MMS-Material-Product-Brand-Management-munotes

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1 PRODUCT MANAGEMENT
1
INTRODUCTION TO PRODUCT
MANAGEMENT
Unit Structure :
1.0 Objectives
1.1 Introduction
1.2 Definitions
1.3 Levels of Product
1.4 Product Classifications
1.5 Need for and Importance of Product Management
1.6 Roles and responsibilities of Product Manager
1.7 Functions of Product Management
1.8 Summary
1.9 Exercise
1.10 References
1.0 OBJECTIVES

1. To Acquaint the students with concept and techniques of Product
Management

2. To Sensitize the students about the role and responsibilities of Product
Manager.

3. To help students understand ab out the functions of product manager.
1.1 INTRODUCTION
Product management is an organizational function that directs each phase
of the lifespan of a product, from development to positioning and pricing,
by placing the customer and the product first. Produc t managers represent
customers' interests within the company and ensure that the voice of the
market is heard to create the greatest product possible.
Product teams consistently deliver better -designed and higher -performing
products because of this custome r-centric emphasis. A deep understanding
of clients and the capacity to develop solutions specifically for them are
more important than ever in the digital industry, where firmly established munotes.in

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Product & Brand Management
2 items are swiftly replaced by newer and better alternatives. Prod uct
management can help with it.
It's a frequent idea that product managers oversee all day -to-day
operations of a product's development. This is a project manager's
responsibility, as we outline on our page comparing product management
with project manage ment. Product management is an important strategic
task. giving product managers the responsibility of figuring out the "Why"
of a product.
They must also convey to the rest of the firm the goals and ambitions for
the products. They must make sure that eve ryone is contributing to a
common organizational objective. Product management includes a wide
range of continuous strategic duties. The specifics of the development
process shouldn't be their responsibility. Innovative companies divide this
role and give tactical responsibilities like workload management and
scheduling to project managers. The product manager is free to
concentrate on the higher -level strategy thanks to this clear split.
There is no one "best" method for managing a product. Processes will
change and adapt to the organization, the stage of the product lifecycle,
and the preferences of the product team members and executives.
Pricing, physical distribution, and promotion won't exist if there is no
product. Because of this, the product is rega rded as the most concrete and
significant element of the marketing strategy. The needs and demands of
the consumer must be met by the product. A business will fail if its
product does not satisfy the demands and wants of its clients.
A product is a group o f tangibles, immaterial, and symbolic qualities that
bring advantages or satisfaction to the user or purchaser. A product
combines objective and subjective characteristics, such as image or
"quality," with physical characteristics like size and shape. Purc hases are
made by a customer in both dimensions.
1.2 DEFINITIONS
According to W. Alderson “A product is a bundle of utilities consisting of
various product features and accompanying services”.
According to Philip Kotler “A product is anything tangible or intangible
that can be offered to a market for attention, acquisition use or
consumption that might satisfy a need or want”.
According to Cravens, Hills and Woodruff “Product is anything that is
potentially valued by a target market for the benefits or sati sfactions it
provides, including objects, services, organizations, places people and
ideas”.
A famous quote from product Management guru Martin Eriksson says
product managemen t is what happens “at the intersection between
business, technology, and user experience.”
According to Marty Cagan “Product management is discovering a product
that is valuable, usable, and feasible.” munotes.in

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Introduction t o Product Management
3 1.3 PRODUCT LEVELS
Kotler's five product tiers model, often known as Kotler's Model, is a tool
created by economist Philip Kotler to assist salespeople in identifying and
evaluating the customer -appeal potential of a product. It distinguishes
between the wishes, needs, and demands of a customer. Here is how e ach
category of value for products in Kotler's model is defined.
a. Want: This is the contribution a product makes to a customer's
fulfilment of a desire. A cinema theatre’s offering, for instance, can
satisfy a customer's desire for enjoyment.

b. Need: A produ ct's value as a means of assisting a client in fulfilling a
need. Products from a grocery store, for instance, can satisfy people's
want for food.

c. Demand: The worth of a good that consumers can and desire to
pursue. For instance, a fog machine can satisfy a customer's demand if
they have the cash and the desire to purchase one.
The marketer must consider five product levels as it plans its market
offering. Customer value hierarchy is made up of the five levels, each of
which increases customer value. The c ore benefit, or the essential service
or benefit that the consumer is actually purchasing, is the most basic level.
"Rest and sleep" is a hotel guest's purchase. Marketers need to understand
how they help providers. The marketer must transform the primary benefit
into a fundamental product at the second level.
At the third level, the marketer creates an expected product, which
includes a list of qualities and circumstances customers often anticipate
when buying this product. Hotel visitors anticipate a rel atively calm
environment, a clean bed, and new towels. Since most hotels are able to
provide this bare minimum, guests typically choose the one that is most
convenient or least priced.
The marketer creates an enhanced offering that surpasses client
expecta tions at level four. A hotel may offer amenities like a TV with a
remote control, fresh flowers, quick check -in and check -out, excellent
cuisine, and room service.
The potential product is located at level 5, and it includes all future
augmentations and mo difications that the product or offering might
experience. Here is where businesses look for novel approaches to satiate
clients and set their offer apart.



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4 The five levels of products are

1. Core Product
Core benefit or core product is the level that i s the most fundamental.
It is the main advantage that a product offers. Customers typically
purchase a main product or its primary benefit. In other words, the
customer is actually purchasing the service or benefit. For instance,
rest and sleep by renting a hotel room, a delectable dinner by the hotel,
entertainment by rock music, etc.
2. Basic Product
The consumer is actually purchasing this product. It is the version of
the product that has those features or properties that are absolutely
essential for it to work. For instance, a hotel room comes with
essentials like a bed, bathroom, towels, fan, table, chair, and water.
Basic goods are often referred to as generic goods. It is, in essence, the
product in its purest form.
3. Expected Product
This is the group of qualities that consumers anticipate from a product.
For instance, a client who purchases a pair of headphones probably
anticipates them to have comfy earpieces and high -quality audio.
Additionally, different clients could have various demands for the
same product.
4. Augmented Product
This is used to describe products that have additional features added
by the manufacturer that go above and beyond the product's core
functions. Companies might take this action to boost a product's
competitiveness against simi lar goods. For instance, bringing live munotes.in

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Introduction t o Product Management
5 entertainment to a restaurant may be used to draw guests also this
would help the hotel to make their customers delighted by such efforts.
5. Potential Product
This covers every modification a business might make to its product in
the future. By consistently upgrading the product, these modifications
hope to raise customer happiness and keep customers interested. For
instance, a car wash might provide consumers with a rewards
programme that entitles them to a new automob ile accessory with each
visit.
1.4 PRODUCT CLASSIFICATION
We are aware that a product has a variety of both tangible and
intangible qualities. Now that we have this broad perspective, it is
reasonable to think about products in terms of recognisable groups .
This can be formalised using a classification system, which helps with
the development of products and markets. Traditionally, producers and
marketers have categorised things based on features including
robustness, tangibility, and usage (consumer or ind ustrial). Each sort
of product has a suitable marketing -mix strategy. Products can be
divided into three types based on their tangibility and durability.

The term "product" refers to the items and services that an organisation is
selling. Here, marketers must understand that customers are more
interested in a set of tangible and intangible traits that satisfy their needs
than just a product's physical features. For instance, when a client
purchases a washing machine, he is actually purchasing a tool that assists
him in washing clothing rather than just a machine. It should be noted that
anything that may be presented to a market for consideration, purchase, or
use is considered a product. Thus, "everything that may be provided to a
market to satisfy a want " is defined as a product.
1. Based on Use
The product can be classified based on the usage of the product. The
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6

a. Consumer Goods
Goods meant for personal consumption by the households or ultim ate
consumers are called consumer goods. This includes items like toiletries,
groceries, clothes etc.
i. Convenience Goods
Products that the client may easily, quickly, and regularly purchase are
known as convenience goods. Newspapers and soaps are examples o f
convenience goods, as are everyday foods like pasta or ketchup.
Purchasing convenience items is typically based on habitual behaviour,
where the buyer will repeatedly buy.
ii. Shopping Goods
Shopping goods are the second sort of product, and they typically involve
a more extensive choosing procedure than convenience items. A consumer
typically evaluates a number of characteristics, such as suitability, quality,
cost, and style. Homogeneous products are ones that have a similar level
of quality yet differ eno ugh from one another in other respects (such as
price, brand recognition, or style) to warrant a search. These items could
be audio or television equipment, or car tyres. Homogeneous retail
products are frequently sold primarily on price.
iii. Speciality Goods
A sizable segment of consumers is willing to make special purchase
efforts for specialty items because they have particularly distinctive
features and brand identifications. Examples include certain brands of
upscale goods, high -end automobiles, gear for p rofessional photographers,
and designer clothing.
b. Industrial Goods
Industrial goods are defined as items intended for consumption, use as raw
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Introduction t o Product Management
7 service. These consist of and are intended f or non -personal and business
use.
i. Raw Materials
ii. Machinery
iii. Components
iv. Operating Supplies
2. Based on Durability
The following are the categories classified on the basis of durability
a. Durable Goods
Products that are utilised for months or years at a time are co nsidered
durable goods. These products include, for instance, refrigerators, cars,
washing machines, etc. Such products typically have huge profit margins
and demand more personal selling efforts. The seller's reputation, as well
as the presale and after -sale services, are significant factors in the decision
to purchase these goods.
b. Non-durable Goods
Products that are typically consumed in one sitting or only get a few uses
are considered non -durable items. These include items like soap, salt,
pickles, sauc e, and others. We buy these commodities more frequently
since they are consumed quickly. The producer often distributes such
goods through a wide range of practical retail locations. Such products
typically have minimal profit margins, and extensive promot ion is done to
encourage people to try them out.
3. Based on Tangibility
On the basis of tangibility the goods can be classified in two ways i.e.
Tangible goods and intangible goods.
a. Tangible Goods
Most things come into this category since they have a physic al form that
can be handled and seen, regardless of whether they are industrial or
consumer items, durable or not. As a result, everything like food,
automobiles, raw materials, machinery, etc. belongs to the category of
tangible products.
b. Intangible Goods
Services offered to individual customers or group purchasers (industrial,
commercial, institutional, government, etc.) are referred to as intangible
products. Services are essentially immaterial actions that satisfy wants or
needs. This category includes things like medical care, postal service,
banking services, and insurance, among others.
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8 1.5 NEED/ IMPORTANCE OF PRODUCT
MANAGEMENT
Product management is a relatively new profession in the club of well -
established ones, but it didn't just appear overnig ht. Other team members,
whose major responsibility would be something else, would typically
handle a product manager's responsibilities. Lean start -ups, where few
founders and early -stage staff wear several hats to conserve money until
they hit pay dirt, a re examples of this manner of living. Because they
make sure that all teams and tasks are operating as intended, product
managers become more important (apart from coming up with product
ideas and shortlisting features for the future and a million other th ings).
Here are a few elements that emphasise the significance of product
management.
Early customer relationship development is essential for corporate
success. However, the significance multiplies with software solution
providers serving other software f irms. The companies that actively seek
to address the problems that their consumers have are the ones that
succeed, and product managers play a critical role in making that happen.
They develop product roadmaps and share them with stakeholders,
detailing t he features they are working on, ideas that may be incorporated
in the future, features that have already been implemented, and other
pertinent information. In order to better understand the demands of the
client, they also continuously gather user feedbac k and feature requests.

1. Focus on Customer
The two most crucial components of any organisation are its products and
its customers. Product/customer focus, which emphasises creating high -
quality products with the potential to please clients, is a defining trait of
successful entrepreneurs. One component of the entrepreneurial process
that many business owners find to be tremendously fulfilling is creating
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Introduction t o Product Management
9 2. Results in Smooth Relationship
Company's long -term success rests o n the rapport it can establish with
clients. Today's consumers are continuously assessing their interactions
with the companies in their lives, and a few slip -ups could result in them
dumping your business. However, if you can regularly deliver warm,
atten tive service to your clients, you can significantly raise their lifetime
value.
For items from businesses that provide excellent customer service,
costumes are willing to spend 17% more, according to Forbes.
Additionally, happy consumers are five times mor e likely to return for a
second transaction and four times more inclined to recommend a business.
3. Helps to Keep up with Market Trend
Efficient product management helps the businesses to keep up with the
dynamic business environment. Some trends last longe r than others, even
though many are fleeting. The current trends in product creation,
marketing, sales, and management are influenced by a wide range of
variables. Consumer demand and behaviour, however, will most often
have an impact on a company's produc t management roadmap and
persuade business leaders to either change their strategy or continue with
what is effective. That being stated, it doesn't matter what sector or market
you operate in; to maintain or develop a marketable product, you must
keep up with the most recent trends. To do thus, one strategy is to get
useful information from customer reviews of the products.
4. Prioritizes features as per the market Trends
The Management of product leads aa manager to produce such goods
which will be customize d as per the customers expectation and changing
business scenario. Doing so is one of the great importance of product
management as by overlooking the customer needs and ignoring the
environmental traits and changes non can ensure success in the field of
business.
5. Prevent Loss
Product management helps in minimizing the losses of companies, as the
organizations via efficiently doing market research will identify the
expectation of customers and produce the goods as per the market
requirement by ensuring the proper quality of products.
6. Ensures Development of Product
The product ones consumed by the consumer will lead to either
satisfaction or dissatisfaction of them. In both ways the feedback will
come to the company which helps the company to focus on custome r
centric production and supply chain management. Customized products
with efficient marketing strategies creates satisfied consumers which
ensures effective flow of information from customer to the company
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10 1.6 ROLES AND RESPONSIBILITIES OF PRODUCT
MANAGER
Making sure that the product supports the organization's broader strategy
and goals is a crucial part of the product manager's job. Delivering a
unique product to market that fills a market need and offers a promising
economic opportunity is the responsibility of the product manager.
Although the Product Manager is ultimately in charge of overseeing the
product from conception to end -of-life, they receive support from
specialists such as designers , developers, quality assurance engineers,
supply chain and operations experts, manufacturing engineers, product
marketing managers, project managers, sales professionals, and others
during this process.

