PRODUCT STRATEGY PRODUCT STRATEGYPRODUCT STRATEGY

business, strategy, product strategy, product life cycle, large scale investment, small scale investment

1. PRODUCT STRATEGY Chapter 7

2. Objectives Evaluate product characteristics and classifications; Critique on product differentiation; Differentiate between product and brand; Illustrate packaging, labeling guarantees and warrantees; Appraise service as a product; and Recommend on new product development.

3. PRODUCT CHARACTERISTICS AND CLASSIFICATIONS 3 levels of a product 1. Core customer value 2. Actual product 3. Augmented product

4. Types of products Consumer products Convenience product Shopping product Durable product Non-durable product Specialty products Unsought product Service

5. Industrial products Materials and parts raw materials: farm products and natural products 2. Manufactured materials and parts component materials and component parts 3. Capital items installation and equipment 4. Suppliers and business services maintenance & repair items and operating supplies

6. Product mix Width Length Depth Consistency

7. Product line Life cycle Market opportunities Customer needs Customer loyalty

8. Product line extensions strategies Products in new areas Products for new demographics Products at new price points Products for new needs

9. PRODUCT DIFFERENTIATION -is a marketing strategy of making product inimitable, distinctive and uniquely valuable to be noticeable compared with competitors. ADVANTAGES OF PRODUCT DIFFERENTATION AS A STRATEGY CREAT VALUE- A strategy that centers on value emphasizes the cost savings or durability of a product compared with other product.

10. NON-PRICE COMPETITION- The product differentiation strategy in addition allows business to fight in areas beside price. BRAND LOYALTY- A successful product differentiation strategy produces brand loyalty amongst customers. NO PERCIEVE SUBSTITUTE- A product differentiation strategy that centers on the quality and design features of the product.

11. TYPED OF PRODUCT DIFFERENTATION PRODUCT FORM PRODUCT FEATURES PERFORMANCE QUALITY OF THE PRODUCT PRODUCT DURABILITY PRODUCT RELIABILITY PRODUCT STYLE SERVICE

12. PRODUCT AND BRAND A product is prepared by a company and can be bought by a consumer in return for money while brand are created via consumer perception, expectations and experiences with all the product or services under a brand. BRAND EQUITY Competitor made a lot of changes to the buying habits and decision making process of consumers.

13. Figure 14: COMPONENTS OF BRAND EQUITY 1.BRAND AWARENESS- likelihood that consumer are acquainted about the life and accessibility of the product.

14. 2 types of brand awareness Aided awareness- this means that once the product category is cited the costumer recognize the brand from the list of brand made known. Top of the mind awareness (immediate brand recall)- this means that on citing the product category, the first brand come first to the mind of the consumer is the brand.

15. 2.BRAND ASSOCIATION – whatever things which the consumer bring to mind or be connected with the brand. It is anything which is deep-rooted in customer mind concerning the brand. 3. PERCIEVED QUALITY- one of the chief basics of building strong brand equity is the realization of the brand promise. Customer evaluate the brand by contrasting its offering against the offering of the competitors. 4. BRAND EXPERIENCE- Combined experiences of the customer with the product offered and the brand general during pre-sale, sale, post-sale. 5.BRAND PREFERENCES- needs to used specific company’s product or services, though there are similarly price and similarly available choices 6. BRAND LOYALTY- Reluctant of a customer shifting to another brand which he does not trust in case there is a change in product features, price or quality.

16. BRAND PERSONALITY is the unique and long lasting personification of a brand. It includes the personality features/characteristics, as well as the demographic features like age, gender, or class psychographic features. Jennifer Aaker defines the associated personality of a brand as a set of: 1. Human demographic characteristics - these include age, gender, social class, and race. 2. Human lifestyle characteristics - these consist of activities, interest, and opinion

17. 3. Human personality traits - these are extroversion, agreeableness, dependability, warmth, concern, and sentimentality

18. Figure 13. Brand Personalities by Aaker

19. Personality Definition Famous Celebrity with such personality Famous Brand Purist A purist brand champion values such as wholesomeness, ethics, simplicity, and purity. Julie Andrews Dove, Disney and Sesame Street Protector Protector brands embody and promote values such as compassion, kindness, care, and love. Mother Theresa Campbell's Soup and Johnson & Johnson Seducer Seducer brands are associated with values such as beauty, pleasure, passion, desire, sensuality, and intimacy. Marilyn Monroe Victoria's Secrets and DeBeers Table 4. Example of Brand Personality

