Product Positioning, Branding, and Product-

Line Strategies

Chapter Chapter SevenSeven

MMarket-Basedarket-Based Management, 4Management, 4thth editionedition

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Product Positioning, Product Positioning, Branding, and Product Line Branding, and Product Line

StrategiesStrategiesChapter Seven

– Product Positioning and Product Positioning Strategies

– Product Differentiation

– Brand Name, Brand Equity, and Branding Strategies

– Product Line Expansion

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Product PositioningProduct Positioning

• What is product positioning?

• Why is it important to determine a product positioning strategy?

• What is the goal of a positioning strategy?

• How does the positioning strategy affect market share?

Market Share = X

Marketing Efforts

Product Position

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Product Positioning StrategiesProduct Positioning Strategies

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Product Positioning Strategies Product Positioning Strategies

• Price Leadership vs. Product Differentiation

• When is price leadership appropriate?

• When is differentiation appropriate?

• Types of Differentiation

Brand Benefits

Service Benefits

Product Benefits

Trans-action Costs

Price

Customer Value

Brand Differentiation

Service Differentiation

Product Differentiation

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DifferentiationDifferentiationDimensions of Product QualityDimensions of Product Quality

11. Quality Killers

4. Quality Aesthetics3. Quality Enhancers

2. Quality Drivers

Reliability

Conformance

Performance

Durability

Features

Serviceability

Appearance

Reputation

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DifferentiationDifferentiationDimensions of Service QualityDimensions of Service Quality

1. Quality Killers

4. Quality Aesthetics

3. Quality Enhancers

2. Quality Drivers

Reliability

Assurance

Performance

Responsiveness

Extended Services

Customer Empathy

Appearance

Reputation

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Brand DifferentiationBrand Differentiation

• What is brand identity?• How do firms develop

brand identity?• What is brand encoding?

• What is the importance/value of a brand name? (enhance positioning and differential advantage)

– Rational vs. Emotional

• How are products positioned with brand differentiation?

(Marriot, Kellogg, Hitachi)

• What are brand extensions? (Coca-Cola)

– Flanker vs. Umbrella

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Brand Encoding StrategiesBrand Encoding Strategies

• Company and Brand Name • Brand and Sub-Brand Name• Company and Product Name• Company, Brand, and Product Name• Company Name, Brand Name, and Number• Brand Name and Benefit• Brand Name Only

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Brand Name DevelopmentBrand Name Development

• Four ways in which new brand names are created:1. Functional or

Descriptive Names

2. Invented Names

3. Experiential Names

4. Evocative Names

Customer Problem

Company/Product Solution

Customer Benefits

Descriptive Words

Brand Name Candidates

Brand Name Tests

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Brand Assets and LiabilitiesBrand Assets and Liabilities

• Brand Liabilities:

– Customer Dissatisfaction

– Environmental Problems

– Product or Service Failures

– Lawsuits and Boycotts

– Questionable Business Practices

• Brand Assets:

– Brand Awareness

– Market Leadership

– Reputation for Quality

– Brand Relevance

– Brand Loyalty

How are Brand Assets and Liabilities Measured?

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Brand EquityBrand Equity

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Broad Vs. Narrow Product LineBroad Vs. Narrow Product Line

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Product Line Development Product Line Development

• How do firms expand their product line?

– Flanker Brands

– Umbrella Brands

– New Brands

• How do flanker brands benefit from umbrella brands?

