CHAPTER ONE

NEW PRODUCT DEVELOPMENT

I. Introduction

Product Management is becoming an important function of marketing. Product

management is vital to delivering innovations and driving business growth. It is an
important organizational role that is growing in popularity. With the passage of
time, product management has undergone many changes. It is no more a
department of churning out promotional materials but is has now become the nerve
center of the organization. Effective product management is a practical, purposeful
and positive approach of improving the company results, through the efforts of a
competent and committed team, coordinating manufacturing, marketing and sales.

1.1 Product

The word “product” can be defined in many ways. The definitions differ according
to the difference in the connotation in which it is being used. Technically, a product
can be defined as anything that is produced, whether as the result of generation,
growth, labour, or thought, or by the operation of involuntary causes; as, the
products of the season, or of the farm; the products of manufactures; the products of
the brain.
In manufacturing, products are purchased as raw materials and sold as finished
goods. In project management, products are the formal definition of the project
deliverables that make up or contribute to delivering the objectives of the project.
Marketing defines a product as anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a want or need.
Products include more than just tangible objects, such as cars, computers, or cell
phones. Broadly defined, “products” also include services, events, persons, places,
organizations, ideas, or a mixture of these.

A product has many important concepts related to it that are very popularly
prevalent in the industries worldwide. Some of the major concepts are: product

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levels, product development, new product, product life cycle and innovation and so
on.

1.2 Product Levels: The Customer-Value Hierarchy

In planning its market offering, the marketer needs to address five product levels.
Each level adds more customer value, and the five constitute a customer value
hierarchy.
 The fundamental level is the core benefit: the service or benefit the customer
is really buying. A hotel guest is buying "rest and sleep." The purchaser of a
drill is buying "holes." Marketers must see themselves as benefit providers.
 At the second level, the marketer must turn the core benefit into a basic
product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser,
and closet.
 At the third level, the marketer prepares an expected product, a set of
attributes and conditions buyers normally expect when they purchase this
product. Hotel guests expect a clean bed, fresh towels, working lamps, and a
relative degree of quiet.
 At the fourth level, the marketer prepares an augmented product that exceeds
customer expectations. In developed countries, brand positioning and
competition take place at this level. In developing and emerging markets such
as India and Brazil, however, competition takes place mostly at the expected
product level.
 At the fifth level stands the potential product, which encompasses all the
possible augmentations and transformations the product or offering might
undergo in the future. Here is where companies search for new ways to
satisfy customers and distinguish their offering.

1.3 Product Classifications

Marketers have traditionally classified products on the basis of durability,
tangibility, and use (consumer or industrial) products. Each product type has an
appropriate marketing-mix strategy.

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Durability and Tangibility: Marketers classify products into three groups according
to durability and tangibility:
1. Non-durable goods are tangible goods normally consumed in one or a few
uses, such as beer and soap. Because these goods are purchased frequently,
the appropriate strategy is to make them available in many locations, charge
only a small markup, and advertise heavily to induce trial and build
preference.
2. Durable goods are tangible goods that normally survive many uses:
refrigerators, machine tools, and clothing. Durable products normally require
more personal selling and service, command a higher margin, and require
more seller guarantees.
3. Services are intangible, inseparable, variable, and perishable products. As a
result, they normally require more quality control, supplier credibility, and
adaptability. Examples include haircuts, legal advice, and appliance repairs.
I, Consumer Goods classification: We classify the vast array of goods consumers
buy on the basis of shopping habits. We distinguish among:
 Convenience goods
 Shopping goods
 Specialty goods, and
 Unsought goods.
1) The consumer usually purchases convenience goods frequently, immediately, and
with a minimum of effort. Examples include soft drinks, soaps, and newspapers.
Convenience goods can be further divided. Staples are goods consumers purchase
on a regular basis.
A buyer might routinely purchase sugar, tooth paste, or cleaning detergents.
Impulse goods are purchased without any planning or search effort. Candy bars and
magazines can be impulse goods. Emergency goods are purchased when a need is
urgent-umbrellas during a rainstorm, boots and shovels during the first winter
snow. Manufacturers of impulse and emergency goods will place them in those
outlets where consumers are likely to experience an urge or compelling need to
make a purchase.

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2) Shopping goods are goods that the consumer characteristically compares on such
bases as suitability, quality, price, and style. Examples include furniture, clothing,
used cars, and major appliances. We further divide this category. Homogeneous
shopping goods are similar in quality but different enough in price to justify
shopping comparisons. Heterogeneous shopping goods differ in product features and
services that may be more important than price. The seller of heterogeneous
shopping goods carries a wide assortment to satisfy individual tastes and must have
well-trained salespeople to inform and advise customers.
3) Specialty goods have unique characteristics or brand identification for which a
sufficient number of buyers are willing to make a special purchasing effort.
Examples include cars, stereo components, photographic equipment, and men's
suits. A Mercedes is a specialty good because interested buyers will travel far to buy
one. Specialty goods don't require comparisons; buyers invest time only to reach
dealers carrying the wanted products. Dealers don't need convenient locations,
although they must let prospective buyers know their locations.
4) Unsought goods are those the consumer does not know about or does not
normally think of buying, such as smoke detectors. The classic examples of known
but unsought goods arc life insurance, cemetery plots, gravestones, and
encyclopedias. Unsought goods require advertising and personal-selling support.
II, Industrial Goods Classification: Industrial goods can be classified in terms of
their relative cost and how they enter the production process. Industrial products are
broadly classified in to:
1. Heavy/capital equipment and investment: require Significant Financial
Expenditure. Includes land, building and other companies, single Purpose
equipment and multipurpose equipment.

2. Light equipment: It includes such readily movable items such as: welders,
hand-held drills, and forklift trucks in industrial settings or Personal
computers and furniture in office settings.

3. Consumable supplies: do not become part of the finished product but most
parts are continuously worn out or used up in the process of operation or

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 facilitating the operation of an enterprise. Items such as paints, soaps, oils and
greases, pencils, stationery items (like pencils, toner etc.) belongs to this
category.

4. Component parts: are those products that are purchased for the purpose of
inclusion into the final products of an industrial company.
5. Raw materials: It includes all those products generated by the extractive
industry which is subject to some amount of processing before becoming a
final product. Typical of these products include coal, iron ore, gypsum, crude
oil, fish, wood, field crop and other similar products.
6. Processed materials: Processed materials resemble component parts in that
they usually enter in to and form an indistinguishable part of the finished
product. Examples of process materials are: Sheet metals, textiles, cement,
chemicals, and electrical and electronic circuits wiring and additives.

7. Industrial services: include janitorial or cleaning service, repair and

maintenance, installation service, delivery & warehousing, consulting,
advertising, accounting service etc.
1.4 Product Hierarchy

Businesses usually organize their products into groups to facilitate their sales. By
looking for these groups, customers can access all the products that are related to
them instead of reviewing the entire catalogue. Learning more about product
hierarchies may help you enhance your marketing skills and assist a business in
organizing its products and services on its online store. In this article, we discuss
what product hierarchy is, explain why this method is important for marketers and
businesses, list its seven levels, and review some tips for implementing it.

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The use of a product hierarchy can assist in recognizing the similarities and
differences among products, aiding in determining the most
effective marketing strategies for the company’s goods.
The product hierarchy framework uses six levels to organize products into
an order that makes sense for the business and end users of the products
involved. Often see these levels illustrated as a pyramid, with ‘product
need’ forming the foundations of the hierarchy and ‘product unit/item’ at
the top.

These six levels are:

1. Product need
2. Product family
3. Product class
4. Product line
5. Product type
6. Product unit/item

1. Product need
The term “product need” refers to the main reason for a product’s existence. It is the
first category used for organizing products and usually includes various types or
classes of products.

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For instance, products related to home improvement have needs like temperature
regulation, insulation, ventilation, and more. Even though there are numerous
options available for these products, they are grouped based on their common
purpose. This makes it easier for customers to recognize and organize them.