1. Domain Expertise
In their book "Building Products for the Enterprise," authors Blair Reeves
and Benjamin Gaines outlined three categories of knowledge that every
project manager should seek out. These three classifications are:
a. Organizational knowledge is acquired via experience and refers to
"understand ing how your firm really works."

b. Product knowledge, or "knowing your product inside and out," may
foster empathy and trust among you, your team, and your end
consumers.

c. Industry knowledge is deemed by Reeves and Gaines to be "the most
important of these three areas of knowledge because it represents a
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11 unsolved" and is "directly associated with the ability to deliver
successful products that will grow your company's revenue."

2. Leadership Skil ls
Excellent product managers are excellent leaders. They are good at
promoting the product, and they help the team develop a strong culture
and sense of camaraderie. They are also able to mentor and coach others,
to lead individuals and groups, and to suc cessfully convey vision and
goals through narrative, for instance.

3. Empathy
Genuine empathy for the people who will use the product is necessary for
its delivery. And developing empathy for consumers' suffering is a talent.
You must learn how to communicat e with your consumers in an efficient
manner so that you can transform their feelings into workable solutions.

4. Research Ability
Great product managers have a thorough understanding of their markets
and customers. Understanding how to sort through and comp rehend all the
information that is presented to you is crucial. Creating shared
documentation for the team to refer to and learn from, such as business
models, user personas, and competitor analyses, is a component of
conducting this research.

5. Project Man agement Skill
It requires a lot of coordination to introduce new features and items to the
market. It can feel stressful to have a never -ending list of duties,
obligations, and crucial deadlines. To become more organized, improve
your project management ab ilities.

6. Decision Making
This is one of the greater responsibilities of product manager as decisions
taken by him will either lead to company for success or failure. Decision
making is a cortical job, one must be a visionary to take critical decision
as it directly concerns the customer and profitability of the company.

7. Product Planning and Presentation
Product Planning and Presentations are frequently given by product
managers to the product team, management, and even customers.
Additionally, managers ca n oversee running webinars, facilitating demos,
or making presentations at conferences. A clear, captivating presentation
that is suited to the audience is successful. Set a goal for improvement
with each presentation you make.
1.7 FUNCTIONS OF PRODUCT MAN AGERS
A great product manager makes sure that everyone on the team cooperates
to realize the product vision. Setting the long -term goal and plan, assuring
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12 However, these may change based o n the nature of the business and
industry, as well as their perceptions of the project manager's duties. A
few people may oversee creating product roadmaps, conceptualizing,
analyzing data, overseeing the development and production process,
conducting mark et and user research, sampling, testing, and forecasting,
while others may oversee promotion, distribution, sales, and marketing
duties, particularly if the product is already in use.

1. Setting the Product vision
The crucial first stage in product develop ment is to define the product
vision. It outlines the overall direction and vision for achieving objectives.
This is based on suggestions and comments from the team that worked on
the product's development. The product development cycle involves
establishi ng clear objectives, defining the product's specifications,
imagining the customer personas it is intended for, determining whether it
addresses the user's fundamental problems and aids in the achievement of
their goals, and including all the measures nece ssary to periodically gauge
the product's success.
2. Strategy Development
The steps to achieving the vision, or the strategy, must be specified once it
has been condensed. The strategy outlines the milestones and techniques
to attain the product goals, which are defined by the vision. To ensure that
the development team can effectively distribute the execution plan, the
strategy should be clear and practical. This makes sure that each team
member is aware of their responsibilities, KPIs, and the interdependen cies
that result in goal achievement.
3. Product Development
Technical specifications must be established before creating prototypes
and mockup designs. A product manager can be involved in writing
technical specifications like the PRD (Product Requirement Do cument)
and FSD (Functional Specifications Document), defining the MVP
(Minimum Viable Product) and ensuring it serves its purpose, as well as
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Introduction t o Product Management
13 are typically handled by the UX team. Fi nding out what user’s desire and
relaying this knowledge to the development team and project managers is
the primary objective of the product manager. They work along with the
UX experts to develop the testing scenario, monitor the results, and inform
the project manager of any adjustments.
4. Execution and Training
The team starts working on the product at this stage in accordance with the
priorities listed in the roadmap. The product manager uses the product
roadmap to direct and regulate the execution proce ss as they add new
features to the existing product or work on developing a new one. To
ensure that usability testing is successful, the product manager works with
potential customers to assess user reactions and feedback and then relays
this information t o the development team and project managers so that
changes can be made based on their input.
5. Marketing and sales
The product manager plans the product positioning, launch, distribution,
operating strategies, and continuously monitors the product's growth and
revenue graph after it is finished. Even though these are practical qualities,
let's take a quick look at the character traits that make outstanding product
managers.
6. Effective Communication
A product manager must interact with a variety of stakeholde rs. To ensure
openness and agreement on potential reiterations, timeframe extensions,
and other requirements that have not been considered, technical
information must be broken down and communicated to customers and
vice versa. Throughout the whole stakeho lder ecosystem, timely and
transparent communication can help prevent interpersonal problems and
promote a healthy and productive environment.
1.8 SUMMARY
Without the cooperation of the team, little can be accomplished. As a
product manager, it is your re sponsibility to work with the team to
develop, promote, and sell the product. Honor their insights and wisdom
while encouraging cooperation. Call for review meetings frequently, be
present and engaged, pay attention, and seek consensus on critical choices.
Recognize achievements and offer helpful criticism. Avoid bias; be
receptive to ideas based on their applicability and compatibility with the
product goal; and demonstrate why each idea important, regardless of
where it originates.Product managers are at the heart of generating goods
that customers enjoy, even if there are many other crucial characteristics
that affect the breadth and success of a company. They create products
that have a beneficial impact on consumer experiences, assisting in the
achievem ent of important company and client objectives. A great product
manager is a creative problem -solver who is passionate about creating
solutions that are rooted in empathy, trust, and transparency. Product munotes.in

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14 managers hone their talents on the job, which comes along with acquiring
useful intelligence from many stakeholders and years of launching
exceptional products, even though technical training and upskilling are
equally crucial.
1.9 EXERCISE
Answer the following questions.
1. Define product management and expl ain the levels of products
2. Explain the Role of manager in detail.
3. Elucidate the concept of product management and explain in detail the
functions of product manager.
4. Write a detailed note on product classification.
1.10 REFERENCES
1. Product Management by Don ald R. Lehmann and Russel S. Winer,
Tata McGraw Hill Publishing Company Ltd., New Delhi.
2. Marketing Management, by Phillip Kotler, Prentice Hall of India, New
Delhi.
3. Marketing Management, Analysis, Planning and Control by Phillip
Kotler, Prentice Hall of India, New Delhi.
4. Marketing Management by RajanSaxsena, Tata McGraw Hill
Publishing Company Ltd., New Delhi.
5. Marketing Management - Planning, Implementation and Control, the
Indian Context by Ramaswami V.S. and Namakumari S., Macmillan
India Ltd., New Del hi.
6. Product Management in India by Majumdar, Prentice Hall of India,
New Delhi.
7. Brand Positioning -Strategies for Competitive Advantage by Subroto
Sengupta, Tata McGraw Hill Publishing Company Ltd., New Delhi.

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15 2
PRODUCT MIX
Unit Structure :
2.0 Objective
2.1 Introduction
2.2 Factors affecting product mix.
2.3 Strategic Business Unit
2.4 Portfolio Analysis
2.5 Boston Consulting Group Matrix
2.6 General Electric Nine Cell Matrix
2.7 Summery
2.8 Exercise
2.9 Refe rences
2.0 OBJECTIVE
 To understand the concept of product mix
 To get information on factors affecting product mix
 To understand the BCG matrix
 To understand GE 9 cell model
2.1 INTRODUCTION
Product mix refers to all the product categories that the busines s offers,
but only those that are currently on the market and not those that are still
in the development or testing phases. "A product mix is the collection of
all product categories and goods that a specific vendor makes available for
purchase by custome rs." For instance, a company's product mix can
include cosmetics, personal care products, and medications. Again, each
line may have a sub line. For example, cosmetics may be divided into
powder, lipstick, nail polish, rouge, etc., thus each line and sub l ine may
have quite a few distinct goods.
While some businesses only produce one item at a time, most do it in bulk
for the market. The complexity of effectively marketing each product
grows when a firm expands the range of goods it sells. It's important to
understand that not every product can be sold in the same way. Spices,
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16 Product & Brand Management Marketing professionals classify products into several groups based on
their distinctions.
The product mix of a c ompany is a crucial component in creating an
effective overall marketing strategy. For instance, it might have an impact
on how a business is structured. Comparatively to a company with little
depth, a lot of width, and little consistency, one with signifi cant depth to
its lines and consistency to its mix is more likely to center its marketing
effort.
PRODUCT MIX MEANING
The full range of goods and/or services that a company provides is
referred to as its product mix, often known as its product assortment or
product portfolio. Product lines, which are connected goods that customers
frequently use together or perceive as related goods or services, make up a
product mix.
Let's look at a straightforward Coca -Cola product mix example. Let's say
for the sake of simplicity that Coca -Cola manages two product categories:
juice and soft drinks (Minute Maid). Coca -Cola, Fanta, Sprite, Diet Coke,
and Coke Zero are considered soft drinks, while Guava, Orange, Mango,
and Mixed Fruit are considered Minute Maid juices.
THE IDEAS OF AN OBJECT'S WIDTH, DEPTH, LENGTH, AND
CONSISTENCY PRODUCT MIX :
A product mix is the collection of goods that a company offers to
customers. A company's product mix will then have a specified depth,
width, uniformity, and length. The variety of pr oduct lines that a
corporation carries make up its product mix. The number of product lines
in the company is indicated by the width of the product mix. On the other
hand, the number of variations that are provided for each of the company's
product lines i s referred to as the depth of the product mix. The variety of
items offered in each product line serves as a gauge for the depth of a
product mix. The length is the total number of products that make up the
product mix. For instance, a particular detergent powder has a depth of six
if it is available in three sizes and two formulas. If there are commonalities
in terms of end use, production needs, distribution methods, and other
factors, a product mix is said to be consistent.
2.2 FACTORS AFFECTING PRODUCT MIX
The product mix of a firm is important to understand as it has a profound
impact on the firm’s brand image. The following are the important points
for the firm to expand its product mix:
a. Expanding the product mix width can provide the company with the
ability to satisfy the needs or demands of the different consumers and
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Product Mix
17 b. Expanding the product mix depth can help the company to cater to the
current customers in a better and fulfilling way.

1. Profitability
Every business strives to in crease its profits, and in order to do this, it tries
to alter its product mix in ways that will improve its profitability. To
increase profitability, the corporation likes to add new product lines or
product items to its already existing product lines. Wh ile this is going on,
the product mix is continually modified to maximize revenues.
2. Objectives and Policy of Company
To achieve its goals, the corporation formulates its product mix. As a
result, the company's aim informs the addition, deletion, or replace ment of
product lines or individual product items. As a result, the product mix is
created and altered in accordance with business policy.
3. Production Capacity
The capacity of the plant or the company's production heavily influences
the decisions made about the marketing mix. The business creates its
product mix to maximize manufacturing capacity.
4. Demand
Decisions on the product mix are typically made considering demand. A
marketer should investigate consumer behaviour to determine how well -
liked their goods are. The company's product mix needs to adapt to
changes in customer preferences, particularly those related to fashion,
interests, and habits. Naturally, the corporation gives higher priority to the
products that are in higher demand. In the event of dec lining demand, a
corporation must gradually stop selling subpar products. As a result, the
product mix is modified over time to satisfy changing consumer demands.
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18 Product & Brand Management 5. Production Cost
Depending on how much each item costs to produce, the product mix is
either extended or narrowed. The products that can be created within the
allocated budget will be preferred by the company. Sometimes, existing
items' manufacturing costs increase, and the corporation decides to
discontinue those products to cut production costs. Additionally, the
selling price, profit margin, and production expenses are all balanced.
6. Government Rules and Restriction
Businesses typically manufacture goods that are not controlled or
outlawed by the authorities. When a product or variety is deemed i llegal, a
corporation occasionally has to stop selling it. Like this, social and
religious demonstrations are crucial in this context. The current legal
system has a direct impact on the scope and make -up of the product mix.
7. Demand Fluctuation
Demand can c hange for several factors in addition to customer behaviour.
Seasonal impacts, lack of replacements, population growth, war, drought,
flood, and other calamities all have an increased impact on demand. The
business must modify its product mix to match the shifting demand for
some products.
8. Competition
One of the key elements influencing the product mix is it. All businesses
strive to have a product mix that allows for a robust response to the
competition. The product mix of the company is significantly impa cted by
the product mix strategy used by its immediate competitors.
9. Impact of Other Elements of Marketing Mix
The design of the product mix should also consider other aspects of the
marketing mix, such as price, promotion, and distribution. To carry out
marketing efforts successfully and efficiently, the corporation tries to
ensure consistency among all these factors.
10. Condition of Economy
Both domestic and international economic factors are taken into
consideration. Due to the liberalization and globalizati on processes, no
company may dare to undervalue the overall state of the global economy.
As a result, a business must consider how the home economy is doing in
relation to the global economy. This is especially important for businesses
engaged in internati onal trade.
2.3 STRATEGIC BUSINESS UNIT
Business strategies function inside a framework that is established by
corporate level strategies. Corporate level, for instance whereas a firm
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Product Mix
19 decides to stabilize, expand, or retrench. Business strategies are the actions
taken by an organisation for each of its businesses separately. They are
designed to help each business in the company's portfolio gain a
competitive edge while also maximizing th e company's use of resources,
skills, and synergies.The corporation, which has multiple goods and
operates in multiple geographies, establishes strategic business divisions
to efficiently handle each of the items. For instance, Hindustan Unilever
Ltd., a m ulti-product company, has embraced the idea of a strategic
business unit. Each strategy focuses on specific products, such as
cosmetics, beverages, laundry products, and hygiene.
A strategic business unit (SBU) is a division within an organisation that
operates much like a stand -alone company, including developing its own
strategic plans and marketing plan. Depending on the levels of control
given to the management of the division, an SBU may adopt the corporate
identity of its parent company or create its own brand identity. In large,
diversified organizations and global corporations, a one -size-fits-all
strategy approach would be insufficient. By breaking down the company's
operations into SBUs, efficiency and market focus are increased. Because
they guara ntee that goods and product lines are given specialized focus, as
if they were developed and promoted by an independent company, SBUs
are a feasible kind of organisational sectioning.
Definition
Strategic Business Unit (SBU) refers to a division of a large corporation
that is independently managed, has its own vision, goal, and objectives,
and plans independently of the company's other companies. The division's
vision, mission, and goals are separate from those of the parent company
and essential to the ent erprise's long -term success.
SBU Structure

