P&BM - Lecture one

1. Introduction to product and brand
management
Product and Brand Management (23C630)
Ch. 1 & Ch. 8
Giuseppe Pedeliento, University of Bergamo (Italy)
Visiting Aalto University School of Economics,
Department of Marketing

2. Agenda
• Lecture on „Introduction to product and brand management‟
– Ch1: Introduction to product management
– Ch8: Developing product strategy
• Discussion on articles
– The brand report card, KL Keller - Harvard Business Review, 2000
– Key components in product management success (and failure), V
Wood, S Tandon - Journal of Product & Brand Management, 1994
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3. Learning objectives
After the lecture, students should be able to
– Describe critical issues related to product and brand
management building on issues learned in „Introduction to
Marketing‟
– Understand the main tasks of product and brand management
and its relationship with other organizational functions
– Identify causes of possible conflict between product and brand
management and other functions and formulate
recommendations to overcome such challenges
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4. Ch. 1
INTRODUCTION TO PRODUCT
(AND BRAND) MANAGEMENT
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5. A Product Manager’s Potential
Interactions Agency media department
Company media department
Suppliers Media sales reps
Advertis-
Trade Manufactur- ing
ing and agency Media
Suppliers Premium
distribution suppliers
Research Premium
and Promotion screening Store
development services testing Sampling
Couponing
Product Packagin
Legal
manager g
Designers
Purchasin Researchers
Fiscal g
Market Publicity Suppliers
Research research
Sales
suppliers
Trade
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6. The product manager’s job is becoming
increasingly complex
• Three main tasks
1. Planning activities related to the product or product line
• Analyzing the market (customers and competition)
2. Getting support from other functions and partners
• Developing objectives and strategies for the product or service in question
3. Making decisions about
• Price, advertising, promotion, channels of distribution, and service
(including internal marketing)
• Changes effecting product management
– The Web (and social media), Data explosion, Increased emphasis of
brands, Changes in the balance of market power, Increased
importance of customer retention programs, Increased global
competition, …
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7. Product vs. general marketing
management
Product Management General Marketing
Management
Scope of responsibility Narrow: Single product Broad: portfolio of
or product line products
Nature of decision- Mainly tactical Mainly strategic
making
Time horizon Short-run (often annual Long-run
or shorter)
• Thus viewpoint into branding in this course relates only to product, not
corporate brands
• Critical skills for product managers: negotiation, teamwork, communication
skills, analytical ability
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8. Who is the product manager? Critical
skills
NEGOTIATION;
TEAMWORK;
COMMUNICATION;
ANALYTICAL ABILITY;
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9. Marketing organization
The effectiveness of PM‟s job is strictly dependent on the firm‟s
marketing organization..
The kind of tasks PM perform (and objective PM can reach) are
highly related to how marketing is organized.
Three different marketing organizations are introduced:
1) Product focused organization;
2) Market focused organization;
3) Functionally focused organization;
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10. Product focused organization
Head of
company/division
Manufacturing Marketing Corporate
Finance
communications
Marketing Product
Support
Research management
Manager of Manager of Manager of
product A product B product C
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11. Market focused organization
Head of the
company/division
Manufactur Corporate
Marketing Finance
ing communications
Manager, Manager, Manager,
market A market B market C
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12. Functionally focused organization
Head of the
company/division
Corporate
Manufacturing Marketing Finance
communications
Product Sales Marketing
Advertising
marketing promotion research
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13. Ch. 8
DEVELOPING PRODUCT
STRATEGY
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14. A good product strategy should address
three related questions
1. Where are we headed?
– Focus on basic objectives such as growth versus profits
2. How will we get there?
– Core of product and brand strategy
– Addresses issues such as focusing on new or existing customers
– Summarized in targeting and positioning statements defining
• Customer targets, competitive targets, and the proposition (offering) that
will enable the firm to succeed in capturing the targeted customers in the
face of competition
3. What will we do?
– Addresses specific programs and tactics to be employed in order to
implement the core strategy
– Entails describing the marketing mix
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15. Benefits of strategy
• Enhances coordination among functional areas of the organization
