Marketing

Strategy &
Management
© Diane M. Phillips
 Chapter 8

Product strategies: Creating

the value proposition
 Learning objectives
1. Create an argument for why a product is much more than
just a collection of attributes.
2. Describe at least two methods by which the marketing
team can create product objectives.
3. Differentiate between design thinking and design for the
environment.
4. Describe the process by which a new market can be
entered, as well as the specific case in which a new non-
domestic market can be entered.
5. Describe why brand equity is such an important concept
for brand management.

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 What is a product?
• Product – a collection of attributes, beliefs, benefits,
emotions and cultural meanings that deliver the value
proposition.
• Product attribute – a characteristic or feature of the
product.
 100% wool sweater
 Electric engine in a new car
 Onsite training for new computer equipment
• Product benefit – the consequence or outcome of the
attribute.
 Warmth and comfort
 Zero CO2 emissions, quiet
 A staff that is well trained and competent with the new
computer systems
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Ted Talk : [Link]
v=2t13Rq4oc7A

• Teller is very enthusiastic about ‘killing’ a lot of his team’s projects. Why?
• ‘Sometimes shifting your perspective is more powerful than being smart’ –
what does Teller mean by this?
PRODUCT FAILURE- In class activity

• [Link]

• 30 minutes for every group to work on why products fail

article and discuss in class the reasons for failure.
• Divide in group and start working!!!!
• Prepare a slide each group and present in class
• Group 1- reason 1
• Group 2- reason 2 and so on!
 New product development
a. Product Life Cycle – describes the ‘life’ of a product, as it
is developed and introduced into the market, then grows,
matures and declines.

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 New product development
a. Product Life Cycle (cont.) – strategy implications:
– Introduction – this is a period of high risk because of the high rate of
new product failures. Marketers must create demand in the market.
– Growth – competitors start to enter because demand and sales are
starting to accelerate. Marketers must expand distribution and
convince consumers to prefer their brand over that of the
competition.
– Maturity – the product is distributed widely and competition is fierce.
Marketers typically differentiate their product with small changes or
improvements in product attributes or service. Differentiation may
also occur through advertising, packaging, or a unique appeal to
niche segments. Price competition intensifies.
– Decline – demand declines, margins shrink and competitors start to
exit the market. Marketers concentrate their resources and may try
to hasten their competitors’ exit from the market.

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 New product development

b. Design thinking – a
process by which the
organization solves
problems by attempting to
optimize the positive impact
on people.
– Keeps the needs of
individuals top-of-mind in
any solution that is
created.

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 New product development
c. Design for the Environment (DfE) – a set of processes and
procedures for a new product design that ensures that
environmental considerations are emphasized at each step of the
product’s life.
– The point is to bake environmental considerations into each step
of the new product development process.

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 New product development
d. Sustainability-Related Products – it is important to use clear and
precise language when describing the product and its sustainability
credentials.
– Greenwashing – a frequently-used marketing technique that
overemphasizes a product’s sustainability credentials.
– Problem terms:
 recyclable
 eco-friendly, natural, green
 carbon neutral, net zero

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 New product development
e. Life Cycle Assessment (LCA) – a decision-making tool that
assesses the environmental impact at each step of the product’s life,
from extraction of raw materials all the way through to the end of the
product’s life.
– Identifies where environmental impact occurs so that it can be
addressed.

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Product-related objectives and strategy

• For each element of the marketing mix, a set of

objectives, strategies and tactics need to be created.
• Product-related objectives – the overall goals that
need to be achieved for the product. Must:
 Be competitive.
 Address how the product can help the organization
achieve a competitive advantage.

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Product-related objectives and strategy

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 Product-related objectives and strategy

• Product-related objectives –
where do we get inspiration?
• One way: the Ansoff Matrix (also
called the Product/Market
Growth Matrix)

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 Product-related objectives and strategy

• Product-related objectives
– where do we get
inspiration?
• Another way: consumer-
focused product-related
objectives.

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 Product-related objectives and strategy

• Product strategy – a consideration of the internal and external

forces on the consumer, competitors and the company’s own
operations to identify new ways to create and deliver the value
proposition.
• Product management – a set of deliberate actions that are taken to
manage the organization’s portfolio of products.
• Product line – a group of related products that exist under one
brand name.
 Pepsi, Diet Pepsi, Wild Cherry Pepsi, Caffeine-Pepsi, etc.
• Product mix – an organization’s collection of product lines.

