Introduction to Product Management–1

Introduction to Product Management

Professor Carl Mela

BA 460 Product Management

Fuqua School of Business

• Brand Management System

• On Building A Brand

• Managing Across Brands

Introduction to Product Management–2

Agenda

• Course Overview

• What is a Brand?

• Brand Equity

• Brand Management

Introduction to Product Management–3

Course Overview

• Objective

• Structure– Brand Management System

– On Building A Brand

– Managing Across Brands

• Requirements– 2 case write-ups, class participation,

marketing plan, and final exam.

Introduction to Product Management–4

Structure

• Part I - The Brand Management System– Class 1: Class Overview, The Nature of a

Brand, Brand/Product Management. An application to the Pepsi syringe scare.

– Class 2: P&G Case. Live commentary from P&G.

Introduction to Product Management–5

Structure

• Part II - Building Brands– Class 3: Branding and Price. The case is

Kodak. Then, Red Hat discusses how its branding strategy leads to a price advantage.

– Class 4: Distribution and forecasting. The Goodyear case. Video regarding the effect of channel on brand.

Introduction to Product Management–6

Structure

• Part II - Building Brands (Cont.)– Class 5: Craig Stacey (VP from IRI)

discusses the use of information to build brands.

– Class 6: Promotions and Brands: Marketing in the NHL with live commentary from the Hurricanes Director of Communications, Ken Lehrner

Introduction to Product Management–7

Structure

• Part II - Building Brands (Cont.)– Class 7: Advertising and Brands with

Intel Inside Interactive CDROM. Live Commentary and Discussion with Michael J. Ganey, Director, Howard, Merrell & Partners,Inc.

Introduction to Product Management–8

Structure

• Part III - Across Brands and Markets– Class 8: The Marketing Plan & Pharmasim.

Tom O’Guinn, Visiting Professor discusses Brand Communities.

– Class 9: Product Extensions: The Black and Decker Case and Video

– Class 10: Global Branding: The Heineken Case, MTV Worldwide, and The Fuqua MBA with Jim Gray, Associate Dean, Fuqua.

Introduction to Product Management–9

Structure

• Part III - Across Brands and Markets– Class 11: Branding on the Internet.

Deborah Kania (Lens Express and author of branding.com) and Beth Yakel (Sciquest)

– Class 12: Wrap-up and PharmaSim Summary.

Introduction to Product Management–10

Agenda

• Course Overview

• What is a Brand?

• Brand Equity

• Brand Management

Introduction to Product Management–11

What is a Brand?

• Name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or groups of sellers and to differentiate them from those of competition.” - AMA

• Not all products are brands.– Focus of Court et al. reading

Introduction to Product Management–12

Why Brand?

• Identify product• Reduce risk• Reduce consumer search cost• Signal quality• Legal protection• Create product associations• Differentiate product

Introduction to Product Management–13

Agenda

• Course Overview

• What is a Brand?

• Brand Equity

• Brand Management

Introduction to Product Management–14

Brand Equity

• The marketing effects uniquely attributable to the brand - Keller

• Positive brand equity leads to:– Loyalty– Margins– Reduced vulnerability to competition– Enhanced marketing effectiveness– Brand extensions

Introduction to Product Management–15

Brand Equity

• Sources of Brand Knowledge– Brand Awareness– Brand Image

• Strength of Brand Associations

• Favorability of Brand Associations

• Uniqueness of Brand Associations

Introduction to Product Management–16

Brand Equity

• Benefits– Loyalty– Larger Margins– Greater Trade Support– More Efficient Communications– Licensing Opportunities– Brand Extension Opportunities

• Coke name worth $39BB, Kodak $11BB (Brand Valuation Reading)

Introduction to Product Management–17

Best Corporate Reputations in America

70

72

74

76

78

80

82

84

Source: Wall Street Journal / Harris Poll

Introduction to Product Management–18

Brand Equity

• But how does one develop brand equity?

• The goal of this course is to learn how to manage brands (via marketing programs) in order to create brand equity - that is, create an enduring advantage for your brands.

Introduction to Product Management–19

Greater loyalty

Less vulnerability to competitive marketing actions and crises

Larger margins

More elastic response to price increases

More inelastic response to price increases

Increased marketing communica- tion efficiency and effectiveness

Possible licensing opportunities

More favorable brand extension evaluations

Figure 2-9 Building Customer-Based Brand Equity

TOOLS AND OBJECTIVES KNOWLEDGE EFFECTS BENEFITS

Choosing Brand Elements (4)

Brand name Logo MemorabilitySymbol MeaningfulnessCharacter TransferabilityPackaging AdaptabilitySlogan Protectability

Brand Awareness (3) Possible Outcome

Brand Associations (3)

Developing Marketing Programs (5 & 6)

Leverage of Secondary Associations (7)

Depth Recall Recognition

Breadth PurchaseConsumption

Strong RelevanceConsistency

Favorable DesirableDeliverable

Unique Point of parityPoint of difference

Product Functional & symbolic benefitsPrice Value perceptionsDistribution channels Integrate “Push” & “Pull”Communications Mix and match options

CompanyCountry of originChannel of distribution AwarenessOther brands MeaningfulnessEndorsor TransferabilityEvent

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Introduction to Product Management–20

Agenda

• Course Overview

• What is a Brand?