• Defines how resources are to be allocated
• Leads to a superior market position
Good marketing strategy coordinates functional
areas of the organization, helps allocate
resources efficiently, and helps the product
attain the market position management desires.
It also identifies an advantage over the other
offering pursuing the same customers.
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16. Elements of a product strategy
• Hulbert (1985)
1. Setting objective(s)
2. Selection of strategic alternative(s)
3. Selection of customer targets
4. Choice of competitor targets
5. Statement of the core strategy
6. Description of supporting marketing mix.
7. Description of supporting functional programs
• Most common objectives
– Growth (market share, sales revenue) and/or profitability + cash flow
• Characteristics of good objectives: quantified standards of
performance, challenging but not unrealistic, time frame to reach
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17. Hierarchy of Objectives
Company Mission/Vision
Level 0
Corporate objectives
Level I
Corporate strategies
Divisional objectives
Level II
Divisional strategies
Product/brand objectives
Level III
Brand strategies
Program objectives
Level IV
Tactics
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18. Strategic alternatives
Long-term
profits
Growth in Efficiency,
sales or short-run
market share profits
Market Market Decrease Increase
development penetration inputs outputs
New Existing Reduce Increase
segments customers costs price
Improve
Convert Competitors’ Improve
asset
nonusers customers sales mix
utilization
New product
development
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19. Positioning decision steps
(Day, 1990)
• Identify alternative positioning themes by consulting the advertising
account team, the product team, and past marketing plans.
• Screen the alternatives according to whether each is (a) meaningful
to customers, (b) feasible given the firm and product resources and
customer perceptions, (c) competitively sensible, or (d) helpful for
meeting the product objective
• Select the position that best satisfies these criteria and can be sold
to the marketing organization
• Implement programs (e.g., advertising) consistent with the product
position selected
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20. Five areas for differentiation
(Schnaars, 1991)
1. Quality – is the product distinctive in terms of quality?
2. Status and Image – Does the product give a distinctive status and
image?
3. Branding – Is the brand distinctive?
4. Convenience and Service – Can we position differently the product
adding services or other immaterial components?
5. Distribution – Can we differentiate the product in terms of
distribution?
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21. Managing Brand Equity (1/2)
(Aaker, 1996) Reduced marketing
costs
Trade leverage
Brand Attracting new
Brand
loyalty customers
loyalty • Create awareness
• Reassurance
Provides value to
customer by
BRAND EQUITY: Time to respond to enhancing
Awareness, competitive threats customer’s:
associations (image),
• Interpretation/
attitude (overall Anchor to which processing of
quality), attachement other associations information
(loyalty), and activity can be attached • Confidence in the
(e.g. WOM) purchase decision
Brand Familiarity-liking
Brand • Use satisfaction
awareness
loyalty Signal of substance/
commitment
Brand to be
considered
Brand
Brand
equity
loyalty
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22. Managing Brand Equity (2/2)
Brand Reason-to-buy
Brand
equity
loyalty Differentiate/
position Provides value to
Perceived
Brand
quality Price firm by
loyalty enhancing:
Channel member
• Efficiency and
interest effectiveness of
Extensions marketing programs
• Brand loyalty
Help process/ • Prices/margins
retrieve • Brand extensions
information • Trade leverage
Brand
Brand Reason-to-buy • Competitive
associations
loyalty advantage
Create positive
attitude/feelings
Extensions
Other
Brand
proprietary Competitive
loyalty
brand assets advantage
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23. Ten Guidelines for Building Strong Brands
1. Brand Identity 6. Brand System
2. Value Proposition 7. Brand Leverage
3. Brand Position 8. Tracking
4. Execution 9. Brand Responsibility
5. Consistency 10. Invest
Over Time
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24. Basic customer strategies
1. Customer acquisition
– Getting new customers by market development or market penetration
by capturing competitor‟s customers
2. Customer retention
– Keeping current customers satisfied via enhancing brand loyalty or
through superior service
3. Customer expansion
– Either getting customers to buy more of what they are currently buying
(increasing usage) or cross-selling other products (market potential via
increasing business with existing customers)
4. Customer deletion
– Dropping customers that are not profitable
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25. DISCUSSION ON ARTICLES
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26. Introduction to product and brand
management
Product and Brand Management (23C630)
Ch. 1 & Ch. 8
Giuseppe Pedeliento, University of Bergamo (Italy)
Visiting Aalto Uniersity School of Economics,
Department of Marketing

