Slide 13.

Product and branding strategy

Chapter 13
Slide 13.2

Introduction
• To marketers, products are bundles of benefits
delivered to the customer.
• The form in which these benefits are delivered can
be both tangible and intangible.
– At the intangible end of the product spectrum are
services.
• Product strategy is derived from the company's
marketing objectives
– influenced by how products are organised by line and
range, and also by the product life cycle.
 Slide 13.3

Levels of a product

Figure 13.1 Three levels of product

Slide 13.4

Levels of a product
• Core product
– problem-solving service or core benefits that
consumers are really buying when they obtain a
product.
• Actual product
– incorporates the quality, features and design, brand
name, packaging and other attributes that combine to
deliver core product benefits.
• Augmented product
– incorporates the consumer services and benefits built
around the core and actual products.
Slide 13.5

Product classifications
• Products can be classified according to their
durability and tangibility.
– Non-durable products are goods consumed
quickly and used on one or a few occasions,
e.g. beer, soap.
– Durable products are used over an extended
time and may last for years, e.g. fridge.
• Marketers also divide products and services into
two other classifications: consumer and
industrial products.
Slide 13.6
Consumer products

Bought to satisfy personal and family needs.

– Classified according to consumer shopping habits:
• Convenience products
– Purchased frequently, minimum comparison and
buying effort.
• Shopping products
– Process of selection, compared on bases of quality,
suitability, price and style.
• Unsought products
– Consumer does not know about the product or
perceives no need for it.
 Slide 13.7

Table 13.1 Marketing considerations for consumer products

Slide 13.8

Industrial products

Products bought for further processing or the purposes of resale.

– Distinction based upon the purpose for which the product is
purchased.
• Materials and parts
– Raw materials.
– Manufactured materials and parts.
• Capital items
– Installations.
– Accessory equipment.
• Supplies and services
– Electricity to power the machines making shirts.
Slide 13.9

Organisations, persons, places and ideas

• Marketers have broadened the concept of

product to include other marketable entities
such as organisations, persons, places and
ideas.
Slide 13.10

Product decisions

• Marketers make product decisions at three

levels:
– individual product decisions
– product line decisions
– product mix decisions
Slide 13.11

Individual product decisions

• Product decisions are focused around the
development and marketing of
– Product attributes
– Branding
– Packaging
– Labelling
– Product support services.
Slide 13.12

Product attributes
• Define the benefits offered to the customer
• Product quality
– Conformance and Customer driven quality
– Durability, reliability, precision, ease of operation and
other valued attributes.
• Product features
– Features are competitive tools in differentiating the
products from the competitors’. Assessed upon the basis
of its customer value versus company cost.
• Product style and design
Slide 13.13

Branding
• A name, term, sign, symbol or design, or a
combination of these, intended to identify the
goods or services of one seller or group of
sellers and to differentiate them from the
competitors.
Slide 13.14

Branding: benefits for consumers

• Brand names tell the buyer about the quality
of the product.
• Brand names increase shopper efficiency.
• Brand names alert consumers to products
that might benefit them.
Slide 13.15

Branding: supplier advantage

• Brand name makes it easier for the supplier
to process orders and track down problems.
• The supplier’s brand name and trademark
provide legal protection for unique
production features that might otherwise be
copied by the opposition.
• Branding enables the supplier to attract a
loyal and profitable set of customers.
• Branding helps suppliers segment markets.
Slide 13.16

Branding: powerful marketing mechanism

• Leads to higher and more consistent product
quality.
• Increases innovation by giving producers an
incentive to look for more new features that can be
safeguarded by the patent.
• Branding results in more product variety and choice
for consumers.
• Branding provides consumer information about
products and where to find them.
Slide 13.17

Packaging
– Innovative and attractive packaging to gain the
attention of the consumer.
– Packaging is central to the marketing
considerations and the packaging concept
should illustrate what the package should be or
do for the product.
• Protection of contents
• Design and presentation
• Colour, trade marks etc.
• Tamper-proof packaging
Slide 13.18