SBU Structure
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20 Product & Brand Management 2.4 PORTFOLIO ANALYSIS
Portfolio analysis is the process of looking at the elements that make up a
group of products with the aim of making choices that should increase
total return. The phrase de scribes the procedure that enables a
management to identify more effective resource allocation strategies with
the intention of raising profitability. It could also be used to describe a
portfolio of investments made up of securities.
A corporation that se lls a variety of goods and services must perform a
portfolio analysis on a regular basis. This entails examining each product
independently in terms of its profitability, contribution to revenue, and
room for expansion. The identification of items that are not at all lucrative
or perform poorly within the group is made easier by this study.
According to predetermined standards like sales value, market share, gross
profitability, contribution margin, and life cycle, the products are divided
into categories. The findings can indicate products that should be removed
from the market or just receive less funding. It can also mean that the
business has to devote more resources and attention on a few standout
goods with more promise. The study is done to boost the performance of
the global portfolio because the goal is to maximize profit for
shareholders. For example, 55 different styles of women's shoes are
produced and sold by Shine Shoes. The general manager saw that over the
previous two years, despite rising sa les, profitability had been
progressively declining. He requested a portfolio review from a consultant
because he had no idea what had happened. The study's findings were
interesting. 17% of all sales were made by the top five models. However,
because to e xcessively high production costs, those five were completely
unprofitable.
Other models were quite profitable at the same time, but their sales within
the whole portfolio were very small. The Manager made the decision to
increase marketing and sales effort s in the most lucrative models to
increase overall profit. The results were encouraging, and the company's
finances significantly improved because of the knowledge gained from the
portfolio study.
2.5 BOSTON CONSULTING GROUP MATRIX
Businesses with multiple divisions or products, this strategy is especially
helpful. The "business portfolio" of the organisation is made up of the
divisions or goods. The company's expansion and success may be directly
impacted by the portfolio's structure.
The Boston Consulting Group (BCG 1973) created a method of strategic
analysis in the 1970s that contrasts a company's market share with the
projected growth of its market over the following five years. The strategy
is the BCG matrix.
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Product Mix
21 is frequently used to examine businesses w ith numerous divisions or
business units. However, it can also be applied to examine a single -unit
firm or even specific product offerings. The BCG matrix is frequently
referred to as a "portfolio analysis tool" because of its adaptability in this
regard. A four -block matrix can be created by placing relative market
share on the horizontal axis and market growth rate on the vertical axis.
Strategies are created based on the business units' relative positions once
they have been positioned on the BCG matrix for the company. The units
can be divided into four categories: "stars," "question marks," "cash
cows," and "dogs" using the four quadrants of the matrix, which were
created by dividing the two variables into "high" and "low" areas (see
Exhibit 12.2). Acco rding to the arrangement, a company needs more cash
to stay competitive and expand the faster the market is growing.
Additionally, more money can be made the larger the firm's market share.
The high "cash generation" divisions can pay for the high "cash
consumption" divisions with the cash they earn.

Source - https://www.edrawmind.com
1. Dogs
Divisions that are struggling include dogs. They have a small market share
in industries with slow growth. Typically, they don't earn a lot of revenue
or take much from the parent firm, yet occasionally they will need a
corporation's cash.to continue doing business. Dogs, at best, don't provide
much value; at worst, they consume resources like money and
management's time and attenti on. Therefore, the common dog tactics
involve turning them around and getting them to walk toward the question
mark box, divesting them, or shutting them down. A company, though, munotes.in

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22 Product & Brand Management can decide to keep a dog for strategic reasons. In the previous eyeglasses
example, there is a market for sports protection; even if positive
movement is not evident, the company could be sensible to continue to
provide items in this category without concentrating on it.
2. Question Mark
In expanding markets, question -mark divisions h ave a small market share.
Question marks frequently need money because the market is expanding
in order to stay competitive. Question marks frequently drain money from
a company instead of being net cash producers. The strategic course of
action in these s ituations is unclear, therefore the question mark. Product
development, market penetration, market development, and other growth
tactics may be employed if the strategist believes there is a chance to
increase the division's market share and elevate the di vision to the star
box. Divestment may be an option if the analyst does not see the
possibility to enhance the division or if the business lacks the funds to
invest in the unit.
3. Star
Divisions that have a significant market share in expanding markets are
known as stars. These companies create a buzz. They also make a lot of
money thanks to their large market share. At the same time, they need a
sizable amount of cash to support their ongoing expansion in the quickly
growing industry and to fend off rivals w ho want to steal their market
share. The money that celebrities bring in typically tends to net out. They
are comparable to dogs in that regard, but they still have a lot going for
them. Continuing to support growth and increasing market share through
mark et penetration and market expansion, product development,
integration strategies, and even joint ventures are examples of strategic
approaches.Defense strategies aimed at preserving the substantial market
share are also considered. A star enters the cash c ow category if it retains
its dominant market share as the market life cycle matures; at this time,
other competitors withdraw, and the star needs less money to support the
excellent financial performance. A star, however, turns into a dog if it is
unable to keep up its share.
4. Cash Cow
Cash cows command a large portion of the market in sectors that are not
experiencing rapid growth.They have sizable profit margins because
pricing power and market dominance frequently go hand in hand. Due to
the market's slo wer growth and the cheap investment requirements, they
also produce much more money than they spend.
Cash cow strategies involve maintaining the division's operations without
making a big financial commitment, then using the money made to
reinvest in turni ng around dogs or converting question marks into stars.
A company's portfolio can be quickly seen using the BCG matrix in
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Product Mix
23 and relative strength or weakness. By positioning the target firm on the
matrix and then correctly positioning the competitors, the matrix may also
be used to show a target company and its position in relation to its
competitors. The BCG matrix is the first analytical tool we've come across
that starts to offer stra tegy in addition to straightforward analysis.
2.6 GENERAL ELECTRIC NINE CELL MATRIX
Businesses nowadays must be more careful to make investments that will
yield the best returns since they are more exposed and competitive. The
corporation can assess its in vestment portfolio more thoroughly and
methodically thanks to the GE McKinsey matrix.
"The GE -McKinsey nine -box matrix is a strategy tool that allows the
multi -enterprise corporation a systematic approach to prioritise its
investments among its business di visions."
Drivers of Industry Attractiveness
1. Market size
2. Market growth share
3. Competitive rivalry
4. Demand variability
Drivers of Competitive Strength
1. Assets and competencies
2. Market share
3. Customer loyalty
4. Cost structure
5. Cash flow

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24 Product & Brand Management The portfolio assessment framework of the GE McKinsey matrix is pretty
like the BCG matrix. To assist investment decisions, both matrices are
used to analyse a company's product or business unit portfolio. The main
difference between the two models is that GE McKinsey uses a nine -cell
matrix whereas BCG only uses a four -cell matrix. The BCG portfolio tool
was too simple for the General Electric employees, so experts created the
GE McKinsey framework. According to the BCG matrix, a business unit's
competitive power is equal to its r elative market share, meaning that the
more market shares a company has, the more equipped it is to compete in
the market.The matrix offers more versatility than the BCG in terms of the
elements that may be included, and it can be referred to as a multifac tor
portfolio model. The matrix enables a corporation to evaluate how well
organisational competencies and service/product offers align.
Additionally, it provides expected business/product placement in the
matrix, aiding in the process of strategic plannin g.

Source - https://www.civilserviceindia.com/subject/Management/notes
Merits
1. It utilized 9 cells as opposed to 4 for BCG.
2. It does not come to a one -dimensional conclusion because it takes into
account numerous factors.
3. Compared to the BCG matrix, it is a more advanced business portfolio
architecture.
4. There are many classification schemes, such as high/medium/low and
strong/average/low, which help distinguish between business
portfolios more clearly.
5. This matrix assesses business strength and industry attr activeness
using a variety of characteristics, allowing users to choose the ones
that are most relevant to their circumstances.

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Product Mix
25 Demerits
1. To ascertain the industry's attractiveness and business unit strength as
precisely as feasible, GE Matrix uses a cons ultant or specialists.
2. The cost of doing it is high.
3. The GE -McKinsey matrix's main premise is that it can function when
production and distribution can achieve economies of scale. The idea
of exploiting the firm's and the SBU's competencies is useless unle ss
the same is true.
4. This examination does not indicate the corporation's or the firm's
fundamental competencies. The key skills can be applied to all SBUs
and can be used to determine whether an SBU is competitively strong.
5. With the growth of businesses, it can become difficult and
burdensome.
6. The position of new businessunits in developing business cannot be
accurately represented.

2.7 SUMMARY
Making judgments regarding investment mix and strategy, matching
investments to objectives, allocating assets fo r both individuals and
institutions, and balancing risk and performance are all parts of portfolio
management, which is both an art and a science. Portfolio management is
the practice of choosing the ideal investing strategy for a certain person
with the l east amount of risk and greatest potential return. Additionally, it
refers to managing a person's investments in bonds, stocks, cash, mutual
funds, etc. to ensure that he makes the most money possible within a given
time frame. Money managed by a person un der the knowledgeable
direction of a portfolio manager is referred to as portfolio management.To
have a risk return trade off, it is done by examining the strengths,
weaknesses, opportunities, and dangers in various investment
possibilities.The choice of d ebt vs. equity, local vs. foreign, growth vs.
safety, and many other choices found in the endeavor to optimize return at
a certain appetite for risk are all about strengths, weaknesses,
opportunities, and dangers. The combination of several equities in a
portfolio is all that it is. The foundation of portfolio management is an
understanding of market dynamics.
2.8 EXERCISE
Answer the Following Questions
1. Define Product Mix in detail and elaborate the concept of product mix.
2. Write a detailed note GE Nine Cell Matrix.
3. Write a detailed note on BCG Matrix.
2.9 REFERENCES
(i) William J. Stanton, Michael J. Etzel, and Bruce J. Walker,
“Fundamentals of Marketing”, 10th Edition, Mc Graw Hill
International edition, 1994. munotes.in

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26 Product & Brand Management (ii) Douglas J. Dalrymple, and Leonard J. Parsons,” Mar keting
Management -Text & Cases”, 7th edition, John Wiley & Sons
Publication, 2002.

(iii) Ang, SH, Leong, SM, Tan, CT, and Kotler, P., “Marketing
Management - An Asian Perspective”, Prentice Hall & Simon &
Schuster (Asia) Pvt. Ltd., Singapore, 1996.

(iv) Brassingto n, F., and Pettitt, S., “Principles of Marketing”, Pitman
Publishing, London, 1997.

(v) Dibb, S., Simkin, L, Pride, WM, and Ferrell, OC, “Marketing
Concepts& Strategies”, 2nd European edition, Houghton Mifflin
Company, London, 1994.


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27 3
PRODUCT DECISION OVER PLC
Unit Structure :
3.0 Objectives
3.1 Introduction
3.2 Product Life Cycle
3.3 Strategies Concerning PLC
3.4 PLC Strategies
3.5 Summery
3.6 Exercise
3.7 Reference
3.0 OBJECTIVES
 To understand the PLC

 To understand PLC strategies
3.1 INTRODUCTION
The central concept of the product strategy is the product life cycle (PLC).
It is predicated on the idea that once a new product is introduced to the
market, it begins a "life cycle." The launch and decline of the product
constitute its "birth" and "death." The interim is characterized by
maturation and growth. When a product's path through the market is
considered, marketing strategies may be created that are appropriate for
the relevant stage of the product's life cycle. In addition to the stages
mentioned, the stage of saturation —a levelling off in sales following
maturity but before decline —is also frequently considered.
The positioning and differentiation strategy of a corporation must evolve
as the product, market, and rivals do. Fo ur things are asserted when a
product is said to have a life cycle:
a. Products have a finite shelf life.

b. Product sales go through several stages, each of which presents the
seller with unique difficulties, opportunities, and challenges.

c. At various points i n a product's life cycle, profits increase and
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28 Product & Brand Management d. Different marketing, financial, manufacturing, purchasing, and human
resource strategies are needed for different stages of a product's life
cycle.

3.2 PRODUCT LIFE CYCLE
In most cases, bell -shaped product life -cycle curves are depicted.
Introduction, growth, maturity, and decline are the four stages into which
these curves are commonly categorized.

1. Introduction
a time when sales are slowly increasing as the product enters the market.
Because of th e significant costs associated with product introduction,
profits are nonexistent. At this point, customers are being introduced to a
novel and unheard -of product. Sales are modest, the production method is
new, and economies of scale or the experience cur ve haven't reduced costs
yet. The goal of the promotion strategy is to familiarize customers with the
product. The pricing strategy is intended to attract new customers and
encourage them to try the product.

