BUSINESS

MANAGEMENT
BY:
MARY JUNE ESPAÑOLA
ANDREA JONA DEVARAS
KYLE NICOLE DEMINGOY
ROBIE FAILAGO
 CHAPTER 4: Product Strategy
PRODUCT
“For the poor majority, the downscale consumers, the
issue is not product quality. It is simply product. It is not
quality of life that matters for them. What matters is
simply life. Survival.”

-DR. EDUARDO ROBERTO

AUTHOR, COLUMNIST, PROFESSOR AND
MARKETING, RESEARCH GURU
 A. PRODUCT
 Target market has been discussed in chapter two while consumer needs and
wants have already been discussed in chapter one. An additional concept
that marketers and product development specialists must understand is the
hierarchy-of-needs espoused by Abraham Maslow. Maslow contends that
the primary motivation of people is subsidized into a five five-stage
hierarchy with each stage offering a different level of satisfaction than the
former. The lower levels are needs that fulfill basic quality of life like food,
shelter and security while the higher levels are needs that are aspirational in
nature like being socially accepted (social) or being recognized (ego).
Exhibit 4-1 shows the Maslow model and is loosely applied here to the
shampoo market:

 a low-priced brand may satisfy a physiological need of just keeping hair clean.
 Procter and Gamble’s Ivory being mild may satisfy the safety need of those
who cannot use other kinds of shampoo because they have sensitive hair or
skin.
 Head and Shoulders anti-dandruff shampoo may satisfy a social need of
avoiding embarrassing situations in a group setting.
 Kerastase special care shampoo may satisfy an ego need of being able to use a
branded product.
 Alterna Terna, at US$60 for an 8.5 oz bottle, is one of the most expensive
shampoos that promises beautiful soft hair inspired from enzyme therapy may
satisfy self-actualization where one can achieve perfect hair.
The key, therefore, is to understand that consumers have different
levels of needs, and each segment (needs) of the market may be an
opportunity for the firm to launch new products and dominate
 3 TYPES OF PRODUCTS
Basically, there are three types of products, which can be distinguished via consumption and tangibility. These are:
1. Durables – which have a long interval between repeat purchases because of the long-lasting nature of the product.
Some examples are:
• Floor polishers like Wilson and GE.
• Cars like Mitsubishi and Nissan.
• TV sets like Panasonic and Samsung.
2. Non-durables – which have stronger repeat purchases because products are consumable . Examples are:
• Detergents like Surf and Pride
• Processed meats like Pampanga’s Best and CDO
• Snacks like Boy Bawang and Voice Biscuits
3. Services – which are essentially intangible because there are no physical products involved. Examples are as follows:
• Auto service centers such as Ambassador Inmogo or Zafra Motors
• Beauty parlors like David’s Salon or Reyes Haircutters
• Training services provided by Mansmith and Fielders, Inc. or the Corporate Achievers Institute (Coach)
Since consumer satisfaction is evaluated in terms of benefits expected minus
costs incurred (Murphy and Enis, 1986), these costs should be conceptualized
on two independent dimensions wherein products can further be distinguished.

1. Effort – which is the amount of money, time, and energy the buyer is willing to spend to
purchase a given product. It is an objective measurement of the value the consumer places on
the product. Since there is an expectation of future value, there is also risk that the product will
not deliver the benefits sought.

2. Risk – this is the buyer's subjective feeling about the consequences of making a purchasing
mistake.
By combining products using effort and risk, we end up with four categories:

1. Convenience products
2. Preference products
3. Shopping products
4. Specialty products
Exhibit 4-2: Four categories of product according to customer’s effort and risk `

 Convenience products are the lowest risk and lowest

effort products where either none or very small
decision-making is made by target consumers before
buying the products. Consumers will not spend a lot of
time or money in buying these products. There is also
no perceived high levels of risk in making a decision.
There are two types of convenience products:
1. Staple goods such as rice, sugar, and other commodities,
and
2. Impulse goods such as candies, and snack food.
 Preference goods, consumers have specific preferences for brands or suppliers but are
willing to make substitutions when necessary, such as during stock-out situations. With
increasing product parity, companies should consciously be moving their products into the
preference products category.
 The distinction between convenience products and preference products is mainly the
perceived risk by the consumer. Branding and advertising efforts, which aim to build brand
loyalty, are usually responsible for this perception. The strategy in marketing preference
goods is acknowledge the risk of consumers when buying the product, and then assuring
the buyer that the risk can be minimized by buying your brand. For instance:
• Known brands like Colgate, Close-up or Hapee are perceived to be less risky than buying unknown brands,
which may contain dangerous ingredients and may end up hurting the consumer’s gums and teeth.
• Serving cheap beer instead of San Miguel beer in a party may lead to the host being ridiculed by his guests.
 Shopping products are products that consumers feel are worth the time and
effort to compare with other competing products. Examples are provided
below:
• Consumer products like bathroom tiles and appliances usually entail some form of comparison
with alternatives.
• Consumer services like life insurance and housing rental.
• Industrial shopping services like the accounting and audit services offered by Ernst and Young
(SGV) or Punongbayan & Araullo.
 Specialty products are unique, customized products which have their own niches.
There are times when specialty products do not have any substitutes since consumers
really want the specialty product and are even willing to make a special purchasing
effort to acquire it.
• Painting done by artists Cesar Legaspi and Fernando Amorsolo (specialty product)
• Market-driving strategy and business model innovation training and consulting of Mansmith and
Fielders,Inc. (specialty services).
 THREE LEVELS OF PRODUCT
 The formal products is the physical or tangible product; augmented products are the
“extras” built-in to the formal product; and the core product is the generic benefit
that each product gives.

