Product Management

Product Management 5

Brand Business

Business Strategy New Product Development Process Growth Strategies Competitive Strategies Marketing Strategies in different situations

For New Product Development

BUSINESS STRATEGY

MARKETING STRATEGY

MARKETING PLAN

For Existing Product/ Brand

BUSINESS STRATEGY

BRAND STRATEGY/BRAND PLAN

MARKETING PLAN

Business Strategy Document

New Product Proposal: Existing Brand/ New Brand

Business Analysis– Consumer NEED Analysis:Trends & Practices,

Habits & Attitudes, Need gap assessment– Competitive Analysis: Positions, Strategies….

SWOT– Corporate Analysis: Mission, Policy, …Portfolio

Analysis…SWOT

Business Strategy Document

Business Objective:– Competition Focus- Reactive- Market Threat– Self Driven- Proactive- Market Growth/ Leadership

Business Strategy:– Market Penetration, – Market Development, – Product Development– Diversification

Business Potential: Volume Projection, Demand Estimation… User-Usage-Frequency

Business Plan: 3 year financial projection ( Turnover, Investment details, Profits)

NPD: Process

Stage 1: Formulation of Business Strategy Stage 2: Product Development Stage Stage 3: Testing & Developing the

Marketing Strategy Stage 4: Commercialization Stage 5: Market Rollout

Stage 1: Ideation to Business Strategy

Idea Generation Process

Objective: To identify categories of interest for the next 3 years

Internal ( multifunctional) Brainstorming session from time to time

Various techniques used to Capture the Needs / Voice of the Consumers

Rule: Quantity over Quality… To generate multiple ideas without applying “judgment”

Idea Generation Triggers : Case Illustration

Brand : Parachute, Product : Coconut Hair Oil Triggers : (mental map)

– Hair Needs: Wash to dry-clean, Natural style to Colouring, Split ends to Dandruff.

– Oil Needs: Non oily oil, Non Smelly oil… single use oil, Ayurvedic oil, massage oil

– Coconut needs: Haircare to skincare…..soaps to shampoos

Idea Screening Process: Innovation Funnel

Assessment of Ideas generated so as to PRIORITIZE the same

Application of “ Judgment”: rationalization, quantification techniques,feasibility studies

Key Inputs : – Business Direction of the Organization– Consumer Trends: Usage & Attitude Studies– Environment / Market Scan: segment size & growth– Competitive Analysis

Screening : Case Illustration

Process of Rationalization:– Skincare , Hair Colourants: Low priority– Split ends & Dry Clean: Niche Markets– Shampoos : Extremely Competitive

Process of Prioritization:– Hair Problems that can be addressed by a hair oil (

dandruff , hair growth etc)– Modern forms of Hair oils ( light , perfumed etc)

Concept Development & Testing

Conversion of Ideation to Product Ideas Formulation of Product Concepts from Product ideas Product Concept captures the product benefit,

product usage details….image details Concept Testing : Projective techniques amongst

target consumer segments or end user segments

Product Idea To Product Concept : Case Illustration

Product Idea: Hair oil to fight hair problems…dandruff, greying, hairfall etc

Product Concept 1: Herbal hair oil for strong hair Product Concept 2: Hair oil + Anti dandruff agents for

Dandruff Product Concept 3:Hair oil + sunscreens for greying Product Concept Test : amongst hair oil users

Product Concept vs Positioning Concept

Product positioning Idea: A specialized hair oil to fight dandruff

Pdt Positioning Concept 1 : A herbal hair oil containing ingredients which also fight dandruff

Pdt Positioning 2 : An effective dandruff treatment oil, which is better than other dandruff treatment products

TARGET SEGMENT Concept Test 1 : Hair oil users having dandruff Concept Test 2: Anti Dandruff Product users also using

hair oil

Product Approval Process: GATE

BUSINESS STRATEGY PRESENTATION Presentation of the Product Concept to the Top

Management Team for Approval Presentation to include the Marketing Strategy :

– Market size, structure.Consumer analysis (why?)– Product Opportunity…volumes, profitability, resources,time

frames (what?)– Long term strategy,projected financials ( how?)

