Product management Flashcards
1
Q
Why do so many products fail?
A
- Market/marketing failure
- Timing failure
- Technical failure
- Organisational failure
- Environmental failure
2
Q
How can you generate ideas for a new product? What are potential sources…
a) Inside a company?
A
- R&D department employees
- Field sales force employees
- Customer service/service hotline employees
- Complaint information
- Suggestions from employees in general
3
Q
How can you generate ideas for a new product? What are potential sources…
a) Outside a company?
A
- Customers
- Competitors
- Market innovations in other markets
- Technological developments
- Experts
- Findings from trend and market research institutes, business consultants, and advertising agencies
4
Q
Timing of marketing entry strategies?
A
- Pioneer strategy
2. Follower strategy
5
Q
What are the benefits and problems of the Pioneer timing strategy?
A
Advantages
- Opportunity to achieve high market share (e.g. volume → cost advantage)
- Strong customer preferences for product (creating entry barriers)
Disadvantages
- Investment in market development
- Uncertainty about consumers’ acceptance
- Lack of experience regarding functionality
6
Q
What are potential motives for product differentiation?
A
- Additional market segments
- Addressing changed customer preferences
- Realizing higher prices
- Market entry barriers for competitors by means of occupying vacant market niches
- Using the positive image of an established brand for additional product variants (image transfer)
7
Q
Why do companies invest in brands?
Think about benefits for companies, retailers and consumers?
A
Companies benefits
- Differentiation from competition and signal of quality (i.e., reducing customer uncertainty)
- Formation of customer preferences and development of customer loyalty (e.g. predictable demand, brands are hard to copy)
- Creation of market entry barriers for competitors
- Establishment of price premium
- Development of a platform for launch of new products (using established brand name)
- Stronger support from supply chain partners
- Reduces costs/risks of marketing program
Retailers benefits
- Reduction of own sales risks
- Image transfer (from brand leader to intermediary)
- Reduction of service activities such as guidance for customers
Consumers benefits
- Point of reference – comfort, familiarity, confidence in decision
- Simplifying gathering of information and information processing (low-effort decision rule)
- Quality signal and reduction of risk
- Establishment of self-portrayal (expression of taste, group affiliation or social status)
- Intangible, added value to a product
8
Q
Benefits to consumer due to branding
A
- Point of reference – comfort, familiarity, confidence in decision
- Simplifying gathering of information and information processing (low-effort decision rule)
- Quality signal and reduction of risk
- Establishment of self-portrayal (expression of taste, group affiliation or social status)
- Intangible, added value to a product
9
Q
Benefits to companies due to branding
A
- Differentiation from competition and signal of quality (i.e., reducing customer uncertainty)
- Formation of customer preferences and development of customer loyalty (e.g. predictable demand, brands are hard to copy)
- Creation of market entry barriers for competitors
- Establishment of price premium
- Development of a platform for launch of new products (using established brand name)
- Stronger support from supply chain partners
- Reduces costs/risks of marketing program
10
Q
Benefits to retailers due to company branding
A
- Reduction of own sales risks
- Image transfer (from brand leader to intermediary)
- Reduction of service activities such as guidance for customers
11
Q
What are potential disadvantages of brand extension?
A
- Confuse consumers (“Which is the right one for me?”)
- Reduce strength of category-brand association
- Diffuse and dilute parent brand’s positioning and meaning
- Retailer resistance
- Cannibalize parent brand sales
- Extension failure can hurt parent brand image
12
Q
What is a product?