2. Product Family
A “family of products” usually refers to a group of products that meet the same
basic customer needs. These products may have different variations but still fulfill
the same core needs.
For example, a customer may need a refrigerator to store food and drinks. There are
many types of refrigerators available, like top-freezer models, side-by-side models,
and French door models. All these products have the same need for temperature
regulation but different features like size, style, color, and energy efficiency.
3. Product Class
A product class refers to a specific category of services offered by a company. A
vehicle manufacturer produces personal vehicles for travel, categorizing them by
different classes such as SUVs, sedans, and luxury vehicles. The Product class assists
customers in selecting among various specifications.
While any vehicle can facilitate travel, certain safety or mechanical features that may
be required are only available in specific vehicle classes.
4. Product Line
A product line refers to products that share similar features or prices. These products
belong to the same category and provide customers with a variety of options to
choose from.
For example, a car manufacturer offers different vehicle lines such as ‘Compact Cars’
and ‘SUVs’ within the same product class.
5. Product Type
A product type is a particular product that is part of a product line. This helps
differentiate similar items and enables customers to make more precise selections.
For example, a car manufacturer offers different types of SUVs, such as small
crossover vehicles, mid-size SUVs, and full-size SUVs. All these vehicles belong to

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the same product line and have different features like size, mileage, engine power,
etc.
6. Product Unit
A unit is a stand-alone product. Businesses often use the term stock-keeping unit
(SKU) to refer to it. Individual units are the specific items that belong to a product
type and are what customers take home after making a purchase. Each SKU within a
product type has the same features and price as the other SKUs in that same product
type.
For example, a car manufacturer offers an SUV type with multiple SKUs that have
different colors and trim levels. The customer can purchase the specific car they
want based on these individual units.

1.5 Product and service decisions

Marketers make product and service decisions at three levels: individual product
decisions, product line decisions, and product mix decisions.

A. Individual Product and Service Decisions

It focus on decisions about product attributes, branding, packaging, labelling, and
product support services

Product and Service Attributes

Developing a product or service involves defining the benefits that it will offer.
These benefits are communicated and delivered by product attributes such as
quality, features, and style and design.

Product Quality: Product quality is one of the marketer’s major positioning tools. It
has a direct impact on product or service performance; thus, it is closely linked to
customer value and satisfaction. The American Society for Quality defines quality as
the characteristics of a product or service that bear on its ability to satisfy stated or
implied customer needs.

Product Features: A product can be offered with varying features. Features are a
competitive tool for differentiating the company’s product from competitors’

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products. How can a company identify new features and decide which ones to add
to its product? It should periodically survey buyers who have used the product and
ask these questions: How do you like the product? Which specific features of the
product do you like most? Which features could we add to improve the product?
The answers to these questions provide the company with a rich list of feature ideas.
The company can then assess each feature’s value to customers versus its cost to the
company. Features that customers value highly in relation to costs should be added.

Product Style and Design:. Another way to add customer value is through
distinctive product style and design. Design is a larger concept than style. Style
simply describes the appearance of a product. Styles can be eye catching or yawn
producing. A sensational style may grab attention and produce pleasing aesthetics,
but it does not necessarily make the product perform better. Unlike style, design is
more than skin deep—it goes to the very heart of a product. Good design contributes
to a product’s usefulness as well as to its looks.

Branding Perhaps the most distinctive skill of professional marketers is their ability
to build and manage brands. Consumers view a brand as an important part of a
product, and branding can add value to a product. Customers attach meanings to
brands and develop brand relationships.

Packaging involves designing and producing the container or wrapper for a

product. Traditionally, the primary function of the package was to hold and protect
the product. In recent times, however, numerous factors have made packaging an
important marketing tool as well. Increased competition and clutter on retail store
shelves means that packages must now perform many sales tasks—from attracting
attention, to describing the product, to making the sale. Companies are realizing the
power of good packaging to create immediate consumer recognition of a brand.

Labelling: Labels range from simple tags attached to products to complex graphics
that are part of the packaging. They perform several functions. At the very least, the
label identifies the product or brand. The label might also describe several things

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about the product—who made it, where it was made, when it was made, its
contents, how it is to be used, and how to use it safely.

Product Support Services Customer service is another element of product strategy. A

company’s offer usually includes some support services, which can be a minor part
or a major part of the total offering.

B. Product Line Decisions

Beyond decisions about individual products and services, product strategy also calls for
building a product line. A product line is a group of products that are closely related
because they function in a similar manner, are sold to the same customer groups, are
marketed through the same types of outlets, or fall within given price ranges. For example,
Nike produces several lines of athletic shoes and apparel, and Marriott offers several lines of
hotels.
The major product line decision involves product line length—the number of items in the

product line. Long product line length can expand the market segment, while shorter
product length can increase the company's profit. But companies can also increase profit by
lengthening the product line.

C. Product Mix Decisions

An organization with several product lines has a product mix. A product mix (or product
portfolio) consists of all the product lines and items that a particular seller offers for sale.
Colgate’s product mix consists of four major product lines: oral care, personal care, home
care, and pet nutrition. Each product line consists of several sub lines. A company’s product
mix has four important dimensions: width, length, depth, and consistency. Product mix
width refers to the number of different product lines the company carries. Product mix
length refers to the total number of items a company carries within its product line. Product
mix depth refers to the number of versions offered for each product in the line. The
consistency of the product mix refers to how closely related the various product lines are in
end use, production requirements, distribution channels, or some other way

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1.6 Product Development

Product development is the process of designing, building, operating, and

maintaining a good or service. Product development adds things like pricing,
marketing, and customer support to the technology to create a complete product.
Companies use a product development process to ensure that they are not just
manufacturing a product that people will want to buy but also one that people
would like to continue to use. To be sure, a base technology is at the heart of the
product, but product development ensures that the customer’s voice is not lost in the
rush to an exciting technology. Product development is performed by a multi-
disciplinary team whose goal is building, operating, and maintaining the product.
Team members may include product managers, product developers, project
managers, product operations engineers, customer support managers, quality
assurance managers, user interface design engineers, marketers, financial personnel,
graphic Notes artists, etc.

1.6.1 New Product

Firms must innovate in order to survive. The dynamics of markets, technology, and
competition have brought changes to virtually every market sector and have made
new product development one of the most powerful business activities. The
monumental changes that constantly impact commerce have forced companies to
innovate with increasing speed, efficiency, and quality. In turn, this has made new
product development one of the most complex and difficult business functions. The
power of innovation is revealed in numerous studies, which show that companies
leading their industries attribute about half of their revenues to products developed
in the most recent five years. By comparison, companies at the bottom of their
industries achieve approximately one-tenth of their sales from new products. A new
product can be defined as a product that is new to the market.
Firms can obtain new products internally or externally. External sourcing means the
company acquires the product or service, or obtains the rights to market the product
or service, from another organization. Internal development means the firm
develops the new product itself. This is riskier than external development because

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the company bears all of the costs associated with new product development and
implementation. Collaborations, which include strategic partnerships, strategic
alliances, joint ventures, and licensing agreements, occur when two or more firms
work together on developing new products.

1.6.2. Categories of new products

There are six categories of new products.
1. New-to-the-world Products (really new Products)
The alternative expression for new-to-the-world products (really new products)
already indicates that this is what most people would define as a new product. These
products are inventions that create a whole new market. Examples: Polaroid camera,
the iPod and iPad, the laser printer and so on.

2. New-to-the-firm Products (new Product Lines)

These are products that take a firm into a category new to it. The products are not
new to the world, but are new to the firm. The new product line raises the issue of
the imitation product: a “me-too”. Examples: P&G’s first shampoo or coffee,
Hallmark gift items, AT&T’s Universal credit card and so on.

3. Additions to existing Product Lines

These are simple line extensions, designed to flesh out the product line as offered to
the firm’s current markets. Examples: P&G’s Tide Liquid detergent, Bud Light,
Special K line extensions (drinks, snack bars, and cereals).

4. Improvements and Revisions to existing Products

Current products made better. Examples: P&G’s Ivory Soap and Tide power laundry
detergent have been revised numerous times throughout their history, and there are
countless other examples.

5. Repositionings
Repositionings are products that are retargeted for a new use or application.
Examples: Arm & Hammer baking soda repositioned as a drain or refrigerator
deodorant; aspirin repositioned as a safeguard against heart attacks. Also includes

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products retargeted to new users or new target markets. A famous example is the
transformation of Old Spice from a brand for older men to a vibrant, youth-oriented
brand.
6. Cost Reductions
Finally, cost reductions complete the six categories of new products. Cost reductions
refer to new products that simply replace existing products in the line, providing the
customer similar performance but at a lower cost. They are typically made possible
through improvements in manufacturing or production processes, allowing for a
cheaper yet comparable alternative to existing products.

1.6.3 The New product development process

The new-product development process for finding and growing new products consists of
eight major steps.

1. Idea Generation
New-product development starts with idea generation—the systematic search for
newproduct ideas. A company typically generates hundreds of ideas, even thousands, to
find a few good ones. Major sources of new-product ideas include internal sources and
external sources such as customers, competitors, distributors and suppliers, and others.