Source - https://www.istockphoto.com/photos/pro duct-life-cycle
2. Growth
Consumers begin to act during the growth stage. They purchase the item,
which raises sales by becoming well -liked. Other businesses have taken
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Product Decision
Over PLC
29 Sales are currently growing quickly. Customers are prepared to
purchase the product since they are familiar with it. Both new
consumers and returning consumers are drawn to the market. The
business may need a significant influx of finance and experience to
ramp up production quickly.As the company goes down the experience
curve and realizes economies of scale, costs are reduced. Profit
margins are typically high. Although new competitors may enter the
industry, there isn't much competition because it's expanding quickly.
To capitalize on the expanding sector, promotion and pricing methods
are updated.
3. Maturity
The market reaches this point of saturation. Production has finally caught
up with demand, and the rate of demand increase abruptly decreases. The
number of first -time b uyers is low. Repeat business is the norm for buyers.
When competition is fierce, aggressive pricing and advertising strategies
are used to either gain market share from rivals or simply hold onto it.
Although size economies and experience curves are reach ed, aggressive
pricing strategies frequently result in lower profit margins. Despite efforts
by businesses to differentiate their offerings, the items end up becoming
increasingly uniform.
4. Decline
At this point, sales decline as customers switch to other products. There is
fierce competition between rivals. Narrow profit margins and falling sales
lead profits to dry up. Businesses occasionally quit the sector. The
businesses that are left try to rekindle consumer interest in the product.
Sales can start to increase if they are successful. If not, either sales will
stabilise or keep declining.
3.3 STRATEGIES CONCERNING THE STAGE OF
PRODUCT LIFE CYCLE
The various Strategies as per the Product Life Cycle Phases are as follows
1. Introduction
Sales growth is typi cally slow during the introduction stage since it takes
time to introduce a new product and fill dealer pipelines. The slow growth
was attributed to several factors, according to Robert Buzzell, including
technical difficulties, a lack of proper distributi on through retail stores,
and customer resistance. High -definition TV sales are being held back by
other factors including product complexity and a dearth of consumers.
Profits at this point are either negative or low.
i. Due to the necessity to I educate pot ential customers,
ii. Encourage product trial, and
iii. Ensure distribution in retail outlets, promotional expenditures are at
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30 Product & Brand Management Businesses concentrate on ready -to-buy customers, who are typically from
higher -income demographics. Cost s are typically high, which leads to high
prices. Companies that want to launch a new product must choose when to
do it. Being first can be very lucrative but also costly and risky. If the later
entry makes sense, in a time where product life cycles are ge tting shorter,
it is crucial to accelerate innovation. Companies who arrive at workable
solutions first will benefit from "first -mover" advantages in the market.
Being early benefits you. If the product meets their needs, early customers
will remember the pioneer's brand name. Pioneer often targets the middle
of the market, which attracts more customers. Along with producer
advantages like economies of scale, technological superiority, patents,
ownership of valuable assets, and other entry -barriers, custome r inertia
also plays a part. An alert pioneer can continue to be in charge indefinitely
by pursuing different tactics.
The company can contribute superior quality, technology, or brand power.
Knowing that it cannot enter all the potential product markets a t once, the
pioneer should envision which markets it might first enter. The pioneer
should evaluate the earning potential of each product market separately
and together before deciding on a strategy for market expansion.
The pioneer strategy calls for ente ring the market for the product first,
moving it to a second market, surprising the competition by creating a
second product for the second market, moving the second product back
into the first market, and finally introducing a third product for the first
market. If this strategy is successful, the initiator company will possess a
sizable portion of the first two segments and provide two or three items to
each of them.
2. Growth
A substantial increase in sales characterises the growth period. Because
the prod uct is well received by early adopters, more people start
purchasing it. The opportunities attract new rivals, who enter the market.
They increase distribution while introducing new product features.
Depending on how quickly demand rises, prices either sta y the same or
slightly decline. To stay competitive and continue educating the consumer,
businesses maintain or slightly increase their promotional spending levels.
The promotion -to-sales ratio has dipped, which is a desirable development
as sales increase far more quickly than promotional expenses. Profits rise
during this phase as advertising expenses are dispersed over a greater
volume and unit production costs reduce due to the producer learning
effect faster than price declines. In order to plan new st rategies, businesses
must keep an eye out for the transition from an accelerating to a
decelerating rate of growth.
The company employs a number of techniques at this point to maintain the
quick market growth:
 It boosts product quality, introduces new func tions, and adopts better
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Product Decision
Over PLC
31  It includes new models and flanker items, which are goods of various
sizes, tastes, and other characteristics that defend the primary product.

 It expands into new market niches.

 It expands its reach and enters new avenue s for distribution.

 The emphasis switches from product awareness to product preference.

 To draw in the next group of price -sensitive buyers, it cuts prices.
An organisation in the growth stage must choose between a high market
share and a high current pr ofit; but, by investing in product development,
marketing, and distribution, it can establish a dominant position. In the
hopes of achieving even higher earnings in the following stage, it forgoes
the greatest existing profit.
3. Maturity Stage
The rate of s ales growth will eventually slow down, and the product will
reach a somewhat mature stage. This stage typically lasts longer than the
preceding stages and presents the planners with significant difficulties.
Most marketing managers deal with the challenge of selling the mature
product because most products are in the maturity stage of their life cycle.
Growth, stability, and declining maturity are the three stages that make up
the maturity stage. The sales growth rate starts to slow down in the first
phase. No fresh distribution channels need to be opened. Due to market
saturation, sales in the second phase level off on a per capita basis. Most
possible customers have already used the product, and population growth
and replacement demand will determine futur e sales. The third stage,
known as fading maturity, is characterised by a drop in sales volume
overall and a shift in consumer preferences.
The industry becomes overcapacity due to the downturn in sales, which
increases competitiveness. Competitors search frantically for niches.
They frequently mark things down. They increase marketing to consumers
and advertising. To create product upgrades and line additions, they raise
R&D expenses. Deals are struck to provide niche brands. Weaker
competitors start to le ave as a shakeout takes place. Eventually, the market
is dominated by well -established rivals whose primary goal is to gait or
hold onto market share.
A small number of enormous companiespossibly a leader in quality, a
leader in service, and a leader in co stthat serve the entire market and
generate the majority of their profits from high volume and low costs
dominate the sector.
Numerous market niches, such as market specialists, product specialists,
and customization businesses, surround these leading ente rprises.
A company in a mature market must decide whether to pursue a niching
strategy and generate profits through low volume and a high margin or to
fight to become one of the "big three" and achieve profits through large
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32 Product & Brand Management Some busi nesses discontinue their less profitable items in favour of newer,
more profitable ones. The Japanese proved wrong the notion that certain
industries, such as automobiles, motorbikes, television, watches, and
cameras, were already mature by coming up with innovative ways to
provide customers with fresh values. Through the use of marketing
creativity, seemingly dead companies like Jell -O, Ovaltine, and Ann &
Hammer baking soda have frequently seen significant sales revivals.
4. Decline Stage
Several factors, s uch as changes in consumer preferences, technical
advancements, and increased domestic and international competition, all
contribute to declining sales. All result in overproduction, increasing price
reductions, and diminished profits. The deterioration co uld happen slowly
or quickly. Sales could dry up completely or petrify at a low level. Some
companies leave the market as sales and profitability fall. The businesses
that are left behind might provide fewer products. They can slash their
promotion expendi tures and further lower prices, as well as withdraw from
weaker trade channels and smaller market sectors.
Unfortunately, most businesses lack a procedure for dealing with
deteriorating goods. Sentiment frequently contributes: It's a dreary job to
kill or let die products, and it frequently causes the same pain as saying
goodbye to long -time friends. Logic might also be important. The
management believes that product sales will increase as soon as the
economy improves, as soon as the marketing strategy is r evised, as soon as
the product is improved, or both. The management also believes that the
weak product may be kept on the market because it is thought to help the
company's other products sell, or that its revenue may be sufficient to
cover out -of-pocket expenses even if it is not making a profit.
Carrying a weak product is incredibly expensive for the company, and not
just in terms of the amount of undisclosed costs and earnings. Many
expenses are unaccounted for. Weak products frequently take up an
exces sive amount of management's time, necessitate frequent price and
inventory changes, typically involve short production runs despite costly
setup times, necessitate both advertising and sales force attention that
could be better used to make the healthy pro ducts more profitable, and can
harm the company's reputation. The greatest expense may very well be yet
to come. The vigorous hunt for alternative products is delayed when weak
products are not eliminated. An uneven product mix is produced by the
subpar pr oducts, which is long on yesterday's breadwinners and short on
tomorrows.
Some businesses will pull out of deteriorating marketplaces before others.
The presence and height of exit barriers in the sector affect a lot. The
easier it is for businesses to qui t the industry, the more enticing it is for the
remaining businesses to stay and win over the clients of the departing
businesses. For instance, Procter & Gamble continued to operate in the
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Product Decision
Over PLC
33 Kathryn Harrigan identified five decline strategies available to the
corporation in a study of company strategies in failing industries:
 Increasing investment by the company (to control the market or
improve its position as a competitor).

 Keepin g the firm's investment level constant until the industry's
uncertainties are cleared up.

 Slightly reducing the firm's investment level by eliminating
underperforming customer segments while stepping up its spending in
attractive areas.

 Harvesting (somet imes known as "milking") the firm's investment to
fast recoup cash.

 Quickly selling the company by transferring its assets in the best way
possible.

3.4 PRODUCT LIFE CYCLE STRATEGIES
The four distinct stages of the product life cycle are introduction, gr owth,
maturity, and decline. The marketing position of the product changes with
each step. To try to extend the life cycle of your products at each step, you
can employ a variety of marketing techniques.
1. Product Introduction Strategies
Marketing strategies used in the introduction stages include:
 rapid skimming - launching the product at a high price and high
promotional level

 slow skimming - launching the product at a high price and low
promotional level

 rapid penetration - launching the product at a low price with
significant promotion

 slow penetration - launching the product at a low price and minimal
promotion
During the introduction stage, you should aim to:
 establish a clear brand identity

 connect with the right partners to promote your product

 set up consumer tests, or provide samples or trials to key target
markets

 price the product or service as high as you believe you can sell it, and
to reflect the quality level you are providing



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34 Product & Brand Management 2. Product Growth Strategies

 The primary goal of marketing ta ctics utilised during the growth stage
is to boost earnings. The following are some typical tactics to try:
 improving product quality

 adding new product features or support services to grow your market
share

 entering new markets segments

 keeping pricing as high as is reasonable to keep demand and profits
high

 increasing distribution channels to cope with growing demand

 shifting marketing messages from product awareness to product
preference

 skimming product prices if your profits are too low
You shoul d have a quick increase in sales, profitability, and market share
throughout the growth stage. Your strategy should aim to take full
advantage of these chances.
3. Product Maturity Stage
Product will reach its mature stage when sales reach their peak. This
frequently indicates that your market will be saturated, and you may need
to alter your marketing strategies to extend the shelf life of your product.
There are two types of typical tactics that can be helpful at this stage:
 Gaining customers from competitor s, redefining target audiences,
entering new markets, and converting non -users are all examples of
market modification.

 Product modification would involve changing or upgrading a product's
features, quality, pricing, or distinguishing it from rival items .

4. Product Decline Strategies
As the product nears its end, you'll see a decline in sales and profits.
Changes in consumer preferences, technical advancements, and new
products on the market can all contribute to this. You will need to choose
your tactics at this point. You can do the following to save money:
 lessen the amount you spend on product promotion.

 lessen the number of distribution channels where they are sold

 Implement price reductions to entice people to purchase the product.

 Discover a new purpose for the product. Keep the product in operation
and wait for rivals to leave the market before abandoning it.


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Product Decision
Over PLC
35 3.5 SUMMARY
Introduction stage: A period of slow sales growth as the product is
introduced in the market. Growth stage: A period of rap id market
acceptance and substantial profit improvement. Maturity stage: A period
of slowdown in sales growth because the produced has achieved
acceptance by most potential buyers. Decline stage: The period when sales
show a downward drift and profits erod e. Style: A style is a basic and
distinctive mode of expression appearing in a field of human endeavour.
1.6 EXERCISE
1. Explain the concept of product life cycle, with suitable illustrations.

2. Describe each of the main stages of the product life cycle, and
strategies thereof.

3. How can we criticise the PLC concept? Support your answer with
examples.

3.7 REFERENCES
1. Product Management by Donald R. Lehmann and Russel S. Winer,
Tata McGraw Hill Publishing Company Ltd., New Delhi.
2. Marketing Management, by Phill ip Kotler, Prentice Hall of India, New
Delhi.
3. Marketing Management, Analysis, Planning and Control by Phillip
Kotler, Prentice Hall of India, New Delhi.
4. Marketing Management by RajanSaxsena, Tata McGraw Hill
Publishing Company Ltd., New Delhi.
5. Marketing Management - Planning, Implementation and Control, the
Indian Context by Ramaswami V.S. and Namakumari S., Macmillan
India Ltd., New Delhi.
6. Product Management in India by Majumdar, Prentice Hall of India,
New Delhi. 7. Brand Positioning -Strategies for Comp etitive
Advantage by Subroto Sengupta, Tata McGraw Hill Publishing
Company Ltd., New Delhi.


