Why do producers heed the cues of the marketplace
The music and entertainment industries provide many examples of personal and organizational branding. Likewise, bands, orchestras, and other artistic groups typically cultivate an organizational or group brand.
Faith branding is a variant of this brand strategy, which treats religious figures and organizations as brands seeking to increase their following. Mission-driven organizations such the Girl Scouts of America, the Sierra Club, the National Rifle Association among millions of others pursue organizational branding to expand their membership, resources, and impact.
The developing fields of place branding and nation branding work on the assumption that places compete with other places to win over people, investment, tourism, economic development, and other resources. While place branding may focus on any given geographic area or destination, nation branding aims to measure, build, and manage the reputation of countries.
The city-state Singapore is an early, successful example of nation branding. Co-branding is an arrangement in which two established brands collaborate to offer a single product or service that carries both brand names. In these relationships, generally both parties contribute something of value to the new offering that neither would have been able to achieve independently.
Effective co-branding builds on the complementary strengths of the existing brands. It can also allow each brand an entry point into markets in which they would not otherwise be credible players. Co-branding is a common brand-building strategy, but it can present difficulties. There is always risk around how well the market will receive new offerings, and sometimes, despite the best-laid plans, co-branded offerings fall flat. Also, these arrangements often involve complex legal agreements that are difficult to implement.
Co-branding relationships may be unevenly matched, with the partners having different visions for their collaboration, placing different priority on the importance of the co-branded venture, or one partner holding significantly more power than the other in determining how they work together.
Because co-branding impacts the existing brands, the partners may struggle with how to protect their current brands while introducing something new and possibly risky. Brand licensing is the process of leasing or renting the right to use a brand in association with a product or set of products for a defined period and within a defined market, geography, or territory. The licensee obtains a competitive advantage in this arrangement, while the licensor obtains inexpensive access to the market in question.
Licensing can be extremely lucrative for the owner of the brand, as other organizations pay for permission to produce products carrying a licensed name. The Walt Disney Company was an early pioneer in brand licensing, and it remains a leader in this area with its wildly popular entertainment and toy brands: Star Wars, Disney Princesses, Toy Story, Mickey Mouse, and so on.
A company creates a line extension when it introduces a new variety of offering within the same product category. To illustrate with the food industry, a company might add new flavors, package sizes, nutritional content, or products containing special additives in line extensions.
Line extensions aim to provide more variety and hopefully capture more of the market within a given category. More than half of all new products introduced each year are line extensions.
While the products have distinct differences, they are in the same product category. A brand extension moves an existing brand name into a new product category, with a new or somehow modified product. In this scenario, a company uses the strength of an established product to launch a product in a different category, hoping the popularity of the original brand will increase receptivity of the new product. An example of a brand extension is the offering of Jell-O pudding pops in addition to the original product, Jell-O gelatin.
This strategy increases awareness of the brand name and increases profitability from offerings in more than one product category. Due to the established success of the parent brand, consumers will have instant recognition of the product name and be more likely to try the new line extension. A company has to be good at both developing new products and managing them in the face of changing tastes, technologies, and competition. Products generally go through a life cycle with predictable sales and profits.
Marketers use the product life cycle to follow this progression and identify strategies to influence it. This progression is shown in the graph, below. The product life cycle can be a useful tool in planning for the life of the product, but it has a number of limitations. Not all products follow a smooth and predictable growth path.
Some products are tied to specific business cycles or have seasonal factors that impact growth. For example, enrollment in higher education tracks closely with economic trends.
When there is an economic downturn, more people lose jobs and enroll in college to improve their job prospects. When the economy improves and more people are fully employed, college enrollments drop. This does not necessarily mean that education is in decline, only that it is in a down cycle.
Furthermore, evidence suggests that the PLC framework holds true for industry segments but not necessarily for individual brands or projects, which are likely to experience greater variability. Of course, changes in other elements of the marketing mix can also affect the performance of the product during its life cycle.
Change in the competitive situation during each of these stages may have a much greater impact on the marketing approach than the PLC itself. An effective promotional program or a dramatic lowering of price may improve the sales picture in the decline period, at least temporarily. Usually the improvements brought about by non-product tactics are relatively short-lived, and basic alterations to product offerings provide longer benefits.
Whether one accepts the S-shaped curve as a valid sales pattern or as a pattern that holds only for some products but not for others , the PLC concept can still be very useful. It offers a framework for dealing systematically with product marketing issues and activities. The marketer needs to be aware of the generalizations that apply to a given product as it moves through the various stages.