Business analysis:Estimating Sales, Costs & profits, financial paybacks

GO or NO GO

Stage 2 : Product Development

Technology Brief

Project handover to the Research & Development Team to develop a “Technical solution” to the Product Need..within specified time frame & cost considerations

The Technical Task : Example:– “Effective Dandruff Hair oil”: A coconut hair oil which

reduces the dandruff flakes, & does not freeze during the winter months

– “Fairness Soap” : A wash off product ( soap) which provides UV protection for a minimum of 5 hours post bath

Product Development

Product Brief:For the completion of the actual product & packaging development

Quality Function Deployment ( QFD): a technique to translate consumer needs & wants into a technical concept or design– Marketing & R&D work towards a joint solution – Translation of marketing inputs ( consumer needs,

wants & perceptions) & R&D factors ( design attributes & specs) via a relationship matrix

Product Tests & Concept Tests ( Concept Use Test)

To finetune the product attributes according to consumer needs

Product form tests: product attributes, delivery system, colour, shape, perfume etc

– Example: “playtime” & absorbency of a lotion and foam & after wash perfume of a detergent : important parameters of Quality

Packaging options: size , colour, design , finish etc– Example: Shampoos in sachets and Lip Balms in tubes :

deliver Convenience

Clinical Tests

To quantify the product performance Product usage amongst the target consumer Technical calibration of before & after use Often used in communications as “ Product Claims” Example: Fair skin over 6 weeks or Twice as effective

as other washing powders Expensive & time consuming Competitive attack : High Legal sensitivity

Completion of a Benched Product

Preparation of a product & packaging prototype

Quality checks to test stability & other parameters

Issue product Raw Material & Packaging Material specifications to the Manufacturing Department for the Commercialization stage.

Stage 3: Market Testing of Brand Strategy

Brand Strategy

Brand Positioning : Benefits, competitive advantage

Target Segment Definition Marketing mix elements ( product , branding,

packaging,price, promotion, distribution) Communication development Marketing Plan Brand financials

Market Testing Methods

Test Market launch: – Select markets ( Strong & weak)– Launch prototype product with complete support– Expensive, time consuming but reliable– Issues on Confidentiality

Simulated Test Market– Simulate a test market situation– Sample consumers exposed to advertising – Map responses before & after product placement

Testing Parameters

Volume Validation Key measures: awareness,trial, repeat,

adoption, purchase frequency Communication Effectiveness Pricing Test Priority Markets Finetune product / packaging Image Indicators

Stage 4 : Commercialization

Project Management : Manufacturing Interface

Plan project Schedules Allocate responsibilities Control Brand Decisions Co ordinate inter functional activities Manage changes

Sales Target Setting : Sales Interface

Market Prioritization Seasonal Skews Distribution Plan Selling Strategy

Stage 5 : Market Rollout

Product Launch : Front Stage

Sales Launch Conference: Product background ,market analysis,product support, selling tools

Product placement: Retail briefing, displays, incentives…below the line activities

Media Break

Important Tracks : Back Stage

Monitor stock distribution, movement, inventory control Monitor sales- areawise, outletwise, SKU wise Monitor effectiveness of inputs – displays, promotions Monitor advertising effectiveness Monitor media effectiveness Take corrective action : where ever & when ever

required

BRAND-WAGON

Mktg Obj Mktg Obj Sales Obj

BusinessPotential

BrandValues

SegmentTargetPosition

Marketing Mix:Product/PkgPricePlace Promo

MktgPlan

Sales Plan

Busi. Obj.