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36 4
NEW PRODUCT DEVELOPMENT
PROCESS
Unit Structure :
4.0 Objectives
4.1 Introduction
4.2 Business Analysis
4.3 Product Development
4.4 Consumer Goods Market Testing
4.5 Market Testing
4.6 Product Launching
4.7 Summery
4.8 Exercise
4.9 References
4.0 OBJECTIVE
Inspiration and sweat are required to produce truly excellent new products.
Companies must first come up with a great idea before working incredibly
hard to make it a reality. It involves eight stages in total, including idea
generation, idea screening, concept development and testing, marketi ng
strategy development, business analysis, product development, market
testing, and commercialization or product launching. New product
development is not just about thinking up new ideas and making products
based on them. The final four steps are the emp hasis of this lecture.
4.1 INTRODUCTIO N
A business is prepared to develop and introduce the right new items once
it has segmented the market, selected its target consumer groups,
determined their needs, and established its intended market positioning.
The establishment of an efficient organisation for managing the
development process is a prerequisite for successful new product
development by the corporation.
Product managers, new product committees, new product departments, or
new product ventures teams ar e all options for businesses. There are eight
stages to the new product development process. The creation of new
product concepts is the first step in the process. To choose the finest
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New Product
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37 and put to the test. Development of a marketing strategy comes next.
Business analysis, product development, market testing, and
commercialization make up the final four phases. The following
discussion covers all four stages.
4.2 BUSINESS ANALYSIS
Management can assess the proposal's business attractiveness after
creating the product concept and marketing strategy. Sales, cost, and profit
estimates must be made by management to assess if they meet business
goals. The product concept can advance to the product development stage
if they do; otherwise, it cannot. A thorough review of the potential
profitability of a new product idea is part of the business analysis phase.
Eliminating is the goal. Before significant development and market -testing
costs are incurred, marginal ventures. Assessing market potential is a
crucial first step. The market potential of a new product is the maximum
amount of cash or units that an industry could sell with a given marketing
effort. Following are some easy steps to potent ial estimation:
MP=N × P × Q Where,
MP = Market Potential
N = Number of possible buyers
P = Average selling price
Q = Average number of units purchased by each buyer
Predicting the costs and earnings is the next stage. A challenging but
crucial compone nt of business analysis is foreseeing expenses, earnings,
and how to create items before they are launched.
i. To determine if sales will be high enough to produce a sufficient
profit, management must estimate total expected sales.

ii. Calculating expected expe nses and profits. Following the preparation
of the sales projection, management should calculate anticipated costs
and profits.
Replacement sales and repeat sales should be included in the expected
total sales. Estimated first -time, replacement, and repeat purchases are
added to determine total estimated sales. A product can be a one -time buy,
like an engagement ring, an infrequent purchase, like a car, or a regular
purchase, like toothpaste, soap, etc. Sales of things that are only purchased
once increase initially, reach a peak, and then decline when the pool of
possible customers is depleted. The curve won't reach zero if new
purchasers continue to flood the market. Products that aren't bought very
often have replacement cycles that are determined by phys ical wear and
tear or by obsolescence brought on by evolving trends, features, and
performance. For this product category's sales forecasting, it is necessary
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38 Product & Brand Management Products that are frequently purc hased, like consumer and industrial non -
durables, have sales that are comparable. While fewer buyers remain, the
number of first -time buyers initially rises before falling as the population
stays constant. If some customers are satisfied with the goods, re peat sales
soon follow. The product is no longer new when the sales curve eventually
flattens out to represent a level of consistent recurring purchase volume.
The number of units that fail in the first, second, third, and so on years
must be investigated by the management to estimate replacement sales.
The low end of the distribution predicts the timing of the initial
replacement sales. Some managers decide to launch a new product purely
on the projection of first -time sales because replacement costs are
challenging to predict before the product is in use. It is not a simple effort
for a seller to predict both repeat and first -time sales for a new product that
is often bought.
Companies assess the merit of a new product proposition using different
financial metrics. The most straightforward is break even analysis, in
which management calculates how many units of the product must be sold
for the business to make a profit at the specified price and cost structure.
Management is likely to progress the project i nto product development if
it thinks sales might quickly reach the break -even point. Risk analysis is
the most challenging approach of profit estimation.
4.3 PRODUCT DEVELOPMENT
Establishing physically appealing qualities for new products and services
throughout development and testing is important. The goal is to translate
concepts into real goods that are cost -effectively produced by the
company, safe, and beneficial to the client. Typically, customer preference
tests, laboratory analyses, use tests, and pilot plant operations are all part
of the development process. The product concept advances to R&D or
engineering to be transformed into a tangible product if it passes the
business test. It has only ever existed as a verbal description, a design, or a
prototype up to this point. The investment required for this level is
significantly higher than it was in the previous ones. The business will
now decide if the product concept can be developed into a that is both
technically and financially viable. If it ca n't, the project's total cost —aside
from any helpful knowledge learned —will be lost.
A collection of techniques called as "quality function deployment"
facilitates the task of converting target customer requirements into a
functional prototype (QFD). The m ethodology converts the market
research -generated list of desirable consumer attributes (CA) into a list of
engineering attributes (EA) that engineers may use. Customers of the
suggested truck, for instance, might demand a specific acceleration rate
(CA).
This can be converted by an engineer into the necessary horsepower and
other engineering equivalents (EA.). The methodology enables
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New Product
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39 demands. The fact that QFD facilitates better communicat ion between
marketers, engineers, and manufacturing personnel is one of its significant
contributions.
One or more physical copies of the product will be created by the R&D
department. Finding a prototype that customers perceive to reflect the core
charact eristics outlined in the product concept statement, functions safely
under typical use and conditions, and can be produced for the estimated
manufacturing costs are its main objectives.
A successful prototype's development and production may take several
days, weeks, months, or even years. Even though it takes years to
construct a new commercial aeroplane, cutting -edge virtual reality
technology is accelerating the process. Companies can swiftly explore
approaches to address the uncertainties by designing a nd testing product
ideas through simulation.
When the prototypes are complete, they must pass demanding consumer
and functional tests.
i. Functionality Test
Alpha and Beta testing are examples of functional tests. The process of
evaluating a product internall y inside a company to determine how it
works in various applications is known as alpha testing. The business
transitions to Beta testing after further prototyping refinement. A group of
clients are recruited to test the prototype and provide feedback on th eir
opinions. Beta testing is most helpful when the target market is diverse,
possible applications aren't fully understood, several decision -makers are
engaged in the purchase decision, and early adopters are sought after for
their opinion leadership.
ii. Consumer Testing
Consumer testing can take many different forms, including inviting
customers into labs and providing them samples to use at home. Product
testing at home is typical for everything from new appliances to ice cream
flavors. In exchange for the homeowners' readiness to share their likes and
dislikes regarding the carpeting, DuPont installed free carpeting in several
homes as it developed their new synthetic carpeting. Numerous methods
exist for measuring consumer preferences.
Let's say a customer is shown three products A, B, and C such as three
commercials or three cameras.
 When asked to rank the three options in order of preference, a
consumer may respond with A>B>C using the Rank Order approach.
Although this method is straightforward, neither does it indicate how
strongly the customer feels about each item nor does it indicate
whether the consumer likes anything a lot. Using this strategy when
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40 Product & Brand Management  The paired comparison method involves showing pairs of products and
asking the customer which one they prefer. As a result, if the consumer
is provided with the pairs AB, AC, and BC and indicates that he
prefers A to B, A to C, and B to C, we can infer that A>B>C. People
may easily express the ir choice between two things, and this technique
enables the consumer to concentrate on the two things, highlighting
their similarities and differences.

 The monadic rating approach invites the consumer to rank their level
of satisfaction with each product . Let's say a seven -point scale is
employed, with 1 denoting a strong dislike, 4 denoting indifference,
and 7 denoting a strong liking. The consumer would respond with the
following rating: A=6, B=5, C=3. We can determine the person's
preference hierarchy, i.e., A>B>C, as well as the qualitative levels of
each preference and the approximate distance between them.

4.4 MARKET TESTING
The product is ready to be dressed up with a brand name and packaging
and put to a market test once management is pleased with functional and
psychological performance. To determine the size of the market and how
competitive it is, the new product is launched in an actual environment.
After experiencing, utilizing, and repurchasing the product, buyers and
sellers respond.
Market testing is a strategy used to evaluate a business's marketing
strategy for a new product before it enters the market. It offers the final
opportunity for fine -tuning and is a real exam in a real setting. It is a
method whereby a business tries to assess th e commercial viability of the
marketing strategy for a new or changed product or package on a small
scale. Such a test serves two purposes.
 It is intended to give a credible assessment of the new product's sales
and profit potential and, before committing to a full -scale introduction,

 It assists management in identifying and fixing any issues relating to
the marketing plan and the product.
Not all businesses conduct market research. The time constraints and
research costs on the one hand, as well as the i nvestment cost and risk,
have an impact on how much market testing is done. Products with a high
risk of failure and large investment requirements must be tested on the
market.
4.5 CONSUMER GOODS MARKET TESTING
The corporation wants to estimate four factor s while testing consumer
goods: trial, first repetition, adoption, and purchase frequency. All these
variables should be found at high levels, the company hopes. In some
instances, many buyers will sample the product, but few will decide to
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New Product
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41 but low purchasing frequency. From the least expensive to the most
expensive, let's go over some of the main consumer products market
testing techniques.
1. Sales Wave Research
Consumers who initial ly test a product for free or with free samples are
offered the same product or a competitor's product again at a discount in
sales -wave research. In what are known as sales waves, the product may
be presented to the consumer up to three or five more times . The business
tracks how many customers choose that company's goods again and their
reported degree of satisfaction. Customers can be exposed to one or more
advertising concepts as part of sales wave study to determine how that
advertising affects repeat purchases.
Sales -wave research can be carried out without final packaging and
advertising, swiftly, and with a reasonable level of security. However,
because the customers that try the product are already chosen, sales -wave
research does not show the trial rates that might be reached with other
sales promotion incentives. Additionally, it does not convey the brand's
ability to secure distribution and a favorable shelf position.
2. Laboratory/Simulated Test Marketing
An inexpensive replacement for conventional test marketing is this. For
packaged consumer goods, the technique often includes respondents
shopping in a controlled environment in a mock supermarket, as well as
viewing advertising and other marketing materials in facilities resembling
auditoriums. Eac h sample's respondents are typical of the target market,
and they take part in the following activities.
 300-400 respondents are exposed to a TV show featuring a number of
communications about brands in the product class, including one for
the brand after completing a self -administered questionnaire on their
individual demographics and purchase behaviour in relation to the
product class of interest.

 The simulated store, which is filled with the items featured in the
advertisements as well as many other com panies, is visited by the
respondents. Respondents are given a set sum of money and instructed
to spend it on the brand of their choice.

 After making a purchase, respondents in small groups have
concentrated conversations about the reasons behind their ch oice.

 The responders then go back to their homes.

 To get feedback on the product purchase, including satisfaction or
discontent, usage information, repurchase intentions, and comparisons
to other brands utilized, respondents may be re -interviewed by phon e
later. Respondents are offered the option to repurchase the test brand,
which is subsequently supplied to them if they request it if an extended
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42 Product & Brand Management  Longer follow -up times allow for the analysis of more repurchase
scenarios, which imp roves the reliability of the test results. The
procedure makes the assumption that the test subject's behaviour was
realistic because he was required to pay for both the initial and
subsequent purchases.

3. Controlled Test Marketing
In this approach, a resea rch company oversees a panel of retailers who
will sell new products in exchange for a fee. The business with the new
product defines how many stores and where in the world it wants to test it.
In addition to controlling shelf locations, the number of faci ngs, displays,
and point -of-purchase promotions, the research firm also delivers the
goods to the participating stores. Electronic scanners at the checkout can
be used to gauge sales outcomes. During the test, the business can assess
the effectiveness of r egional advertising and promotions.Through
controlled test marketing, the business can examine the effects of in -store
elements and modest advertising on consumer behaviour. Later, a sample
of consumers might be questioned about the product to get their op inions.
The business is not required to employ its own sales team and provide
trade allowances. This tactic, nevertheless, makes the product and its
characteristics vulnerable to competitive inspection.
4. Full Scale Test Marketing
Putting a new consumer prod uct into full -fledged test markets is the best
approach to test it. The business picks a few representative cities, and the
sales team works to sell the product while simultaneously attempting to
give it favorable shelf exposure. Like its national marketin g strategy, the
corporation runs a comprehensive advertising and promotion campaign in
these markets.
4.6 PRODUCT LAUNCHING
The introduction of new products to dealers and eventually to the final
consumers is the last step in the product development proces s. The goal of
the product launch is to convince the retailers to stock the goods and the
final customer to make a first -time purchase. The corporation feels
confident launching the product thanks to the positive test marketing
results. The company can now begin full -scale manufacturing, but it must
first choose the date, region, target market, and introduction strategy for
the new product launch.
1. When (Timing)
The timing of a new product's market introduction is crucial since many
products' success or fail ure depends on when they are first presented.
Imagine that a business is almost finished with the development of a new
product when it discovers that a rival is virtually finished. The business
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New Product
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43 i. First entry: A company that enters a market first typically has an edge
over later entrants in terms of locking up important distributors and
clients and establishing reputational leadership. According to
conventional knowledge, launching new items initially can help you
attract early adopters and build a dominant position in the market. For
instance, Chrysler was the first company to sell minivans, and they
continue to lead the market. However, if the product is pushed into the
market before being fully tested, it may develop a negative reputation.

ii. Parallel entry: The business may time its entry to coincide with that
of a rival. When two companies promote a new product, the market
may pay greater attention, and awareness will be raised more quickly.

iii. Late Entry: The company may postpone its launch until after the
competition has begun. The expense of educating the market will have
been borne by the rival. The product of the rival might exhibit flaws
that the late entrant could avoid. The market's size can be more
accurately estimated by the company.

2. Where (Geographic Strategy)
The business must choose whether to introduce the new product to the
national market, the international market, one locale, a region, or many
areas. The size of the company is crucial in this case. Small businesses
will first choose a desirable city before expanding into more cities one at a
time. Large businesses will launch their product throughout a whole
region before moving on to the following one. Companies that have a
national distribution network, like automakers, will introduce their new
models there. New items are typically created by businesses with the
domestic market in mind.If the product sells successfully, the business
may think about exporting to nearby nations or the global market. Due to
the Internet's ability to link remote regions of the world, businesses are
increasingly launching new items globally at once as opposed to only
locally or even nationally.
3. To Whom (Target Market)
To the best prospect groups, the corporation must direct its early
distribution an d promotion. The business might concentrate on cheaply
accessible early adopters, frequent users, and opinion leaders.
4. How (Introductory Market Strategy)
The business must create an implementation strategy before releasing the
new product.
The business mus t choose the launch pricing, marketing strategy,
distribution, and even the models and characteristics of the
product.Because sales and goodwill might be lost if a product doesn't
reach the market on time, product availability is vital throughout the
launc h phase.Management can employ network -planning methods like
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44 Product & Brand Management activities involved in launching a new product (CPS). The CPS
recommends creating a master chart outlining the concurrent and
sequential actions that must be taken to launch the product. The planners
estimate how long it will take to complete the project by calculating how
long each activity will take. The project will be postponed if any task on
the critical path is delayed. The pla nner looks for solutions to shorten the
critical path if the launch needs to be done sooner.
4.7 SUMMARY
The last four steps of the new product development process —business
analysis, product development, market testing, and product launch —are
covered in th is session. The marketing test idea examines the methods
utilized for marketing tests as well as the justification for them.market
analysis the product launch concept provides a thorough explanation of the
marketing strategy for the introduction of a new p roduct as well as the
actions required for identifying and choosing the target market.
4.8 EXERCISE
(i) How will you conduct business analysis for developing new
products?

