Product Strategies for the Asia Pacific

Asia-Pacific Marketing Federation Certified Professional Marketer

Copyright Marketing Institute of Singapore
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Outline

Product Hierarchy Product-Mix Decisions Product-Line Strategies New product development in ASPAC Positioning & Repositioning Brand decisions
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Introduction
Product (or service) is the main
element of the marketing mix Therefore, need to determine the Product Strategies before deciding on the remaining marketing mix

7-Levels of Product Hierarchy

Product needto satisfy a need e.g. feet protection Product classa family of products having similar

function e.g. all shoes Product linea group of products with closely related functions e.g. sports shoes Product typeproducts within a line having similar form e.g. basket-ball shoes Branda name representing a product or line e.g. Nike Item (Stock Keeping Unit)a unit item e.g. one pair of Nike basket-ball shoe
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Product-Mix Decisions
Decisions on the product mix (the number of product lines and items in each line) that the company may offer A single product

Multiple products

Most firms started off as a single-product company

e.g. Creative Technology markets sound cards as
well as MP3 players

A systems of products
options

e.g. Nikon sells camera, lenses, filters & other

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Product-Line strategy How many product lines should we

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

Product-Line strategy (contd)

How many product items in each line? Example: Both Gardenia and Bonjour

launched new flavors in January 1999 to nibble away at each others market share of a loaf estimated to be worth about $80 million
(Source: ST, Home, Jan29/99)

Expanding the Product Line 1.Product line extension: add an item to

the existing product line

2.Product category extension: add a new

item or line of items for a company e.g.

P&G have Vidal Sassoon, Head & Shoulders, Rejoice, and Panthene in the same category

Many FMCG companies introduced various sizes of the same product e.g.mini-packs for travelers, extra-large size for hospital

Expanding the Product Line (contd)

3. Brand extension: Product category

extension that uses an existing brand name e.g.

Cerebos introduced Brands Essence of Chicken with TangKwei targeting women Nestle extended its Bear Brand condensed milk in Thailand by introducing Bear Brand with Honey
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More on Product Line Extension

Downward stretch by introducing lower range of

the products e.g.

In 1989 the Shangri-La, a chain of deluxe hotels and

Upward stretch by entering the high end of the

market e.g.
Infiniti
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resorts in Asia established the Traders Hotels, a sister brand to deliver high value, mid-range, quality accommodation to the business traveler Mercedes introduced the baby Merz to cater to the upper class mid-sized range of the market

Toyota introduced the Lexus and Nissan introduced the

Product Line Extension (contd)

Two-way stretch by filling the whole

line e.g.

Toyota has the Starlet at the lower end;

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

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New Product Strategy New products are critical to survival New-product development (NPD) is
NPD process having top-management support

essential for companies seeking growth

It should be an on-going, well organized

What is a new product? (see next slide)

a product that it is unfamiliar in any way

From a firm's perspective, a new product is

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1. Products new to the world; usually

Definition of Product Newness

revolutionary products resulting from product innovation e.g When Creative Technology first introduced the Sound-blaster When disposable cameras were first introduced When Seiko introduced the Seiko Kinetic Relay, a watch that can go into suspended animation 13

Definition of Product Newness (contd)

2. Products new to the firm Improvements to existing products e.g.

In 1960 Kao introduced shampoo liquid and in 1970 introduced Kao Merit shampoo (antidandruff) In 1965 Kao introduced the Kao Tender hair conditioner

Additions to existing lines e.g.

Costs reductions and re-positionings

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

AP (August 22, 2000)

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Product Convergence
First coined by Creatives Sim W H who was referring to the marriage between the PC and home entertainment Creative Multi-Speaker Surround (CMSS) uses seven audio channels
Source: Computer Times, 1997
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Positioning
Positioning refers to placing a brand in
that part of the market where it will have a favorable reception compared to competing brands Subash Jain A products position is the place the position occupies in consumers minds relative to competing products.