 Exhibit 4-3: Levels of Product

Exhibit 4-4: Customer-oriented Product Framework
 “Change Gear” is salesmanship technique that highlights the major capabilities of a
product and dwarfs the lesser differentiated features. This technique is used in the hope
that the customer may be convinced of the advantages of the products’ major
capabilities.

 To be able to build sustainable businesses, products developed must match customer

purchase decision criteria (also called needs and wants) at all times. This gives rise to
two methods of satisfying customer’s needs and wants:
• Problem Solving Method – identifies and satisfies an actual or existing need and want of a
customer.
• Creating Dissatisfaction Method – introduces new ways of doing things to the customers
which would convert customer’s existing satisfaction level to a dissatisfaction level.
 QUALITY
 Profit Impact on Marketing Strategies (PIMS) studies have shown that companies with quality
scores in the top third out-earn those in the bottom third by a 2-to-1 margin PIMS co-author Robert
Buzzell and Frederick Wiersema (Successful Share-BuildingStrategies, Harvard Business Review,
Jan-Feb 1981) found that compares showing market share gains typically outperformed their
competitors in three areas: new product activity, relative product quality, and marketing
expenditures, specifically:
1. “Share-gaining companies typically developed and added more new products to their line.”
2. “Companies that increased their product QUALITY relative to competitors enjoyed greater share gains than
those whose quality ratings remained constant or declined.”
3. “Companies that increased their marketing expenditures faster than the rate of market growth typically
achieved share gains. Increases in sales force expenditures were effective in producing share gains for both
industrial and consumer markets. Increased advertising expenditures produced share gains mainly for
consumer-goods companies. Increased sales promotion expenditures were effective in producing share
gains for all kinds companies.”
4. “Companies that cut their prices more deeply than their competitors did not achieve significant market
share gains, contrary to expectation. Presumably enough rivals met the price cuts partly, and others offered
other values to the buyers, so that buyers did not switch as much as to the prise cutter.”
 Exhibit 4-5 presents the summary of a research paper entitled “Quality and Customer Satisfaction”
delivered by the marketing professor Dr. Eduardo Roberto of the Asian Institute of Management
during the 23rd National Marketing Conference sponsored by the Philippine Marketing Association
in May 1992. In his research paper, Dr. Roberto outlined ten in lessons in a set of quality
propositions.

 Exhibit 4-5: Ten learning lessons about “Quality and Customer Satisfaction”
1. Before a disappointing experience, consumers take a broad general concept of quality. It is stated
almost like the statistician’s “null hypothesis” – “In a quality product, nothing must go wrong.
2. It is when something goes wrong that consumers are able to go into the specific quality elements.
3. It is also when consumers are able to compare that they are able to say something about specific
quality elements.
4. With the consumer, there is such a thing as the right amount of quality. More is not necessarily
better. Neither is lesser. Just right is the right amount.
5. When consumers do go into the specific quality elements, they often need to be probed in order that
their concept of quality becomes truly specific.
6. To the consumer, there is such a thing as the right kind of quality. Each kind defines a need segment
that must be satisfied.
7. It is the product’s unexpected quality characteristic that impresses the consumer the most. The more
unexpected that quality characteristic is, the deeper the consumer’s favorable impression and
satisfaction.
8. There is a certain kind of customer satisfaction that they may be called lower order because it
results in, at most, a retrial. Once another product offers something a little better than what it provides,
the consumer is ready to switch immediately.
9. There is a second kind of customer satisfaction that is longer lasting. It is a satisfaction that brings
the consumer to a committed usage of the product. It results in consumer loyalty.
10. For the poor majority, the downscale consumers, the issue in targeting marketing perfection is not
product quality. It is simply product. It is not quality of life that matters to them. What matters is simply
life. Survival.
COST OF QUALITY AND NON-QUALITY

 What is the cost of quality and non-quality? Various research, including

those of PIMS, have indicated that product quality has an indirect beneficial
impact on cost. This is because of the positive impact of quality on market
share and negative impact of market share on direct cost. Quality and market
shares, therefore, are complementary. Quality improvements may be
obtained through improved technology, which need not result in cost
increase and may, in fact, result on cost savings. The higher quality product
offered at the same price to the consumers will then be a plus factor for firms
in increasing market shares.
LOOK-ALIKE PRODUCTS
 Technology enables products to be imitated and counterfeited more easily nowadays. Levi’s jeans,
Mongol pencils, Microsoft computer programs, YALE LOCK SETS, Coleman water containers,
Philips light bulbs, Casio G-shocks, Prada bags, Rolex watches, Sharp calculators and Fundador
brandy are some of the products that enjoy wide brand recall and market acceptability. This makes
them primary targets of unscrupulous manufacturers selling look-like products.

