Chapter 5

Product and Service Strategy and

Brand Management
OFFERING STRATEGY FRAMEWORK

 The profitability of an organization depends on its

product or service offering(s) and the strength of its
brand(s).

 Marketers face three offering-related strategy

decisions:

Modifying the Positioning Branding

Offering Mix Offerings Offerings
THE OFFERING CONCEPT

 An offering consists of the benefits or satisfaction

provided to target markets by an organization.
 It consists of the following elements:

Tangible
product/service
Related services (a physical entity)
Brand name(s)
(delivery, setup, etc.)

Warranties/
Packaging
Guarantees
Other Features
ADDITIONS TO THE OFFERING MIX

Single Entire
 Additions take the form of: Offering Line

 Questions to ask when considering new offerings:

How consistent is the new offering with

Consistency
existing offerings?

Does the organization have the resources to

Resources
introduce and sustain the offering?

Market Is there a viable market for the offering?

ADDITIONS TO THE OFFERING MIX

Market

 Consider whether a market exists.

 Consider whether the new offering has a relative

advantage over competitive offerings at a price
consumers are willing and able to pay.

 Consider if there is a distinct buyer group or segment

for which no present offering is satisfactory.
STAGES IN THE NEW-OFFERING
DEVELOPMENT PROCESS
Idea
Generation

Idea
Screening

Business Analysis

Market
Testing

Commercial-
ization
STAGES IN THE NEW-OFFERING
DEVELOPMENT PROCESS

Business Analysis

 Assess financial viability based on estimated:

Sales Costs Profits

 Forecasting sales is difficult for new offerings.

 Profitability analyses relate to:

Investment Break-even Payback Period – NO

NO NO
EXHIBIT 5.1: GENERAL FORM OF A
PRODUCT LIFE CYCLE
Sales

Introduction Growth Maturity-Saturation Decline

Time
POSITIONING

Positioning is the act of designing

an organization’s offering and
image so that it occupies a distinct
and valued place in the target
customer’s mind relative to
competitive offerings.
POSITIONING STRATEGIES

 Strategies include positioning by:

Attribute or Use or Product or

Benefit Application Brand User

Product or Price and

Competitors
Service Class Quality

 Marketers often combine two or more of these strategies when positioning a

product, service, or brand.
CRAFTING A POSITIONING STATEMENT

 Once the desired positioning has been

determined, marketers prepare a succinct,
written positioning statement.
 A positioning statement identifies:
• The target market and needs satisfied
• The product (service) class or category in
which the organization’s offering competes
• The offering’s unique attributes or benefits
CRAFTING A POSITIONING STATEMENT

A positioning statement takes this form:

 For (target market and need), the (product, service,

brand name) is a (product/service class or category)
that (statement of unique attributes or benefits provided).

 Example:

“For upscale American families who desire a

carefree driving experience, Volvo is a
premium-priced automobile that offers the
utmost in safety and dependability.”
BRAND AND BRAND EQUITY

Brand Brand Equity

A brand name is any Brand equity is the added

word, “device” (design, value a brand name
sound, shape, or color), bestows on a product or
or combination of these service beyond the
that are used to identify functional benefits
an offering and set it provided.
apart from competing
offerings.
EXHIBIT 5.3: CUSTOMER-BASED BRAND
EQUITY PYRAMID

Intense,
4. Relationships = What
active
about you and me?
Consumer loyalty
brand
resonance

3. Response = Consumer Consumer Positive, accessible

What about you? judgments feelings reactions

Strong, favorable,
2. Meaning = Brand Brand
and unique brand
What are you? performance imagery associations

1. Identity = Deep, broad

Who are you?
Brand salience brand awareness
Branding Strategy (Tactics?)
Multiproduct Branding – One name for all
the products in a product class (e.g., Dell,
Sony). Sub-branding (e.g., GE, auto cos. )
Multibranding – Giving each product a
distinct brand name (e.g., Proctor &
Gamble)
Private Branding – Manufacturer makes
product for a reseller (e.g., Sears and
Walmart contract with manufacturers)
BRAND GROWTH STRATEGIES

An organization introduces additional offerings with the same

Line brand in a product class that it currently serves (e.g., Campbell’s
Extension chunky style soup).

Brand Is the practice of using a current brand name to enter a

completely different product class (e.g., Honda snowblowers).
Extension
Involves the development of a new brand and often a new
New offering for a product class that has not been previously served
Brand by the organization (Proctor & Gamble ).

• Creates new brands for an existing product class that attracts

Fighting/ specific consumer segments not served by an organization’s
existing products/brands
Flanker Brand • Represents a defensive move to counteract competitors
• Heublein’s Smirnoff, Relska and Popov brands
EXHIBIT 5.4: BRAND GROWTH
STRATEGIES
Product/Service Class
Served by the Organization

New Product Class Existing Product Class

New Fighting/
New Brand Brand Flanking
Strategy Brand Strategy
Brand Name
Brand
Line
Existing Brand Extension
Extension Strategy
Strategy