1

Product Strategies for Product Strategies for the Asia Pacificthe Asia Pacific

Asia-Pacific Marketing Asia-Pacific Marketing FederationFederation

Certified Professional Certified Professional MarketerMarketerCopyrightCopyright

Marketing Institute of SingaporeMarketing Institute of Singapore

2

OutlineOutline

Product Hierarchy Product Hierarchy Product-Mix DecisionsProduct-Mix Decisions Product-Line StrategiesProduct-Line StrategiesNew product development in New product development in

ASPACASPAC Positioning & RepositioningPositioning & RepositioningBrand decisionsBrand decisions

3

IntroductionIntroductionProduct (or service) Product (or service) is the main is the main

element of the marketing mixelement of the marketing mixTherefore, need to determine Therefore, need to determine

the Product Strategiesthe Product Strategies before before deciding on the remaining deciding on the remaining marketing mixmarketing mix

4

7-Levels of Product 7-Levels of Product HierarchyHierarchy

Product need—to satisfy a need e.g. feet Product need—to satisfy a need e.g. feet protectionprotection

Product class—a family of products having Product class—a family of products having similar function e.g. all shoessimilar function e.g. all shoes

Product line—a group of products with closely Product line—a group of products with closely related functions e.g. sports shoesrelated functions e.g. sports shoes

Product type—products within a line having Product type—products within a line having similar form e.g. basket-ball shoessimilar form e.g. basket-ball shoes

Brand—a name representing a product or line Brand—a name representing a product or line e.g. Nikee.g. Nike

Item (Stock Keeping Unit)—a unit item e.g. one Item (Stock Keeping Unit)—a unit item e.g. one pair of Nike basket-ball shoepair of Nike basket-ball shoe

5

Product-Mix DecisionsProduct-Mix Decisions Decisions on the product mix (the number of Decisions on the product mix (the number of

product lines and items in each line) that the product lines and items in each line) that the company may offer company may offer

A single productA single product Most firms started off as a single-product companyMost firms started off as a single-product company

Multiple productsMultiple products e.g. Creative Technology markets sound cards as e.g. Creative Technology markets sound cards as

well as MP3 playerswell as MP3 players

A systems of productsA systems of products e.g. Nikon sells camera, lenses, filters & other e.g. Nikon sells camera, lenses, filters & other

optionsoptions

6

Product-Line strategyProduct-Line strategy

How many product lines should How many product lines should we have?we have?

Example:Example: Delft Sensor SystemsDelft Sensor Systems offer offer a comprehensive range of products, a comprehensive range of products, including portable and platform including portable and platform mounted night vision systems and mounted night vision systems and thermal imaging systems, head- and thermal imaging systems, head- and helmet mounted displays, laser helmet mounted displays, laser rangefinders and fire control systems rangefinders and fire control systems ((Source: http://www.oip.be/press/brazil.htm)

7

Product-Line strategy Product-Line strategy (cont’d)(cont’d)

How many product items in each How many product items in each line?line?

Example:Example: Both Both GardeniaGardenia and and BonjourBonjour launched new flavors in January 1999 launched new flavors in January 1999 to nibble away at each other’s to nibble away at each other’s market share of a loaf estimated to market share of a loaf estimated to be worth about $80 million be worth about $80 million

((Source: ST, Home, Jan29/99)Source: ST, Home, Jan29/99)

8

Expanding the Product LineExpanding the Product Line

1.1.Product line extension: add an item to Product line extension: add an item to the existing product line the existing product line Many FMCG companies introduced various Many FMCG companies introduced various

sizes of the same product e.g.mini-packs sizes of the same product e.g.mini-packs for travelers, extra-large size for hospitalfor travelers, extra-large size for hospital

2.2.Product category extension: add a new Product category extension: add a new item or line of items for a company e.g.item or line of items for a company e.g. P&G have Vidal Sassoon, Head & Shoulders, P&G have Vidal Sassoon, Head & Shoulders,

Rejoice, and Panthene in the same category Rejoice, and Panthene in the same category

9

Expanding the Product Line Expanding the Product Line (cont’d)(cont’d)

3.3.Brand extension: Product category Brand extension: Product category extension that uses an existing extension that uses an existing brand name e.g.brand name e.g. Cerebos introduced Brands Essence Cerebos introduced Brands Essence

of Chicken with TangKwei targeting of Chicken with TangKwei targeting womenwomen

Nestle extended its Bear Brand Nestle extended its Bear Brand condensed milk in Thailand by condensed milk in Thailand by introducing Bear Brand with Honeyintroducing Bear Brand with Honey

