Marketing strategy India inc.

Indian Strategies

NAVEEN SARPAL

Kotler Speak…

The best way to hold customers is to constantly figure out how to give them more for less.

Objectives for the day…

What are the characteristics of products?How can a company build and manage its

product mix and product lines?How can a company make better brand

decisions?

3-4

1.Ultimately the goal for any firm or business unit is to gain sustainable competitive advantage. What key decisions are necessary to get there?

Discussion Question

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Emphasis on new product-market growthHeavy emphasis No emphasis

Prospector Analyzer Defender Reactor

Units primarily concerned with attaining growth

through aggressive

pursuit of new product-market opportunities

Units with strong core bus.;

actively seeking to expand into rel. prod-mkts

with differentiated

offeringsUnits with strong

core bus.; actively seeking to expand into rel. prod-mkts with low-cost

offerings

Units primarily concerned with maintaining a differentiated

position in mature markets

Units primarily concerned with maintaining a

low-cost position in

mature markets

Units with no clearly defined product-market development or

competitive strategy

Combined Typology of Business-Unit Competitive Strategies

3-6

Dimensions•Scope

•Goals and obj. Adaptability (new product success) Effectiveness (inc. mrkt share) Efficiency (ROI)

•Resource deployment

•Synergy

Low-cost defenderMature/stable/well-defined domain; mature tech.and cust. segments

Very little

Low

HighGenerate excess cash (cash cows)

Need to seek operating synergies to achieve efficiencies

Differentiated defenderMature/stable/well-defined domain; mature tech.and cust. segment

Little

Low

HighGenerate excess cash (cash cows)

Need to seek operating synergies to achieve efficiencies

How Business Strategies Differ in Scope, Objectives, Resource Deployments, and Synergy

3-7

Dimensions•Scope

•Goals and obj. Adaptability (new product success) Effectiveness (inc. mrkt share) Efficiency (ROI)

•Resource deployment

•Synergy

ProspectorBroad/dynamic domains; tech. and cust. segments not well-established

Extensive

HighLowNeed cash for product dev. (? or *)

Danger in sharing operating fac. and programs - better to share tech./mktg skills

AnalyzerMixture of defender and prospector strategies

Mix. of defender & prospector strats.

Mix. of defender & prospector strats.

Mix. of def. & prosp. strats Need cash for prod. dev. but < prospectors

Danger in sharing operating fac. and programs - better to share tech./mktg. skills

How Business Strategies Differ in Scope, Objectives, Resource Deployments, and

Synergy

3-8

Co

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Emphasis on new product-market growthHeavy emphasis No emphasis

Prospector Analyzer Defender Reactor

Units primarily concerned with attaining growth

through aggressive

pursuit of new product-market opportunities

Units with strong core bus.;

actively seeking to expand into rel. prod-mkts

with differentiated

offeringsUnits with strong

core bus.; actively seeking to expand into rel. prod-mkts with low-cost

offerings

Units primarily concerned with maintaining a differentiated

position in mature markets

Units primarily concerned with maintaining a

low-cost position in

mature markets

Units with no clearly defined product-market development or

competitive strategy

Let’s combine the two perspectives and examine the book retailing

industry

5-9

Earlymajority34%

Latemajority34%

Earlyadopters13.5% 16%2.5%

Innovators

Laggardsand nonadopters

Source: Adapted with permission from Marketing, 11/e, Acetate 8-8, by Michael J. Etzel, Bruce J. Walker, and William J. Stanton. The McGraw-Hill Companies, Inc. © 1997. All rights reserved.

5-6

Ideas for new products or new ventures: How do we know how fast

customers will adopt?

5-10

4. How fast will the adoption curve move for a particular innovation?

Discussion Questions

8-11

Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West Publishing Company. All rights reserved.

Time (years)

Pro

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sal

es(r

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do

llar

s)P

rofi

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er u

nit

(rea

l d

oll

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Profit/unitSales

Life cycleextension

GrowthCompetitiveturbulence

Maturity Decline orextension

Introduction

8-3

How do opportunities evolve over time?