27. A Brand Report Card
Characteristic Examples
Delivers benefits desired by customers. Starbucks offers “coffee house
experience,” not just coffee beans, and
monitors bean selection and roasting to
preserve quality.
Stays relevant. Gillette continuously invests in major
product improvements (MACH3), while
using consistent slogan “The best a man
can get.”
Prices are based on value. P&G reduced operating costs and passed
on savings as “everyday low pricing,” thus
growing margins.
Well positioned relative to competitors. Saturn competes on excellent customer
service, Mercedes on product superiority.
Visa stresses being “everywhere you want
to be.”
Is consistent. Michelob tried several different
positionings and campaigns between 1970
and 1995, while watching sales slip.

28. A Brand Report Card
Characteristic Examples
The brand portfolio makes sense. The Gap has Gap, Banana Republic, and
Old Navy stores for different market
segments; BMW has the 3-, 5-, and 7-
series.
Marketing activities are coordinated. Coca-Cola uses ads, promotions, catalogs,
sponsorships, and interactive media.
What the brand means to customers is well Bic couldn‟t sell perfume in lighter-shaped
understood. bottles; Gillette uses different brand names
such as Oral-B for toothbrushes to avoid
this problem.
Is supported over the long run. Coors cut back promotional support in
favor of Coors Light and Zima, and lost
about 50% of its sales over a four-year
period.
Sources of brand equity are monitored. Disney studies revealed that its characters
were becoming “overexposed” and
sometimes used inappropriately. They cut
back on licensing and other promotional
activity as a result.

29. Key components in PM success (and
failure)

30. Propotitions
P1: The greater the number of meaningful boundary spanning activities (both inside and outside the organization) undertaken by
product managers, the greater their information power.
P2: Product managers’ information power is more dependent on (i.e. more highly correlated with) their outside boundary spanning
activities than their inside boundary spanning activities.
P3: The greater the information power of product mangers, the higher the interfunctional coordination of relevant functional
departments.
P4: The higher the level of interfunctional coordination among relevant functional departments, the greater the performance of
product managers.
P5: The higher the level of product managers‟ performance, the higher their personal job satisfaction.
P6: The higher the level of product managers‟ information power, the higher their personal job satisfaction.
P7: The more demanding product managers‟ boundary spanning activities, the higher their role conflict.
P8: The more demanding product managers‟ boundary spanning activities, the higher their role ambiguity.
P9: The higher product managers’ role conflict, the lower their job performance.
P10: The higher product managers’ role conflict, the lower their job satisfaction.
P11: The higher product managers’ role ambiguity, the lower their job performance.
P12: The higher product managers’ role ambiguity, the lower their job satisfaction.
P13: The higher product managers’ role conflict, the lower their information power.
P14: The higher product managers’ role ambiguity, the lower their information power.
P15: The greater the number of meaningful boundary spanning activities performed by product managers, the greater their
information power when their organization adopts a prospector or analyzer orientation.
P16: No matter what the level of meaningful boundary spanning activities performed by product managers, their information power is
lower when their organization adopts a defender orientation.
P17: The relationship between product managers‟ meaningful boundary spanning activities and their information power is
inconsistent when their organization adopts a reactor orientation.