New Product Strategy and Brand Management Ananda Sabil

New Product Strategy and Brand Management Ananda Sabil Hussein, Ph. D

INNOVATION AND NEW PRODUCT STRATEGY • Innovation as a Customer Driven Process • New Product Planning • Idea Generation • Screening, Evaluating, and Business Analysis • Product and Process Development • Marketing Strategy and Market Testing • Commercialization • Variation in the Generic New Product Planning Process

INNOVATION FEATURE Managing Google’s Idea Factory As director of consumer Web products Marissa Mayer is a champion of innovation. She favors new product launches that are early and often. She joined Google in early 1999 as a programmer when the workforce totaled 20. By 2007 Google had 5, 700 employees with expected sales of $16 billion. How Google Innovates The search leader has earned a reputation as one of the most innovative companies in the world of technology. A few of the ways Google hatches new ideas: § FREE (THINKING) TIME Google gives all engineers one day a week to develop their own pet projects, no matter how far from the company’s central mission. If work gets in the way of free days for a few weeks, they accumulate. Google News came out of this process.

FINDING CUSTOMER VALUE OPPORTUNITIES Customer value analysis Objective is to identify needs for: 1. New products 2. Improvements to existing products 3. Improvements in production processes 4. Improvements in supporting services

TRANSFORMATIONAL Break-through innovation Digital photography NEW PRODUCT CATEGORY Dell Printers Nike Apparel Golf clubs LINE EXTENSION New color/package/style INCREMENTAL IMPROVEMENTS Software updates

Characteristics of Successful Innovators Creating an Innovative Culture Leveraging Capabilities Making Resource Commitments STRATEGIC INITIATIVES Selecting the Right Innovation Strategy Developing and Implementing Effective New Product Processes

NEW PRODUCT PLANNING PROCESS Customer Needs Analysis Idea Generation Screening and Evaluation Business Analysis Marketing Strategy Development Product Development Testing Commercialization

Achieving Cross-Functional Interaction and Coordination R&D Operations Marketing Finance

IDEA GENERATION • • • Idea search: targeted or open-ended? How extensive and aggressive? What specific sources are best for generating a regular flow of new product ideas? How can new ideas be obtained from customers? Where will responsibility for the new product ideas search be placed? What are potential threats from alternative (or disruptive) technologies?

SCREENING, EVALUATING, AND BUSINESS ANALYSIS IDEA GENERATION SCREENING (fit/feasibility) CONCEPT EVALUATION BUSINESS ANALYSIS

Business Analysis • Revenue Forecasts • Preliminary Marketing Plan • Cost Estimation • Profit Projections • Other Considerations

PRODUCT AND PROCESS DEVELOPMENT NEW PRODUCT CONCEPT PRODUCT DEVELOPMENT AND USE TESTING MARKETING STRATEGY DEVELOPMENT MARKET TESTING LAUNCH

MARKETING STRATEGY AND MARKET TESTING § Marketing Strategy Decisions • Market Targeting • Positioning Strategy § Market Testing Options • Simulated Test Marketing • Scanner – Based Test Marketing • Conventional Test Marketing • Testing Industrial Products • Selecting Test Sites • Length of the Test • External Influences

COMMERCIALIZATION The Marketing Plan • Complete marketing strategy • Responsibilities for execution • Cross – functional approach Monitoring and Control • Real – time tracking • Role of the Internet • Include product performance metrics with performance targets

Marketing Strategy Market Target(s) Objectives Marketing Program(s)

A brand is a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers. American Marketing Association A compelling logic has been proposed that the distinction between goods and services should be replaced by a view that services are the dominant perspective in the 21 st century, consisting of both tangible and intangible components. * *Stephen LVargo and Robert F. Lusch, “Evolving to a New Dominant Logic for Marketing, ” Journal of Marketing, January 2004, 1 -17.

Brand Management Challenges* Internal and external forces create hurdles for product brand managers in their brand building initiatives: Intense Price and Other Competitive Pressures Fragmentation of Markets and Media Complex Brand Strategies and Relationships Bias Against Innovation Pressure to Invest Elsewhere Short-Term Pressures *David A. Aaker, Building Strong Brands, 1996, 26 -35.