A
A product is a bundle of features that aim to create customer benefits
13
Q
Product types
A
A. Tangible goods a) Consumer goods 1. Consumables 2. Durables b) Industrial goods 1. Products 2. Plants 3. Systems 4. Original equipment B. Services a) consumption related 1. Continuously rendered services within the scope of a business relationship 2. Continuously rendered services without formal relationship 3. Occasionally rendered services within the scope of a business relationship 4. Occasionally rendered services without formal relationship b) investment related 1. Industrial services 2. Purely investment- related services
14
Q
3 aspects of product management
A
- Brand management
- Innovation management
- Management o established products
15
Q
Benefits of innovation to consumers and society
A
- New and improved products and services
- Reduced costs of existing products and services
- Private wealth and social welfare
- Longer, healthier lives
16
Q
Benefits of innovation to companies
A
- Surviving in the market/
necessity for growth - Increased productivity
- Satisfaction of consumer needs that are changing faster
- Reaction to shorter product life cycles
- Differentiation from competition
- Opportunity to pay higher wages (quality of employment)
- Higher market value
17
Q
Types of innovation
A
- Incremental
2. Radical
18
Q
Characteristics of incremental innovation
A
- Continuing improvements that are cumulatively very important (new products build on past products)
- Enhancements that keep a business competitive, such as new product features and service improvements
- Dominant form of innovation
19
Q
Characteristics of radical innovation
A
- Discontinuous changes (often result of significant R&D)
- May create new markets or render existing product obsolete
- Radicalness is relative
20
Q
Phases with innovation processes
A
- Generation and elaboration of ideas
- Concept definition
- Concept evaluation
- Market launch of new products
MANAGEMENT OF INNOVATION PROCESS
21
Q
How to generate ideas for innovation?
A
1) Observing consumers
2) Experimenting (if possible)
3) Integrating customers
4) Using formal creativity methods
22
Q
Formal creativity methods?
DRAW TABLE
A
Enforcement of the intuition
Systematic analytic procedure
SLIDE 42
23
Q
Describe the morphological box
Slide 43
A
- Broad definition of the problem
- Dividing the problem into components (parameter) that influence the solution of the problem.
- Searching for all known and possible characteristics for each component (values of parameters)
• Combining the parameter and its values into a matrix to create solutions.
• Ideal solution is selected depending on the measurements of company- internal criteria.
24
Q
Methods for elaboration of ideas?
A
- Conjoint analysis
2. Lead user approach
25
Explain conjoint analysis
1. Evaluation of products provides information about the significance of single attributes
2. Conclusions about the influence of modification of single attributes on perceived benefits
3. Quantification of the importance of single product attributes for customers
4. Identification of the willingness of customers to pay for the product improvement
26
Explain Lead user approach
Core definition of lead users:
1. Lead users face needs that will be general in a marketplace – but face them months or years before the bulk of that marketplace encounters them.
2. Lead users expect to benefit significantly by obtaining a solution to those needs.
Lead users often innovate to solve own needs at private expenses
27
Steps of Lead User approach
1. Indicators to determine lead users (e.g. trends)
2. Identify lead user groups
3. Develop product with the groups
4. Check for general acceptance
28
Concept evaluation (Innovation funnel)
1. Alternative product concepts
2. Rough selection
3. Marketability analysis
4. Economic feasibility analysis
5. Realisation
29
Market launch steps
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption
30
Draw the adoption curve and explain stages and definition of diffusion
Slide 60
Diffusion is “the spread of a new idea from its source of invention or creation to its ultimate users or adopters.”
```
Innovators (2.5%)
Early adopters (13.5%)
Early majority (34%)
Late majority (34%)
Laggards (16%)
```
31
What makes a product innovation successful?
1. Product attractive for consumers
2. Fast market penetration
3. High consumer penetration
4. Consumers have positive experience with product
5. Sustainable acceptance of product
6. High re-purchase rate
32
Customers accept innovations the earlier...
Customers accept innovations the earlier...
1. the higher the relative customer benefit (e.g. productivity,
convenience, fun, image),
2. the higher the compatibility to existing problem solutions, and the fit to existing life-style,
3. the lower the complexity and the higher the understandability,
4. the lower the risk (e.g. expenses, testability),
5. the easier it is to communicate the innovation, and the higher the availability.
33
Time-to-Takeoff meaning?