BUSINESS STRATEGY MARKETING STRATEGY SALES STRATEGY

An

alys

is

Business StrategyPowering the Engine

Business/ Growth Potential: Analyse Company-Competition- Consumer

Brand Fit: Image- Identity- Proposition-Position

G row th Chart

N on - U sers

O th er B ran d sS W ITC H

O w n B ran dC A N N IB A L IZ A TIO N

E xis tin g U sers

New Users Increase Usage Quantity Increase Usage Frequency

Growth Strategies

Intensive Growth Opportunities1. Market Penetration Strategy2. Market Development Strategy3. Product Development Strategy

Integrative Growth Opportunities Backward( Supplier), Forward( Distribution),

Horizontal( Competition) Diversification Growth Opportunities

Current MktCurrent Mkt

New MarketNew MarketCurrent PdtCurrent Pdt New PdtNew Pdt

1 3

2 Diversify

Market Penetration Strategy: Increase Mkt Share

G row th Chart

N on - U sers

O th er B ran d sS W ITC H

O w n B ran dC A N N IB A L IZ A TIO N

E xis tin g U sers

New Users Increase Usage Quantity Increase Usage Frequency

Market Development Strategy:Increase Availability

New User Groups / Consumer Markets New Distribution Channel New Location/ Region

Product Development Strategy

Additional/ New Features Improved Quality

Growth StrategiesG row th Chart

C on vert N on - U sers o f th e P d t C a teg oryM arket Penetration Startegy

E g : U p g rad e Too th p ow d er u sers to too th p as te

E n te r N ew M arke t S eg m en tsM arket Developm ent Strategy

E g : C om p u ters from O ffice to H om e U se

S w itch C om p etito r's U sers to you r B ran dBrand Sw itching

E g : F a ir & L ove ly u sers sw itch in g to F a irever

Attract New Users to the Brand

In c reas in g th e occas ion s fo r u seUsage Frequency or Rate

E g : B ru sh in g Tee th Tw ice a D ay

M ore U sag e p er O ccas ionUsage Am ount or Quantity

E g :A p p ly sh am p oo tw ice & rin se o ff fo r b e tte r c lean in g

N ew / D iffe ren t U ses fo r th e sam e P rod u c tNew Uses

E g : M ilk m a id fo r D essert R ec ip es

M ore Usage

Growth Path

Britannia Cheese: Major player in Niche market Cadbury’s Dairy milk: Leading the Chocolates

market. Nestle Frugurt: First Mover of the Flavoured yoghurt

market. Pepsi Cola: Less than 30 % share in a Competitive

market, dominated by Thums Up & Coke Bisleri : First mover of the Mineral water market.

Lost its position to Kinley. Onida TV: Erstwhile Market Leader in a competitive

Market.

Competitive Analysis- Porter’s Model

Five Competitive Forces determine Industry Profitability– Threat of New Entrants/ Entry of New Competitors

Entry Barriers: Market Leadership, Brand identity,Distribution, Capital Reqt, Technology, Govt. Policy, Switching Cost

– Threat of Substitutes….Mobiles to Telephones, Shampoos to hairoils

Price- Value equation, Switching cost

– Bargaining Power of Buyers….Instore Labels Buyer concentration/ information/ volumes/ switching costs,

Ability to backward integrate, substitute products, relative switching costs, price sensitivity

Porter’s Model

– Bargaining Power of Suppliers…Godrej Real Good Chicken, Diamonds

Differentiation of inputs, Importance of volume, Forward Integration ability, Relative switching Costs

– Rivalry amongst existing competitors Product Differentiation, Brand identity, Industry growth,

Market penetration, Operating Costs, Exit Barriers

Competitive Strategies Based on Level/ Nature of Competition

Cost Leadership Strategy– Lower Cost of Production than its Competitors– May or May NOT be at the Lowest price– Ensures Higher returns which it can use advantageously against the

Competitor Differentiation Strategy …. Competitive Advantage

– Differentiating the Product/ the Offering in the minds of the Consumer– From Product Innovation to Brand Building , all aim to create a

sustainable competitive advantage Focus Strategy

– Selecting only a certain segment/ group in the entire market… & then ensure a cost advantage over the competitors or a point of differentiation to attract the consumers.