20. BRANDING STRATEGIES - a brand strategy has the possibility to make any company grow significantly and get into its target market. Here are some of the branding strategies commonly used by companies. 1. Product Line Extension - is launching a new product that is comparable to what the company already offers and targeting a current market by using the existing brand name. 2. Multi Brand - is running a several brand strategy within an identical market. It involves having more than one brand competing in the same product category.

21. 3. Brand Extension - is broadening the market's understanding of the brand by offering more products of different categories under the current brand name. 4. New Brand - happens when the company is increasing its offering by means of developing a new product line which previously was not offered.

22. PACKAGING, LABELLING, GUARANTEES, AND WARRANTIES - most tangible products have to be boxed up and labeled. Most marketers regard packaging is labeling as a component of product strategy. Warranties and guarantees can also be essential elements of the product strategy, which are often shown in the package. PACKAGING - packaging consist of all the activities of designing and producing the container for a product. Packages when well- made can produce convenient and promotional value. It is also a styling weapon, particularly in food products, cosmetics, toiletries, medicines and small consumer appliances. Packaging comes into various forms such as boxes, bottles, jars, and other containers. It is also designed in different colors, shapes, and sizes.

23. Here are some benefits of packaging: 1. Protect Products - packaging makes certain that product is safe when transported to stores and shipped to customers. A product should also be protected when placed inside shelves of stores. Companies always see to it that customers accept their product with intact packaging. 2. Attract Customers - visually attractive product packaging magnetizes consumers and influence them to pick and try it. Consumers become interested about its use and find out its value.

24. 3. Provide Information - information about the product could be communicated by means of product packaging. This information is about the ingredients used, how to use the product, its features and benefits which may be written on the packaging. 4. Reinforce Branding and Logo - brand elements such as logos, product characters and tag lines are also contained in product packaging. These brand elements which companies work hard to achieve help for easy brand recognition of consumers when placed on store shelves and when advertised.

25. LABELING - most products are labeled. A label can be in the form of a sample tag that is fastened to the products. Or it can be more richly designed graphics that is placed as component of the product package. Some labels only hold the brand name, however, there are labels that contain a lot of information about the brand. Most of the times, companies comply with the law in placing numerous information on label.

26. Here are seven of the unique label types that are commonly found in the marketplace: 1. Dry Peel Labels - are a type of label that can be peeled away and removed from the product container or package. An adhesive is used to temporarily hold the label in place, but is limited enough to easily peel the label off.

27. 2. Fold-Out Labels (booklet labels) - are labels that fold out to provide additional content. Similar to a dry peel label, fold out labels are often used for instant redeemable coupons or to add additional copy. A fold-out label can also come completely off the container, but rather than having another label underneath it, a fold-out label is used in addition to the primary label used on the container.

28. 3. Reseal labels - are exactly what they sound like a label that is able to reseal the packaging or container it comes on. This usually takes place when an opening to the package or container is placed under the reseal label.

29. 4. Expandable reseal booklet - are a bit of a combination of two labels we already discussed fold-out and reseal. By combining these two features, expandable reseal booklets are label that expand out for more content, but can also adhere back to the container for later reference.

30. 5. Specialty die-cut labels - labels that have a unique shape or outline to them are usually specialty die-cut labels, whether for branding or other aesthetic purposes.

31. 6. Tag and board packaging - laminated tag and board is more than a package than a label, but its worth nothing that this type of packaging can often be printed in a similar way as a label. By using a thicker board stock as the printing material, laminated tag and board is a convenient way to differentiate and package a product.

32. 7. Prime Labels - refers to the primary label on a container or packaging. This usually consist of the label that has the branding or product at the front and center. A variety of enhancements can be used on a primary label to make them stand out from the rest of the packaging.