Duration of introductory stage = time between product introduction and takeoff
Takeoff: the new product breaks into rapid growth, associated with a huge jump in sales
34
Time-to-Takeoff is...
1. ... shorter in wealthier countries.
2. ... shorter in countries with higher education level and high media infrastructure.
3. ... shorter in countries with low uncertainty avoidance (cf. Hofstede).
4. ... shorter in a country when the product has already been introduced in other countries.
35
Choice waterfall versus sprinkler strategy:
Waterfall strategy seems more appropriate (e.g. in large countries first, then in small countries)
36
Decisions concerning product mix
```
A. EXPANDING PRODUCT MIX
1. Variation
2. Differentiation
3. Diversification
B. ESTABLISHING SYNERGIES WITHIN PRODUCT MIX
C. REDUCTION OF PRODUCT MIX
1. Elimination
```
37
What is product variation?
Product variation refers to modification of the characteristics and features of an already existing product without changing the core function of the product
Distinction between...
• ...product care (smaller, continuous modification) and
• ...product relaunch (modification on a larger scale)
38
What are the Variations that are made to a product?.
1. aesthetic properties (e.g., colour, form)
2. physical-functional properties (e.g., material, quality)
3. symbolic properties (e.g., brand image)
39
What is product differentiation?
Product differentiation refers to to the addition of new product variants to an already established product.
1. With product variation, the original product is modified and thus no longer present in the market.
2. With product differentiation, the original product continues to exist.
3. Results in an increased depth or, in some cases, increased width of
product mix
40
What are the types of product differentiation?
* Vertical product differentiation: if products variants of different quality are offered at different prices
* Horizontal product differentiation: if products variants with different functions but comparable quality and price levels are offered.
41
What is Vertical product differentiation?
if products variants of different quality are offered at different prices
42
What is horizontal product differentiation?
if products variants with different functions but comparable quality and price levels are offered.
43
What are the types of product diversification?
1. Horizontal
2. Vertical
3. Lateral
44
What are is horizontal diversification?
Integration of products at the same market level with the aim to offer new services to previous customers or new customer groups
45
What are is vertical diversification?
A supplier conducts activities in upstream or downstream stages of the value chain
46
What are is lateral diversification?
Venturing into totally new markets that have no connection whatsoever to the previous operations of the company
47
What is the aim of product diversification?
Diversification thus increases the “width” of the product mix
48
What happens during product diversification?
A company integrates products into its product mix that are not directly related to the products already available in the product portfolio.
49
What is a brand?
A brand is a “name, term, design, symbol, or any other feature that identifies one seller's good or
50
What are the elements of branding?
```
Branding
• Brand name
• Brand slogan
• Brand logo
• Packaging
• Product design
```
51
What does the brand need to be?
1. Memorable
2. Meaningful
3. Likeable
4. Transferable
5. Adaptable
6. Protectable
52
What are the types of brand resonance?
1. Points-of-parity:
• associations that are not
necessarily unique to the brand but may in fact shared with other brands
2. Points-of-difference: • associations that are
unique to the brand, strongly held, and favourably evaluated by consumers
53
What is points of parity?
associations that are not necessarily unique to the brand but may in fact shared with other brands
54
What is points of Points-of-difference?
associations that are unique to the brand, strongly held, and favourably evaluated by consumers
55
Brand reach elements
1. Geographical perspective
2. Vertical perspective
3. Cooperation
56
What is the brand reach in terms of geographical perspectives?
1. Local brand strategy: specific national market
2. Regional brand strategy: markets in geographic proximity
3. International brand strategy: several national markets (at least 2) 4. Global brand strategy: world wide brand
57
What is the vertical brand perspective?
• How visible is brand to customers of customers:
1) Ingredient branding: visible to end customer (e.g., Intel)
2) Processing branding: not visible to end customer
58
What is cooperation for brands?