10

More on Product Line ExtensionMore on Product Line Extension

Downward stretch by introducing lower range of Downward stretch by introducing lower range of the products e.g. the products e.g. In 1989 the Shangri-La, a chain of deluxe hotels and In 1989 the Shangri-La, a chain of deluxe hotels and

resorts in Asia established the Traders Hotels, a sister resorts in Asia established the Traders Hotels, a sister brand to deliver high value, mid-range, quality brand to deliver high value, mid-range, quality accommodation to the business traveleraccommodation to the business traveler

Mercedes introduced the “baby Merz” to cater to the Mercedes introduced the “baby Merz” to cater to the upper class mid-sized range of the market upper class mid-sized range of the market

Upward stretch by entering the high end of the Upward stretch by entering the high end of the market e.g. market e.g. Toyota introduced the Lexus and Nissan introduced Toyota introduced the Lexus and Nissan introduced

the Infiniti the Infiniti

11

Product Line Extension (cont’d)Product Line Extension (cont’d)

Two-way stretch by filling the Two-way stretch by filling the whole line e.g. whole line e.g. Toyota has the Starlet at the lower Toyota has the Starlet at the lower

end; the Corolla in the executive end; the Corolla in the executive range; the Camry in the upper-range; the Camry in the upper-management range and the Lexus in management range and the Lexus in the luxury rangethe luxury range

12

New Product StrategyNew Product StrategyNew products are critical to survival New products are critical to survival New-product development (NPD) is New-product development (NPD) is

essential for companies seeking growthessential for companies seeking growth It should be an on-going, well organized NPD It should be an on-going, well organized NPD

process having top-management support process having top-management support What is a new product? (see next slide)What is a new product? (see next slide)

From a firm's perspective, a new product is a From a firm's perspective, a new product is a product that it is unfamiliar in any way product that it is unfamiliar in any way

13

Definition of Definition of Product NewnessProduct Newness

1.1.Products new to the world; usually Products new to the world; usually revolutionary products resulting revolutionary products resulting from product innovation e.gfrom product innovation e.g

When Creative Technology first When Creative Technology first introduced the Sound-blasterintroduced the Sound-blaster

When disposable cameras were When disposable cameras were first introducedfirst introduced

When Seiko introduced the Seiko Kinetic Relay, a watch that can go into suspended animation

14

Definition of Product Definition of Product Newness (cont’d)Newness (cont’d)

Products new to the firm Products new to the firm Improvements to existing products Improvements to existing products

e.g.e.g. In 1960 In 1960 KaoKao introduced shampoo liquid introduced shampoo liquid

and in 1970 introduced and in 1970 introduced KaoKao MeritMerit shampoo (anti-dandruff)shampoo (anti-dandruff)

Additions to existing lines e.g.Additions to existing lines e.g. In 1965 In 1965 Kao Kao introduced theintroduced the Kao Tender Kao Tender

hair conditionerhair conditioner

Costs reductions and re-positioningsCosts reductions and re-positionings

15

Example of NPD--LogitechExample of NPD--Logitech

““Logitech, the world's biggest Logitech, the world's biggest maker of computer mice, has maker of computer mice, has come up with a mouse that allows come up with a mouse that allows the user to feel what is seen on the user to feel what is seen on the the screen. This mouse [is] screen. This mouse [is] called the iFreeMouseMan”called the iFreeMouseMan”

AP (August 22, 2000)AP (August 22, 2000)

16

Product ConvergenceProduct Convergence

First coined by Creatives’ Sim W H who First coined by Creatives’ Sim W H who was referring to the marriage was referring to the marriage between the PC and home between the PC and home entertainmententertainment

Creative Multi-Speaker Surround Creative Multi-Speaker Surround (CMSS) uses seven audio channels(CMSS) uses seven audio channels

Source: Computer Times, 1997Source: Computer Times, 1997

17

PositioningPositioning

““Positioning refers to placing a brand Positioning refers to placing a brand in that part of the market where it will in that part of the market where it will have a favorable reception compared have a favorable reception compared to competing brands”to competing brands” Subash JainSubash Jain

““A product’s position is the place the A product’s position is the place the position occupies in consumers’ minds position occupies in consumers’ minds relative to competing products.”relative to competing products.”