33. GUARANTEES AND WARRANTIES Basically, warranties and guarantees are assurance of good quality products given by manufacturers to protect the interest of customers. Warranties and guarantees also serve as competitive uniqueness for the consumer as well as brand image enhancer. A warranty is an assurance of a manufacturer that the product it produces is defect-free and it functions optimally within the warranty period. While a guarantee is a commitment given by a manufacturer to its customers that the product it produces is of high-caliber and will last for a longer period of time. Warranty which is legally enforceable comes into two forms namely implied warranty or express warranty. Implied Warranty offers the assurance that the products customers bought shall function based from expected product performance. On the other hand, express warranty offers openly the promise that if defects happen ; the manufacturer is willing to repair and namely such defects and make necessary free replacement if the situation calls for it.

34. SERVICE AS A PRODUCT – a service is a performance of vital intangible benefit, either in its own right or as a major ingredient of a tangible product, using some form of exchange that satisfies a need. Four distinctive service characteristics that greatly affect the design of marketing programs: ● Intangibility ●Inseparability ●Variability ●Perishability

35. Five types of service offering: ●Pure intangible good ●Tangible good with accompanying services ●Hybrid ●Major service with accompanying minor goods and services ●Pure service

36. SERVICE DIFFERENTIATION - The key to competitive success may be in the form of added-value service and improved quality when the tangible product cannot be distinguished easily Differentiator of Service ●Ordering Ease ●Delivery ●Installation ●Customer training ●Customer consulting ●Maintenance and repair

37. Service Marketing Strategies ●Referrals - a satisfied customer is more than willing to to share his experience with friends, when asked, he will surely tell why he likes the service. ●Education - this could be in the form of seminars, lunch-and-learns, or other educational meetings. ●Demonstration - providing free demonstration helps ease customers concerns and can effect in instant sales.

38. ●Industry specialization - with limited market but so many services companies, each company should identify which skill sets to specialize and highlight those skills. ●Social Media - social media marketing allows service providers to gain advantage of free tools and get them to spread the word to their network of contacts.

39. NEW PRODUCT MANAGEMENT – process of producing a product or service from idea to bringing it to the market. Types of new products ●New to the world products - simply these products where never seen before in the market ●New product lines - when a company presents a product from a new category, that has never been developed or sold before, it would be a new product line. ●Additions to existing product line - this takes place when a company includes a new product that strengthens its area of product offerings.

40. ●Improvement and revision to existing products - these products provides improved quality, features, or performance of a current product to make it better ●Repositioned products - current products targeted to new markets or changed slightly to increase sales. ●Lower-priced product - new products that simply replace existing products in the line, providing similar performance at lower cost.

41. NEW PRODUCT PROCESS Companies have to create new ones and undergo cautiously the process of new product development. 8 common steps in the new product development process: Idea Generation – Means the methodical exploration for new product ideas. 2 Prime sources of new ideas that can be identified: Internal idea sources – Means research and development and also contributions from employees. External idea sources – Includes all types of external sources, such as distributors and suppliers, and even competitors. And the most significant external source is customers.

42. Idea screening – Means sorting out the ideas to select good ones. Concept development and testing – Attractive ideas developed into a product concept. A product concept is a comprehensive description of the new product idea declared in significant consumer terms. New product concepts are required to be tested with sets of target consumers. Marketing strategy development – When a good concept has been developed and tested, planning for the opening marketing strategy of the new product is prepared. 3 Parts of the marketing strategy statement that needs to be crafted with caution. A description of the target market, the intended value proposition, and the sales, market shares and profit goals for the initial few years. An outline of the product’s designed price, distribution and marketing budget for the initial year. The intended long-term sales, profit goals and the marketing mix strategy.

43. Business analysis – An evaluation on the business attractiveness of the proposed new product by management is done after finally deciding for the product concept and marketing strategy. Product development – Once the product concept is able to pass the business test, it is time to develop the physical product. Test marketing – The newly developed product and its planned marketing program are tested in real market situations. Commercialization – Company would surely incur highest costs due to advertising, sales promotion and other marketing efforts in the initial year. Factors that need to be considered prior to commercializing the product: Introduction timing – Company should consider proper timing in introducing the new product. Introduction place – New product could be launched in a single location, a region, the national market, or possibly the international market.