ISO
 An important development in quality is the ISO family of standards, which was formulated by the
Geneva-based International Organization for Standardization (ISO). It is a series of quality
management and assurance standards which define the elements required to achieved a quality
system regardless of the product manufactured or the technology used. By adopting ISO standards,
a compay is able to establish its reliability as a supplier with a quality system that conforms to
international standards. This becomes more relevant with the global trend to increasingly
deregulate foreign trade as can be seen in the formation of European Economic Community (EEC)
among European nations; North American Free Trade Area (NAFTA) among the United States,
Canada, and Mexico; and the Asian Free Trade (AFTA) among countries in the ASEAN region in
the early 1990s.
NEW PRODUCT OPPURTUNITY
 What product should be launched in the marketplace? Let’s review the basic
framework for internally generated marketing growth opportunities.

Exhibit 4-6: Internally-generated growth opportunities

Note that the product could come either as a totally new product in an existing
market (Product Development) or as an existing product in an existing market (Market
Penetration) or as product which may or may not need some modification to enter a new
market (Market Development).
 Market development concentrates on new market segments. An example is RFM Corporation prioritizing the food
service (hotel, restaurants, and other institutions) market starting 1985 in addition to their existing consumer
market. Quite obviously, selling to industrial markets like the food service industry is different from selling to
consumers because of the differences in purchase decision criteria like quickness of service, assured availability,
and profitability, among others.

 EXHIBIT 4-7: Comparing sales form existing and new products

Existing Products in Existing

Market (Market Penetration):
Existing Products in New
Market (Market Development)

Sub-total from Existing Products

Add: New Products
 
Total from All Products

A list of “assumptions’ as to why new products are needed is given in the next section. This list will help
marketers in forecasting future sales and profit.
NEW PRODUCT DEVELOPMENT
 Two sets of needs must be met in new product development. One is internal
which looks at the company’s objectives and resources, while the other is
external which looks at the customer’s needs and wants.
• PLDT launched the Tele-Tipid prepaid cards for their landlines not only to expand
their base of users to the broad C and D income classes by encouraging them to
avail of a telephone at a relatively low cost but also to shield the company from
potential collection problems in the future.
• Bounty Agro officially launched Chooks To Go oven baked chicken in 2008,
anticipating the reduction of import tariff of dresses chicken from 30% in 2007 to
only 5% in2010, which may attract lower cost countries like Thailand to ship their
dressed chicken to the Philippines. This innovative move turned out to be a
winning value-adding formula as they are to give consumers delicious rotisserie
chicken at lower prices but with superior profit for Bounty Agro because they are
the manufacturer/producer of chicken.
 Exhibit 4-8: Factors to consider in new product development
Internal External
 

 Satisfying a company’s need deals with fulfilling the company’s

vision and mission, doing better performance than competition,
ensuring availability of financial resources, and accomplishing target
financial performance such as return on investment (ROI), return on
equity (ROE), and return on sales (ROS). This is the push portion of
new product development because new products are introduced to
satisfy the company’s need s by identifying relevant customer needs
and wants.
 New Product Development
Program
A new product development program is needed for three purposes:
1. To effectively respond to changing customer’s needs and wants;
2. To effectively respond or preempt competitors and other threats fast; and
3. To effectively respond to the company’s expansion plan.

Just look at products that exist today that did not exist five years ago. Would you have
been able to guess back then that they would ever exist? What about new products that
would be launched five years from now?

Marketing strategy formulation must begin outside of the firm so that the business is
constantly focused on marketing opportunities. In order to do this, environmental analysis
and assumptions that can predict demand should be done as defined in exhibit 4-9.
Exhibit 4-9: Environmental analysis and assumptions for product development
1. Customer lifestyle
 The trend toward smaller families , working women, reduction of the number of household
maids, social networking, late marriages, healthier routines and other lifestyle changes have very
impact on consumer buying behavior. Home delivery of food products for instance, has seen
unprecedented growth and is expected to outgrow the dine-in segment.
 
2. Macro and micro economics
 Consumers are guided by the real income they have as well as their expected future income. A
good harvest by farmers will increase their disposable income which commensurately increases
their purchasing ability for products and services. It is also noteworthy that there is a trend
towards having dual income among employees in the middle lower class income bracket, which
popularized the office four-gives or “hulugan” payment system. This got accelerated with entry
of several network marketing companies in the mid-1990s.
3. Raw materials costs, availability and limitations
 Non-biodegradable materials will suffer increasing environmentalist moves against
them. For instance, plastic bottles take 600 years to decompose on landfill while
Styrofoam takes 2,000 years. Another example is the oil crisis in the early 1970s, which
changed the design of automobiles making it more efficient in terms of gasoline
consumption.

4. Competition 
 A look at the newspaper and TV advertisements would immediately tell you the extent of
the rivalry between Globe and Smart in the telecom industry. They are always trying to
be better than the other.
 