Philip KotlerPhilip Kotler

18

Generic Positioning StrategiesGeneric Positioning Strategies

Our product is unique Our product is unique e.g. e.g. Raffles HotelRaffles Hotel (oldest hotel); (oldest hotel); Westin Westin

HotelHotel (tallest hotel) (tallest hotel)

Our product is different Our product is different e.g. e.g. Seng ChoonSeng Choon eggs (low in cholesterol) eggs (low in cholesterol)

ListerineListerine (kills germs) (kills germs)

Amex Amex Blue credit card (6-month Blue credit card (6-month rate ofrate of

15.9% vs the market rate of 24%)15.9% vs the market rate of 24%)

Our product is similarOur product is similar e.g. Thai fragrant ricee.g. Thai fragrant rice

19

Approaches to PositioningApproaches to Positioning By attributes By attributes

e.g. Singapore Airlines (first class comfort)e.g. Singapore Airlines (first class comfort)

By benefits By benefits e.g. Citibank Credit Card (7/24 availability)e.g. Citibank Credit Card (7/24 availability)

By price/quality By price/quality e.g. Proton e.g. Proton

By usage or application By usage or application e.g.100Plus (fluid e.g.100Plus (fluid replenishment in sports)replenishment in sports)

By users By users e.g. Johnson Baby Shampoo; J&J Affinity e.g. Johnson Baby Shampoo; J&J Affinity Shampoo (hair conditioner for women)Shampoo (hair conditioner for women)

By product class By product class e.g. Camay soap (with bath oils—not just soap)e.g. Camay soap (with bath oils—not just soap)

By competitors By competitors e.g. Avis against Hertze.g. Avis against Hertz

20

Product Positioning Using Product Positioning Using Perceptual & Preference MapsPerceptual & Preference Maps

Marketing managersMarketing managers use a use a Mapping Mapping technique to help them technique to help them visualize the competitive visualize the competitive structure of the market before structure of the market before they develop differentiation and they develop differentiation and positioning strategiespositioning strategies

21

Positioning StatementPositioning Statement

For [a target segment], the [concept] is For [a target segment], the [concept] is [the primary claim] because [it is the [the primary claim] because [it is the single most important factor].single most important factor].

Example:Example:

For For Seng Choon eggsSeng Choon eggs, the , the low cholesterollow cholesterol levellevel is the is the only healthy alternativeonly healthy alternative because because it is it is safe for frequent safe for frequent consumptionconsumption

22

Example of a 2D Perceptual Map Example of a 2D Perceptual Map for Laptopfor Laptop

Slow-speed

Light-weightValue

Style

Brand A

Brand B

Appearance

Performance

23

RepositioningRepositioning

Why reposition?Why reposition?Competitors position next to Competitors position next to

youyouConsumer preferences changedConsumer preferences changedNew consumer preference New consumer preference

clusterclusterOriginal mistakeOriginal mistake

24

Repositioning (cont’d)Repositioning (cont’d)

Repositioning among existing customersRepositioning among existing customers e.g. Cerebos repositioned BRAND’S from e.g. Cerebos repositioned BRAND’S from a a

traditional therapeutic and recuperative tonic traditional therapeutic and recuperative tonic to one for preventative health maintenanceto one for preventative health maintenance

APB repositioned Tiger Beer as a beer for all APB repositioned Tiger Beer as a beer for all timetime

Repositioning among new usersRepositioning among new users BRAND’S essence of chicken for studentsBRAND’S essence of chicken for students

Repositioning for new usesRepositioning for new uses Repositioning BRAND’S as a base for double-Repositioning BRAND’S as a base for double-

boil cookingboil cooking

25

Product-Overlap StrategyProduct-Overlap Strategy

This strategy refers to a situation in This strategy refers to a situation in which a company decides to compete which a company decides to compete against its own brand by using:against its own brand by using:

Competing brandsCompeting brands e.g. Gillette Atra, Sensor, Mach 3e.g. Gillette Atra, Sensor, Mach 3

Private labelingPrivate labeling e.g. Sin Sin Chilli Sauce, Watson Vitaminse.g. Sin Sin Chilli Sauce, Watson Vitamins

OEMOEM e.g. IBM selling magneto-resistance (MR) heads to e.g. IBM selling magneto-resistance (MR) heads to

OEM disk drive developers/manufacturersOEM disk drive developers/manufacturers

26

Product-Elimination Product-Elimination StrategyStrategy

When a product’s performance is When a product’s performance is falling short of expectations and falling short of expectations and continued support is no longer continued support is no longer justified, it’s time to pull it out of justified, it’s time to pull it out of the marketplacethe marketplace

How?How?Harvesting, line-simplification, total-Harvesting, line-simplification, total-

line divestmentline divestment

27

Value-Marketing StrategyValue-Marketing Strategy

Value-marketing strategy means Value-marketing strategy means delivering real product performance delivering real product performance based on the following promisesbased on the following promises Quality strategyQuality strategy Customer-serviceCustomer-service Time-basedTime-based

Example:Example: Dell cuts the duration from order to delivery Dell cuts the duration from order to delivery

of most of its products to the minimumof most of its products to the minimum

28

BrandsBrands ““A rose by any name smells as sweet.” A rose by any name smells as sweet.”