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Using internal sources, the company can find new ideas through formal R&D. Beyond its
internal R&D process; companies can pick the brains of its employees— from executives to
scientists, engineers, and manufacturing staff to salespeople. Many companies have
developed successful “entrepreneurial” programs that encourage employees to envision and
develop new-product ideas.

Companies can also obtain good new-product ideas from any of a number of external
sources. For example, distributors and suppliers can contribute ideas. Distributors are close
to the market and can pass along information about consumer problems and new-product
possibilities. Suppliers can tell the company about new concepts, techniques, and materials
that can be used to develop new products. Competitors are another important source.
Companies watch competitors’ ads to get clues about their new products. They buy
competing new products, take them apart to see how they work, analyze their sales, and
decide whether they should bring out a new product of their own. Other idea sources
include trade magazines, shows, and seminars; government agencies; advertising agencies;
marketing research firms; university and commercial laboratories; and inventors. The most
important source of new-product ideas is customers themselves. The company can analyze
customer questions and complaints to find new products that better solve consumer
problems. Or it can invite customers to share suggestions and ideas.

Truly innovative companies don’t rely only on one source or another for new-product ideas.
Instead, according to one expert, they create “extensive networks for capturing inspiration
from every possible source, from employees at every walk of the company to customers to
other innovators and myriad points beyond.”

2. Idea Screening
The purpose of idea generation is to create a large number of ideas. The purpose of the
succeeding stages is to reduce that number to a manageable few which deserve further
attention. The first idea-reducing stage is idea screening. The purpose of screening is to spot
good ideas and drop poor ones as soon as possible. As product development costs rise
greatly in later stages, it is important for the company to go ahead only with those product
ideas that will turn into profitable products.

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3. Concept Development and Testing
Attractive ideas must now be developed into product concepts. It is important to distinguish
between a produce idea, a product concept and a product image. A product idea is an idea
for a possible product that the company can see itself offering to the market. A product
concept is a detailed version of the idea stated in meaningful consumer terms. A product
image is the way consumers perceive an actual or potential product. Concept testing calls
for testing new-product concepts with a group of target consumers. The concepts may be
presented to consumers symbolically or physically.

4. Marketing Strategy Development

The marketing strategy statement consists of three parts. The first part describes the target
market, the planned product positioning, and the sales, market share and profit goals for the
first few years. The second part of the marketing strategy statement outlines the product's
planned price, distribution and marketing budget for the first year. The third part of the
marketing strategy statement describes the planned long-run sales, profit goals and
marketing mix strategy.

5. Business Analyses
Once management has decided on its product concept and marketing strategy, it can
evaluate the business attractiveness of the proposal. Business analysis involves a review of
the sales, costs and profit projections for a new product to find out whether they satisfy the
company's objectives. If they do, the product can move to the product development stage.

6. Product Development
So far, the product concept may have existed only as a word description, a drawing or
perhaps a crude mock-up. If the product concept passes the business test, it moves into
product development. Here, R & D or engineering develops the product concept into a
physical product. The product development step, however, now calls for a large jump in
investment. It will show whether the product idea can be turned into a workable product.
The R & D department will develop one or more physical versions of the product concept. R
& D hopes to design a prototype that will satisfy and excite consumers and that can be
produced quickly and at budgeted costs. Developing a successful prototype can take days,
weeks, months or even years. The prototype must have the required functional features and
also convey the intended psychological characteristics.

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7. Test Marketing
If the product passes functional and consumer tests, the next step is test marketing, the stage
at which the product and marketing programs are introduced into more realistic market
settings. Test marketing gives the marketer experience with marketing the product before
going to the great expense of full introduction.
It lets the company test the product and its entire marketing program - positioning strategy,
advertising, distribution, pricing, branding and packaging, and budget levels - in real
market situations. The company uses test marketing to learn how consumers and dealers
will react to handling, using and repurchasing the product.
The results can be used to make better sales and profit forecasts. Thus a good test market can
provide a wealth of information about the potential success of the product and marketing
program.
When using test marketing, consumer-products companies usually choose one of three
approaches - standard test markets, controlled test markets or simulated test markets.
i. Standard Test Markets: Using standard test markets, the company finds a small number
of representative test cities, conducts a full marketing campaign in these cities and uses store
audits, consumer and distributor surveys, and other measures to gauge product
performance.
ii. Controlled-Test Markets: Several research firms keep controlled panels of stores which
have agreed to carry new products for a fee. The company with the new product specifies
the number of stores and geographical locations it wants. The research firm delivers the
product to the participating stores and controls shelf location, amount of shelf space,
displays and point-of- purchase promotions, and pricing according to specified plans. Sales
results are tracked to determine the impact of these factors on demand.
iii. Simulated Test Markets: Companies also can test new products in a simulated
shopping environment. The company or research firm shows, to a sample of consumers, ads,
and promotions for a variety of products including the new product being tested. It gives
consumers a small amount of money and invites them to a real or laboratory store, where
they may keep the money or use it to buy items. The researchers note how many consumers
buy the new product and competing brands. This simulation provides a measure of trial and
the commercials effectiveness against competing commercials.
Test Marketing for New Industrial Products: Business marketers use different methods for
test marketing their new products, such as: product-use tests; trade shows;
distributor/dealer display rooms; and standard or controlled test markets.

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Product use test, Here the business marketer selects a small group of potential customers
who agree to use the new product for a limited time. The manufacturer's technical people
watch how these customers use the product.
From this test the manufacturer learns about customer training and servicing requirements.
After the test, the marketer asks the customer about purchase intent and other reactions. For
some products, product-use tests may involve both the business customer and final or end-
user.
Trade show, these shows draw a large number of buyers who view new products in a few
concentrated days. The manufacturer sees how buyers react to various product features and
terms, and can assess buyer interest and purchase intentions.
Distributors and dealers display rooms, here the new industrial product may stand next to
other company products and possibly competitors' products. This method yields preference
and pricing information in the normal selling atmosphere of the product.
Standard or controlled test market; these are used to measure the potential of new
industrial products. The business marketer produces a limited supply of the product and
gives it to the sales force to sell in a limited number of geographical areas. The company
gives the product full advertising, sales promotion and other marketing support. Such test
markets let the company test the product and its marketing program in real market
situations.
8. Commercialization
Test marketing gives management the information needed to make a final decision about
whether to launch the new product. If the company goes ahead with commercialization -
that is, introducing the new product into the market - it will face high costs. The company
will have to build or rent a manufacturing facility. It must have sufficient funds to gear up
production to meet demand. Failure to do so can leave an opening in the market for
competitors to step in. For example, London-based electronics company Psion's new Series 5
palmtop organizers, launched in years before, were so popular that the firm could not meet
demand initially, due to problems at one of its component suppliers. The backlog of orders
was taking some four months to clear. Potentially, that left a gap in the hand-held computer
market for American and Japanese rivals, which built similar machines based on an
operating system designed by US software giant Microsoft. Companies may have to spend
millions of pounds for advertising and sales promotion in the first year of launch.

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Why Do New Products Fail?

Product failures occur when a new product after its launch fails to gain an adequate
amount of sales, leading to its loss. When a product does not manage to recover its
cost and the amount of money used for its marketing, then the product is said to be a
huge failure. The failure of a product is most often realized in its utilization phase.
Concorde aircraft (an Anglo-French project), PCjr personal computer (IBM), (Walt Disney/
Euro Disney Group), the C5 (Clive Sinclair's electric car) all have one thing in common - they
all failed to meet target returns on investment, and therefore joined the ranks of new-
product failure. There are several reasons for new product failure. Some of them are

1. Lack of product uniqueness

If a product produced has features exactly as products that are already available, it
leads to its failure.

2. High price tag

The price tag factor is one of the biggest reasons for the failure of a product. A
product with a very high price is very difficult to be sold in a market. People prefer
alternative products that have a lesser price than high priced products.
3. Poor timing
For a product to be successful, it is important for it to be released at the correct time.
If the product is introduced when the product is not needed, then this leads to the
product’s failure.

4. Poor planning
Failure of a company to make plans about every stage of a product’s life will lead to
the product’s failure. They must plan to take care of their customers

5. Lack of promotional measures

It is important to promote or popularize the product in its introduction stage. Failure
in doing so would cause a great loss to the organization.

6. Higher costs: Sometimes the costs of product development are higher than
budgeted and sometimes competitors fight back harder than expected.