– Brand Awareness

– Known Quality

– Market Reach

– Product Mix

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Product Line Extensions and Product Line Extensions and EnhancementsEnhancements

• Vertical Brand-Line Extensions• Horizontal Brand-Line Extensions• New Product-Market Brand Extensions• Co-Branding

• Product Bundling• Product Unbundling• Effects of all product-line enhancements

– Scale– Substitution

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TakeawaysTakeaways//ReviewReview

• Product Positioning

• Product Differentiation

– Quality – Service– Brand

• Brand Encoding Strategies

• Brand Name Development

• Brand Equity

• Product Line Enhancements

• Effects of Enhancing Product Line

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Marketing Performance ToolsMarketing Performance Tools

Impact of Product Line Substitution

Price Core Brand Flanker A Flanker B

$3.49

$2.99 Core Brand Multi-Grain Reduced Fat

$1.49

$0.99

$0.49

$0.00

Product Line

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Marketing Performance ToolsMarketing Performance Tools

Impact of Product Line Substitution

From - To Core Brand Flanker A Flanker B

Umbrella X 0.1 0.25

Flanker A 0.05 X 0.2

Flanker B 0.1 0.05 X

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Marketing Performance ToolsMarketing Performance Tools

Impact of Product Line Scale Effects

Area of Core Multi- Reduced Product

Performance Brand Grain Fat Line

Volume

Primary Demand 50,000,000 10,000,000 20,000,000 80,000,000

Core Brand 32,500,000 5,000,000 12,500,000

Multi-Grain 500,000 7,500,000 2,000,000

Reduced Fat 2,000,000 1,000,000 17,000,000

Net Volume 35,000,000 13,500,000 31,500,000 80,000,000

Wholesale Price per Unit $1.95 $1.95 $1.95 $1.95

Sales $68,250,000 $26,325,000 $61,425,000 $156,000,000

Variable Cost per Unit $0.95 $1.00 $1.05 $1.00

Margin per Unit $1.00 $0.95 $0.90 $0.95

Total Contribution $35,000,000 $12,825,000 $28,350,000 $76,175,000

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Marketing Performance ToolsMarketing Performance Tools

Impact of Product Line Scale EffectsArea of Core Multi- Reduced Product

Performance Brand Grain Fat Line

Volume

Primary Demand 50,000,000 20,000,000 10,000,000 80000000

Core Brand 32,500,000 5,000,000 12,500,000

Multi-Grain 500,000 7,500,000 2,000,000

Reduced Fat 2,000,000 1,000,000 17,000,000

Net Volume 35,000,000 13,500,000 31,500,000 80,000,000

Wholesale Price per Unit $1.95 $1.95 $1.95 $1.95

Sales $68,250,000 $26,325,000 $61,425,000 $156,000,000

Variable Cost per Unit $0.95 $1.00 $1.05 $1.00

Margin per Unit $1.00 $0.95 $0.90 $0.95

Total Contribution $35,000,000 $12,825,000 $28,350,000 $76,175,000

Manufacturing Overhead $17,500,000 $6,750,000 $15,750,000 $40,000,000

Gross Profit $17,500,000 $6,075,000 $12,600,000 $36,175,000

Fixed Marketing Expenses $4,375,000 $1,687,500 $3,937,500 $10,000,000

Variable Brand Expenses $3,412,500 $789,750 $1,842,750 $6,045,000

Total Marketing Expenses $7,787,500 $2,477,250 $5,780,250 $16,045,000

Net Marketing Contribution $9,712,500 $3,597,750 $6,819,750 $20,130,000

Marketing ROS 14.2% 13.7% 11.1% 12.9%

Marketing ROI 124.72% 145.23% 117.98% 125.46%

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Marketing Performance ToolsMarketing Performance Tools

Assessing Brand Assets

Brand Assets Below Somewhat About Somewhat Top Brand

Average Below Average Above Performer Asset

0 5 10 15 20 Score

Brand Aw areness 0

Market Leadership 0

Reputation for Quality 0

Brand Relevance 0

Brand Loyalty 0

Total Brand Assets 0

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Marketing Performance ToolsMarketing Performance Tools

Assessing Brand Liabilities

Brand Liabilities Below Somewhat About Somewhat Top Brand

Average Below Average Above Performer Liability

0 5 10 15 20 Score

Customer Dissatisfaction 0

Environmental Problems 0

Product Failures/Recalls 0

Law suits and Boycotts 0

Questionable Practices 0

Total Liabilities Assets 0