(ii) Discuss the process of converting idea or concept in physical shape.

(iii) Differentiate b etween test marketing and market testing and discuss
the process of test marketing.

(iv) How can a company launch a new product? Explain with the help of
suitable example.

4.9 REFERENCES

(i) William J. Stanton, Michael J. Etzel, and Bruce J. Walker,
“Fundamenta ls of Marketing”, 10th Edition, Mc Graw Hill
International edition, 1994.

(ii) Douglas J. Dalrymple, and Leonard J. Parsons,” Marketing
Management -Text & Cases”, 7th edition, John Wiley & Sons
Publication, 2002.

(iii) Ang, SH, Leong, SM, Tan, CT, and Kotler, P., “Marketing
Management - An Asian Perspective”, Prentice Hall & Simon &
Schuster (Asia) Pvt. Ltd., Singapore, 1996.

(iv) Brassington, F., and Pettitt, S., “Principles of Marketing”, Pitman
Publishing, London, 1997.

(v) Dibb, S., Simkin, L, Pride, WM, and Ferrell, OC, “Marketing
Concepts& Strategies”, 2nd European edition, Houghton Mifflin
Company, London, 1994.
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45 5
FINANCIAL DECISION USING POLLI
AND COOK MODEL
Unit Structure :
5.0 Objectives
5.1 Introduction
5.2 Management Implications
5.3 Managing Finances at different levels of PLC
5.4 Summery
5.5 Exercise
5.6 Refences
5.0 OBJECTIVES
1. To sensitise students about financial implication of PLC
2. To identify various factors affecting Financial Decision
3. To understand the stagewise implication of PLC on Financial decision
making in an organisation

5.1 INTRODUCTION
The traits and make -up of corporations have undergone significant
transformation in the first years of the twenty -first century. The number of
public companies has sharply decreased, and these companies are bigger
and older, spend more on R&D than on capital investments, and have l ess
fixed capital. In addition, market concentration has increased, superstar
firms have been created, and there have been significant changes in how
public companies use both the public and private financial markets.
Understanding a company's investment a nd financing decisions starts with
these changes.
While the stages of a product's life cycle significantly influence
investment choices, financing strategies follow a similar pattern. For
instance, it's likely that stock would be used to finance the design and
development. It becomes more likely for the company to issue debt
instruments as it advances to investing in process innovation, including
investments in physical assets like plants and distribution systems,
especially since the physical assets can be used as collateral. The balance
shifts in favour of tax management as the project matures and produces
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46 Product & Brand Management funding will be the stages of a firm's lifecycle and the anticipated growth
prospe cts available at each step.
Although the idea of a "product life cycle" has received a lot of attention
over the past ten years, it has not been thoroughly investigated as a model
of sales behaviour. This could be due to a tendency to not take the model's
notion seriously, which would be consistent with the validity of the model
as it is now understood. However, some authors have suggested that the
substance of marketing programmes at various stages of the product life
cycle be based on the life cycle of th e product.' Some of these authors'
suggestions regarding the amount of advertising weight, kind of
distribution, price strategy, and other topics are predicated on the idea that
the product life cycle is The vast bulk of the business' marketing initiatives
are unconnected. Variations in advertising, for instance, might not have a
large impact on a product's life cycle, but this should be confirmed clearly
before it is used as a foundation for planning.
Introduction Vs Maturity Stage of Product Life Cycle
Businesses that are adept at managing all four stages can boost
profitability and enhance profits. Those that can't might see a rise in their
marketing and production expenditures, which would ultimately result in
their product having a shorter shelf life.
Theodore Levitt, a marketing professor, stated in the Harvard Business
Review in 1965 that the innovator carries the most risk because so many
truly novel products fail in the introduction stage, which is the first stage
of their life cycle. Failure only oc curs when significant time and money
have been spent on research, development, and production. Many
businesses are discouraged from even trying something truly novel due to
this problem. Instead, he claimed, they watch for success in others before
duplicat ing it.
Many of the world's most popular items are kept as long as possible in the
mature stage while getting minor upgrades and redesigns to make them
unique. Examples include Apple laptops and iPhones, Ford's best -selling
pickup vehicles, and Starbucks c offee. All of these products undergo small
adjustments followed by marketing initiatives that are intended to
maintain their perception as being exceptional and distinctive in the eyes
of customers.
Businesses are under increasing pressure to alter their o perations and
become more efficient as a result of the toughening of the global
competition. Product life cycles are getting shorter and changes are
happening at an unprecedented rate. As more and more products are
produced in accordance with customer requ ests, the number of variations
in product structures will rise.

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Financial Decision
Using Polli and Cook
Model
47 Examples of PLC
Woolworth Co.
Frank Winfield Woolworth established the general merchandise retail
establishment F.W. Woolworth Co. in 1905. In 1929, Woolworth had
roughly 2,250 outlet stores s pread out over the United States and Great
Britain. Decades later, in 1997, Woolworth closed the last of its variety
stores in the United States due to increased competition from other
discount retailers, shifting its attention to athletic goods.
COCA -COLA
Coca -Cola introduced the "new Coke" formula for its well -known
beverage on April 23, 1985. Coca -Cola chose to introduce a new formula
in the hopes of reviving consumer interest in the product because its
market -share advantage had been declining during the previous 15 years.
Following the change's introduction, Coca -phone Cola's line started
receiving 1,500 calls daily, many of which were complaints over the
modification. 100,000 people were enlisted by protest groups to endorse
their campaign fo r the return of "vintage" Coke.
Typically, a product class can be divided based on a number of factors.
Only when all of the product and package distinctions that contribute to
different trends in demand are taken into consideration can a product class
be satisfactorily divided into product forms. Contrary to what the overall
results suggest, we discovered that when a market was sufficiently
segmented, there was typically pretty good consistency between the sales
behaviour of the various product types and the life cycle model.
5.2 MANAGEMENT IMPLECATIONS
Even after a protracted stretch of stable sales in a general product class, it
is wrong to assume that a ceiling sales level, or saturation, has necessarily
been reached. Whatever its other benefits, the product life cycle model
cannot be used to support this conclusion. Only when both new product
forms and new uses for existing forms cannot be found with current
technology is saturation reached. Both of these factors have the potential
to considerably rai se consumer acceptability of a general product class,
and their impacts cannot be predicted based on previous shifts in sales
behaviour.
A. Decline as an Adjustment Period
A general product class's sales won't necessarily continue to drop just
because there h ave been multiple episodes of decline following a long
period of sales stability. On the other hand, our research indicates that a
general product class is likely to continue declining. Though a product
class's observed decline period could continue, the m ost likely outcome
will be a downward change in the sales ceiling followed by a new era of
sales stability or maturity. Therefore, a general product classdecline in munotes.in

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48 Product & Brand Management popularity does not indicate that it represents a market opportunity that is
about to expir e.
B. Growth is Short and Maturity Prolonged
The findings do improve our understanding of how much time is spent in
each stage. It was determined that maturity takes longer than growth and
that maturity is too readily lost. Only little more than 26% of the
observations included in the study were classified as being in the growth
stage, while more than 50% were classified as being in the maturity stage.
It would seem that managing older products is a significant, lasting issue.
C. Maturity Conceals Turmoil
It has been hypothesised on occasion that a product's market share stability
is related to its stage of maturity. This recommendation was determined to
be inappropriate in relation to the share of product forms within a broad
product class. Even after protrac ted maturity in the broad product class,
variations in acceptance levels among product forms are quite substantial.
This repeatedly happened during our testing of the life cycle model.
Consider plain filter cigarettes as an illustration. This product type had
quick expansion to a high level of sustained demand, despite the fact that
the product class has been in the mature stage for more than 40 years. A
mature product class may, of course, present significant market potential
to a new product form with uni que product advantages. Though additional
data needs to be examined, it appears that the same idea of share stability
over maturation applied to trademarks with - in a product form is accurate.
D. Decline in Product Form is Real
Strong consequences for market planning follow from the validity of the
life cycle model or productsales in comparison to product -class sales. The
beginning of a decline period in a certain form must be treated seriously
because it is likely to be irreversible, according to a reliable l ife cycle
model for product forms. The performance of the life cycle model is
robust enough to warrant usage in that category and future testing in other
categories, even at the brand level of aggregation, where only cigarette
sales were examined.
Factors Affecting Financial Decision
Determining how much money will be raised from which long -term
source, such as shareholder capital or borrowed funds, is the focus of the
financial decision. Debentures, long -term loans, and public deposits are
examples of bor rowed money, whereas share capital, reserves, surplus,
and retained earnings are examples of shareholders' money.
There are two ways to talk about the variables that affect financial choices.
There are two types of factors: internal and external. The type of business,
size, organisational structure, and asset structure are only a few examples
of internal influences. External influences include things like the state of munotes.in

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Financial Decision
Using Polli and Cook
Model
49 the economy, tax laws, government regulations, capital structures, and
financial markets.
There are three important financial decisions
a. Choosing an Investing - The financial choice about the investing of a
company's funds in various assets is known as the investment decision.
One can decide whether to invest for the long term or the short term. A
capital budgeting choice is a decision about a significant number of
long-term investments that cannot be undone except at a significant
expense. Short -term investment decisions that impact a company's
daily operations are known as working capital decisi ons. It addresses
choices involving the amounts of cash, inventories, and receivables.

b. Decision on Financing - The sum of money to be raised from various
long-term funding sources, such as equity shares, preference shares,
debentures, bank loans, and so for th, is included in a financial
decision. A financing choice is what is being made here. In other
words, it concerns the "capital structure" of the business.

c. Dividend Decision - Determine how much of a company's profit
should be distributed to shareholders a s a dividend and how much
should be kept back for unforeseen circumstances when making the
dividend choice (retained earnings). A dividend is a portion of the
earnings that is paid out to shareholders. With the overarching
objective of boosting shareholder value in mind, dividend policy
decisions should be made.
Factors which affect these decisions are

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50 Product & Brand Management 1. Cost
All decisions on funding are based on how to allocate resources and
reduce expenses. The price of borrowing money from different sources
varies. Generally speaking, a responsible financial manager would go with
the cheapest option. The best solution should be picked based on pricing.
2. Risk
Different sources carry varying levels of risk. The finance manager
favours securities with a low risk factor after weighing the cost and risk.
When compared to stock funds, borrowing money comes with a higher
risk. Risk assessment is one of the most crucial aspects of funding
selections.
3. Floatation Cost
As the cost of flotation increases, the source loses attract ion. It alludes to
expenses related to the issuance of securities, including broker
commissions, underwriters' fees, prospectus costs, and so forth. A source's
attraction to management decreases with increasing flotation cost.
4. Cash Flow Position of Busines s
Debt financing may be more attractive than equity financing due to a
higher cash flow situation. Companies with consistent cash flow can
readily afford borrowed fund securities, but when cash flow is scarce, they
must rely solely on owner’s fund securit ies. A positive or negative cash
flow position encourages or discourages investors to invest in the
company.
5. Level of Fixed Operating Cost
High fixed operational costs are a positive indicator for a business (e.g.,
building rent, Insurance premium, Salarie s, etc.). It must select fixed
financing costs that are less expensive. Therefore, lower interest -rate debt
financing is preferred. In a similar vein, higher debt financing may be
chosen if the fixed operational costs are lower.
6. Control Considerations
Increased equity concerns could reduce management's sway over the
business. Contrarily, debt financing has no such effects. As a result,
businesses that are worried about a takeover offer could favour debt over
equity. If existing shareholders desire to ma intain complete control of the
business, they choose borrowing money securities to raise more funds.
7. Tax Rate
Because interest is a deductible expense, the tax rate affects the cost of
debt. A higher tax rate lowers the cost of debt and makes it more tempting
than equity because interest is a tax -deductible expense. As the tax rate
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Financial Decision
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51 8. Condition of The Market
Financing choices are significantly influenced by the situation of the
market. The most frequent proble m for businesses is equity during a
boom, but during a recession, they will need to rely on loans. The funding
procedure depends on these choices.
5.3 MANAGING FINANCES AT DIFFERENT STAGES
OF PRODUCT LIFE CYCLE
Launch, growth, maturity, and decline or r enewal are the four stages of
any business' life cycle. Too many times, businesses miss possibilities for
efficient management because they are unable to recognise the precise
stage that their company is in. For instance, it is incorrect to assume that a
steady rise in revenue means your company is in a growth period.
You may better prepare for the opportunities and challenges in each phase
of the business life cycle by having a thorough understanding of each one.
Depending on the sort of business, each sta ge's characteristics may differ,
however if there is one aspect that influences all stages of business, it is
cash flow.


1. Launch
The business life cycle begins at this stage. Establishing your business
concept with your audience is the aim of this phase in order to generate a
profit. If you look at the graph for this stage, you'll see that sales typically
start out slowly before gradual ly increasing. Businesses frequently focus
on marketing their concepts to a certain audience in order to increase
income.
2. Growth
The growth phase has a slightly steeper slope than the earlier phase. This
stage of a firm is characterised by a sharp rise in sales that, as your
company becomes more well -liked by a larger consumer base, increases
earnings. You must concentrate on creating and developing your brand munotes.in

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52 Product & Brand Management and make investments in initiatives that raise your brand value if you want
to compete in this pe riod.
3. Maturity
If your company has progressed to this point, you have a loyal following
of clients, but the competition is still fierce. Because of this, the graph's
slope, which shows your consistent turnover, is a flat line. Because you
sell roughly the same goods at the same price every year, your sales
revenue will be quite consistent. Businesses in this phase concentrate on
holding their ground in relation to the economy, rivals, and the shifting
needs of the customers. To compete with other businesse s, you must
concentrate on productivity and improvement while keeping an eye on the
wider picture.
4. Decline or Renewal
Businesses may struggle in this phase, also known as the post -maturity
phase, to handle the fresh difficulties provided by rivals. Busine sses can
now choose from a number of paths based on how their leadership reacts.
If there is no room for continued business and no effective attempt at
regeneration, they may eventually decline. Otherwise, they may stay in
their current state.