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7. Too many competitors: some companies bring new product into an
Oversaturated market:

1.7. The Product Life Cycle Model and its Implications and Application

After launching the new product, management wants that product to enjoy a long
and happy life. Although it does not expect that product to sell forever, the company
wants to earn a decent profit to cover all the effort and risk that went into launching
it. Management is aware that each product will have a life cycle; although its exact
shape and length is not known in advance. To say that a product has a life cycle is to
assert four things:
1. Products have a limited life.
2. Product sales pass through distinct stages, each posing different challenges,
opportunities, and problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing, and
human resource strategies in each life-cycle stage.

Product Life Cycles : Most product life-cycle curves are portrayed as bell-shaped.
This curve is typically divided into four stages: introduction, growth, maturity, and
decline.

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1. Introduction-A period of slow sales growth as the product is introduced in the
market Profits are nonexistent because of the heavy expenses of product
introduction.
2. Growth-A period of rapid market acceptance and substantial profit improvement.
3. Maturity---A slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits stabilize or decline because of increased
competition.
4. Decline----Sales show a downward drift and profits erode.

1.7.1. Introduction Stage

The introduction stage starts when a new product is first launched. Introduction
takes time, and sales growth is apt to be slow. Well-known products such as frozen
foods and HDTVs lingered for many years before they entered a stage of more rapid
growth. In this stage, as compared to other stages, profits are negative or low

20
because of the low sales and high distribution and promotion expenses. Much
money is needed to attract distributors and build their inventories. Promotion
spending is relatively high to inform consumers of the new product and get them to
try it. Because the market is not generally ready for product refinements at this stage,
the company and its few competitors produce basic versions of the product. These
firms focus their selling on those buyers who are the most ready to buy. A company,
especially the market pioneer, must choose a launch strategy that is consistent with
the intended product positioning. It should realize that the initial strategy is just the
first step in a grander marketing plan for the product’s entire life cycle. If the pioneer
chooses its launch strategy to make a “killing,” it may be sacrificing long-run
revenue for the sake of short-run gain. As the pioneer moves through later stages of
the life cycle, it must continuously formulate new pricing, promotion, and other
marketing strategies. It has the best chance of building and retaining market
leadership if it plays its cards correctly from the start
1.7.2. Growth Stage
The growth stage is marked by a rapid climb in sales. Early adopters like the
product, and additional consumers start buying it. New competitors enter, attracted
by the opportunities.
They introduce new product features and expand distribution. Prices remain where
they are or fall slightly, depending on how fast demand increases. Companies
maintain their promotional expenditures at the same or at a slightly increased level
to meet competition and to continue to educate the market. Sales rise much faster
than promotional expenditures, causing a welcome decline in the promotion-sales
ratio.
Profits increase during this stage as promotion costs are spread over a larger volume
and unit manufacturing costs fall faster than price declines, owing to the producer
learning effect. Firms must watch for a change from an accelerating to a decelerating
rate of growth in order to prepare new strategies.
1.7.3. Maturity Stage
At some point, the rate of sales growth will slow, and the product will enter a stage
of relative maturity. This stage normally lasts longer than the previous stages and

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poses big challenges to marketing management. Most products are in the maturity
stage of the life cycle.
The maturity stage divides into three phases: growth, stable, and decaying maturity.
 In the first phase, the sales growth rate starts to decline. There are no new
distribution channels to fill. New competitive forces emerge.
 In the second phase, sales flatten on a per capita basis because of market
saturation. Most potential consumers have tried the product, and future sales
are governed by population growth and replacement demand.
 In the third phase, decaying maturity, the absolute level of sales starts to
decline, and customers begin switching to other products. The third phase of
maturity poses the most challenges. The sales slowdown creates overcapacity
in the industry, which leads to intensified competition. Competitors scramble
to find niches. They engage in frequent markdowns. They increase
advertising and trade and consumer promotion. They increase R&D budgets
to develop product improvements and line extensions. They make deals to
supply private brands. A shakeout begins, and weaker competitors withdraw.
 The industry eventually consists of well-entrenched competitors whose basic
drive is to gain or maintain market share.
Three potentially useful ways to change the course for brands are: market,
product, and marketing program modifications.
Market Modification: A company might try to expand the market for its mature
brand by working with the two factors that make up sales volume: Volume =
number of brand users x usage rate per user.
Product modification: Managers also try to stimulate sales by modifying the
product's characteristics through quality improvement, feature improvement, or
style improvement. Quality improvement aims at increasing the product's functional
performance. A manufacturer can often overtake its competition by launching a
"new and improved" product.
Marketing program Modification: Product managers might also try to stimulate
sale by modifying other marketing program elements. They should ask the questions
like:

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  Prices, would a price cut attract new buyers?
 Distribution, Can the company obtain more product support and display in
existing outlets? Can the company introduce the product into new
distribution channels?
 Advertising, Should we increase advertising expenditures? Change the
message or ad copy? The media mix? What about the timing, frequency, or
size of ads?
 Sales promotion, Should the company step up sales promotion-trade deals,
cents-off coupons, rebates, warranties, gifts, and contests?
 Personal selling, should we change the basis for sales force specialization?
Revise sales territories or sales force incentives? Can we improve sales-call
planning?
 Services, Can the company speed up delivery? Can we extend more technical
assistance to customers?

1.7.4. Decline Stage

The sales of most product forms and brands eventually dip. The decline may be slow
for some goods, such as in the cases of stamps and oatmeal cereal, or rapid, as in the
cases of cassette and VHS tapes. Sales may plunge to zero, or they may drop to a low
level where they continue for many years. Sales decline for many reasons, including
technological advances, shifts in consumer tastes, and increased competition. As
sales and profits decline, some firms withdraw from the market. Those remaining
may prune their product offerings. They may drop smaller market segments and
marginal trade channels, or they may cut the promotion budget and reduce their
prices further. Carrying a weak product can be very costly to a firm, and not just in
profit terms. There are many hidden costs. A weak product may take up too much of
management’s time. It often requires frequent price and inventory adjustments. It
requires advertising and sales force attention that might be better used to make
“healthy” products more profitable. A product’s failing reputation can cause
customer concerns about the company and its other products. The biggest cost may
well lie in the future. Keeping weak products delays the search for replacements,

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creates a lopsided product mix, hurts current profits, and weakens the company’s
foothold on the future. For these reasons, companies need to pay more attention to
their aging products. A firm’s first task is to identify those products in the decline
stage by regularly reviewing sales, market shares, costs, and profit trends. Then
management must decide whether to maintain, harvest, or drop each of these
declining products.
Management may decide to maintain its brand, repositioning or reinvigorating it in
hopes of moving it back into the growth stage of the PLC. P&G has done this with
several brands, including Mr. Clean and Old Spice. Management may decide to
harvest the product, which means reducing various costs (plant and equipment,
maintenance, R&D, advertising, sales force), hoping that sales hold up. If successful,
harvesting will increase the company’s profits in the short run. Finally, management
may decide to drop the product from its line. It can sell it to another firm or simply
liquidate it at salvage value. In recent years, P&G has sold off several lesser or
declining brands, such as Folgers coffee, Crisco oil, Comet cleanser, Sure deodorant,
Duncan Hines cake mixes, and Jif peanut butter. If the company plans to find a
buyer, it will not want to run down the product through harvesting.

In the last few years, the amount of time a product takes to reach the decline stage
has increased significantly. The duration varies for different products and depends
on the industry as well. That said, on average, products are reaching the decline
stage faster. The smartphone space is an ideal example in this regard. Companies are
launching new models yearly in all budget segments to compete in the market.

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 CHAPTER TWO
OVERVIEW OF BRAND MANAGEMENT

Introduction

Brands have been around for many years. They existed silently. Managers thought
about branding once the product was developed, priced, and packaged. Branding
was an after decision-not much significant for the marketers who felt that the
product was more important. The tangible aspects caught more attention. Branding
meant passively assigning names to pre-manufactured products.

But in the last four decades the brands have got out of their slumber. They are the
hot spots in total marketing process. Among the manager’s chief concerns, brands
reign at the top. Brands are not universally acknowledged as drivers of financial
performance of a company. Not any more are they cynosures of marketing people;
they constantly figure in financial strategy and valuations. When brands are so
important, branding becomes even more important.

The well-known brands in the global markets today are the objects of desire for
marketers who still struggle to come up with powerful brands. Brands like apple,
Amazon, Coca Cola, Toyota, Walmart, etc. are outcomes of careful and well-crafted
branding strategies. To achieve this end, the managers need to approach branding
cautiously and with dedication. But the process of branding cannot be approached
correctly if confusion surrounds the concept of brand. The need is to confront the
critical issue: What is a brand and what it is not.

