New Product Strategy and Brand Management
Ananda Sabil Hussein, PhD
INNOVATION AND NEW PRODUCT STRATEGY INNOVATION AND NEW PRODUCT STRATEGY
• Innovation as a Customer Driven Process Innovation as a Customer Driven Process
• New Product Planning New Product Planning
• Idea Generation Idea Generation
• Screening, Evaluating, and Business Analysis Screening, Evaluating, and Business Analysis
• Product and Process Development Product and Process Development
• Marketing Strategy and Market Testing Marketing Strategy and Market Testing
• Commercialization Commercialization
• Variation in the Generic New Product Variation in the Generic New Product Planning Process
Planning Process
INNOVATION FEATURE INNOVATION FEATURE
Managing Google
Managing Google’’s Idea Factorys Idea Factory
As director of consumer Web products Marissa Mayer is a champion of innovation. She favors new product launches that are early and often.
She joined Google in early 1999 as a programmer when the workforce totaled 20. By 2007 Google had 5,700 employees with expected sales of
$16 billion.
How Google Innovates
The search leader has earned a reputation as one of the most innovative companies in the world of technology. A few of the ways Google
hatches new ideas:
FREE (THINKING) TIME
Google gives all engineers one day a week to develop their own pet projects, no matter how far from the company’s central mission. If work gets in the way of free days for a few weeks, they accumulate.
Google News came out of this process.
FINDING CUSTOMER VALUE OPPORTUNITIES FINDING CUSTOMER VALUE OPPORTUNITIES
Customer value analysis
Objective is to identify needs for:
1. New products
2. Improvements to existing products
3. Improvements in production processes
4. Improvements in supporting services
TRANSFORMATIONAL
Break-through innovation Digital photography
NEW PRODUCT CATEGORY Dell Printers
Nike Apparel Golf clubs LINE EXTENSION
New color/package/style INCREMENTAL IMPROVEMENTS Software updates
Characteristics of Successful Innovators Characteristics of Successful Innovators
STRATEGIC INITIATIVES
Creating an Innovative Culture
Leveraging Capabilities
Selecting the Right
Innovation Strategy
Developing and
Implementing Effective New Product Processes Making Resource
Commitments
Customer Needs Analysis Customer
Needs Analysis
Business Analysis Business
Analysis Screening
and Evaluation
Screening and Evaluation Idea
Generation Idea
Generation
Marketing Strategy Development
Marketing Strategy Development
Product Development
Product Development
Testing Testing
Commercialization Commercialization
NEW PRODUCT PLANNING PROCESS
Achieving Cross-Functional Interaction and Coordination
R & D
Operations Marketing
Finance
• Idea search: targeted or open-ended?Idea search: targeted or open-ended?
• How extensive and aggressive?How extensive and aggressive?
• What specific sources are best for generating a What specific sources are best for generating a regular flow of new product ideas?
regular flow of new product ideas?
• How can new ideas be obtained from How can new ideas be obtained from customers?
customers?
• Where will responsibility for the new product Where will responsibility for the new product ideas search be placed?
ideas search be placed?
• What are potential threats from alternative (or What are potential threats from alternative (or disruptive) technologies?
disruptive) technologies?
IDEA GENERATION
IDEA GENERATION SCREENING
(fit/feasibility)
CONCEPT EVALUATION BUSINESS ANALYSIS
SCREENING, EVALUATING, AND BUSINESS ANALYSIS
Business Analysis Business Analysis
• Revenue ForecastsRevenue Forecasts
• Preliminary Marketing PlanPreliminary Marketing Plan
• Cost EstimationCost Estimation
• Profit ProjectionsProfit Projections
• Other ConsiderationsOther Considerations
NEW
PRODUCT CONCEPT
PRODUCT DEVELOPMENT
AND USE TESTING
MARKETING STRATEGY DEVELOPMENT MARKET
TESTING LAUNCH
PRODUCT AND PROCESS DEVELOPMENT
MARKETING STRATEGY AND MARKET TESTING MARKETING STRATEGY AND MARKET TESTING
Marketing Strategy DecisionsMarketing Strategy Decisions
• Market TargetingMarket Targeting
• Positioning StrategyPositioning Strategy
Market Testing OptionsMarket Testing Options
• Simulated Test MarketingSimulated Test Marketing
• Scanner – Based Test MarketingScanner – Based Test Marketing
• Conventional Test MarketingConventional Test Marketing
• Testing Industrial ProductsTesting Industrial Products
• Selecting Test SitesSelecting Test Sites
• Length of the TestLength of the Test
• External InfluencesExternal Influences
COMMERCIALIZATION COMMERCIALIZATION
The Marketing Plan The Marketing Plan
• Complete marketing strategyComplete marketing strategy
• Responsibilities for executionResponsibilities for execution
• Cross – functional approach Cross – functional approach Monitoring and Control
Monitoring and Control
• Real – time trackingReal – time tracking
• Role of the InternetRole of the Internet
• Include product performance metrics with performance Include product performance metrics with performance targets
targets
Market Target(s)
Marketing Program(s) Objectives
Marketing Strategy
A brand is a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.
American Marketing Association
A compelling logic has been proposed that the
distinction between goods and services should be replaced by a view that services are the dominant perspective in the 21st century, consisting of both tangible and intangible components.*
*Stephen LVargo and Robert F. Lusch, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, January 2004, 1-17.
Brand Management Challenges*
Internal and external forces create hurdles for product brand managers in their brand building initiatives:
Intense Price and Other Competitive Pressures Fragmentation of Markets and Media
Complex Brand Strategies and Relationships Bias Against Innovation
Pressure to Invest Elsewhere Short-Term Pressures
*David A. Aaker, Building Strong Brands, 1996, 26-35.