 Malls also keep upgrading their facilities to avoid what happened to Escolta which was
once the center of commerce during its old glory days. Cubao has its Gateway Mall
while Greenhills has upgraded and rebranded Virra Mall (now V-mall) and Promenade.
5. Technology
 The internet has changed the way people buy. For example, books and electronic items can be
bought from Amazon.com and even music can now be ordered and downloaded online via iTunes.
Even how people read books and other publications has changed with the entry of Kindle and Ipad.

6. Social forces
 The government program on the use condoms to fight against worldwide spread of AIDS, which
started in late 1992, drew strong protests from the Catholic Church. The church feels this may
permanently influence the sexual behavior (or misbehavior) of some people, although the church’s
stand against contraception did not affect the sales of condom as much.

7. Government
 One of the first things President Fidel V. Ramos did in his first 100 days office in 1992 was to
deregulate foreign exchange. This attracted foreign money to flow in due to our higher interest
rates for money placement. This, however, lead to the appreciation of the peso which exporters
strongly complained about as this decreased their earnings.
NEW PRODUCT DEVELOPMENT
PROCESS
 A seven-step process (Taylor, 1984) for developing new products is shown in
exhibit 4-10. The process may be revised and adapted to the unique needs of each
company.
 A product “champion” is needed for each product or group of products. A
product champion is a person who initiates or revives a new product concept,
who believes in it and sees to it that the new product development reaches a
successful and profitable commercialization stage within the least possible time.
Ideally, a product champion should not only be a good analyzer but should also
be good at getting things done. This will reduce the likelihood of either analyzing
a project too much or rushing into the market without careful evaluation.
Exhibit 4-10: New product development process
Process criteria

Idea Generation

Idea Screening

Business Analysis

Prototype Development

Market Test

Full Commercialization
Product Criteria
 Product criteria define the kinds of products a firm will be selling, or won’t be
selling. This, in turn, defines the business in the future. As any strategy should
match a company’s relative strengths to customer’s needs and wants, developing
product criteria is no different. The marketer should identify their relevant strengths
to customer’s needs and wants, developing the product criteria. By “relevant”, we
are referring to the key factors for success or the limited number of functions,
activities, factors, or even bottlenecks that must be managed well to outperform
competition.
 Product criteria can be divided into “Must” and “Wants”. The “Must” criteria are
mandatory or non-negotiable while the “Wants” criteria are desirable but negotiable.
It is dangerous to choose products without any product criteria.
Exhibit 4-11: Product criteria for a consumer durable direct
selling company
MUST:
1. Potential for market dominance
2. At least 50% gross margins
3. Around P10,000 to P30,000 in end user pricking
WANTS
4. Unique benefits
5. Good product quality
6. Minimal after sales service
7. A menu of potential product criteria is presented in exhibit 4-12.
 Exhibit 4-12: Menu of Possible product criteria
1. Corporate image fit 1. Low break-even point
2. Product standardization 2. Payback period
3. Product line compatibility 3. Market share potential
4. Stage in product life cycle 4. Sales volume potential
5. Unique benefits 5. Sales trends for the last few years
6. Few substitutes 6. Repetitive needs / purchase
7. Affordable development cost 7. No sales seasonality
8. Fast development period 8. Distribution compatibility
9. Production capability and capacity 9. Existing management / marketing skills
10. Raw materials availability and affordability 10. No government restriction
11. Minimal after sales service requirements 11. No legal restrictions
12. Affordable capital requirements
13. New product in
Profitability criteria
% need not be limited to manufacturing companies. Retailers and direct selling
companies, for instance, can come up with new product criteria to guide them whether they should accept
the new products being offered to them by manufacturers and importers. Some suggestions are given in
exhibits 4-13and 4-14.
Exhibit 4-13: Possible product criteria for retail stores

1. Product Uniqueness
 Untapped demand obviously brings in additional sales. The unique features may
convince consumers to upgrade their present standard. Extraderm offered retail stores
the opportunity to increase total sales revenues by way of its unique therapeutic features
versus regular astringent as well as better margins for the store.

2. Good Value
 No “junk” items shall be carried that may affect store image. Pricing must be reasonable
vis-à-vis quality. SM has the reputation of carrying products that must affordable to the
middle class.
3. Advertising Support 
 Consumers will not purchase new products unless they are aware of their existence. No
products will be purchased unless the supplier can show relevant support levels for
creating awareness and merchandising. Multinational marketers like J&J, Colgate-
Palmolive and P&G’s business models involve offering superior products and promoting
the benefits by way of heavy advertising expenditures.

4. Profitability
 Different product lines have different margins. Monde’s Lucky Me is considered a traffic
builder because supermarkets only make about 3-5% in profit, while its biscuits line is
considered a profit generator because supermarkets make about 8-10% from them.
5. Introductory Discounts or Allowances
 New products may not move as fast as older products and deny the store faster turnover
and better return on shelf space. Zuellig Pharma offers an extended 90-day term their
drugstores for any new products launched in the market. SM expects an introductory
discount for a few months on all new products while major retailers now charge a listing
fee per product model.