Co-branding
59
• Characteristics of a clear brand positioning:
1. Fit to a company’s positioning
2. Supports clear differentiation from competitors
3. Long-term and stable focus
4. Subjectively perceived by customers
5. Focus on most important criteria of product from perspective of consumers (overload dilutes clear positioning)
60
What does brand positioning mean?
Positioning a brand means emphasizing the distinctive characteristics that make it different from its competitors and appealing to the public
61
What are the three levels of brand positioning?
1. Brand Core
2. Brand Benefits
3. Brand Personality
in a circle!
62
what is Theory of Animism?
People have an inevitable need to soul objects with human characteristics (Anthropomorphism)
• Example: people (nick)name their cars, talk to them
63
How to communicate a brand personality ? Three important advertising tactics
1. Celebrity Endorsers
2. User Imagery
Showing a typical user along with images of the types of activities they engage in while using the brand
3. Executional Factors
Factors going beyond the core message
to include “how” something is communicated
64
Brand architecture
I. Single branding II. Single umbrella branding
| III. Multiple umbrella branding
65
What are the advantages of Single branding strategy?
1. Targeting specific customer segments (e.g., clear positioning of one product/brand, clearly defined target group)
2. Reduced cannibalization effects
66
What are the disadvantages of Single branding strategy?
1. Costs (marketing budget goes into just one product)
2. Slow development of a brand image
3. Problem of finding new brand names
67
What are the advantages and disadvantages of Single branding strategy?
advantages
1. Targeting specific customer segments (e.g., clear positioning of one product/brand, clearly defined target group)
2. Reduced cannibalization effects
disadvantages
1. Costs (marketing budget goes into just one product)
2. Slow development of a brand image
3. Problem of finding new brand names
68
What are advantages of Single umbrella branding strategy?
1. Joint investments for products
2. Aiding introduction of new products
3. New products benefit from the good will transfer from the other products
69
What are disadvantages of Single umbrella branding strategy?
1. Dilution of brand positioning (e.g., clear positioning not easy, concentration of specific target groups is quite difficult)
2. Risk of negative halo effects (e.g., failure with one product harms umbrella brand)
70
What are advantages and disadvantages of Single umbrella branding strategy?
Advantages:
1. Joint investments for products
2. Aiding introduction of new products
3. New products benefit from the good will transfer from the other products
Disadvantages:
1. Dilution of brand positioning (e.g., clear positioning not easy, concentration of specific target groups is quite difficult)
2. Risk of negative halo effects (e.g., failure with one product harms umbrella brand)
71
What are advantages and disadvantages of Multiple umbrella branding strategy?
Advantages:
1. Opportunity of specific positioning for product lines
2. More than one product carries marketing budget
3. New launched products benefit from good will transfer from other products
4. “Brand family” allows to build complete strategic business area
Disadvantages:
1. Core of original brand limits launching of sub- or endorsed brands
2. Risk of stretching brand too much by launching products which are not within the philosophy of the original brand
3. Existing brand positioning have to be considered when new product introduced
72
What are advantages of Multiple umbrella branding strategy?
1. Opportunity of specific positioning for product lines
2. More than one product carries marketing budget
3. New launched products benefit from good will transfer from other products
4. “Brand family” allows to build complete strategic business area
73
What are disadvantages of Multiple umbrella branding strategy?
1. Core of original brand limits launching of sub- or endorsed brands
2. Risk of stretching brand too much by launching products which are not within the philosophy of the original brand
3. Existing brand positioning have to be considered when new product introduced
74
What are the two ways to extend brand?
1. product line extension
| 2. brand extension
75
What are the success factors for line extension?
1. Core brand is known
2. Core brand has a strong emotional and symbolic image
3. Extension is supported by communication and sales promotion
4. Extensions provides new markets
76
What are Success factors of brand extension?
1. Image familiarity between core brand and new product (credibility)
2. Brand is perceived as high quality brand
3. Core brand is not a prototype of a product category