True or false?True or false? Would you go vacationing on Hog Island? Would you go vacationing on Hog Island? Why are Coca-Cola, McDonald’s and Why are Coca-Cola, McDonald’s and

Kentucky Fried Chicken (KFC) successful?Kentucky Fried Chicken (KFC) successful? Do you think Maikenji would be half as Do you think Maikenji would be half as

successful?successful? Maikenji restaurant in Badaling, north of

Beijing combines the Chinese Characters used in the names for McDonald’s and KFC and offers a menu similar to KFC located 100 metres away (AP 11,Jul2001)

29

Brands (continued)Brands (continued)

““Buildings age and become dilapidated. Buildings age and become dilapidated. Machines wear out. Cars rust. But Machines wear out. Cars rust. But what lives on are brands.”what lives on are brands.”

Sir Hector LaingUnited Biscuits, U.K. Source: The economist, Dec 24, 1988

30

What is a brand?What is a brand?

Six levels of meaning:Six levels of meaning:Attributes Attributes e.g. High resale valuee.g. High resale value

Benefits Benefits e.g. Safety e.g. Safety

Values e.g. Values e.g. Brand loyaltyBrand loyalty

Culture Culture e.g. organized and efficiente.g. organized and efficient

Personality Personality e.g. seriouse.g. serious

Type of users Type of users e.g. by occupatione.g. by occupation

31

Alternative Brand Alternative Brand StrategiesStrategies

1.1.No brand identityNo brand identity Small firms with unknown brands Small firms with unknown brands

e.g. small tailoring outfitse.g. small tailoring outfits

2.2.Private brandsPrivate brands Retailers with established brand Retailers with established brand

names e.g. NTUC Fairpricenames e.g. NTUC Fairprice

3.3.Corporate brandsCorporate brands Family name e.g. This FashionFamily name e.g. This Fashion

32

Alternative Brand Strategies Alternative Brand Strategies (cont’d)(cont’d)

4.4. Product line extensionProduct line extension Create cost advantage e.g. Novena’s collection Create cost advantage e.g. Novena’s collection

of an extensive range of furniture at reasonable of an extensive range of furniture at reasonable priceprice

5.5. Specific productSpecific product Individual brand e.g In addition to the Novena Individual brand e.g In addition to the Novena

brand, Novena Holdings also carry the Castilla brand, Novena Holdings also carry the Castilla brand of Italian designed furniturebrand of Italian designed furniture

6.6. CombinationCombination e.g. Novena Holdings’ Novena Collection, e.g. Novena Holdings’ Novena Collection,

Dickson Beech Collection and the White Dickson Beech Collection and the White Collection; Collection; Seiko’s Alba and PulsarSeiko’s Alba and Pulsar

33

The Branding ProcessThe Branding Process

From commodity to product From commodity to product e.g. air travele.g. air travel

From product to brand From product to brand e.g. Singapore Airlinese.g. Singapore Airlines

From brand to experience From brand to experience e.g. Romance in the aire.g. Romance in the air

From experience to the heart From experience to the heart e.g. A Great Way to Flye.g. A Great Way to Fly

34

Branding on the WebBranding on the Web

Profile of “Gen-N”Profile of “Gen-N”How to harness the Internet for brand-How to harness the Internet for brand-

building?building?By rewarding brand loyalty and updating By rewarding brand loyalty and updating

your site etc.your site etc.

Decision-influence factorDecision-influence factorConventional branding => imageConventional branding => imageOnline branding => customer experienceOnline branding => customer experience

The issue of trust in a brandThe issue of trust in a brand

(Source: Hi-Tech, Hi-Touch Branding by Temporal and Lee)

35

Old Brands StrategyOld Brands Strategy

Old brands survive due to emotional Old brands survive due to emotional bond with the consumerbond with the consumer

For slow moving brands either revive it For slow moving brands either revive it with marketing money or kill itwith marketing money or kill it

Growing interest in old brands because Growing interest in old brands because brand names carry value that is getting brand names carry value that is getting more expensive and risky to createmore expensive and risky to create

When re-promoting old brands, do not When re-promoting old brands, do not ignore younger consumersignore younger consumers

Source: “Selling”, Fortune, April 28, 1986