There are some common marketing considerations associated with each stage of the PLC. These considerations cannot be used as a formula to guarantee success, but they can function as guidelines for thinking about budget, objectives, strategies, tactics, and potential opportunities and threats. Keep in mind that we will discuss the new-product development process next, so it is not covered here.
Think of the market introduction stage as the product launch. This phase of the PLC requires a significant marketing budget. The market is not yet aware of the product or its benefits. Introducing a product involves convincing consumers that they have a problem or need which the new offering can uniquely address.
You want this! To achieve these goals, often a product launch includes promotional elements such as a new Web site or significant update to the existing site , a press release and press campaign, and a social media campaign.
There is also a need to invest in the development of the distribution channels and related marketing support. For a B2B product, this often requires training the sales force and developing sales tools and materials for direct and personal selling. In a B2C market, it might include training and incentivizing retail partners to stock and promote the product. Pricing strategies in the introduction phase are generally set fairly high, as there are fewer competitors in the market.
This is often offset by early discounts and promotional pricing. It is worth noting that the launch will look different depending on how new the product is. If the product is a completely new innovation that the market has not seen before, then there is a need to both educate the market about the new offering and build awareness of it.
In when Google launched Google Glass—an optical head-mounted computer display—it had not only to get the word out about the product but also help prospective buyers understand what it was and how it might be used. Google initially targeted tech-savvy audiences most interested in novelty and innovation more about them later when we discuss diffusion of innovation. Tech bloggers and insiders blogged and tweeted about their Google Glass adventures, and word-of-mouth sharing about the new product spread rapidly.
In that case Tesla offered a new line of home products from a company that had previously only offered automobiles. Breaking into new product categories and markets is challenging even for a well-regarded company like Tesla. One other consideration is the maturity of the product. The reason for brand management is relatively simple. Through creating a lasting impression and meaningful relationship with users, organizations can retain customers and create brand loyalty.
Brand loyalty simply means that customers, when making a purchase to fulfill a given need, will default to their brand of choice.
Brand of choice is something every organization wants to be, as the cost of maintaining loyal customers is much lower than the cost of acquiring new ones. Loyal customers are cheaper, and happy customers are likely to talk about the company in a positive light. As a result, building brand is a key to success in an enormous number of industries. There are many approaches to this, both traditional and modern, and understanding both the strategy and the potential tactical channels available is integral to making smart branding decisions:.
Social media has changed the landscape for branding, and at this point encompasses a critical and necessary series of channels to leverage when pursuing any of the above branding strategies. Distributing messaging and displaying the core values of the organization is both easier and more difficult than ever. In just a click of a button, organizations can make a huge impression on the general public. However, the digital landscape is noisy; being heard can be extremely challenging. Along similar lines is social proofing.
Companies like Amazon offer consumers the ability to rate a product or service, which ultimately establishes a brand quality level many others consumers will trust and see as more objective.
Social proofing can have an enormous impact on the perception of an organizations brand. Brand Touch-point Wheel : As a supplement to the various strategies listed above, these touch-points indicate where the tactics of these strategies will come into play. Understanding where the organization will be in direct communication with a prospective consumer is imperative to ensuring messaging is clean, consistent, and clear across the board.
Packaging refers to the physical appearance of a product when a consumer sees it, and labels are an informative component of packaging. With the increased importance placed on self-service marketing, the role of packaging is becoming quite significant. For example, in a typical supermarket a shopper passes about items per minute, or one item every tenth of a second. Thus, the only way to get some consumers to notice the product is through displays, shelf hangers, tear-off coupon blocks, other point-of-purchase devices, and, last but not least, effective packages.
Considering the importance placed on the package, it is not surprising that a great deal of research is spent on motivational research, color testing, psychological manipulation, and so forth, in order to ascertain how the majority of consumers will react to a new package. Based on the results of this research, past experience, and the current and anticipated decisions of competitors, the marketer will initially determine the primary role of the package relative to the product.
Should it include quality, safety, distinction, affordability, convenience, or aesthetic beauty? Various Packaging Designs, including labeling : Packaging refers to the physical appearance of a product when a consumer sees it, and labels are an informative component of packaging. A label is a carrier of information about the product. The attached label provides customers with information to aid their purchase decision or help improve the experience of using the product.
Labels can include:. Many types of symbols for package labeling are nationally and internationally standardized. For consumer packaging, symbols exist for product certifications, trademarks, and proof of purchase.
