Developing Product and Brand Strategy

1. Developing Product and Brand Strategy Mrs. Wonder10-22-2018

2. Introduction • Product strategy is critical to the success of the overall marketing strategy. • Value is captured in two key areas: • Product Strategy • Existing and proposed products. • Branding • Value enhancement through awareness and image.

3. Product Strategy • Product value is derived from • Features, and • Benefits received • Products can be tangible goods, services, places, ideas, organizations, or people.

4. Designing a Service

5. Features and Benefits • Features: Specific attributes that enable a product or service to perform its function. • Benefits:.

6. Mass Customization • Mass Customization: Creating products, on a large scale, with features tailored to the needs of individual customers. Offerings should be analyzed, feature by feature, to help understand the benefits and value derived by the target customers. Try to avoid “feature bloat”.

7. Sample Needs, Features and Benefits

8. Quality Quality: Put simply, how well the product satisfies customers. • Basic functionality is only the price of entry. • Superior quality attracts business. • Poor quality can lead to negative word-of-mouth.

9. Design Design: Quality comes from design, components/ingredients and processes. • At the forefront of many categories. • Includes “emotional quality” – the impact of design on how it makes the customer feel. 6-9

10. Packaging • Keeps products safe. • Helps companies burnish their brand imagery and highlight points of differentiation. 6-10

11. Labeling • Communicates product contents, uses and warnings. • Conforms to national, regional and local laws and requirements mandating warnings, allowable use of certain phrases, and even the size and type of words used. • Helps attract attention, stand out from retail clutter. 6-11

12. The Product Life Cycle Marketers must carefully monitor the environment to determine where their industry or product may be among the following stages of the PLC: • Introduction • Growth • Maturity • Decline Let’s look at product strategy from the perspective of the Product Life Cycle… 6-14

13. Product Strategy andthe Product Life Cycle 6-15

14. Product Mix and Product Lines • Product Mix: The overall assortment of all product or services offered. • Product Lines: A group of products that are all similar in some way. • Product Mix Width: Number of lines offered. • Product line Depth: Number of products in a line. 6-16

15. Line Extensions & Brand Extensions • Line Extension: Putting an established brand on a new product and adding it to an existing product line. • A low fat version of Lay’s potato chips. • Brand Extension: Putting an established brand on a new product in a different category for a new customer segment. • E.g., Snicker’s brand ice cream. 6-17

16. Product Line and Mix Decisions 6-18

17. Planning Branding • Branding gives a product a distinct identity and differentiates it from competitive products using: words, designs, and symbols. • In terms of branding, a product may carry: • Company name and individual brand. • Courtyard by Marriott • Individual name. • Gap, Old Navy • Private-label brand. • Wal-Mart • Multiple Brands (co-branding, ingredient branding). • Dell PC with Intel computer chips 6-19

18. Brands Should Be…. • Meaningful. • Recognizable and memorable. • Capable of being legally protected. • Suitable for international markets.

19. Branding and Positioning • Branding not only identifies a particular product, but it sets it apart from the competition (both direct and indirect). • Positioning: What the target group perceives about your brand relative to how they perceive the competition. 6-20

20. The Power of Brand Equity • Brand Equity: the extra value customers perceive that enhances their long-term loyalty to a brand. • Can insulate a company against competitive threats. • Can help new products achieve acceptance. • The Value of Strong Brands: • Encourages brand loyalty. • Boosts customer lifetime value. • The total amount that a customer spends on a brand or with a company during the life of their relationship. 6-21

21. Pyramid of Brand Equity Resonance Feelings Judgments Performance Imagery Salience 6-22

22. IKEA Case Study anD Questions • IKEA is now Sweden’s best-known export. There are more than 226 IKEA stores in thirty-three countries. IKEA is long been known for providing good quality products at low prices, appealing to a wide customer base, but only focusing on the products IKEA feels meet the trend and pricepoint requirements for their customers. However, an important issue for IKEA to address is the overwhelming individuality of U.S. consumers. American consumers are very demanding and tend to reward marketers that go out of their way to address individual tastes and needs. Expansion into the U.S. market will require IKEA to adapt its offerings and stores to local tastes—a marketing strategy that is much more expensive to deliver and contrary to IKEA’s cost-conscious design. IKEA’s franchised structure is well suited to this task. This allows IKEA to get closer to customers by hiring local employees that represent the same values, cultures, and lifestyles of the local area. IKEA’s U.S. expansion is expected to move fairly slowly. The company does not have the financial resources and marketing experience to roll out a large number of products and stores simultaneously. In addition, IKEA will slowly adapt its promotional strategy to U.S. standards. For example, most of IKEA’s current commercials are considered too “edgy” for American television. Despite any adaptations it might make in its marketing program, the IKEA vision is consistent throughout the world.

23. The Assignment • You are the new Product Manager for the US IKEA Office, congrats on your new job! You have been asked by your boss to develop a product strategy for the US stores, as they do differ from the European market stores that IKEA has serviced for decades. You are to complete the following questions in at least one paragraph per question. Use what you have learned today, along with your general understanding of what people your age and older like and dislike about IKEA. • Why are the styling and design of IKEA products so popular (for photographs, go to http://www.ikea.com)? Does IKEA’s blend of style and pricing have appeal to mainstream U.S. consumers? • What should IKEA do in the United States with more customers having more individualized tastes in furniture. Should they use the same strategy they use in other international markets? Why or Why not? • Think back to the lecture we had with Mr. Wonder on product differentiation – can you think of other companies that have had to re-think their strategy when they entered into foreign markets? Why did they have to make changes to their product or pricing?