6. Company Reputation
 Some companies enjoy a reputation for marketing winners. The probability of buying
from reputable suppliers decreases the risk of having non-moving items. Multinational
companies Nestle, Del Monte, L’Oreal, Procter and Gamble, Unilever, Johnson and
Johnson and San Miguel Corporation are some of the companies looked up to by retailer
not only in marketing products but also in partnering with the stores in building their
businesses. 
 Exhibit 4-14: Possible product criteria for a direct selling company
1. Not widely distributed at the retail stores
 A good reason to buy directly from a salesman is its non-
availability in retail stores. Nikken promotes its magnet-based
products that are hardly available in the stores.
2. Not widely advertised in mass media
 A well-advertised product increases the chance of a prospect to
inquire from other sources instead of buying from the direct
salesman. Tupperware sells unique plastic containers that are not
promoted in the mass media by other companies.
3. Attractive profit margins
 High income potential is offered to independent salesman (called
dealers or associates). The margins of the product should be large
enough to compensate for the efforts of the salesman as well as
leave a decent profit for the company. NU Skin and Amway offer
a total commission of over 50%of the retail price for their sales
leaders.
 
4. Affordable pricing
 Cash prices should be reasonably attractive for consumers to buy.
The price must be comparable with what is available in the retail
stores, feature for feature. Avon offers prices that are competitive
against other brands available in the retail stores.
5. Requires educational / demonstration effort to sell
 Products that require educational or demonstration effort enable
the salesman to explain the differentiated features of the product
they are selling. Noah Ion Cell Cleanse gives free foot detox to
prospects and customers while explaining the need to remove
excesses from food and vices like smoking.
6. Almost everyone can use and use continuously
 The selling of consumables that can be used by almost everybody
can capture a market for repeat purchases assuming customers are
happy with the product, service, as well as price. Sara Lee offers
a range of products like cosmetics, undergarments and clothes
that enable their dealers to continue doing business with their
clients.
Idea Generation
 Lamoiyan Corporation came about when its owner’s former company was faced with an empty
plant, potential retrenchment of employees and an empty pocket, when major multinational customers
shifted from the aluminum tubes they have been supplying since 1987 to the more convenient
laminated plastic toothpaste tubes in 1997. Left with a huge inventory of aluminum tubes, Cecilio
Pedro (the owner) chose to go into toothpaste manufacturing and thus was born Hapee toothpaste.
 Ideas need not always come from crisis situations. Lamoiyan’s relative success in the Philippine
market was exceptional. Luck and timing also played a major role. There must be systematic ways to
regularly get new product ideas aside from using a company’s suggestion box to attract ideas from any
employee. A creative source of new product ideas is available by simply talking to customers and the
sales force often, most especially about problems both groups are encountering with existing products.
Other opportunities can come from sourcing new inventions or by attending trade shows in other
countries. Marketers can also get new product ideas by analyzing and anticipating changes in industry,
technology, or environment. From a marketing standpoint, new ideas can be sourced by combining
answers to the questions “who” (target market), “what” (value proposition), “how and where”
(business system). The following marketing techniques can also be used to get new products ideas:
 1. Mission Statement
2. Focus Group Discussions
3. Competitive Products Segmentation
4. Perceptual Mapping
5. Items by Use

Mission Statement
 A mission statement answers the question “what business are we in?” The mission
Statement of any company will dictate what type of products or services they will offer.
But instead of stating the products such as “we sell air conditioners”, it is the benefits
of the products that are mentioned.

For example:
Carrier includes in their definition of business: “Ensuring Comfort and Peace of Mind Everywhere
A round the World”. This will not limit them in promoting only air conditioners but they may also
promote heaters in cold countries like the United States.
Exhibit 4-15: Examples of new product ideas from mission statement

 PRODUCT • Moving people and cargo

• Auto repair   
 BUSINESS  POSSIBLE NEW
• Water purifiers • Providing safety and PRODUCTS
comfortable drive • Automotive spare parts,

• Photocopier  
• Seatbelts, Car fire
• Crayons
• Consumer healthy lifestyle extinguishers
 
• Office productivity • Air purifiers, Foot detox, No-
• Bus oil cookware, Food
• Inspiring creative self- supplements, Exercisers
expression
• Computers, Facsimile
machines, paper shredders,
PABX System
 A three-dimensional mission structure identifying customer
benefit, customer groups, and substitutes is suggested to define
possible mission statement products. An example is shown in
exhibit 4-16 for travel product.

 Exhibit 4-16: Three-dimensional structure for a mission statement

 Note that each of these dimensional segments can grow at

different rates with varying degrees of attractive for new product
development. This can also identify and create new markets with
new products currently not available in the market.
Focus Group Discussions (FGDs)

 Originally based on clinical psychology and altered for use in marketing, this
popular qualitative research method involves gathering together several small
groups of six to twelve people who all have some similar characteristics of
interest to the marketer. Usually, the FGD panellists are existing customers or
potential customers of a products category.
 Idea Screening
 A process used to evaluate innovative product ideas, strategies and marketing
trends.