Some requirements and symbols exist to communicate aspects of consumer use and safety. For example, the estimated sign notes conformance to EU weights and measures accuracy regulations. For example, a law label is a legally required tag or label on new items describing the fabric and filling regulating the United States mattress, upholstery, and stuffed article industry. Laws requiring these tags were passed in the United States to inform consumers as to whether the stuffed article they were buying contained new or recycled materials.
The recycling logo,, needed to be displayed on the label. The Fair Packaging and Labeling Act FPLA is a law that applies to labels on many consumer products that states the products identity, the company that manufactures it, and the net quantity of contents.
Labels Indicating Recycled Material : Laws were passed in the United States to inform consumers as to whether the stuffed articles they were buying contained new or recycled materials. Privacy Policy. Skip to main content. Product and Pricing Strategies. Quality control on an automobile assembly line is built into the system.
If the left front wheel is missing, the person next in line, whose task is to fasten the lug bolts, will stop the line. Repeat business gets jeopardized. No matter how well trained or motivated they might be, people make mistakes, forget, commit indiscretions, and at times are uncongenial—hence the search for alternatives to dependence on people.
Previously in HBR, I have suggested a variety of ways to reduce people dependence in the so-called service industries. I called it the industrialization of service, which means substituting hard, soft, or hybrid technologies for totally people-intensive activities:.
The managerial revolution. Industrializing helps control quality and cut costs. Instead of depending on people to work better, industrialization redesigns the work so that people work differently. Thus, the same modes of managerial rationality are applied to service—the production, creation, and delivery of largely intangible products—that were first applied to production of goods in the nineteenth century. In successive waves, the mechanical harvester, the sewing machine, and then the automobile epitomized the genius of that century.
Each was rationally designed to become an assembled rather than a constructed machine, a machine that depended not on the idiosyncratic artistry of a single craftsman but on simple, standardized tasks performed on routine specifications by unskilled workers. This required detailed managerial planning to ensure proper design, manufacture, and assembly of interchangeable parts so that the right number of people would be at the right places at the right times to do the right simple jobs in the right ways.
Then, with massive output, distribution, and aftermarket training and service, managers had to create and maintain systems to justify the massive output. That is why the quality of intangibles tends to be less reliable than it might be, costs higher than they should be, and customer satisfaction lower than it need be.
While I have referred to the enormous progress that has in recent years been made on these matters, there is one characteristic of intangible products that requires special attention for holding customers.
Unique to intangible products is the fact that the customer is seldom aware of being served well. Such products include certain banking services, cleaning services, freight hauling, energy management, maintenance services, telephones, and the like.
Consider an international banking relationship, an insurance relationship, an industrial cleaning relationship.
Only then do they become aware of what they bargained for; only on dissatisfaction do they dwell. Satisfaction is, as it should be, mute. Its existence is affirmed only by its absence. That makes them terribly vulnerable to the blandishments of competitive sellers. A competitor can always structure a more interesting corporate financing deal, always propose a more imaginative insurance program, always find dust on top of the framed picture in the office, always cite small visible failures that imply big hidden ones.
Vendors must regularly reinstate the promises that were made to land the customer. Most customers seldom recall for long what kind of life insurance package they bought, often forgetting as well the name of both underwriter and agent.
To be reminded a year later via a premium notice often brings to mind the contrast between the loving attention of courtship and the cold reality of marriage. No wonder the lapse rate in personal life insurance is so high! Once a relationship is cemented, the seller has created equity. He has a customer. To help keep the customer, the seller must regularly enhance the equity in that relationship lest it decline and become jeopardized by competitors.
There are innumerable ways to do that strengthening, and some of these can be systematized, or industrialized. Periodic letters or phone calls that remind the customer of how well things are going cost little and are surprisingly powerful equity maintainers.
Newsletters or regular visits suggesting new, better, or augmented product features are useful. Even nonbusiness socializing has its value—as is affirmed by corporations struggling in recent years with the IRS about the deductibility of hunting lodges, yachts, clubs, and spouses attending conferences and customer meetings. It bears repeating that all products have elements of tangibility and intangibility. Companies that sell tangible products invariably promise more than the tangible products themselves.
Indeed, enormous efforts often focus on the enhancement of the intangibles—promises of bountiful benefits conferred rather than on features offered. To the buyer of photographic film, Kodak promises with unremitting emphasis the satisfactions of enduring remembrance, of memories clearly preserved.
Kodak says almost nothing about the superior luminescence of its pictures. The product is thus remembrance, not film or pictures. You are registered. Access to your account will be opened after verification and publication of the question. Ok Close. Add photo Send. Question sent to expert.
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