Responsibility for Managing Products Responsibility for Managing Products
Product/Brand Management
Planning, managing, and coordinating the strategy for a specific product or brand
Product Group/Marketing Management
Product director, group manager, or marketing manager
Product Portfolio Management
Chief executive at SBU
Team of top executives
Strategic Brand Management
Brand Identity Strategy
Identity Implementation
Brand Strategy Over Time
Managing the Brand Portfolio
Leveraging the Brand
BRAND EQUITY MANAGEMENT
STRATEGIC BRAND ANALYSIS
Product Life Cycle Analysis Product Life Cycle Analysis
Relevant issues in PLC analysis include:
Relevant issues in PLC analysis include:
• Determining the length and rate of change of the PLCDetermining the length and rate of change of the PLC
• Identifying the current PLC stage and selecting the Identifying the current PLC stage and selecting the product strategy that corresponds to that stage
product strategy that corresponds to that stage
• Anticipating threats and finding opportunities for altering Anticipating threats and finding opportunities for altering and extending the PLC
and extending the PLC
• Product Performance AnalysisProduct Performance Analysis
ManagementManagement’’s performance criterias performance criteria
Strengths and weaknesses relative to portfolioStrengths and weaknesses relative to portfolio
• Brand Positioning AnalysisBrand Positioning Analysis
Perceptual maps for brand comparisonPerceptual maps for brand comparison
Buyer preferences Buyer preferences
• Other Product Analysis MethodsOther Product Analysis Methods
Information ServicesInformation Services
Research studies Research studies
Financial analysisFinancial analysis
BRAND EQUITY BRAND EQUITY
Company/Customer Value of Brand Name and
Symbol of a Product
Determined by the brand’s set of
assets (and liabilities)
Brand Equity
Effective strategic brand management requires that we understand brand equity and evaluate its impact when making brand management decisions:
“Brand equity is a set of brand assets and liability linked to a brand, its name, and symbol, that add to or subtract
from the value provided by a product or service to a firm and/or to that firm’s customers.*
* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15.
**Ibid, 102-120.
Measuring Brand Equity. Several measures are needed to capture all relevant aspects of brand equity.**
* loyalty (price premium, satisfaction/loyalty),
* perceived quality/leadership measures (perceived quality, leadership/popularity),
* associations/differentiation (perceived value, brand personality, organizational associations),
* awareness (brand awareness), and
* market behavior (market share, price and distribution indices).
These components provide the basis for developing operational measures of brand equity.
BRAND IDENTITY STRATEGY
Brand identity is a unique set of brand associations that the brand strategist aspires to create or
maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members.*
Four Brand Identity Perspectives Product
Organization Person
Symbol
* David A. Aaker, Building Strong Brands, 1996, 68.
MANAGING BRAND STRATEGY MANAGING BRAND STRATEGY
Proactive efforts
should be devoted to managing each brand
over time.
Strategies for Improving Product Performance Strategies for Improving Product Performance
Product line Strategy
Add new
product(s) Cost reduction
Product
improvement Alter marketing
strategy Eliminate
specific product(s)
Strategies for Brand Strength Strategies for Brand Strength
Brand-Building StrategiesBrand-Building Strategies
• Developing the brand identification strategyDeveloping the brand identification strategy
• Coordinate identity across the organizationCoordinate identity across the organization
Brand RevitalizationBrand Revitalization
• Find new uses for mature brandsFind new uses for mature brands
• Add products related to heritageAdd products related to heritage
Strategic Brand VulnerabilitiesStrategic Brand Vulnerabilities
• Brand equity can be negativeBrand equity can be negative
• Retailer private brands compete with manufacturer brandsRetailer private brands compete with manufacturer brands
• Major shifts in consumer tastesMajor shifts in consumer tastes
• Competitive actionsCompetitive actions
• Unexpected eventsUnexpected events
Product Mix Modifications Product Mix Modifications
Motivation for changing the product mix:
Motivation for changing the product mix:
• Increase the growth rate of the businessIncrease the growth rate of the business
• Offer a more complete range of products to wholesalers and Offer a more complete range of products to wholesalers and retailers
retailers
• Gain marketing strength and economies in distribution, Gain marketing strength and economies in distribution, advertising, and personal selling
advertising, and personal selling
• Leverage an existing brand positionLeverage an existing brand position
• Avoid dependence on one product line or categoryAvoid dependence on one product line or category
BRAND
EXTENSION LINE
EXTENSION
Extensions of the brand name to other product categories
--Similar
--Dissimilar
Minor variants of a single
product are marketed under the same brand name
BRAND LEVERAGING STRATEGY
CO-BRANDING CO-BRANDING
Co-branding (dual branding) involves two or more
established brands making a joint offer of their product brands —
The participant’s brand names are identified on the good or service.
Several different forms –
Component co-branding
(Volvo and Michelin) Same company co-branding Alliance co-branding
(Delta and American Express) Ingredient co-branding
BRAND LEVERAGING EVALUATION CRITERIA
Brand Relevance/Differentiation
Capabilities/Perceived Value Match
Market/Segment Opportunity
Cannibalization Risks
Potential for Core Brand Damage
Clarity of Product Offerings
Estimated Financial Performance
Brand Equity Impact
SEVEN DEADLY SINS OF BRAND MANAGEMENT*
Failure to fully understand the meaning of the brand.
Failure to live up to the brand promise.
Failure to adequately support the brand.
Failure to be patient with the brand.
Failure to adequately control the brand.
Failure to properly balance consistency and change with the brand.
Failure to understand the complexity of brand equity measurement and management.
*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.