Understanding Business Strategies

Underlying Factors of a Business Strategy Market Attractiveness: Market Potential of the Category…. Market Size & Market

GrowthCompetitive Position: Level of Competition in the Category …Market Share & Relative

Market share of the players i.e. Market Share Relative to the largest competitor.

Where the “Market” or the Potential User Segment ( those who will use the pdt) is first defined by the Marketer, & then quantified.

While the competition is accordingly determined.

The Strategy Matrix

Mar

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Com

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arke

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ompe

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Lo

Hi

Lo

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Lo Lo Hi Hi Market AttractivenessMarket Attractiveness

Innovation DifferentiationInnovation Differentiation

Focus ExpansionFocus Expansion

Business Strategies of Brands

Growth / Market Expansion….Market Leader Strategies– When the Market Potential is high, & the level of competition is minimal– Objective to build a User base.– High Investment Required over a period of time

Eg : Creation of the Deodorants category in India by Rexona. Differentiation/ Competitive Advantage…Market Challenger Strategies

– When the Market Size is high, but there are strong existing competitors one has to deal with.

– Objective to gain market share through Brand switches.– Medium- High Investments

Eg: Introduction of Britannia Milkman, in the dairy pdts mkt dominated by Amul & Nestle.

Business Strategies of Brands

Focus/ Specialization….Market Nicher stategies– When Market Size is limited, no major competitors– Objective to focus on & gain ownership of a particular target

segmentEg: Launch of Loreal Hair Colour in India…focused on Beauty

Parlour distribution Innovation+ Significant Cost advantage…Frontal/

Encirclement Attack strategy– Need a lot of consideration before entering such a market– Objective to displace competitionEg: Launch of Pond’s Body Lotion at a Low Price Point in the

Skincare Market..threatening the leadership of Lakme Maximum Moisturiser.

Marketing StrategiesBased on Market Position

Market Leader:– Market Expansion Strategy…Market Growth strategies

Developing New Users- convert non-users to users of the Product Category

Eg: Airlines flexible fares to attract Rail Passengers. Developing New Uses for the Product …New applications, new

markets. Eg: Maggi noodles … from choice cuisine to commonplace easy

to make snack food/ tiffin. More Usage – Increase amount used or frequency of use of the

ProductEg: Toothpastes promoting twice a day brushing

– Defense Strategy…Through continuous innovation( Brand Revitalization Strategy)


Market Challenger:– Attack Strategy- Competitive

Frontal attack- Pitched against Competitor’s Strength– Eg: Pepsodent- Fights germs Better than Colgate

Flank attack- Bring to light Competitor’s Weakness– Eg Anchor Toothpaste as 100% Vegetarian, unlike others

Encirclement Attack- Close in on Competitor with Multiple Attacks on all fronts

– Eg: Airtel Bypass Attack – Deviate to unrelated products/areas

– Eg: Reliance Mobiles with Technology, Nirma with Price Guerilla attack- Harass Competitor with small frequent attacks

– Eg: Nihar Coconut Hair Oil


Market Follower: Me- Too Strategy- Following or copying the moves of the Key Competitor

– Eg: Detergents…Ghari, Coconut Hair oil…Cococare, CocoRaj

Market Nichers:– Specialist/ Focus Strategy- Building Customer goodwill where

competition is weak or not present or not interested. – Eg: Gillete in men’s pdts– Low volumes, but high growth & high margins.– Eg: Loreal Hair Colour

Legal Aspects of Brand Management

New Product Development: Product classification/ Excise classification, Trademark registration, copyright, patent, FDA regulations on Brand name, formulation & packaging

Advertising & promotions: Claim substantiation, ASCI rulings, MRTP regulations

Sales & Distribution: Distributor relationship, region specific issues

Manufacturing:Manufacturer relationship, product specific issues