8-12

1. Key question: Is it better to be a market pioneer, or a follower?


8-13

2. So, when, and for whom, does it make sense to pursue a pioneer strategy?


8-14

3. When, and for whom, does it make sense to pursue a follower strategy?


8-15

4. If you want to be a pioneer, what are your strategic options? Under what circumstances might each option be more likely to succeed?


8-16

5. How might introductory marketing plans differ under each of these pioneering strategies?


8-17

First mover advantage is trumped by pioneers who are better. Best beats first. Concentrate on being best.

Being a pioneer without the basis for sustainable competitive advantage is a trap!

Some Advice for Would-Be Pioneers

Product Physical goods Services Experiences Events Persons Places Properties Organizations Information Ideas

Components of the Market Offering

The Product and the Product Mix


Product levels Customer value

hierarchy Core benefit Basic product Expected product Augmented product Potential product

(Consumption system)

Five Product Levels


Product hierarchy Need family Product family Product class Product line Product type Item Product system Product mix


Product classifications Durability and Tangibility Classification: Nondurable goods Durable goods Services


Consumer-Goods Classification: Convenience goods

Staples Impulse goods Emergency goods

Shopping goods Homogeneous shopping goods Heterogeneous shopping goods

Specialty goods Unsought goods


Industrial-Goods Classification Materials and parts

Farm products Natural products Manufactured materials and parts Component materials Component parts

Capital items Installations Equipment


Supplies and business services Maintenance and repair items Operating supplies Maintenance and repair services Business advisory services

Product mix (Product assortment) Product mix has a certain:

Width Length Depth Consistency

Example


Product-line decisions Product-line analysis

Sales and Profits Four types of product classes:

Core product Staples Specialties Convenience items


Market profile

Product Map for a Paper-Product Line


Product-line length Line Stretching

Downmarket Stretch The company may notice strong growth opportunities

as mass retailers attract a growing number of shoppers The company may wish to tie up lower-end competitors

who might otherwise try to move upmarket The company may find that the middle market is

stagnating or declining Upmarket Stretch Two-Way Stretch


Line Filling Just-noticeable

DifferenceLine Modernization,

featuring, andpruning

Brand decisions What is brand?

Attributes Benefits Values Culture Personality User

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A name, term, sign, symbol or design, or a combination

Identifies the goods or services of a seller

differentiates them from competitors

What is a Brand?

Brand

Commonly used research approaches to determine brand meaning: Word associations Personifying the brand Laddering up the

brand essence Brand essence Laddering up

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Identify the maker

Simplify product handling

Organize accounting

Offer legal protection

The Eight Roles of a Brand

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Signal quality

Secure Price Premium

Create Barriers to Entry

Create Competitive Advantage

The Eight Roles of a Brand

Building Brand Identity

Building Brand Identity Brand bonding Brands are not built by advertising but by the brand

experience Everyone in the company lives the brand Three ways to carry on internal branding – Employees

must Understand Desire, and Deliver on the brand promise

Building Brands in the New Economy

Building Brands in the new economy Heidi and Don Schultz urge companies to:

Clarify the corporation’s basic values and build the corporate brand.

Use brand managers to carry out the tactical work. Develop a more comprehensive brand-building plan. Define the brand’s basic essence to be delivered wherever it is

sold. Use the brand-value proposition as the key driver of the company’s

strategy, operations, services, and product development. Measure their brand-building effectiveness, not by the old

measures of awareness, recognition, and recall, but by a more comprehensive set of measures including customer-perceived value, customer satisfaction, customer share of wallet, customer retention, and customer advocacy

Brand Equity

Brand Equity Brand awareness Brand acceptability Brand preference

Aaker’s five levels of customer attitude: The customer will change brands, especially for price

reasons. No brand loyalty. Customer is satisfied. No reason to change brands. Customer is satisfied and would incur cost by changing

brand. Customer values the brand and sees it as a friend. Customer is devoted to the brand.

Brand Value

Value of Brand Equity Brand valuation Competitive advantages of high brand equity:

The company will have more leverage in bargaining with distributors and retailers because customers expect them to carry the brand.