Labelling
– Identifies the product
– Conforms to legal requirements as in the case
of medical products
– Describes the key features of the product
– Promotes the product through attractiveness
– Grades the quality of the product
– Unit pricing
– Open dating
– Nutritional labelling
Slide 13.19

Product support services

– Customer service is an essential element of
the product strategy, and can play a major or
minor part in the product offering.
– Product support services augment the actual
products.
Slide 13.20

Product line considerations

• The product line is comprised of a group of
products that are closely related because:
» they function in a similar manner
» are sold to the same groups
» are marketed through the same types of
outlet
» fall within given price ranges
Slide 13.21

Product line length decisions

• The product line length involves the number of
items in the product line.
• Greatly influenced by the company objectives
and the resources.
• Product line growth needs to be planned
carefully and is extended in two ways:
‘stretching’ and ‘filling’.
Slide 13.22

Product line stretching

– Downward stretch
• Company initially located at the top end of the market and then
‘stretches’ downwards to pre-empt a competitor or respond to
an attack. Launch of C-Class by Mercedes-Benz.
– Upward stretch
• Companies stretching upwards to add prestige to their existing
range of products. Toyota with the Lexus.
• Can be risky due to customer perception and inability of sales
people to trade up and negotiate to the new level.
– Two-way stretch
• Extending product lines upwards and downwards to address
different segments of the market.
Slide 13.23

Figure 13.3 Product-line stretching decisions

Slide 13.24

Product line filling

– Increasing the product line by adding more
items within the present range of the line.
– Reasons for product filling:
• Extra profits
• Satisfying dealers
• Using excess capacity
• Being the leading full-line company
• Plugging holes to keep out the opposition
– Care needs to be taken that the line filling does
not lead to cannibalisation and customer
confusion.
Slide 13.25

Product mix decisions

• Product mix or product assortment consists
of all the product lines and items that a
particular seller offers for sale to buyers.
Slide 13.26

4 Dimensions of the product mix

• Breadth or width
– Wide product mix containing many different product
lines.
• Unilever producing cooking oil, toilet soap,
cosmetics etc.
• Length
– Total number of products in the product lines
• Depth
– Different versions, such as size of packaging and
different formulations.
• Consistency
– How closely related the various product lines are in
end use, production requirements, distribution
channels etc.
Slide 13.27

Product mix strategies

• Company can add new product lines, thus widening
the product mix.
• Company can lengthen the existing product lines to
become a more full line company.
• It can add more product versions of each product and
deepen its product mix.
• The company can pursue more product line
consistency, or less, depending upon whether it
wants to have a strong reputation in a single field or
in several fields.
Slide 13.28

Branding strategy
• Branding viewed as the major enduring asset
of a company, outlasting products.
• Powerful assets that must be developed and
managed.
• Branding is an important element of the
tangible product
• particularly in consumer markets as a means of
linking items within a product line or emphasising
the individuality of product items.
Slide 13.29

Brand equity
• Brands represent the consumers’ perceptions
and feelings about products and their
performance.
• The real value of branding is the ability to
capture consumer preference and loyalty.
• Brands vary in power and value and have
varying degrees of brand awareness, brand
preference and brand loyalty.
Slide 13.30

Brand equity
• Brand equity is defined as the value of the
brand, based on the extent to which it has
high brand loyalty, name awareness,
perceived quality, strong brand associations
and other assets such as patents, trademarks
and channel relationships.
Slide 13.31

Brand valuation
• Placing values on brands is difficult.
• Not always incorporated into the balance sheet asset
valuations.
• Interbrand, the branding consultancy utilise the
estimated economic earnings; which is equal to the
brand’s future operating profits minus a capital and
tax charge, as the valuation method for brands.
– However, this does not measure future growth and
thus the following marketing insight illustrates other
methods:
Slide 13.32