2.1 Concept of Brand

The concept of brand in its present form is recent. Creating brand is the ultimate aim
of marketing endeavour. Brands are different from products in a way that brands
are “what the consumers buy”, while products are “what concern/companies
make”. Brand is an accumulation of emotional and functional associations. Brand is
a promise that the product will perform as per customer’s expectations. It shapes
customer’s expectations about the product. Brands usually have a trademark which

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protects them from used by others. A brand gives particular information about the
organization, good or service, differentiating it from others in marketplace. Brand
carries an assurance about the characteristics that make the product or service
unique. A strong brand is a means of making people aware of what the company
represents and what its offerings are.

A brand name is used by the marketers because of the roles it can perform. It
identifies the product or service. This helps consumers to specify, reject or
recommend brands. This is how brands become part and parcel of a consumer’s life.
Secondly, brands help in communication. Brands communicate either overtly or
subconsciously. For instance, the brand ‘Fair and Lovely’ communicates what the
product does. Similarly, a brand like Johnson and Johnson is a symbol of expression
of a mother’s love.

Conventionally brands were viewed myopically. They were seen to perform

identification and differentiation functions. But mere identification may not be a
sufficient condition for survival in a competitive marketplace. Brands do not exist for
the sake of identification and differentiation.

Brands exist because of and for customers. The value dimension is the key to
existence of any kind of brand in the marketplace. Branding must not be limited to
the process of passively assigning a name or symbol to a product. The purpose of
branding is to transform the product. It must add value that consumer’s desire.
Transforming a commodity like product into customer satisfying value added
propositions is the essence of branding.

2.2 Evolution of Brands

Brand evolution has interesting history. Branding has been around for centuries as a
means to distinguish the goods of one producer from those of another. In fact, the
word brand is derived from the Old Norse word brandr, which means “to burn,” as
brands were and still are the means by which owners of livestock mark their animals
to identify them. In ancient Roman and Greek society, shopkeepers hung pictures

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above their shops of the products they sold. There was a high degree of illiteracy in
those days; the pictorial representation did help the buyers. Each retailer then
started developing symbols to represent his speciality. This led to the development
of brand logos. Logos are shorthand device indicating capability of a brand. The
trend is continuous even now.

In medieval times, craftsmen put their marks on products to indicate the skills which
went in to making them. Branding based on the reputations of craftsmen has existed
over the centuries. Thus suppliers started distinguishing themselves. Branding was
used as a guarantee of the source of the product. Later it came to be used for legal
protection against copying and imitation. Trademarks now include works, symbols
and package design, and are registerable.

Branding was associated with the mark put on cattle by red hot iron as a proof of
ownership, and this must have influenced Oxford English Dictionary’s lexical
meaning of a brand as an indelible mark as proof of ownership, as a sign of quality
or for any other purpose. Ranchers in the old west used brands to identify their
cattle. As fencing was not invented, this was the only way to mark their valuable
property. Brands thus became differentiating devices, and remain so even today.
They identify the products of one seller or group and competitors. Brands can be a
name, term, sign, symbol or design or any combination of them.

Classical brand management developed in the retail grocery stores. Manufacturer-

retailer relationship underwent transformation in the wake of the Industrial
Revolution. Wholesalers were a dominant force then. Manufacturers sold unbranded
products to the wholesalers and had little contact with the retailers. But
technological advances enabled manufacturer to mass produce goods in anticipation
of demand. They questioned their reliance on wholesalers. They tried to protect their
investment by branding their products, and by patenting them. They tried to bypass
the wholesalers by advertising these brands directly to the consumers. Advertising
then focused on creating awareness of a brand, emphasising its reliability, and
guaranteeing that branded goods were of a consistent quality.

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Manufacturers also began to appoint their own salesmen to deal directly with the
retailers. All this happened by the second half of the 19th century.

The power shifted from the wholesalers to the manufacturers thanks to the branding
process. Manufacturers took efforts to create brand awareness, and to make their
brands different from those of the competitors. They also strove to maintain a
consistent quality level. Brands came to have three dimensions-differentiation, legal
protection and functional communication.

After the World War II, the consumers hankered after the goods which were short
since resources were diverted to the war efforts. People started life afresh and
wanted security. Family provisions were a desirable objective. It promised well for
the manufacturers. Many of today’s great brands emerged in this period. Brand
management became a respectable subject. In the last century, brands came to
acquire an emotional dimension also. They made personality statements and
represented buyer moods.

2.3 Definition of Brand

According to American Marketing Association (AMA) a brand is “a name, term,
sign, symbol or design or a combination of them, intended to identify the goods and
services of one seller or group of sellers and to differentiate them from those of
competitors”.
There are three aspects of this definition. Firstly, it focuses on ‘What’, of the brand.
Secondly, it emphasises on what the brand ‘does’. Finally, a brand becomes an asset
or property which only the owner has the right to use. The brand property is legally
protected. All the registered names are the valuable assets of the owners.

McDonald’s: is a name

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Golden Arches: is a symbol or sign which is trademarked (it is the Exclusive property of McDonald
Corporation)
Combination: A unique art work that Combine all elements of brand

Any outlet that displays this sign achieves two objectives immediately in the prospects mind:
1. The prospect is easily able to identify that this outlet is McDonald Corporation.
Hence he knows what to expect from this outlet.
2. The brand differentiates. The prospect upon seeing the above sign is able to differentiate this outlet
from the others which also sell similar kind of products or services.

A brand in short is an identifier of the seller or the maker. A brand name consists of
words, letters and/or numbers that can be vocalized. A brand mark is the visual
representation of the brand like a symbol, design, distinctive colouring or lettering.
Mercedes Benz is a brand name and the star with it is a brand mark.

Essentially, a brand is a promise of the seller to deliver a specific set of benefits or

attributes or services to the buyer. Each brand represents a level of quality.
Irrespective of the fact from whom the brand is purchased, this level of quality can
be expected of the brand. A brand is much more complex. Apart from attributes and
benefits, it also reflects values.

2.4 Why do brands Matter? (Importance of Branding)

Why are brands important? What functions do they perform that make them so
valuable to marketers? The importance of brands can be viewed from two
perspectives. That is, from the customer side and from the firm side

2.4.1. Importance to Consumers

To consumers, brands provide important functions. Brands identify the source or
maker of a product and allow consumers to assign responsibility to a particular
manufacturer or distributor. Most important, brands take on special meaning to
consumers.

Because of past experiences with the product and its marketing program over the
years, consumers find out which brands satisfy their needs and which ones do not.
As a result, brands provide a shorthand device or means of simplification for their
product decisions.

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If consumers recognize a brand and have some knowledge about it, then they do not
have to engage in a lot of additional thought or processing of information to make a
product decision. Thus, from an economic perspective, brands allow consumers to
lower the search costs for products both internally (in terms of how much they have
to think) and externally (in terms of how much they have to look around). Based on
what they already know about the brand—its quality, product characteristics, and so
forth—consumers can make assumptions and form reasonable expectations about
what they may not know about the brand.
The meaning imbued in brands can be quite profound, allowing us to think of the
relationship between a brand and the consumer as a type of bond or pact.
Consumers offer their trust and loyalty with the implicit understanding that the
brand will behave in certain ways and provide them utility through consistent
product performance and appropriate pricing, promotion, and distribution
programs and actions. To the extent that consumers realize advantages and benefits
from purchasing the brand, and as long as they derive satisfaction from product
consumption, they are likely to continue to buy it.
These benefits may not be purely functional in nature. Brands can serve as symbolic
devices, allowing consumers to project their self-image. Certain brands are
associated with certain types of people and thus reflect different values or traits.
Consuming such products is a means by which consumers can communicate to
others or even to themselves the type of person they are or would like to be. Some
branding experts believe that for some people, certain brands even play a religious
role of sorts and substitute for religious practices and help reinforce self-worth. The
cultural influence of brands is profound and much interest has been generated in
recent years in understanding the interplay between consumer culture and brands.

Brands can also play a significant role in signalling certain product characteristics to
consumers. Researchers have classified products and their associated attributes or
benefits into three major categories: search goods, experience goods, and credence
goods. Given the difficulty of assessing and interpreting product attributes and

30
benefits for experience and credence goods, brands may be particularly important
signals of quality and other characteristics to consumers for these types of products.

Brands can reduce the risks in product decisions. Consumers may perceive many
different types of risks in buying and consuming a product. Consumers can certainly
handle these risks in a number of ways, but one way is obviously to buy well-known
brands, especially those with which consumers have had favourable past
experiences. Thus, brands can be a very important risk-handling device, especially in
business-to-business settings where risks can sometimes have quite profound
implications.

