A Successful Strategy:

3. A Successful Strategy: • Helps achieve coordination among functional areas of the organization. • Defines how resources are to be allocated. • Leads to a superior market position.

4. Elements of a Product Strategy • Statement of the objective(s) the product should attain • Selection of strategic alternative(s) • Selection of customer targets • Choice of competitor targets • Statement of the core strategy • Description of supporting marketing mix. • Description of supporting functional programs

5. Hierarchy of Objectives Company Mission/Vision Level 0 Corporate objectives Level I Corporate strategies Divisional objectives Level II Divisional strategies Product/brand objectives Level III Brand strategies Program objectives Level IV Tactics

6. Strategic Alternatives Increase outputs Decrease inputs Increase price Reduce costs Improve asset utilization Improve sales mix Long-term profits Efficiency, short-run profits Growth in sales or market share Market development Market penetration New segments Existing customers Convert nonusers Competitors’ customers New product development

7. Criteria for Evaluating Strategic Alternative Options • Size/growth of the segment • Opportunities for obtaining competitive advantage • Resources available to penetrate the segment

8. Target Segments for Handspring

9. Positioning Decision Steps • Identify alternative positioning themes by consulting the advertising account team, the product team, and past marketing plans. • Screen the alternatives according to whether each is (a) meaningful to customers, (b) feasible given the firm and product resources and customer perceptions, (c) competitively sensible, or (d) helpful for meeting the product objective • Select the position that best satisfies these criteria and can be sold to the marketing organization • Implement programs (e.g., advertising) consistent with the product position selected

10. Total Product Concept Potential product Generic product Expected product Augmented product

11. Five Areas for Differentiation • Quality • Status and Image • Branding • Convenience and Service • Distribution

12. Joint Space for Colas Cola RC Cola • Segment 3 • Diet Pepsi • Diet Rite • Pepsi • Nondiet Diet • Segment 1 Segment 2 • • Dr Pepper • Tab • Fresca • Coke • 7-Up Noncola

13. Brand Equity • Reduced marketing costs • Trade leverage • Attracting new customers • Create awareness • Reassurance • Time to respond to competitive threats Anchor to which other associations can be attached Familiarity-liking Signal of substance/ commitment Brand to be considered • Provides value to customer by enhancing customer’s: • Interpretation/ processing of information • Confidence in the purchase decision • Use satisfaction Brand loyalty Brand awareness Brand equity Brand loyalty Brand loyalty Brand loyalty

14. Brand Equity cont. Reason-to-buy Differentiate/position Price Channel member interest Extensions Help process/ retrieve information Reason-to-buy Create positive attitude/feelings Extensions • Provides value to firm by enhancing: • Efficiency and effectiveness of marketing programs • Brand loyalty • Prices/margins • Brand extensions • Trade leverage • Competitive advantage Competitive advantage Perceived quality Brand associations Brand equity Other proprietary brand assets Brand loyalty Brand loyalty Brand loyalty Brand loyalty

15. Some Brand Attribute and Image Dimensions Attributes Image Dimensions Reliable—unreliable Old—young Technical—nontechnical Sensible—rash Interesting—boring Creative—noncreative Sentimental—nonsentimental Impulsive—deliberate Trustworthy—untrustworthy Conforming—rebellious Daring—cautious Forceful—submissive Bold—timid Sociable-unsociable • Color • Style • Comfort • Freshness • Construction material • Availability • Serviceability • Compatibility • Energy efficiency • Instructions • Automation • Ease of Use • Flavor/taste • Caffeine content • Price • Packaging • Size • Calories • Brand name • Sweetness • Weight • Warranty • Durability • Convenience

16. Ten Guidelines for Building Strong Brands • Brand Identity • Each brand should have an identity, a personality. It can be modified for different segments. • Value Proposition • Each brand should have a unique value proposition. • Brand Position • The brand’s position should provide clear guidance to those implementing a communications program. • Execution • The communications program needs to implement the identity and position, and it should be durable as well. • Consistency Over Time • Product managers should have a goal of maintaining a consistent identity, position, and execution over time. Changes should be resisted.

17. Ten Guidelines for Building Strong Brands (cont.) • Brand System • The brands in the portfolio should be consistent and synergistic. • Brand Leverage • Extend brands and develop co-branding opportunities only if the brand identity will be both used and reinforced • Tracking • The brand’s equity should be tracked over time, including awareness, perceived quality, brand loyalty, and brand associations. • Brand Responsibility • Someone should be in charge of the brand who will create the identity and positions and coordinate the execution. • Invest • Continue investing in brands even when the financial goals are not being met.

18. IBM Notebook Computers: Purchase vs. Positive Opinion

19. Basic Customer Strategies • Customer acquisition • Customer retention • Customer expansion • Customer deletion

20. Strategy Over the Life Cycle

21. Linked Strategy Issues

22. Illustration: Odwalla Energy Bar Objective: Grow 10 percent faster than the category Customer Targets: Existing juice customers Health conscious and on-the-go Sports enthusiasts Health purists Nutrition-seeking families Competitive Targets: Clif Bars and Clif Luna Kashi Go Lean Balance (Outdoor, Plus, Oasis) Core Strategy: Increase distribution to 80 percent ACV in mainstream grocery stores Focus on natural health Leverage brand name, Minute Maid resources

23. Illustration: Handspring Objective: To capture 15 percent of the PDA market by the end of year 2 Customer Targets: Price-conscious professionals Nonbusiness professionals Nonprofessionals Competitive Targets: Palm Sharp Core Strategy: Simplicity/convenience Low price Expandability (via expansion slot)