• Brand Equity

• Brand Management

Introduction to Product Management–21

Brand Management

• Brand management is the act of designing and implementing marketing programs to build and maintain brand equity.– Product– Price– Distribution– Communications

Introduction to Product Management–22

The Role of a Brand or Product Manager

• Prepare Marketing Plan

• Develop Copy, Programs, and Campaigns

• Stimulate Sales and Distribution

• Market Intelligence

• Product Improvements

Introduction to Product Management–23

• Pluses- Cost effective mix, quick market reaction, attention for small brands, good training for executives

• Minuses- Conflict and frustration (responsibility and no authority), administrative work with executive expectations, learns products not functions, short horizon, costs of associates and assistants

The Role of a Brand or Product Manager

Introduction to Product Management–24

A Product Manager - Computer Software Firm

• Background– Undergrad in architecture, became

director of marketing for architecture firm

– Received MBA– International marketing manager for

sporting goods company– Founded a toy company

Introduction to Product Management–25

A Product Manager -Computer Software Firm

• Typical day– Meetings - new product line, marketing

mix, marketing staff, organizational design and integration

– E-mail/Phone - 3rd party developers, sales force, product support

• Marketing planning - drafting the marketing plan

Introduction to Product Management–26

A Product ManagerComputer Software Firm

• Marketing mix - recommends price to corporate committee, manages advertising, conducts focus groups for product positioning and development, decides on channels

Introduction to Product Management–27

A Product Manager - Consumer Packaged Goods Firm

• Background– Medical equipment sales after undergraduate– Received MBA– Assistant Brand Manager at large CPG Company– Switched firms, promoted several times to

product manager.– Switched firms again to as senior product

manager

Introduction to Product Management–28

A Product Manager -Consumer Packaged Goods Firm

• Typical day– 75% fighting fires, 25% planning

• Marketing planning - key is volume forecasting since unsold inventory is perishable

• Mix - 1/3 on pricing issues (list & trade), 20% on consumer promotions, president handles ads, 15% on distribution, little on sales and service

Introduction to Product Management–29

A Product ManagerComputer Software Firm

• Marketing mix - recommends price to corporate committee, manages advertising, conducts focus groups for product positioning and development, decides on channels.

Introduction to Product Management–30

The Marketing Department

Marketing Administration

Advertising &Promotion

Sales

Market Research

New Products

Existing Products

VP Marketing

Design the Department!!!Matrix or Tree?

Introduction to Product Management–31

Brand Management Issues

ProductManagerProductManager

Manufacturing

R&D

Legal

Fiscal

MarketResearch

Salesforce

Publicity

Purchasing Packaging

PromotionServices

Media

AdvertisingAgency

Distribution

Department Their Emphasis Marketing’s Emphasis

R&D Basic Research, Intrinsic Quality, Applied Research, PerceivedFunctional Features Quality, Sales Features

Engineering Long Design Lead Times, Few Short Lead Times, Many Models,Models, Standard Components Custom Components

Purchasing Narrow Lines, Standard Parts, Price Broad Lines, Nonstandard Parts, of Material, Large & Infrequent Lots Quality of Material, Small Lots

Manufacturing Long Lead Times, Long Runs, Few Short Lead Times, Short Runs, Models & Revisions, Standard Orders, Many Models, Custom Orders, Ease of Fabrication, Average Quality Fine Appearance, Tight Quality

Finance Strict Rationale for Spending, Hard Intuitive Arguments for Spending,and Fast Budgets, Pricing Covers Flexible Budgets, Pricing to Costs Market Developments

Accounting Standard Transactions, Few Reports Special Terms/Discounts

Credit Full Disclosures, No Risk, Tough Minimum Disclosure, Some Risk, Terms, Tough Collection Easy Credit, Easy Collection

The Nature of the Job

Introduction to Product Management–33

A Key Trend in Product/Brand Management

• Salaries and bonus for product marketers are up 65% in the last two years (Marketing News, Nov. 99)

Introduction to Product Management–34

Brand Management Prognostications

• Future of brand management– Customer management vs. product

management– Cuts across brands and products – Managers organized by portfolios of

customers

Introduction to Product Management–35

Summary

• Brand Equity– Awareness– Associations

• Created by the mix

• It is the role of a product manager to manage the mix to create equity

• The brand management system