times, 1997
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Positioning
Positioning refers to placing a brand inthat part of the market where it will
have a favorable reception comparedto competing brands Subash Jain
A products position is the place theposition occupies in consumers mindsrelative to competing products.
Philip Kotler
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Generic Positioning Strategies
Our product is unique
e.g. Raffles Hotel(oldest hotel); Westin Hotel(tallest hotel)
Our product is different e.g. Seng Chooneggs (low in cholesterol)
Listerine(kills germs)
Amex Blue credit card (6-month rate of15.9% vs the market rate of 24%)
Our product is similar
e.g. Thai fragrant rice
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Approaches to Positioning
By attributes e.g. Singapore Airlines (first class comfort)
By benefits
e.g. Citibank Credit Card (7/24 availability)
By price/quality e.g. Proton
By usage or application e.g.100Plus (fluidreplenishment in sports)
By users e.g. Johnson Baby Shampoo; J&JAffinity Shampoo (hair conditioner for women)
By product class e.g. Camay soap (with bath oilsnot just soap)
B com etitors e.g. Avis against Hertz
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Product Positioning Using
Perceptual & Preference Maps
Marketing managersuse a Mappingtechnique to help them visualize the
competitive structure of the marketbefore they develop differentiationand positioning strategies
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Positioning Statement
For [a target segment], the [concept] is [theprimary claim] because [it is the single most
important factor].
Example:
For Seng Choon eggs, the low cholesterollevelis the only healthy alternative because it issafe for frequent consumption
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Example of a 2D Perceptual Map
for LaptopBrand A
Brand B
Appearance
Performance
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Repositioning
Why reposition?
Competitors position next to you
Consumer preferences changed
New consumer preference cluster
Original mistake
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Repositioning (contd)
Repositioning among existing customers e.g. Cerebos repositioned BRANDS from a
traditional therapeutic and recuperative tonic to
one for preventative health maintenanceAPB repositioned Tiger Beer as a beer for all time
Repositioning among new users BRANDS essence of chicken for students
Repositioning for new uses Repositioning BRANDS as a base for double-boil
cooking
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Product-Overlap Strategy
This strategy refers to a situation in whicha company decides to compete against
its own brand by using:Competing brands
e.g. Gillette Atra, Sensor, Mach 3
Private labeling e.g. Sin Sin Chilli Sauce, Watson Vitamins
OEM e.g. IBM selling magneto-resistance (MR) heads to
OEM disk drive developers/manufacturers
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Product-Elimination
Strategy
When a products performance is fallingshort of expectations and continued
support is no longer justified, its timeto pull it out of the marketplace
How?
Harvesting, line-simplification, total-linedivestment
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Value-Marketing Strategy
Value-marketing strategy means delivering realproduct performance based on the following
promises Quality strategy
Customer-service
Time-based
Example: Dell cuts the duration from order to delivery of most
of its products to the minimum
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Brands
A rose by any name smells as sweet. Trueor false?
Would you go vacationing on Hog Island?
Why are Coca-Cola, McDonalds andKentucky Fried Chicken (KFC) successful?
Do you think Maikenji would be half assuccessful? Maikenji restaurant in Badaling, north of Beijing
combines the Chinese Characters used in thenames for McDonalds and KFC and offers a menusimilar to KFC located 100 metres away (AP11,Jul2001)
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Brands (continued)
Buildings age and become dilapidated.Machines wear out. Cars rust. But what
lives on are brands.
Sir Hector Laing
United Biscuits, U.K.Source: The economist, Dec 24, 1988
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What is a brand?
Six levels of meaning:
Attributes e.g. High resale value
Benefits e.g. Safety
Values e.g. Brand loyalty
Culture e.g. organized and efficient
Personality e.g. serious
Type of users e.g. by occupation
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Alternative Brand
Strategies
1.No brand identity Small firms with unknown brands e.g.
small tailoring outfits
2.Private brands Retailers with established brand
names e.g. NTUC Fairprice
3.Corporate brands Family name e.g. This Fashion
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Alternative Brand Strategies
(contd)
4. Product line extension Create cost advantage e.g. Novenas collection of
an extensive range of furniture at reasonable price
5. Specific product Individual brand e.g In addition to the Novena
brand, Novena Holdings also carry the Castillabrand of Italian designed furniture
6. Combination e.g. Novena Holdings Novena Collection, Dickson
Beech Collection and the White Collection;
Seikos Alba and Pulsar
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The Branding Process
From commodity to producte.g. air travel
From product to brande.g. Singapore Airlines
From brand to experience
e.g. Romance in the airFrom experience to the hearte.g. A Great Way to Fly
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Branding on the Web
Profile of Gen-N
How to harness the Internet for brand-
building?By rewarding brand loyalty and updating your
site etc.
Decision-influence factorConventional branding => image
Online branding => customer experience
The issue of trust in a brand
(Source: Hi-Tech, Hi-Touch Branding by Temporal and Lee)
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Old Brands Strategy
Old brands survive due to emotional bondwith the consumer
For slow moving brands either revive it withmarketing money or kill it
Growing interest in old brands becausebrand names carry value that is getting
more expensive and risky to create When re-promoting old brands, do not
ignore younger consumers
S S lli F t A il 28 1986