 Business analysis is a research discipline of identifying business needs and determining

solutions to business problems.
 A target market is a group of consumers or organizations most likely to buy a company's
products or services. Because those buyers are likely to want or need a company's offerings, it
makes the most sense for the company to focus its marketing efforts on reaching them.
 A communication plan describes what an organization wants to accomplish with the
information it sends out. It lists objectives, the tools used to produce communications and
intended recipients. The plan describes what information will be shared and how it will be
distributed.
 Financial analysis is the process of evaluating businesses, projects, budgets,
and other finance-related transactions to determine their performance and
suitability
 The marketing mix is a crucial tool to help understand what the product or
service can offer and how to plan for a successful product offering. The
marketing mix is most commonly executed through the 4 P's of marketing:
Price, Product, Promotion, and Place.
 Prototype testing is the process of testing the original model on which a
physical product will be based. ... By testing a physical product with users
now, you can avoid having to make expensive changes down the line while
ensuring that the end results meet the user's goals and desires
 Conjoint analysis' is a survey-based statistical technique used in
market research that helps determine how people value different
attributes (feature, function, benefits) that make up an individual
product or service.
 A product-brief is one of the most important elements in a product
design project. The product-brief is a plan and a compass – it defines
the product's goals and attributes, and shows you where to go. The
product-brief has a great impact on the product's quality and character,
and the project's efficiency.
 Product life-cycle management is the succession of strategies by
business management as a product goes through its life-cycle. The
conditions in which a product is sold changes over time and must be
managed as it moves through its succession of stage.
 Primary demand is the demand by the final user (consumer) for the
product. ... Derived demand only exists because there is a primary demand
from the consumer.
 The test marketing is the most reliable method of sales forecasting wherein
the product is launched in a few selected cities/town to check the response of
customers towards the product.
 Commercialization is the process of bringing new products or services to
market. The broader act of commercialization entails production,
distribution, marketing, sales, customer support, and other key functions
critical to achieving the commercial success of the new product or service.
 Branding
“Branding is the process of differentiating
yourself from the competition. The ability of
the company to compete and to deliver
sustainable, profitable growth largely depends
on the power of its brand.”
- Dondi Gomez
Products can be copied by the competitors. A brand,
however cannot.
 Why Do Brand Exist?
1. Identification
2. Protection
3. Positioning
Note: The brand becomes the consumer’ s simplifier of
choice.
 Criteria for Choosing a Brand Name
1. Distinctive
2. Word Association
3. Legal Requirements
4. Memorability
5. Pronounciability
6. Limitations
 PRODUCT

Existing New

New Multi Brand New Innovation

Brand
Existing Line Extension Franchise Extension
 Since market segments usually overlap. It is difficult to position in different
segments independently. The overlap may result from a group of customers
who shift between segments or from media or channels of distribution that
impact both segment.
 This multi-brand strategy may also be considered products where consumers
may not have as much consumer loyalty.
 Using line or existing brands for existing products would be logic extensional
for products with various models or options.
 For a new company’s product, marketers have to decide whether to use a
totally new brand (new innovation) or use an existing brand (brand franchise
extension). Both have advantages and disadvantages.
 Using an existing popular brand may make it easier to enter a market in
the short term, especially with an increasingly crowded and expensive
media. It can also own a key word or benefit in the consumer’s mind.
Care must, however, be exercised in brand franchise extensions,
otherwise, it may dilute the parent brand.
 David Arnold (1992) provided four criteria for successful franchise
extension of brands:
1. The brand essence (or identity) is still applicable.
2. The brand property
3. The brand variants could be promoted and distributed together
4. When repertoires (brand switching) are a hallmark of consumer behavior in
the category.
Using a new brand on the other hand, when done successfully, in
introducing a new product may earn it place in a product category.
No Meaning Brand Names

 Decades ago there was much lesser competition so it was easier and
cheaper to launch products and be recognized. No-meaning names
became known because they represented something in the consumer
mind. The situation in today’s “crowded communication” market is
totally different
Brand Concept Management

 A brand concept is not the same as a product concept. Product concept refers
to a new product idea while a brand concept reflects a general meaning or
associated with the brand.

 A brand concept is also not the same as positioning. Positioning is

implemented to build up and support the brand concept. While a brand
concept is like a strategic, long term management plan it enables the brand to
change its positioning.
 Brand concept must be chosen by the firm based on the consumer needs and
wants because it represents values to the consumers. The three possible
brand concepts are:
1. Functional needs are those motivate the search for products that solve or
prevent consumption-related problems.
2. Symbolic needs involve desires for products that fulfill internally generated
needs for self-enhancement, role position, group membership, or ego-
identification. Some ways to establish a symbolic brand concept are to
charge a high price, and to limit distribution or availability.
3. Experiential needs are desires for products that provide
sensory pleasure, variety, and/or cognitive stimulation.
Experiential needs fulfill internally generated needs for
stimulation and/or variety and therefore, encourage frequent
consumption.
4. Brands may offer a mixture of functional, symbolic and
experiential benefits. However, positioning strategies will not
only be difficult with different concepts, but multiple concepts
will create more competition for the brand. This is because
the brand concept guides positioning decisions, which
determine the set competing brands.
 Brand Equity

 Brand equity refers to the net worth of a brand.