Philip Kotler
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Generic Positioning Strategies

Our product is unique
(tallest hotel)

e.g. Raffles Hotel (oldest hotel); Westin Hotel

Our product is different

e.g. Seng Choon eggs (low in cholesterol)

Listerine (kills germs) Amex Blue credit card (6-month rate of
15.9% vs the market rate of 24%)

Our product is similar

e.g. Thai fragrant rice

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Approaches to Positioning
By attributes
By benefits
e.g. Singapore Airlines (first class comfort) e.g. Citibank Credit Card (7/24 availability)

By price/quality e.g. Proton By usage or application e.g.100Plus (fluid replenishment in sports) By users e.g. Johnson Baby Shampoo; J&J Affinity Shampoo (hair conditioner for women) By product class By competitors e.g. Avis against Hertz

e.g. Camay soap (with bath oilsnot just soap)

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Product Positioning Using Perceptual & Preference Maps

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

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Positioning Statement
For [a target segment], the [concept] is [the primary claim] because [it is the single most important factor].
Example: For Seng Choon eggs, the low cholesterol level is the only healthy alternative because it is

safe for frequent consumption

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Example of a 2D Perceptual Map for Laptop

Brand A

Performance

Brand B

Appearance

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Repositioning
Why reposition? Competitors position next to you Consumer preferences changed New consumer preference cluster Original mistake

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Repositioning (contd)
Repositioning among existing customers
e.g. Cerebos repositioned BRANDS from a
traditional therapeutic and recuperative tonic to one for preventative health maintenance APB repositioned Tiger Beer as a beer for all time

Repositioning among new users

Repositioning for new uses

cooking

BRANDS essence of chicken for students Repositioning BRANDS as a base for double-boil
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Product-Overlap Strategy
This strategy refers to a situation in which a company decides to compete against its own brand by using: Competing brands

Private labeling OEM

e.g. Gillette Atra, Sensor, Mach 3

e.g. Sin Sin Chilli Sauce, Watson Vitamins

e.g. IBM selling magneto-resistance (MR) heads to
OEM disk drive developers/manufacturers
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Product-Elimination Strategy When a products performance is falling

short of expectations and continued support is no longer justified, its time to pull it out of the marketplace How?

Harvesting, line-simplification, total-line

divestment

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Value-Marketing Strategy
Value-marketing strategy means delivering real
product performance based on the following promises

Example:

Quality strategy Customer-service Time-based

Dell cuts the duration from order to delivery of most

of its products to the minimum
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Brands
A rose by any name smells as sweet. True
or false? Would you go vacationing on Hog Island? Why are Coca-Cola, McDonalds and Kentucky Fried Chicken (KFC) successful? Do you think Maikenji would be half as successful?

Maikenji restaurant in Badaling, north of Beijing

combines the Chinese Characters used in the names for McDonalds and KFC and offers a menu similar to KFC located 100 metres away (AP 11,Jul2001) 28

Brands (continued)
Buildings age and become dilapidated. Machines wear out. Cars rust. But what lives on are brands.
Sir Hector Laing United Biscuits, U.K.
Source: The economist, Dec 24, 1988

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What is a brand?
Six levels of meaning: Attributes e.g. High resale value Benefits e.g. Safety Values e.g. Brand loyalty Culture e.g. organized and efficient Personality e.g. serious Type of users e.g. by occupation
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1.No brand identity

Alternative Brand Strategies

2.Private brands

Small firms with unknown brands e.g. small tailoring outfits Retailers with established brand names e.g. NTUC Fairprice Family name e.g. This Fashion
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3.Corporate brands

Alternative Brand Strategies (contd)

4. Product line extension

5. Specific product 6. Combination

Create cost advantage e.g. Novenas collection of an extensive range of furniture at reasonable price Individual brand e.g In addition to the Novena brand, Novena Holdings also carry the Castilla brand of Italian designed furniture e.g. Novena Holdings Novena Collection, Dickson Beech Collection and the White Collection; Seikos Alba and Pulsar

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The Branding Process

From commodity to product

From product to brand From brand to experience
e.g. Singapore Airlines
e.g. air travel

From experience to the heart

e.g. A Great Way to Fly
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e.g. Romance in the air

Branding on the Web

Profile of Gen-N How to harness the Internet for brandbuilding?

By rewarding brand loyalty and updating your

site etc.

Decision-influence factor

The issue of trust in a brand

Conventional branding => image Online branding => customer experience

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

Old Brands Strategy

Old brands survive due to emotional bond
with the consumer For slow moving brands either revive it with marketing money or kill it Growing interest in old brands because brand names carry value that is getting more expensive and risky to create When re-promoting old brands, do not ignore younger consumers
Source: Selling, Fortune, April 28, 1986
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