Responsibility for Managing Products Product/Brand Management § Planning, managing, and coordinating the strategy for a specific product or brand Product Group/Marketing Management § Product director, group manager, or marketing manager Product Portfolio Management § § Chief executive at SBU Team of top executives

Strategic Brand Management Brand Identity Strategy Identity Implementation STRATEGIC BRAND ANALYSIS Brand Strategy Over Time Managing the Brand Portfolio Leveraging the Brand BRAND EQUITY MANAGEMENT

Product Life Cycle Analysis Relevant issues in PLC analysis include: • • • Determining the length and rate of change of the PLC Identifying the current PLC stage and selecting the product strategy that corresponds to that stage Anticipating threats and finding opportunities for altering and extending the PLC

• Product Performance Analysis § Management’s performance criteria § Strengths and weaknesses relative to portfolio • Brand Positioning Analysis § Perceptual maps for brand comparison § Buyer preferences • Other Product Analysis Methods § Information Services § Research studies § Financial analysis

BRAND EQUITY Company/Customer Value of Brand Name and Symbol of a Product Determined by the brand’s set of assets (and liabilities)

Brand Equity Effective strategic brand management requires that we understand brand equity and evaluate its impact when making brand management decisions: “Brand equity is a set of brand assets and liability linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers. * * David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15. **Ibid, 102 -120.

Measuring Brand Equity. Several measures are needed to capture all relevant aspects of brand equity. ** * loyalty (price premium, satisfaction/loyalty), * perceived quality/leadership measures (perceived quality, leadership/popularity), * associations/differentiation (perceived value, brand personality, organizational associations), * awareness (brand awareness), and * market behavior (market share, price and distribution indices). These components provide the basis for developing operational measures of brand equity.

BRAND IDENTITY STRATEGY Brand identity is a unique set of brand associations that the brand strategist aspires to create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members. * Four Brand Identity Perspectives Product Organization Person Symbol * David A. Aaker, Building Strong Brands, 1996, 68.

MANAGING BRAND STRATEGY Proactive efforts should be devoted to managing each brand over time.

Strategies for Improving Product Performance Cost reduction Add new product(s) Product improvement Product line Strategy Alter marketing strategy Eliminate specific product(s)

Strategies for Brand Strength § Brand-Building Strategies • Developing the brand identification strategy • Coordinate identity across the organization § Brand Revitalization • Find new uses for mature brands • Add products related to heritage § Strategic Brand Vulnerabilities • Brand equity can be negative • Retailer private brands compete with manufacturer brands • Major shifts in consumer tastes • Competitive actions • Unexpected events

Product Mix Modifications Motivation for changing the product mix: • Increase the growth rate of the business • Offer a more complete range of products to wholesalers and retailers • Gain marketing strength and economies in distribution, advertising, and personal selling • Leverage an existing brand position • Avoid dependence on one product line or category

BRAND LEVERAGING STRATEGY LINE EXTENSION BRAND EXTENSION Minor variants of a single product are marketed under the same brand name Extensions of the brand name to other product categories --Similar --Dissimilar

CO-BRANDING Co-branding (dual branding) involves two or more established brands making a joint offer of their product brands — The participant’s brand names are identified on the good or service. Several different forms – Component co-branding (Volvo and Michelin) Same company co-branding Alliance co-branding (Delta and American Express) Ingredient co-branding

BRAND LEVERAGING EVALUATION CRITERIA §Brand Relevance/Differentiation §Capabilities/Perceived Value Match §Market/Segment Opportunity §Cannibalization Risks §Potential for Core Brand Damage §Clarity of Product Offerings §Estimated Financial Performance §Brand Equity Impact

SEVEN DEADLY SINS OF BRAND MANAGEMENT* §Failure to fully understand the meaning of the brand. §Failure to live up to the brand promise. §Failure to adequately support the brand. §Failure to be patient with the brand. §Failure to adequately control the brand. §Failure to properly balance consistency and change with the brand. §Failure to understand the complexity of brand equity measurement and management. *Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.