44. Business analysis – An evaluation on the business attractiveness of the proposed new product by management is done after finally deciding for the product concept and marketing strategy. Product development – Once the product concept is able to pass the business test, it is time to develop the physical product. Test marketing – The newly developed product and its planned marketing program are tested in real market situations. Commercialization – Company would surely incur highest costs due to advertising, sales promotion and other marketing efforts in the initial year. Factors that need to be considered prior to commercializing the product: Introduction timing – Company should consider proper timing in introducing the new product. Introduction place – New product could be launched in a single location, a region, the national market, or possibly the international market.

45. CONSUMER ADOPTION PROCESS. Marketer should help consumers in each step of the consumer adoption process. 6 Steps of William Stanton Awareness Stage – Consumer is conscious that there is a new product or an innovation in the market but has limited information about it. Interest and Information Stage – Consumer notices seriously the innovation and seeks to gather more information. Evaluation Stage – Consumer uses the gathered information to appraise the innovation. Trial Stage – Consumer is prepared to test the new product. Adoption Stage – Consumer decides to adopt/buy the innovation. Post-Adoption Behavior Stage – If consumer is pleased with a new product and its associated services, he continuously purchases it more often.

46. NESTLE WENT WRONG IN PRINTING ‘NO ADDED MSG’ ON PACKET Some states banned Maggi, while others have not. Given that more states have banned Maggi on account of monosodium glutamate (MSG), the impression gaining ground is that Maggi has been serving up MSG when it should not have, which is not the issue here. Some states have alleged excessive levels of MSG in the noodles, which is strange because the FSSAI does not specify any limit for MSG in noodles. The problem lies in the “No added MSG” label in the packaging.

47. The Food Safety and Standard Authority of India (FSSAI) identified three problems with Nestle’s Maggi range of products: lead levels higher than the permissible quantity of 2.5 ppm (part per million); misleading labelling on the package that stated “No added MSG”; and release of “Maggi Oats Masala Noodle with Tastemaker” without product approval.

48. As of June 12, 18 States (including Delhi) have banned Maggi. Four have banned the product on account of excessive lead content, five cited presence of MSG as the reason, while the remaining nine have done so either on the basis of media reports or in response to FSSAI recommendations. Of the 12 states that have not instituted a ban, some have found the product safe for consumption and sent samples for further testing. Food companies typically use MSG as a flavor enhancer. While scientific opinion is still divided on whether MSG is harmful to human health, from a regulatory standpoint, there is no requirement that noodles should have no MSG in them. By the Food Safety and Standards Regulations, 2011 framed by the FSSAI, MSG is permitted for use of seasoning. The United States Food and Drug Administration (FDA), too, considers the addition of MSG in foods to be “generally recognized as safe”. MSG is also present in various products such as soya sauce and soups. Yet Assam, Uttarakhand, Punjab, Odisha and Madhya Pradesh have cited the presence of MSG as the reason for banning Maggi.

49. Maggi noodles sold in India contain hydrolyzed groundnut protein, onion powder and wheat flour, all of which contain glutamate. MSG is a sodium salt of glutamate. The glutamate in MSG is chemically indistinguishable from glutamate present in food proteins. So if the lab reports are detecting MSG, it is probably due to natural glutamate, Nestle says. By FSSAI regulations, foods with any ingredients that naturally contain MSG cannot add a label “No added MSG” on their packaging, as this could give a misleading impression that the product contain no MSG. And this is where Nestle went wrong. Nestle’s “No added MSG” label is in violation of the FSS (Packaging and Labelling) Regulations, 2011. The company has now agreed to remove the label from the packet. But given that, with or without this label, the actual quantum of MSG in Maggi is not going to change - the MSG- driven bans would seem to have less to do with food safety than a consumer’s right to know. But Maharashtra, Tamil Nadu, Gujarat and Delhi did find excessive levels of lead in the product. And Karnataka, Uttarakhand, Goa, Punjab, Telangana, Haryana and West Bengal found the lead content to be within prescribed limits, not in violation of safety norms. High lead content is a health hazard because lead poisoning, especially in children, can affect cognitive development. Nestle argues that lead testing should be done for the final product.

50. CASE QUESTIONS: What were the effects of the “misleading” experience of Maggi brand? Describe them. If you were the brand manager and your brand suffered the same bad situation, what would you do? What do you think of the argument that “lead testing should be done for the final product”. Explain your side on this issue.