 Brand equity, like a balance sheet, has a set of brand assets as well as
brand liabilities.
 The idea is that brands have a value of their own and are not solely
“owned” by the company but are shared with consumers through an on-
going relationship.
 The brand equity topic started attracting significant attention because
thousands of companies being bought or sold worldwide since the 1980s.
 A brand is said to have brand equity vis-à-vis other brands when
consumers, who are the ultimate decision makers, have stronger
preference towards the brand. This is especially true under any
of several circumstances;
1. When the firm is continuously able to charge a premium price for the
brand without affecting the desired volume;
2. When consistently higher sales volume is achieved because of
target consumer confidence in the brand;
3. When relatively lesser marketing expenditures such as display and
sales promotion cost, can be spent vis-à-vis competition to create
demand for new products under the brand.
 PACKAGING
“Gusto ko yan, maganda ang
design.”
-Calel Gosingtan Grade 3, 9yrs. Old (2001)
 Packaging and brand are “partners” of every product. Packages of product are
like clothes that can flatter one’s figure or make one look fat.
 Packaging is also the silent “salesman” in the store.
 Outstanding and unique packaging is always stand out in the marketplace.
Packaging also plays a key role in attracting consumers to buy food and
impulse items.
 The Marketing Science Institute discovered that so long as there is no risk of
overusing a product, larger package sizes actually encourage greater usage
for each occasion of use.
 Packages can be divided into unit packs and outer packs. Unit packs are like
silent salesman in the store while the outer packs protect the unit packs.
Criteria for Choosing Packaging Materials

1. Protection
2. Display Value
3. Cost
4. Convenience
5. Size
 Performance Requirements

Stage Performance Requirements

1. In the factory Convenience: Will the pack be
convenient for filling, sealing,
stamping and making?
Limitations: Will the pack destroy or
alter product quality and
specifications?
2. In transit Protection: Is the product breakable or
flammable?
Space: Can it fit a 20- or 40-footer shipping
container comfortably and efficiently in the case
of export products or will it have a lot of unused
space?

3. In the store Protection: Can someone saboteurs destroy

your product and risk the safety of the product?
Limitations: Can dealer shelves accommodate
package size and display this security measure
well?

4. In the home Convenience: Is package easy to open? Is it

easy to use?
Limitations: Should the package be destroyed
after use or can it be re-used?
 Packaging Brief
To : Head of Art Department
From : Brand Manager of “888”
Re :Packaging Brief for “888” Liver Spread

I. Overall Objective: To design and develop a label for “888” liver

spread.

II. II. Rationale:

1. “888” liver spread will be launched in the market in five months to complement our existing can
meat line composed of can sausages, meatloaf, and corned beef.
2. Since we are currently undergoing redesign of our existing labels for other “888” products due to
our planned adoption of a new “888” logo recommended by our advertising agency, we must
ensure consistency in image and projection for all products to increase display value.

III. Primary Target Competition: RENO liver spread hold about 70% of the market. Other
more visible low-priced liver spread products are Rio, Rica, and Honey while the more
expensive ones locally are Swifts, Purefoods, Argentina and Lady’s Choice.

IV. Primary Target Market: Middle income broad C and lower income D.

V. Performance Objectives: The label design should meet the following requirements:
1. Display Value – Since canned liver spreads are usually sold thru supermarkets, groceries and sari-sari
store, we want to capture the immediate attention of consumers especially since we are new in the
market. Reinforcement will come from our point-of- purchase shelf- takers designed to create
interest and a good reason to buy by emphasizing “Kaisarap ng Lasa, Kaigaan sa Bulsa”.
2. It is observed that most labels of canned liver spread do not show product in use. We suggest a
sample design to include product in-use for distinction and consistency with our labels, which show
our products in use.
3. The size of the label is 21 cms. In length x 3 cms. In width.
4. To help target consumers stretch their food budget, various one-color food recipes using “888” liver
spread will be printed at the back of our label during the initial six months of launch.
5. Text of labels such as details of ingredients, weight, and manufacturer’s name and address as
required by the Bureau of Foods and Drugs, is attached for your layout.
VI. Timetable: We expect to see at least three recommendations, side by side with our competition, in 30
days time. As usual, our final choice or choices will be validated by our consumer panel.
I. Overall Objective: Describes the result expected such as designing label for a new product or
improving existing packaging.
II. Rationale: Discusses the background of the project.
III. Primary Target Competition: Identifies the principal competition, as well as other competition
for reference.
IV. Primary Target Market: Defines the expected or most logical volume of the product.
V. Performance Objectives: Outlines a priority list of packaging or attributes. Details unlit pack
or the outer pack, considering usage in the factory, in transit, in the retail level, in the
customer’s location. May include the image or emotional feelings that customers would
associate with the product.
VI. Timetable: Defines when product is needed for evaluation and estimated launch date.
Label Development Process