2.4.2. Importance to Firms

Brands also provide a number of valuable functions to their firms. Fundamentally,
they serve an identification purpose, to simplify product handling or tracing.
Operationally, brands help ororganize inventory and accounting records.

A brand also offers the firm legal protection for unique features or aspects of the
product. A brand can retain intellectual property rights, giving legal title to the
brand owner. The brand name can be protected through registered trademarks;
manufacturing processes can be protected through patents; and packaging can be
protected through copyrights and designs. These intellectual property rights ensure
that the firm can safely invest in the brand and reap the benefits of a valuable asset.

These investments in the brand can endow a product with unique associations and
meanings that differentiate it from other products.

Brands can also signal a certain level of quality so that satisfied buyers can easily
choose the product again. This brand loyalty provides predictability and security of
demand for the firm and creates barriers of entry that make it difficult for other firms
to enter the market. Although manufacturing processes and product designs may be
easily duplicated, lasting impressions in the minds of individuals and organizations

31
from years of marketing activity and product experience may not be so easily
reproduced.
One advantage that brands such as Colgate toothpaste, Cheerios cereal, and Levi’s
jeans have is that consumers have literally grown up with them. In this sense,
branding can be seen as a powerful means to secure a competitive advantage.
In short, to firms, brands represent enormously valuable pieces of legal property,
capable of influencing consumer behavior, being bought and sold, and providing the
security of sustained future revenues. For these reasons, huge sums, often
representing large multiples of a brand’s earnings, have been paid for brands in
mergers or acquisitions, starting with the boom years of the mid-1980s. The merger
and acquisition frenzy during this time led Wall Street financiers to seek out
undervalued companies from which to make investment or takeover profits.

2.5. Relation and differences of Brands and Products

Brand and product are among the basic factors for a company to achieve and
maintain a competitive position in the market. Brand and product are not the same,
they are two different things. Products are manufactured in factories, agricultural
fields, offices and software houses whereas brands are built in the mind of the
consumers. Brands take time to grow and become strong and popular with the
passage of time.

The main points of difference between brand and product are given below:

1. Market value
Products have a base value, and they are generic. Brands are the added value to
make a product perception better inside the minds of consumers. People stereotype
generic products as less attractive, poor quality or less effective than branded
products. On average, a branded product is 30 per cent more expensive than a
generic product.

2. Consumer expectation

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Brands are more expensive because users expect more from them than generic
products. Branding is all about providing a consistently better experience for
consumers. Users spend more to get more, so markets tend to have higher
expectations from brands.

3. Emotional appeal

Brands target the emotions of consumers. Strategies are focused on triggering and
creating an emotional appeal among consumers to convince them. You will be
amazed to know that 57 per cent of successful business owners believe they have a
personal connection with consumers. Products are more about selling to consumers.

4. Attraction for consumers

Brands are magnets they are designed to attract their consumers. Products may fail
to attract buyers despite being good. Branding is a marketing strategy to set a
product apart, and it gives an edge to products in competitive marketing. In simple
words, brands are used to increase sales by creating a persona of products.

5. Trustworthiness and reliability

Consumers like certainty; they need to be sure about a product before making a
purchase. Brands are to ensure customers that the products are the best match for
them. Brands offer evaluation of products so that consumers can trust. Products
without a brand are anonymous, and it is hard for customers to trust them or
become loyal to them.

6. Market identity

Generic products are anonymous whereas brands have market identities. A brand
represents the identity of products in a competitive market, and brands display the
quality and reputation of products. In modern emerging markets, brands are valued
more than their owning companies. For example, the iPhone (a product of Apple
Company) is more popular than its owner company. Consumers tend to develop a

33
specific taste for a particular brand or its product over time, and this creates a
brand’s identity.

2.6. Brand Attributes

Brand Attributes portray a company’s brand characteristics. They signify the basic
nature of brand. Brand attributes are a bundle of features that highlight the physical
and personality aspects of the brand. Attributes are developed through images,
actions, or presumptions. Brand attributes help in creating brand identity.

A strong brand must have following attributes:

1. Relevancy- A strong brand must be relevant. It must meet people’s

expectations and should perform the way they want it to. A good job must be
done to persuade consumers to buy the product; else in spite of a product
being unique, people will not buy it.
2. Consistency- A consistent brand signifies what the brand stands for and
builds customers trust in brand. A consistent brand is where the company
communicates message in a way that does not deviate from the core brand
proposition.
3. Proper positioning- A strong brand should be positioned so that it makes a
place in target audience mind and they prefer it over other brands.
4. Sustainable- A strong brand makes a business competitive. A sustainable
brand drives an organization towards innovation and success. Example of
sustainable brand is Marks and Spencer’s.
5. Credibility- A strong brand should do what it promises. The way companies
communicate their brand to the audience/ customers should be realistic. It
should not fail to deliver what it promises. Do not exaggerate as customers
want to believe in the promises make to them.
6. Inspirational- A strong brand should transcend/ inspire the category it is
famous for. For example- Nike inspires Jersey Polo Shirt.
7. Uniqueness- A strong brand should be different and unique. It should set a
company apart from other competitors in market.

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 8. Appealing- A strong brand should be attractive. Customers should be
attracted by the promise make and by the value to deliver.

Having a strong and crucial set of brand attributes makes the brand stand apart from
the rest of the competition in the market as its offerings are unique in nature, the
objective of quality is well met and defined, and it offers the best level of customer
service experience.

When the brand has well aligned and defined brand attributes, it is easier for the
management and the branding department to decide on the brand positioning and
how do they want to portray the brand in the market that will form as the identity.

When the brand attributes are in place, it is easier to decide on which marketing
techniques and promotional tools should be opted to promote the products and
services of the company. The targeted marketing and sales activities have to be in
tandem with the values, objectives, fundamentals, and attributes of the brand.

2.7. Brand Name

Brand name is one of the brand elements which help the customers to identify and
differentiate one product from another. It should be chosen very carefully as it
captures the key theme of a product in an efficient and economical manner.
It can easily be noticed and its meaning can be stored and triggered in the memory
instantly. Choice of a brand name requires a lot of research. It should be chosen very
carefully as it captures the key theme of a product in an efficient and economical
manner. It can easily be noticed and its meaning can be stored and triggered in the
memory instantly.

2.7.1. Types of Brand Names

There are many types of brand names. Although brand names do not always fit
100% into a specific category, most brand names fall into one of ten different brand
name categories. However, some can fall into several different categories. For this
course we will discuss the 10 most commonly known types of brand names.

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1) Descriptive brand names
Descriptive names are those that explicitly convey the product or service offered by
a company. These types of brand names explain the service offered by the company
in a proper descriptive way. There’s hardly any room for creativity in the brand
name since the name is complete and simple which describes the occupation of the
company.
The positive aspect of having a clear and clean brand name is that it describes the
brand story clearly and effectively to the audience; on the other hand, the negative
part is that when company thinks of diversification, the same brand name doesn’t go
with the new product lines or business. For example if we take General Electric, the
brand name is simple and communicates the business to the customers but if at all
General Electric decides to go into FMCG the brand name may not appeal to
customers and it would look out of place.
Other examples include; Toys R Us, the Body Shop Burger King, The Shirt,
Company, Hotels.com, Booking.com

2) Evocative Brand Names

Evocative brand names (sometimes called Arbitrary, metaphor, emotive or brand
names) use words that often evoke emotions in consumers. This type of brand name
brings feelings, images, memories, or mental associations to mind that resonate with
consumers. Hence they are considered as cornerstone of brand naming and brand
positioning. They are usually singular, very creative and act as powerful
differentiators in the industry. They are exactly on the opposite side of the creative
spectrum and their names employee suggestion or a metaphor to bring to the mind
the powerful experience or the positioning of the brand.

Their uniqueness means that evocative business names are generally easier to
trademark than descriptive .Evocative brand names are typically memorable and can
help your brand appeal emotionally to consumers. If you choose a good name and
are willing to invest in branding and promoting it, the rewards can be significant.

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However, since the words are not applicable literally, it can be hard to convey
meaning or symbolism, getting consumers to equate one thing with another.
It is essential that they maintain their dignity in the market by offering the products
that suit their brand name since within an evocative brand name comes to a great
responsibility. Examples include Virgin, Nike, Amazon, Apple, Uber, and Dove.

After considering names like Cadabra and Relentless, Jeff Bezos eventually settled
on the name Amazon. It is the largest river in the world and symbolizes the scale of
his ambitions.

Steve Jobs reportedly chose the name Apple while on a fruitarian diet, inspired by a
visit to an apple farm and finding the name “fun, spirited and not intimidating.”
Nike is the name of the Greek goddess of victory, responsible for success and
achievements.