Figure 13.4 Major brand strategy decisions

Slide 13.33

Aspects of brand positioning

• Attributes
– Provides a basic position for the brand based upon its features.
• Benefits
– Customers buy benefits not features. These features must be
translated into functional and emotional benefits.
• Values
– The brand reflects the values of the buyer.
• Culture
– The brand represents the culture of the organisation and product.
• Personality
– Each brand has a personality and the brand will attract people
whose actual or desired self-images match the brand’s image.
Slide 13.34

Brand name selection

• A good name contributes significantly to the
success of a brand.
• Given the global market, great care needs to
be taken regarding the translation of the brand
name as illustrated:
Slide 13.35

Desirable qualities for a brand name

• Should suggest something about the product’s
features and benefits.
• Easy to pronounce, recognise and remember.
• Brand name must be distinctive.
• Must translate easily and accurately into other
major languages.
• Must be capable of registration and legal protection.
– Once selected, the brand name needs to be legally
protected and registered with the appropriate Trade
Marks Register.
Slide 13.36
Brand sponsorship
• Manufacturer’s brand (national brand)
– Brand created and owned by the producer of the
product or service.
• Private brand (middleman, distributor or store brand)
– A brand created and owned by a reseller of a product
or service.
• Licensed brand
– A product or service using a brand name offered by the
brand owner to the licensee for an agreed fee or
royalty.
• Co-brand
– The practice of using the established brand names of
two different companies on the same product.
Slide 13.37

Manufacturers’ brand versus private brand

• The brand battles rage between
manufacturers’ brands and private brands.
Winners of the battle focus on one simple rule:
achieve success through delivering superior
value to target customers.
Slide 13.38

Manufacturers’ brand versus private brand

• Retailers have many advantages:
– They control the stock on the shelf
– Which products to feature in promotions
– They price store brands lower than the
manufacturers’ brands
– Appeal to budget conscious consumers
– Higher profit margins generated
Slide 13.39

Brand licensing
• Branding is costly and time consuming and in an
effort to short circuit the process, some organisations
seek licensing agreements for big brands especially
in emergent markets.

• The fastest growing licensing category is corporate

brand licensing, a form of licensing whereby a firm
rents a corporate trademark or logo made famous in
one product or service category, and uses it in a
related category.
Slide 13.40

Co-branding
• Co-branding occurs when two established brand
names of different companies are used on the same
product or service.
• It offers many advantages:
– creates broader consumer appeal.
– greater brand equity.
– allows companies to enter new markets with minimal
risk or investment.
• It also has limitations:
– partnerships should be carefully evaluated and often
involve complex legal contracts.
– a great deal of trust is necessary for success.
Slide 13.41

Figure 13.5 Brand development strategies

Slide 13.42

Brand development
• Line extensions
– Using a successful brand name to introduce
additional items in a given product category
under the same brand name, such as new
flavours, forms, colours, added ingredients or
package size.
– Danger of overextending the brand and losing
meaning.
– Danger of cannibalisation of own products.
Slide 13.43

Brand development
• Brand extensions
– Using a successful brand name to launch a new or
modified product in a new category.
– Gives new product greater recognition and faster
acceptance.
– Save high advertising costs due to familiar brand
name.
– Must ensure the appropriateness of the new product to
the brand and market to customers that value the
brand.
– Guard against confusing the consumer.
Slide 13.44

Brand development
• Multi-brands
– Firm develops two or more brands in the same product category.
– Establishes different features and appeals to different market
segments and buying motives.
– Some companies develop multiple brands for different families of
products. This is called range branding and is illustrated by the
Matsushita Group with its ranges of Technics™, National™,
Panasonic™ and Quasar™.
– In corporate branding the firm makes its company name the
dominant brand identity across all products, e.g. Johnson &
Johnson™.
– Other companies use the company and individual branding
approach, e.g. Nestlé KitKat™.
Slide 13.45

Brand development
• New brands
– Some companies create a new brand for a
new product if their existing brands do not fit or
seem appropriate.