Source -https://www.zoho.com/books/articles/heres -how-you-can-manage -
cash-flow-at-different -stages -of-business -growth.html
5.4 SUMMARY
The management of products throughout their lives is known as product
life cycle management. Here are a few of the several business concept
principles. American economist Theodore Levitt originally introduced the
phrase "product life cycle" in 1965. He used th e management concept to
demonstrate to product managers and brand leaders how to effectively
apply it to their company operations in one of his publications. Levitt
covered the definition of the product life cycle as well as how the idea
might be applied t o obtain a competitive edge in his article. The
American -German scholar also discussed how, when used properly, the
idea may help businesses. munotes.in

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Financial Decision
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53 How have companies like Pepsi Co., Apple, and Coca -Cola stayed popular
for so long? It's because they successfully incorporated the product life
cycle concept into their approach for developing and analysing business
ideas. It is simpler to comprehend the meaning of the product life cycle if
you follow the development of these brands and learn how they handled
crises by using this management principle.
How long does a product last, then? It charts the period of time from the
product's introduction until its removal from the market. It is a
management tool mostly used by marketing managers and brand managers
to examine the behaviour of a product from conception to conclusion.
Managing a product's life cycle from conception to finish is referred to as
product life cycle management (PLM). PLM covers everything, from
design to price. Software is used to carry out the proces s, making it simple
for PLM managers to monitor progress and adjustments.
Along with monitoring and assessing a product, PLM is essential for the
conception and creation of new goods that provide a competitive edge. It's
interesting how many companies impl ement a product management life
cycle to stay competitive and incorporate new features into their current
products to boost customer loyalty.
5.5 EXERCISE
Answer The Following Question
1. Explain the Factors Affecting Financial decisions in an Organisation
2. Write a detailed note on stage wise implication of Product Life Cycle
on financial decisions

5.6 REFERENCES
 Hertati, L., Safkaur, O., Simanjuntak, M.A. (2020), How to align
management commitments to the successful implementation of
management accounting i nformation systems in manager decision
making. IJTC Ilomata International Journal of Tax and Accounting,
 Hertati, L., Syafarudin, A. (2018), How the implementation of the
industrial revolution 4.0 management information system influenced
innovation: The c ase of small and medium enterprises in Indonesia.
Journal of Asian Business Strategy, 2018, 3(4), 52 -62.
 Hertati, L., Widiyanti, M., Desfitrina, D., Syafarudin, A., Safkaur, O.
(2020), The effects of economic crisis on business finance.
International Jour nal of Economics and Financial Issues, 10(3), 236 -
244.

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54 Product & Brand Management  Hertati.L.Safkaur. O. (2020). The Influence of Information
Technology Covid -19 Plague Against Financial Statements and
Business Practices 2020. IJTC Ilomata International Journal of Tax
and Accounting . 2020.
 https://www.google.com/search?q=product +life+cycle+affecting+fina
ncial+decision&oq=product+life+cycle+affecting+financial+decision
&aqs=chrome..69i57j33i160l2.12103j1j15&sourceid=chrome&ie=UT
F-8
 https://emeritus.org/in/learn/what -is-product -life-cycle/



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55 6
INTRODUCTION TO BRAND
MANAGEMENT
Unit Structure :
6.0 Objectives
6.1 Introduction
6.2 Concept and Definitions of Brand
6.3 Branding - Meaning
6.4 Scope of Branding
6.5 Challenges of Branding
6.6 Brand Architecture
6.7 House of Brands - Meaning, Advantages and limitations
6.8 Branded Hou se- Meaning, Advantages and limitations.
6.9 Corporate Brands - Meaning and Advantages
6.10 Exercise
6.11 Refences
6.0 OBJECTIVES
1. To Acquaint the students with concept and importance of Brand
management

2. To Sensitize the students about the Brand architecture

3. To help stu dents understand house of brands, Branded house and
corporate brands
6.1 INTRODUCTION
Understanding the definition of "brand" in its entirety is the first step in
managing a brand. It entails coming up with a promise, making that
promise, and keeping it. I t entails defining, positioning, and
communicating the brand. Creating and maintaining a brand is all that
brand management is. Customers become loyal to your company because
of your brand. Your items stand out from those of the competition thanks
to a str ong brand. It enhances the reputation of your company.
The idea of a brand is very new in its current form. The ultimate goal of
any marketing endeavor is to create a brand. According to the American
Marketing Association, a brand is any name, phrase, sign , symbol, design,
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56 Product & Brand Management services of one seller or group of sellers and set them apart from those of
rivals. This definition has three elements. It begins by concentrating on the
brand's "Wha t." It also emphasises what the brand "does." Any
combination of a name, symbol, logo, or trade mark might be considered a
brand.
6.2 DEFINITIONS
“A successful brand is an identifiable product, service, person or place,
augmented in such a way that the buy er or user perceives relevant unique
added values which match their needs most closely. Further more -its
success results from being able to sustain these added values in the face of
competition.”
“A name, term, sign, symbol or design, or a combination of these, that is 
intended to identify the goods and services of one business or group of
businesses and to differentiate them from those of competitors”
“A mixture of tangible and intangible attributes symbolized in a
trademark,  which, if properly manage d, creates influence and generates
value” – (Interbrand - a leading branding consultancy)
A product, but one that adds other dimensions that differentiate it in
some  way from other products designed to satisfy the same need.
6.3 BRANDING
Making a brand is the act of branding. Establishing brand standards,
creating your name (your verbal identity), designing your corporate
identity or product identity (your visual identity), creating your brand
messaging (verbal and written tone), and positioning your bu siness or
product in the market (carving out your own niche) are all steps in the
process (how you keep your brand consistent and strong). One of the most
crucial elements of corporate strategy nowadays is branding. It's also one
of the most misinterpreted , too. Sometimes people think branding is just
another form of advertising.
In short branding is
Branding is a strategic perspective, not a limited range of actions.
Not simply for images, branding is essential to generating customer value.
A crucial strat egy for establishing and preserving competitive advantage is
branding.
Brands are societal cultures that are told in commonplace ways.
Effective brand strategy must take into account the four main facets of
brand value.
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Introduction to Brand
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57 To put it another way, it's the marketing technique of coming up with a
name, symbol, or design that defines and sets a product apart from similar
things.

Source:https://ebooks.lpude.in/management/mba/term_4/DMGT508_PRO
DUC T_AND_BRAND_MANAGEMENT.pdf
Brand Management
A brand communicates who and what your business is. This includes your
company's name, logo, messaging, merchandise, design, and any other
element that distinguishes your business from competitors and identifies
your products and services. You are creating a promise with your brand,
communicating this promise, and then upholding it.
The art and science of building and maintaining a brand is called brand
management. This entails defining the brand, positioning the brand, and
continuously communicating the brand value. Branding fosters customer
loyalty to your company. A strong brand sets your company apart from the
competition and gives you an advantage over them, enabling you to boost
sales and expand your company.
Dealing with a brand's tangible and intangible qualities is a part of brand
management. Regarding product brands, this covers the actual product,
packaging, cost, accessibility, etc. Customers' experiences are tangibles
for service brands. Emotional ties and expectations with regards to goods
and services are examples of intangibles. Building your brand also entails
choosing the ideal marketing strategies to establish and support your
identity. If done properly, you may even develop a brand that can stand
out from the competition and inspire customer loyalty.
6.4 SCOPE OF BRANDING
1. Physical goods: Traditionally, trademarks have been associated with
physical goods, which include many of the most well -known and
esteemed consumer items, including Mercedes -Benz, Nescafé, Sony,
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58 Product & Brand Management 2. Services: Although well -known service brands like American Express,
British Airways, HDFC Bank, LIC, Airtel, Dominos, Big Bazaar, etc.
have been around for a while, service branding is crucial because it
enables consumers to t ell one service apart from another.
3. Retailers and Distributors: Brands serve a number of crucial services
for retailers and other channel participants that distribute items. As
people come to expect specific brands and items, brands can increase
consumer a ttention, spending, and loyalty in a store. Retailers have the
option of launching their own brands under their existing identities,
brand -new names, or a combination of the two.Eg: Amazon, 99 stores
etc.
4. Online Services and Goods: Some of the most powerfu l companies in
recent years were created online. Three prominent examples include
Google, Facebook, and Twitter. Online marketers are now aware of
the limitations of developing brands. Successful online brands are
strategically positioned and have develope d original methods for
meeting consumers' unmet demands.
5. Individuals and Organizations: The naming component of branding
is, at the very least, typically simple when the product category is
people or organisations. Some companies, like TATA, Google, and
Philips, have established themselves as household names. These
brands frequently have distinct identities that people can recognise and
either like or despise. Even public people like politicians, actors, and
athletes are brands in their own right and have a n impact on
consumers' purchasing decisions.
6. Sports, the arts, and entertainment: In recent years, sports
marketing has advanced significantly. A creative fusion of advertising,
promotions, sponsorship, direct mail, digital, and other kinds of
communicatio n is how many sports teams advertise themselves. FIFA,
the Mumbai Indians, the VIVO IPL, etc. The arts and entertainment
sector, which produces our favourite television shows, music, and
novels, places a specific emphasis on branding. By fusing all these
elements into a formula that appeals to customers, several film series,
such Spider Man, James Bond, Harry Potter, and others, have built
themselves into great brands.
7. Geographical locations, such as a country, city, region, or individual,
can likewise be b randed. The tourism sector has expanded in recent
years. The promotion of Ayurveda by Kutch Ran Mahotsav, Dubai's
Shopping Festival, Kerala's "God's Own Country," and other events
have raised awareness and improved brand perception.
8. Ideas and Causes: Many ideas and causes, especially those supported
by nonprofit organisations, have been branded. They might even be
symbolised by a phrase or a symbol, like the AIDS ribbon, Swatch
Bharath, etc.
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59 6.5 CHALLENGES OF BRANDING
1. Smart Consumers: Both consumers and bu sinesses are becoming
more accustomed to and aware about marketing. A thriving media
landscape has led to a rise in the amount of focus placed on corporate
marketing strategies and goals. Many think it's more challenging now
than it was in the past to infl uence consumers through conventional
communications. Some marketers think that consumers' expectations
for brands, products, and services have evolved. For instance, Saatchi
and Saatchi's Kevin Roberts contends that businesses must go beyond
brands to est ablish "trust marks" —a name or symbol that emotionally
connects a business with the needs and goals of its clients.

2. Brand Proliferation: The proliferation of new brands and goods
brought on by the surge in line extensions and brand extensions is
another s ignificant trend in the branding landscape. As a result, a
brand name can now be associated with a variety of goods that vary in
their degree of likeness. A number of line extensions have been added
to Procter & Gamble's original Crest toothpaste, includin g Crest Mint,
Crest for kids, Crest Baking Soda, and Crest Multi care Advanced
Cleaning.

3. Media Fragmentation: The fragmentation of traditional advertising
media and the advent of interactive and non -traditional media,
promotion, and other communication al ternatives are significant
changes in the marketing environment.

4. Increasing Competition: The level of competition has increased as a
result of variables on both the supply and demand sides. On the
demand side, the consumption of a number of goods and serv ices has
gotten fat and reached the maturity stage, if not the decline stage, of
the product life cycle. As a result, brand sales growth can only be
attained by depriving rival brands of some of their market share.

5. Rising Costs: The price to launch a new product has increased along
with the level of competition. It becomes challenging to match the
amount of money and support that businesses were able to get in prior
years.

6. Greater Accountability: Earnings reports that are solid and consistent
are valued b y stock analysts as a sign of a company's long -term
financial health. Because of this, marketing managers could be forced
to make choices that have both short - and long -term benefits.

7. Additionally, many of these managers have gone through a lot of job
changes and promotions, so they might not stay in their current roles
for very long. These various organisational pressures could promote
hasty fixes, which might have negative long -term effects.


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60 Product & Brand Management 6.6 BRAND ARCHITECTURE
Building a strong brand entails brand architecture, which generally
outlines how a brand appeals to consumers and provides cues as to what
the brand is purposefully comprised of. The organisation of brands inside
an organization's identity is known as brand architecture. The gist is that a
brand's architecture is a system for setting up the many divisions of a
larger brand. It refers to how a company's portfolio of brands link to or set
themselves out from one another. The architecture should outline the
organisational hierarchies, including h ow the "parent" or corporate brand
interacts with the sub -brands, how they complement or compete with one
another, and how the sub -brands reflect or advance the corporate brand to
which they are related. It can assist a marketer in understanding how to
maintain various aspects of a brand distinct when necessary and how to
enable them to collaborate and support one another.Thereare two basic
approaches to building a brand: the Branded House and the House of
Brands. They nearly seem familiar, but they are ver y different.
6.7 BRANDED HOUSE V/S HOUSE OF BRANDS
David Aaker introduced the concepts of "branded house" and "house of
brands" in his book Brand Leadership. To describe how offers in a
portfolio relate to their corporate parent brand, Aaker created a bran d
relationship spectrum. Marketers who are looking for the best method to
organise their brand portfolios still use this today.
Aaker's study provides multiple instances of businesses with portfolios at
either end of the brand architecture spectrum and at points in between,
going into great detail and depth about it. He also suggests the benefits and
drawbacks of each position. Five factors are relevant to all businesses,
regardless of size or industry, even though the factors that organisations
take into a ccount when choosing where to live on that spectrum vary.