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 Product-related objectives and strategy
a. New Product Innovation is necessary to consistently deliver the
value proposition and to keep the competition at bay.
1) Types of Innovations:
a) Continuous Innovation
 A modification to an existing product; does not require
extensive learning from the customer.
b) Dynamically Continuous Innovation
 A pronounced modification to an existing product; requires a
modest amount of learning.
c) Discontinuous Innovation
 Creates major changes in the way people live.

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 Product-related objectives and strategy
a. Types of Innovations (cont) –
2) Diffusion of Innovation Model - describes the process by which
a new innovation is adopted by the target market over time.
– Innovators
– Early Adopters
– Early Majority
– Late Majority
– Laggards

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 Product-related objectives and strategy
a. Types of Innovations (cont) –
2) Diffusion of Innovation Model (cont):
– Innovators – these consumers are comfortable with risk
and uncertainty; they are daring, venturesome and often
cosmopolitan. These consumers are the gatekeepers for a
new innovation’s entry and acceptance into a market.
– Early Adopters – somewhat more socially integrated into
their social networks, where they often behave as opinion
leaders within their groups. Early adopters are respected
within their social network and, to maintain that status,
make careful decisions and recommendations.

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 Product-related objectives and strategy
a. Types of Innovations (cont) –
2) Diffusion of Innovation Model (cont):
– Early Majority – frequently interact with their social networks, but are
unlikely to take on a leadership role. They are very deliberate in their
decision-making.
– Late Majority – quite cautious and somewhat distrustful. Although they may
be convinced of the benefits of a new innovation, they will likely not adopt
until they experience social pressure to do so.
– Laggards – last consumers to adopt an innovation. These individuals are
very traditional, cautious and somewhat suspicious of innovations and
change.
2) Diffusion of Innovation Model (cont):
– At each stage, consumers can be targeted in a unique way, such that the
product offering and messaging resonate with their specific needs.
– Crossing the Chasm – that point on the curve between the early adopters
and the early majority.
 The curve moves from increasing at an increasing rate to increasing at a
decreasing rate.
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 The product moves from
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 Product-related objectives and strategy

b. Branding and Brand Management –

– A brand is a combination of symbols and meanings associated with
the organization’s value proposition.
o Brand equity – the value of the brand, over and above that of
the generic version of the product.
 Nike shoes vs. no-name running shoes.
o Iconic brand – one that connects the meanings associated with
the brand to important cultural values and a person’s cultural
identity.
 Lego

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 Product-related objectives and strategy
b. Branding and Brand Management –
1) Building brand identity
a) Brand identity – the more tangible elements of the brand, such as
the brand logo, name, symbols, shape, colours, etc.
b) Unique selling proposition (USP) – part of the brand identity, it is
the unique product benefit that is different from what the competition
can provide.
c) Organizational brand identity – here, the organization is the brand.
It reveals a genuine set of values by which the organization operates.
c. Branding and Brand Management –
2) Brand management – efforts to build brand equity
a) Brand recognition – the process of selecting symbols, colours,
logos, and other factors that clearly identify your organization’s brand
as unique from all others.
b) Brand loyalty – a consumer’s preference for purchasing one brand
vs. another.
c) Brand building – strengthening the brand competitively over the
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 Product-related objectives and strategy
b. Branding and Brand Management –
2) Market entry strategies –
a) First, erect barriers to entry
b) Second, organize for market entry:
 leverage existing assets
 reconfigure value chains
 establish niches
c) Third, 4 options:

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 Product-related objectives and strategy
• Export – an export merchant receives delivery of products and
arranges for delivery to retail outlets or directly to consumers.
• Contractual agreements – forging a contractual agreement with a
stakeholder. One type of contractual agreement, a license, conveys
the rights to a proprietary process, the brand identity, operations, and
other brand or product-specific materials and procedures.
• Joint ventures –forging a partnership with another entity that already
has a presence in the new market. The new entrant invests its own
expertise, financial capital, and even personnel to the effort.
• Direct investment – committing a very significant investment in the
new market. The new entrant is likely to acquire or build office space
as well as production facilities, distribution channels, or warehouse
space.

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 Chapter summary
• A product is much more than just a collection of attributes
that delivers value to the customer.
• Product objectives need to be competitive in nature; they
should address the essential question of how the product
can help the organization achieve a competitive
advantage in the marketplace.
• Design Thinking is a process by which the organization
attempts to solve problems by attempting to optimize the
positive impact on people. Design for the Environment
focuses on the positive impact towards the planet.
• The 4 market entry options range from low capital
investment and risk (exporting) to high capital investment
and risk (direct investment).
• Brand equity is the overall value of the brand; it is the
reason why consumers pay for a product.
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