The company can charge a higher price than its competitors because the brand has higher perceived quality.

The company can more easily launch extensions because the brand name carries high credibility.

The brand offers some defense against price competition.

Managing Brand Equity Branding Challenges Branding Decision: To Brand or Not to Brand?

Discussion Question

When is a brand more than just a brand? Have you ever based a purchasing decision primarily on the brand? Was it because of some perceived quality difference, or was it based on the expectation of how others would see or treat you? Have you ever seen someone buying a given brand of an item in an attempt to be seen as “cool”?

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Improved Perceptions of Quality

Greater Loyalty

Less Vulnerability to Competitive ActionsLess Vulnerability to Crises

Eight Advantages of Strong Brands

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Larger Margins

More inelastic consumer response

Increased IMC effectiveness

Potential Licensing opportunities

Eight Advantages of Strong Brands

Branding Decisions

Brand-Sponsor Decisions Manufacturer brand Distributor brand Licensed brand name Slotting fee Brand ladder Brand parity

Brand-Name Decision Four available

strategies: Individual names Blanket family names Separate family names

for all products Corporate name

combined with individual product names

Qualities of a brand name

Desirable qualities for a brand name It should suggest something about the product’s

benefits It should suggest the product or service category It should suggest concrete, “high imagery” qualities It should be easy to spell, pronounce, recognize and

remember It should be distinctive It should not carry poor meanings in other countries

and languages

Tools

Brand building tools Public relations and press releases Sponsorships Clubs and consumer communities Factory visits Trade shows Event marketing Public facilities Social cause High value for the money Founder’s or a celebrity personality Mobile phone marketing

Discussion Question

Nike’s arrangement with Michael Jordan has provided an excellent example of a celebrity endorsement. Can you think of an endorsement campaign that backfired? What did it cost the company in the short term? What, if any, have been the lasting effects?

4 Branding Strategies45

Branding Decisions

Brand Strategy Decision

Functional brand Image brand Experimental brands

Line Extensions Branded variants

Brand extensions Brand dilution

Multibrands, New Brands, and Co-Brands Multibrand

Flanker BandsCo-branding (Dual

branding) Ingredient co-branding Same-company co-

branding Joint venture co-

branding Multisponsor co-

branding

Packaging as Branding

Packaging and Labeling Packaging Package

Primary Package Secondary Package Shipping Package

Factors which have contributed to the growing use of packaging as a marketing tool Self-Service Consumer affluence Company and brand

image Innovation opportunity

Labeling Functions

Identification Grading Description

Consumerists have lobbied for: Open dating Unit pricing Grade labeling Percentage labeling

Branding is a Business Process

One that is planned, strategically-focused and integrated throughout the organization. Branding establishes the direction, leadership, clarity of purpose, inspiration and energy for a company’s most important asset – its brand. Even the most potentially powerful strategy will fail if not executed effectively and consistently.

Brand Promise

Everyone in the company must live up to the Brand Promise – the concept is simple but all-encompassing – it is about turning every company member, product, service, piece of communication or interfaces into a walking, talking, touchable reflection of the brand itself

Brand Strategy

It is not a consequence,

but the starting point itself.

Three requirements of Branding Strategy

Clearly articulated business strategy with a view of the scale & scope of the business and how you want to compete

Deep customer insights and understanding of evolving business economics

Determine the role of branding as perceived by your corporation which will help shape many strategic brand decisions during the development process.

7 Step Brand Strategy Development Process

Brand Positioning, Identity and Image

Brand IdentityHow brand strategists want the brand to

be perceived or needed to be perceived as part of the business strategy

Brand PositioningThe part of the brand identity and

value proposition to be actively communicated to selected target

segments

Brand ImageHow the brand is currently being perceived

in the market place as confirmed by research

Kingfisher – Irreverence, individual, freedom-loving and anti-establishment.Kingfisher stands for all the above qualities whether you like it or not and that’s why it is loved.

Brand Positioning Example

5 Positioning Principles

Consistency

Importance

Uniqueness

Endurance

Believability

7 Step Brand Strategy Development Process

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