Product Decisions and Branding

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Product Decisions and Branding

• Week 5
• Fall 2007

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Analysis Framework
Segmentation
Positioning (Vintage)
Company Analysis
Competitor
Analysis
Consumer Orientation
Competitive Advantage
Marketing Strategy
Consumer Behavior (TiVo)
Product
Price
Promotion
Place
Market
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Product Strategy and Branding

• Part 1
• A comprehensive marketing view of a Product
• Levels of Product Decisions
• The role of perception.
• Part 2
• Branding and Brand Equity.
• Brand Strategies

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Product Levels
Augmented Product
Installation
After- Sale Service
Credit
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Product Decisions Physical Product

• Physical Product attributes/features (Dual
  airbags).
• Product Styling attributes (miata vs. corolla)
• Quality Level / Consistency
• Consistency Zero defects objective (Motorola)
• How does the Product Levels concept apply to
  McDowells Vintage or to Steinway?

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Consumer Perceptions and Product Strategy

• Perception and product attribute strategy
• The Case of Oral Flea
• Program Lufenuron

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Product Decisions BrandingBrand Equity
(Interbrand, 2006)
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Branding

• Whats in a Name
• The Coca-Cola name is worth 67 billion
• What do you think its total assets are worth in
  2006?
• 29.963 billion?
• Why is Coke valued at 67 billion?
• Why do companies brand their products?

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Why Branding?

• Twin automobiles (e.g, Toyota Corolla and Geo
  Prizm) a basis of a natural experiment.
• These twins are made in the same plant, and are
  identical in all respects other than the name
  plate.
• Consider models of a twin pair with no
  differences in standard equipment, so in fact
  they are perfect substitutes.
• If brand factors have no effect then the used car
  price ratios (e.g., as provided by the Blue Book)
  should be 1.

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Why Branding?
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Sources of Brand Equity

• Lowers consumers search cost
• Acts as a symbol that enables a purchaser to
  identify goods or services that have been
  satisfactory in the past and to reject goods or
  services that have failed to give satisfaction.
• Tells the consumer about what features and
  benefits to consistently expect (Crest, Mercedes
  Benz).
• Carves out a competitive position for the product
  in the consumers mind.
• What do I stand for? (Volvo).
• Differentiates a product from competition.
  Anybody can make a can of flavored water.
• Investing in Brand Equity to signal social status
  or social matching.
• Polo shirts

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Sources of Brand Equity

• Brand investments are like the posting of a
  credible bond to consumers.
• Consumers use branding as a signal of quality or
  reliability.
• Acts as a symbol that enables a consumers to
  identify products that have been satisfactory in
  the past and to reject products that have failed.
  
• The consumers dependence on brands motivates the
  firm to invest in its product and attempt to
  maintain or improve quality over time.
• Successful branding therefore creates a virtuous
  cycle

Consumers use brand as a credible signal of
quality
Firm invest in Branding Quality
Firms with greater brand value will lose more if
they cheat on quality
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Brand Equity, Other Benefits

• Brand Equity cannot be copied. Patenting not
  possible with consumer productscan be easily
  copied
• Brand Equity is a long-lived property

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Messages

• A product is not simply a collection of physical
  attributes, but it includes intangible aspects
  from which consumers derive psychological
  benefits.
• Often these intangible aspects are far more
  critical than the physical aspects of the
  product.
• Investments in these intangible aspects pay off
  in valuable Brand Equity.
• Brands are credible bonds
• Successful Branding creates a virtuous cycle