 Before labels are finally recommended for approval, rough

designs are submitted first. This is to ensure more
alternatives and better choices before final designs are
given. Designs that are accepted by an approving
authority, usually the chief marketing officer, are then
referred to a consumer panel for validation.
 “Proofs” or actual printed samples of the label are then
submitted to printing suppliers after final artworks are accepted.
 Accepted proofs are signed by the company, usually by the head
of the art department after consultation with the brand manager
and sometimes, up to the level of the chief marketing officer.
Final Design
Profiling
Delivery and Quality Check
Initial Design
Consumer Test
Final Design
Profiling
Delivery and Quality
Check
Managing Products Lines
"Product in a portfolio are like a threads of woven intricately
in a fabric to form a design. The quality and selection of each
will determine the strength and beauty of the fabric"
 Johnlu Koa
Founder, The French Baker
 Each major product or product line carried by a company can be
treated either as a separate company or as a profit center.

• For instance; Jollibee owns Chowking Chinese fast food, Greenwich

pizza, and is co owner of the Caffe Ti Amo coffee franchise in the
Philippines. It also owns the majority stakes in Yonghe King in Shanghai,
Hing Zhuang Yuan in Beijing and San Pin Wang noodle restaurant in
Nanning ang Liuzhou in Southern China.
 Jollibee can plan according to the performance and position of
each company or (product) in the market place. For instance,
sales of Greenwich might be affected more during economically
challenging times due to its higher prices. They can launch new
products other than pizza that are more in line with peak lunch
and dinner time instead of the snack time pizza, while being
consistent with their brand identity. Two of the most popular
frameworks for managing product lines or portfolio are the
Boston Consulting Group (BCG) grid and the General Electric
(GE) matrix.
Boston Consulting Group Grid
 Introduced by Bruce Henderson in the mid 1960s, the Boston Consulting Group
model uses two key success factors in any business to plot the competitive position
of products in their industries . These are Market Growth rates and Relative
Market. Shares, which when combined, will result into a four quadrant matrix
characterized by their net cash usage or contribution to their company. To identify
a company's position within the industry, circles are used to represent each profit
center or Strategic Business Unit (SBU).
 Exhibit 4-39 Boston Consulting Group Grid

 The BGC model gives weight to a competing brand's position in the market. Brands,
therefore, can be characterized as market leaders, challengers, or followers.
 A market leader's Relative Market Share ( RMS) is computed
by dividing the leader's market share with the market
challenger's market share. A non-market leader's market share
by the market leader's market share.
 The higher the RMS, the more dominant the company.
 In the absence of a high RMS, a low RMS means that the
company is vulnerable to market challengers. Having a RMS
0.1 means that the company's sales volume is 10% of the
market leader's sales volume. While having 1 RMS means the
company has the same sales volume as their nearest competitor
 Cash Cows are commonly referred to as "Today's Businesses".
Cash Cos are cash contributors to the company because of their
large market shares and relatively lower funding requirements to
finance further expansions.

 Starsare also known to be "Tomorrow's Breadwinners" since a big

chunk of the cash generated has to be reinvested in the business to
maintain a strong position or create a stronger one by increasing
market shares.
 Question Mark products are the real risks for management since
they are the larger cash users in a rapidly growing market where
their market are still negligible. They could be "Day After
Tomorrow's Businesses".

 Dogs are "Yesterday's Has-beens". They are products with low

market shares in a low market growth environment. Therefore,
there is really not much point of investing a lot of cash in a market
where the product is weak and where the potential for growth is
low.
 The ideal situation is to use Cash Cow products to finance both Question
Mark and Star products so they can expand market shares further and
improve their positions in the industry. At the same time, Dog products
can be divested unless there is an expected reversal in market growth rate,
a planned of cross-selling different SBU products, or a good chance at
market leadership.

 So as not to oversimplify, BCG grid, we must qualify that not all Cash
Cows are in an ideal situation. A company may have only one Cash Cow
but several Question Marks or Doga which will make them vulnerable
when the Cash Cow needs some of the cash to defend its market shares
from aggressive competitor's attack.
General Electric Matrix
 General Electricamd McKinsey and attractiveness business
strength matrix called the General Electric model.

 Exhibit 4-40:
 Green Marketing
"Social responsibility is not only responsibility to people but
also responsibility for making people PEOPLE."
-Prof. Emmanuel Fernandez
 Consumer worldwide are now more educated and have better access to
information and choices making them demand products, packages and
processes that are safer to the environment.
 Marketers should take a proactive role and assume responsibility for their
products and packages after use and disposal.
 An ecological misstep can mean customer disapproval and even boycotts,
government fines, massive clean-up costs, and wasted time and effort.
Companies may suffer long term losses if they market products that are not
safe and have a high environmental risk.
Green Products

 The term "green" is now often used as synonym for

anything environmentally-safe or eco-sustainable. "Green"
products can be loosely referred to as those products
which "have relatively less damaging impact on earth and
the consumer or which do not have any detrimental on
health and the environment.
 Some of the more popular "green threats" and their
impact to the environment are as follow:
1. Global warning and ozone ,depletion
2. Acid Rain
3. Water Pollution
4. Air Pollution
5. Over-packaging
THANK YOU