3) Invented brand name

Invented brand names (sometimes called abstract, fanciful, coined, or empty-vessel
brand names) are made-up words. Since they typically bear no direct relation to
products, they are suitable for almost anything.

Works well for technology and ecommerce brands, especially when it is impossible
to find a word in the dictionary that creates the right impression for example Google,
Yahoo, and Zapier.

Most of the times the Latin or Greek is used as a root word to create the brand name.
For example:- Exxon, Verizon, Kodak, etc. They have no inherent definition assigned
to them which is the most challenging part of these types of brand names. To ensure
that they are very easy to remember marketers, tend to spend a lot of money to
establish their meaning in the minds of the customer.

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4) Lexical brand names

These brand names rely entirely on the wordplay for their remembrance. Having a
combination of compound words, spellings and foreign words are the most popular
styles of naming this kind of brand name.

Lexical names rely on wordplay for effect. Puns, phrases, compound words,
alliteration, onomatopoeia, and intentional misspellings are all styles of this popular
naming type.
Lexical names are often clever. Some would argue they’re too clever. This naming
type has been used to great effect by consumer brands in industries like snack food,
pet supplies, and restaurants. It’s a style well-suited for playful brands in fun-loving
spaces.
When it comes to corporate branding, you won’t find many serious B2B brands
whose names fall into the lexical category. This is a great example of knowing which
naming type is best suited for the brand you’re looking to build and the competitive
landscape in which you operate.
Examples of the lexical brand name include Dunkin Donuts, Burger King, Coca-
Cola, Hubba Bubba etc. These types of brand names appeal mostly to contemporary
audiences who have been exposed to such names for a long time.

5) Acronym Brand Names

Most of the time acronym brand names are acronyms of the entire name of the
company which might be difficult to pronounce. It is seen that as a rule, acronyms
are usually hard to remember for audiences and even harder to trademark.
If there’s one naming convention that has come to signify large, national
corporations, it is the acronym. From AT&T to IBM, the combination of uppercase
letters signifying a longer business name has always had a certain heft behind it.

But there are obvious challenges with an acronymic name. A combination of letters
does not, in and of itself, have the same meaning as the words it signifies. It can

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reference those words, but only if your audience knows what they are. (How many
people stopped on the street could actually tell you what the letters AT&T or IBM
stand for?) Instead, acronyms often work in the same way that invented names do.
Whatever meaning they have is the result of years of branding and marketing, not of
the words (or letters) themselves. Over their decades in existence, brands like BMW
and CVS have invested millions of dollars in both brand positioning and brand
design to imbue these letters with trust and credibility. IBM, BBC, BMW, KFC, MTV,
UPS, H&M, NASA, UNICEF, are few of the renowned examples of acronym brand
names.

6) Geographical brand name

When the brand name includes the geography or territory in which the brand
operates or has given birth to them it is termed as the geographical brand name.
However, it is found that expanding such a business in different countries has its
limitations, which comes with the geographical brand name. In countries where
there are geographical problems with a certain country or state, it would be hard to
expand and adapt.
Often, geographical names are behind companies that started locally but have since
made it big. This is one of the biggest detractors of this naming type. After all, if you
name your brand after the city or state where you’re located, what happens when
you want to expand into other markets? Outgrowing the region where you started is
one of the most common signs it’s time to rebrand your business. Geographical
brand name examples include:- New York Life, Kentucky Fried Chicken, Canada
Dry, Swiss military, American Express, Boston Scientific.

7) Founder brand names

Founder brand names (sometimes called historical or origin brand names) typically
carry the names of the people who founded them. The principles of founders are
easily trademarked with the brand name and they can be distinctive position
correctly. There will always be brands named for the people who started them.

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The founder brand tradition stretches back to the earliest brands as well. These days,
founder-based names may not be as common.
On the upside, founder names are definitely easy to trademark. They can also be
distinctive if positioned correctly, and even leverage the existing brand equity of
celebrity or influencer. Founder brand name examples include:-
 Disney (named after Walt Disney)
 Ford ( named after Henry Ford)
 Adidas (named after Adolf “Adi” Dassler)
 Kellogg’s (named after brothers W.K. Kellogg and John Harvey Kellogg)
 Calvin Klein
 Heineken (named after Gerard Adriaan Heineken)
 Lipton (named after Thomas Lipton)
 Colgate (named after William Colgate)
 Nestlé (named after Henri Nestlé)

8) Historical brand names

These brand names associated with historical figures and names which have no
relation with the company but may indicate support of the company towards the
particular historical figure. Historical names may also reference a specific historical
figure, which inspires the particular values, personality, or core focus of the brand.
Hence they can have significantly more meaning and depth than other naming
strategies. In some cases, historical names are similar to founder business names, as
they can frequently reference the people or persons responsible for building a
company.

Example: Tesla is named after one of the best-known individuals in the electricity
landscape, Nikola Tesla.

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9) Portmanteau Brand Names
Portmanteau words are a linguistic blend of words where portions of two words are
combined to form a new word. Sometimes called hybrid or suggestive brand names,
the word adopts the meanings of both original words. Are typically memorable and
relatively easy to trademark. Many have the added advantage of being suggestive
without being too descriptive. However, the meaning behind some is not always
apparent/clear and might be confusing to consumers.

Examples: Instagram (from Instant and Telegram), Microsoft (from Microcomputer

and Software), FedEx (from Federal and Express)

10) Alphanumeric Brand Names

Alphanumeric brand names combine letters and numbers to create a unique brand
name or convey a message. This type of brand name can be effective if there is a
clear purpose or good reason for using them. Adding a number to a name only
because your original choice is unavailable is not a good reason.
Examples: 7-Eleven( reflects its opening hours when it was established, 7:00 a.m. to
11:00 p.m) this days they work 24/7, 20th Century Studios, Forever 21, 7up and so
on.

2.8. Branding Challenges and Opportunities

Branding is constantly changing and evolving, just like the market needs, consumer
preferences, and definition of quality. So marketers must first understand the
significant branding challenges and opportunities to succeed. Although brands may
be important as ever to consumers, brand management may be more difficult than
ever. The challenges for brand managers are discussed below.

1. Savvy Customers: Increasingly, consumers and business have become more

experienced with marketing and more knowledgeable about how it works.
With the advancement of technology and the internet has made consumers and
business more experienced with marketing and more knowledgeable about how it
works.

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Many believe that it is more difficult to persuade consumers with traditional
communications than it was in years gone by. One of the key challenges in today’s
marketing environment is the vast number of sources of information consumers may
consult.
A well-developed media market has resulted in increased attention paid to the
marketing actions and motivations of companies. Many believe that it is more
difficult to persuade consumers with traditional communications than it was in
years gone by. Other marketers believe that what consumers want from products
and services and brands has changed.

2. Consumer revolt: Because of the little differences that are not found meaningful,
consumers are not willing to pay premium prices in most of the cases until real
performance benefits are perceived by them. The manufacturers find it hard to
amass profits. For this reason, marketing departments get under pressure to produce
results.

3. Brand Proliferation: Another challenge in the branding environment is the

proliferation of new brands and products, by the rise in line and brand extensions.
As a result, a brand name may now be identified with a number of different
products of varying degrees of similarity. Procter & Gamble’s original Crest
toothpaste, has been joined by a series of line extensions such as Crest Mint, Crest for
kids, Crest Baking Soda, Crest Multi care Advanced Cleaning. Hence it becomes
difficult to capture customers’ interest with a particular brand name

4. Media cost and Fragmentation: An important change in the marketing

environment is the fragmentation of traditional advertising media and the
emergence of interactive and non-traditional media, promotion and other
communication alternatives.

The commercial breaks on network TV have become more cluttered as advertisers

increasingly have decided to advertise with 15 second spots rather than the
traditional 30 or 60 second spots. Marketers are spending more on non-traditional

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forms of communication and new emerging forms of communication such as
interactive, electronic media, sports and events sponsorship, in -store advertising,
mini bill boards in transit vehicles and in other locations. Due to this it has become
challenging for brand managers to be practically aware of the media costs and the
effects of fragmenting a TV campaign. Not only that, they also have to be able to
plan an integrated communication campaign with various tools of communication at
their hands.

5. Retailer power: Knowing brand managers being under pressure, retailers like to
keep them under pressure for promotions that suit retailers more than anyone else in
the trade sections. With retailers’ concentration, the balance of power between the
manufacturer and the retailer has tilted toward the retailer in products distribution
and storage.

6. Policy issues: Within the same company, brand policy often conflicts with other
policies. As these are unwritten and implicit, they may seem innocuous, when in fact
they are a hindrance to a true brand policy. Current corporate accounting, as such, is
unfavourable towards brands. Accounting is ruled by the prudence principle:
consequently, any outlay for which payback is uncertain is counted as an expense
rather than valued as an asset. This is the case of investments made in
communications in order to inform the general public about the brand’s identity.
Because it is impossible to measure exactly what share of the annual
communications budget generates returns immediately, or within a specified
number of years, the whole sum is taken as an operating expense which is
subtracted from the financial year’s profits. Yet advertising, like investments in
machinery, talented staff and R&D, also helps build brand capital. Accounting thus
creates a bias that handicaps brand companies because it projects an undervalued
image of them.

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2.8.1. Dealing with Challenges in Branding

The ultimate award for a brand is to be at the top of its category. Once this has
happened, however, it risks becoming generic and being unable to act as a brand –
the ability to distinguish goods from different producers.
There are strong brands in every line of business – consumer goods (Beverages like
Coca Cola, Pepsi), Consumer durables (LG, Samsung, Sony), Software (Microsoft,
Google), Insurance (Prudential, AIG, MetLife), Automobiles (Ford, Toyota, Saturn)
and so on.

To monetize or profit from a brand, companies have to build it and keep innovating
it constantly. In order to survive, they must keep their brand fresh, relevant,
accessible and customer-oriented. Brand building is like establishing a reputation in
the market. It is a difficult process, but if you can build a strong brand, you will be
reaping profits for a long time.
The ultimate test for any brand is to be at the top of its field. To do that, companies
need the help of a good branding strategy, which will convey your brand’s values,
appeal to your intended audience and beat out the competition.

Always remember that not everyone will find your brand appealing. A person who
buys a Mercedes is unlikely to look at a Nano. But you need to decide who you are
marketing to, and then stick to that. This will help you find your voice and create
your niche in the market.

2.9. Brand Management

Brand management is a function of marketing that uses techniques to increase the
perceived value of a product line or brand over time. It aims to increase the overall
perceived value of the brand in the long run and build a loyal customer base
through positive brand associations.

The creation of a brand in the market is altogether a task for the marketers and brand
managers but managing and sustaining a brand requires the factors of dedication,
determination, and consistent effort for the brand to be able to survive and thrive in

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the market amidst the evolving tastes of the customers, cut-throat competition, and
the changing market dynamics.

2.9.1. Functions of Brand Management

Brand management forms a subset of marketing management. It deals with the
overall brand development right from the birth of the brand until the time it ceases
to exist. The functions of brand management include but are not limited to the
following –
 Identifying the ideal target market, understanding what motivates them to
choose one product over others and positioning the brand in the same
domain.
 Developing an ideal brand message which resonates both with the needs of
the target market and with the value proposition of the offering.
 Communicating the brand promise to the customers by making use of almost
every possible touch point.
 Making efforts to build brand equity and measure it from time to time.
 Managing the brand architecture and making sure sub-brands structure and
communication align with the master brand structure and communication
policies.
 Building the brand identity and making sure that it aligns with the brand
image in the market.
 Handling brand communication in the market
 Anticipating and accommodating new brand identity needs

2.10 Strategic Brand Management process

Brand management aims at building brand equity and making it grow over time.
This process involves planning, executing, and controlling marketing and branding
strategies and activities to build, measure, and control brand equity to boost revenue
and accomplish long term business objectives of the firm.

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When a company wants to improve brand perception, recognition, retention, value,
customer loyalty, it is necessary to have an exclusive brand management process to
achieve the same. If a company follows the right brand management strategy, then
a company can create a unique personality in the business world.
The strategic brand management process involves the following steps.
1. Identification of the planning process
2. Brand positioning
3. Implementation of brand marketing
4. Measuring and interpreting brand performance
5. Growing and sustaining brand equity

1. Identification of the planning process

In this step of brand management, a company needs to understand the values of
strategic planning and ensure that it is adhered to by all the company departments.
A company’s values should be aligned with the strategic planning process, and the
focus should be on achieving the company’s vision and mission. The planning
process should be effective to make the other steps effective in the strategic
management process.

2. Brand Positioning
Brand Positioning is the act of designing a proposal for the company and analysing
the position in the market. In this step, a company tries to convince the consumers
about the company’s advantage over the other brands available in the market. With
brand positioning, a consumer also understands the various associations of the
company that are linked to the brand.
It involves the brand manager to identify an untapped yet beneficial position in the
market which can be tapped to counter the existing competition and build a good
brand image for the long run. This is usually done using mental maps and
positioning maps. Once identified, the brand management team then works on
building a core brand identity, brand associations, and brand essence.

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 3. Implementation of Brand Marketing
The marketing of the brand is essential for effective working in the market. In this
step, a company must create a brand that is acceptable to consumers. Once the
positioning strategy is set, the next step involves the brand manager to actually plan and
implement strategies to position the brand as planned. It further involves three steps –
 Choosing the brand elements brand name, logo, symbols, characters,
packing, and tagline. These are usually the first things customers will come
across before actually trying the product.
 Choosing the marketing activities and supporting marketing programs and
the way the brand is integrated into them
 Leveraging secondary associations like the country of origin, the channel of
distribution, etc. These are usually other entities that have their own
associations. They result in lending their own associations to add to the
planned positioning.

4. Measuring the Brand Performance

After the step of brand marketing, the next step is to measure the performance of the
brand. Here, measuring means understanding the effects of marketing programs of
the brand. With this step, a company can understand the value chain of the brand by
analysing the financial impact of brand marketing expenditures and investments
which helps the brand managers to measure and manage brand profitability.
A brand equity measurement system is a set of research procedure designed to provide
timely, accurate and actionable information about the concerned brand to the brand
managers so they can make best possible tactical and strategic decisions to benefit the brand
in the short as well as the long run.
Implementing this system requires marketers to complete these three steps –

 Conducting Brand Audits: A brand audit is a comprehensive examination of

the brand’s current position in the market with respect to its competitors. It
involves assessing the strengths and weaknesses of the brands and providing
suggestions on how to strengthen it.
 Designing Brand Tracking: Brand tracking involves the collection of brand-
related information directly from the consumers on a routine basis over time,

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 to measure the present health of a brand, both in terms of consumers’ usage of
it and what they think about it.
 Establishing A Brand Equity Management System: It is a set of
organizational processes designed to improve how the brand equity concept
is understood within the company. This framework identifies sources and
outcomes of brand equity and permits tactical guidelines as to how to build,
measure, and manage brand equity.

5. Equity Growth and Sustainment of Equity

In the last step, a company needs to define the brand strategy. Brand equity
management ensures the success of the company’s future marketing programs. For
measuring equity growth and brand sustainment, a market should consider
international factors, market segments, and types of consumers. It can provide
accurate and timely information for making better decisions in the short and long
run.

The step involves maintaining and expanding it to make sure that the brand
continues to grow. This is usually a never-ending process and involves –

 Defining brand architecture: It includes defining general guidelines about

the branding strategy and answers the what, why, where, who, and how
about the brand structure and brand elements. It is made up of brand-product
Matrix- graphical representation of all the brands and products sold by the
firm, a brand portfolio – listing all the brands a company has to offer, and a
brand hierarchy – listing the number and nature of common and distinctive
brand elements across the company’s products.
 Managing brand equity over time: It involves taking marketing decisions
with a long-term perspective of how such decisions will affect brand equity in
the long run. It also involves managing the brand within the context of other
brands as well as multiple categories, over time, and across multiple market
segments.

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  Brand reinforcement and revitalisation: It is all about making tactical
decisions which make sure that the customers have the desired knowledge
structures so that the brands continue having its necessary sources of brand
equity

2.10.1 Importance of Strategic Brands Management

When a company gets a strategy that is both agile and beneficial to its brand, then
that strategy helps the company to add value to the brand’s overall perception.
However, the importance of strategic brands management is reflected in the
following points:
 Improvement in customer retention and establishing customer loyalty
 Better engagement of employees in achieving the company’s objective
 Employees feel more closed to the company
 Brand perception gets improved, and selling power strengthens up
 Allows the company to have an impactful marketing communication
 A company gets less vulnerable to the drastic changes in the industry market
 Increase customer responses and trade cooperation
It promotes licensing opportunities

If a company does not adopt the brand strategic management process, then a
company may face the problem of appealing to customers or providing any
unique value proposition to enjoy a sustainable market presence and consistent
growth. In the market, various brands and companies can deliver the same product
as another company.

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