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61 6.8 BRANDED HOUSE
Unquestionably, the most typical type of brand architecture is a Branded
House. The company is the brand in this style of brand architecture.
Although they are not technically labelled, market sectors and services are
the focus of that principal brand. These subsidiary brands fall under the
main brand's marketing and management. Examples of well -known top
brands that use this strategy are Google, Apple, and F edEx. For instance,
there are sub -brands under the Apple umbrella, such as Mac, iPhone, and
Apple Music.
Even smaller businesses can implement the Branded House brand strategy
with success. It is important to note that while the sub -brands are known,
they do not dominate or detract from the primary brand.
A one -firm brand strategy is another name for the Branded House method
in the professional services industry. The company has a single brand,
which includes a logo, narrative, and market positioning. Howev er,
depending on the goods and services they are providing, the sub -brands'
service offers that share these brand components also contain their own
distinctive message points.
Benefits of Branded House
 It is more effective because each offering is covered by a single brand
code and marketing approach.
 Confusion and competition are readily avoided by keeping every offer
under the same brand.
 Because you don't have to handle many brands, which might be
expensive, it is more affordable.
 Customers are more like ly to accept new products from the same
brand.
 It enables the sub -brands to increase their brand value much more
quickly.
Limitations of Branded house
 If the main brand is unsuccessful or performs poorly, it may hinder the
success of the sub -brands.
 Mainta ining a single brand identity across all sub -brands while
preserving the individuality of the main brand may be somewhat
difficult.
 The brand's reputation is in jeopardy. The other sub -brands may be
impacted if one sub -brand experiences backlash.
 Through m ergers and acquisitions, adding new brands can be
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62 Product & Brand Management House of Brand Approach
The House of Brands is another well -liked brand architecture strategy. It
operates in complete opposition to the Branded House strategy. A House
of Brands is mad e up of several distinct brands, each with its own
audience and marketing strategy, as opposed to a Branded House, which
keeps its focus on just one, well -known, and consistent brand. These
brands typically have their own distinctive visual identities,
communication styles, tones, and logos. Many House of Brand enterprises
are holding corporations or consumer goods that buy brands, particularly
big, established worldwide brands.
The House of Brands differs from the Branded House in another way
because it re presents the singular aim of each and every brand rather than
growing stronger by making references to other brands.
Unilever, P&G, and General Motors [GM] are a few outstanding instances
of House of Brands. Although this strategy frequently yields positiv e
results for consumer brands, it might not be the best choice for a typical
business.
Benefits of House of Brands
 Additionally, this tactic offers a number of advantages, such as:
 Avoiding the one -size-fits-all approach and creating techniques that
are p erfect for a certain target will help.
 It enables improved resource allocation since managers may better
distribute budgets if they are aware of each brand's positioning.
 It provides more flexibility in terms of communication, brand
positioning, and target market.
 It reduces risks since if one brand has a PR catastrophe, it won't have
an impact on the other brands.
 Brands that fall under the House of Brands can separate themselves
from the "baggage" or brand toxicity that comes with the main brand.
Limitati ons of House of Brands
 It goes without saying that managing a brand may be challenging.
Maintaining a large number of them can be considerably more
challenging. The following are some drawbacks of the House of
Brands strategy:
 The cost of managing differe ntiated brands is high.
 It can be highly overwhelming to develop and implement multiple
marketing tactics.
 Customers may become perplexed about the genuine identity of the
main organisation.
 The reputation of the subsidiary brands cannot be boosted by the main
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63 6.9 CORPORATE BRAND
Corporate branding is the process of presenting a company's image or
identity to customers. Typically, a company's brand reflects its values,
brand voice, and messaging. Building corporate brands is a common
strategy used by marketing experts to show how they want the company to
be seen. Microsoft, Nestlé, and L'Oréal are three examples of business and
consumer brands. As long as the corporate and consumer brands share the
same set of values and don't attempt to send conflict ing signals, this type
of branding can function very well. Corporate branding enables clients to
connect with a company and recognise a variety of product offerings
throughout time. Because consumers have a predetermined idea of the
product's benefits, eff ective branding reduces the need for significant
marketing initiatives for every new product.
Corporate branding refers to the practise of using the firm name as its
brand in all stakeholder communications and across all media channels.
The intangible ment ality and spirit that underpin the company are what
give it its unique identity in the market and in the minds of its customers.
It is a far wider idea than promoting the company's products and services.
Advantages of Corporate branding
 Due to the company' s strong corporate identity and brand name,
consumers are well aware of it, giving it a competitive edge when
selling its goods and services in the market.
 Due to the strong corporate legacy generated with the previous or
existing line of the products and services given by the company, it
enables the launch of new items and is well received in the market.
 As the corporate entity has already established a reputation for itself
through corporate branding activities, it enables the company penetrate
and enter new markets and regions on a domestic and international
basis.
 As a result of the emotional connection with current and potential
customers, a sense of brand loyalty develops in their minds.
 With strong corporate branding in place, consumers are more likel y to
trust the company's product and service offerings, which facilitates
marketing and promotional efforts.
 With consumers recognising the firm's logo, mascots, colour schemes,
tagline, and other brand aspects and having top -of-mind recall of all
brand ex pressions, there is a heightened awareness of the company and
its offers.

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64 Product & Brand Management 6.10 EXERCISE
Questions
1) State difference between House of Brands and Branded house

2) Write a note on Corporate Brands.
6.11 REFERENCES
1. Brand Management, Co -creating Meaningful Brand s, SECOND
EDITION by Michael Beverland , SAGE PUBLICATION
2. http://www.eiilmuniversity.co.in/downloads/Brand -Management.pdf
3. http://www.untagsmd.ac.id/files/Perpustakaan_Digital_1/BRAND%20
NAME%20PRODUCTS%20New%20S trategic%20Brand%20Manage
ment%20 -%200749450851.PDF
4. Brand Management. (1998). Singapore: Ashgate.
5. Marketing Management, by Phillip Kotler, Prentice Hall of India, New
Delhi.
6. Marketing Management, Analysis, Planning and Control by Phillip
Kotler, Prentice Hall of India, New Delhi.
7. Marketing Management by RajanSaxsena, Tata McGraw Hill
Publishing Company Ltd., New Delhi.
8. Marketing Management - Planning, Implementation and Control, the
Indian Context by Ramaswami V.S. and Namakumari S., Macmillan
India Ltd., New Delhi.
9. Brand Positioning -Strategies for Competitive Advantage by Subroto
Sengupta, Tata McGraw Hill Publishing Company Ltd., New Delhi.

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65 7
BRAND PRISM BY KAPFERER MODEL,
BRAND ANATOMY
Unit Structure :
7.0 Objective
7.1 Introduction
7.2 Brand Identity
7.3 The two -dimensional Kapferer Brand Identity Prism
7.4 Successful brand identity
7.5 Brand Anatomy
7.6 Exercise
7.7 References
7.0 OBJECTIVES
1. To Acquaint the students with concept and elements of Brand Prism
identity model

2. To Sensitize the students about the Brand anatomy

3. To help students understand benefits of strong brand anatomy
7.1 INTRODUCTION
A strategic method for generating and separating your company's image,
goods, and services from those of your rivals is called brand development.
As part of development, your brand must be in line with your company's
goals, communicate with your target audience, and be updated or
strengthe ned as needed.
As your firm expands, brand development continues, with goals serving as
more or less benchmarks and denoting novel concepts and goods.
Therefore, as culture develops and you reach out to new audiences, your
strategy may vary over time. In t he section below, we'll look at how to
create a brand development strategy that tells your narrative and wins over
customers.
Brand development and brand identity
Developing a brand identity is a multi facted approach. Each component
of a brand identity ne eds to support the broader message and corporate
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66 Product & Brand Management company's name, logo, and design, as well as the way and tone in which
its text is written, how its products seem and are put t ogether, and of
course, how active it is on social media.
7.2 BRAND IDENTITY
The visual components of a brand, such as its colour, design, and logo,
help people recognise and differentiate it in their minds. Consistent
branding, messaging, and sales are th e results of consistent marketing.
According to the Aaker Model, brand identity is made up of 12
dimensions centred on 4 perspectives: (Product scope, product attributes,
quality/value, uses, users, and country of origin)
Brand -as-organization (organisati onal qualities, local versus global)
(organizational attributes, local versus global)
Brand -as-person (brand personality, brand -customer connections) (brand
personality, brand -customer relationships)
brand as a symbol( Visual metaphors, brand history, )
Additionally, according to Aaker, a brand's identity consists of both a core
and an extended identity.
The brand's core identity —its fundamental, timeless essence —is most
likely to endure when it expands into new markets and merchandise.
The extended ident ity consists of different brand identification
components arranged into categories that are logical and significant.
Companies can use the Kapferer Brand Identity Prism as a guide to create
a strong and enduring brand identity.
Every brand needs an identit y that reflects the essential values of the
brand. In daily life, many brands that are purchased have a clear identity.
One company may be known for selling a particular product for the lowest
price among all other companies, but for another company, a hig her price
may signify better value for the consumer. In the field of marketing, the
Kapferer Brand Identity Prism model is a widely used one. Six facets of a
brand identity are represented by the prism: appearance, personality,
culture, self -image, reflect ion, and relationship.
The brand manager can view the brand from several angles thanks to the
model's connection to brand management.
7.3 THE TWO -DIMENSIONAL KAPFERER BRAND
IDENTITY PRISM
Six components, broken up into two dimensions, make up the Kapferer
Brand Identity Prism. First, the prism's top and bottom display the sender's
and receiver's respective images. Internalization on the right and
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Brand Prism by Kapferer
Model, Brand Anatomy
67 Image Receiver vs. Image Sender
A brand must be able t o be compared to an item or a person (physique,
personality). The brand must also be able to be described in terms of the
user (reflection, self -image).
Externalisation vs. Internalisation
A brand's expression is influenced by a number of societal factors.
Externalization refers to this and has to do with the body, the connection,
and the reflection.
Aspects of the brand are also entwined with the brand itself. Identity,
culture, and personality are all affected by internalization.
7.4 SUCCESSFUL BRAND IDEN TITY: SIX ELEMENTS
According to Kapferer, a brand identity can only come to life when all
requirements are satisfied, and the brand effectively engages its target
audience. However, a powerful brand identity can only be developed when
all components work t ogether to form a concrete, understandable, and
compelling identity.
1. Physique
The primary attributes of a good or service that a brand sells make up its
brand identity. Design components, fundamental functions, colours, and
other features are examples of g eneral characteristics.These traits
guarantee that a buyer can quickly distinguish one brand from another.
When a customer is pleased with one product, they are also more likely to
purchase another that exhibits the same core brand attributes.

Apple is an illustration of a company that succeeds at this. Sleek,
contemporary, and minimalistic designs are a trademark of Apple, and
they are present in every one of the company's product lines.

Sports car makers also make an effort to use physical attributes to
showcase their fast automobiles to customers.

2. Personality
The personality or character of a brand is the second component of a brand
image, according to the theory underlying the Kapferer Brand Identity
Prism model.

These are a brand's attributes in the eyes of the customer. The brand uses a
number of marketing strategies to establish its personality. If a brand
commonly employs humour in the marketing materials for example,
customers link that with a light personality.

Consider the brand to be a living thing to properly consider this. What
kind of animal is it? How is it acting? What character does it have?

Additionally, brands might communicate personality attributes by using a
particular house or writing style, attitude, or colour. As in M from
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68 Product & Brand Management 3. Culture
According to L. Kapferer, a brand's culture is its foundational set of
principles.

The culture of a brand may be influenced by its country of origin, but it
may also have no connection at all. Ferrari is an illustration of a company
whose p roducts reflect the culture of the nation of origin.

Toyota applied culture in a unique way. They developed a variety of
ground -breaking ideas with the Toyota approach, such as distributing
work loads evenly to save waste.

4. Relationship
According to the K apferer Brand Identity Prism hypothesis, relationships
are a brand identity's fourth component. Part of branding is the creation of
a relationship between a brand and a consumer. Customers return more
frequently when they feel as though their involvement i s more significant
than just making purchases.

Only when a brand sincerely makes an attempt to do so can it develop this
kind of meaningful relationship. Although it takes time to develop genuine
relationships, doing so is a key step in creating an enduri ng and well -
respected company identity.

For every brand, relationships with customers are different. It is likely that
the brand is engaged on social media and serves as a friend who is always
there for a business with a youthful, active target market.

A very professional business that specialises in building distinctive and
custom vehicles mostly communicates with its target market through
personal interactions.

5. Reflection
Reflection is the sixth component of the Kapferer Brand Identity Prism
model.

The brand must, in accordance with the principle, capture the character
and identity of the target market. Reflection is the set of stereotypical
beliefs or traits that are frequently alluded to or emphasised in advertising
and other marketing strategies amo ng a brand's target population.

It makes sense to develop a brand image that reflects those demographic
traits when the target population is made up of retirees.

When customers believe they fit with a brand's culture, they are more
likely to feel a conne ction with it and its products. This does not exclude
those who do not share the brand's cultural traits from becoming clients,
either. One illustration of this is soft drinks. Many soft drink producers
present themselves as being energetic, upbeat, and ad venturous. In
actuality, their target market is made up of individuals of different ages
and temperaments.

6. Self-Image
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Brand Prism by Kapferer
Model, Brand Anatomy
69 Self-image refers to how customers of a certain brand perceive
themselves and how that brand relates to them. By incorporating
this self -image into their own identities, brands can leverage this to
their advantage. In this manner, the brand serves as a mirror for the
customer.

A buyer expects a brand or product to p roduce a certain emotion.
In the realm of luxury cars, this idea is frequently observed. The
purchaser improves his self -esteem by purchasing the exclusive
vehicle and receiving the elite treatment.

Source: Kapferer Brand Identity Prism
7.5 BRAND ANATOMY
An essential management tool is the clear expression of what your brand
stands for and how this translates for your customers. It influences a
variety of business decisions, from the colour of your logo to the materials
used to make your items. The founda tion of a brand is a collection of
beliefs and values that have a direct impact on how you act, how you
present yourself, and your objectives in life. This is comparable to the
foundation of a personality.
The three "legs" of a brand are as follows:
Brand Positioning
The business's purpose and methods are described in the brand positioning
statement. There are three of them:
Brand vision is the overarching strategic objective that affects both the
client and the company. Amazon, for instance, states that it s goal is to be
the world's most customer -focused business and to create a location where
people can go to find and discover whatever they could want to buy
online.
Market positioning describes the brand's position in the market and the
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70 Product & Brand Management adolescent, and professional segments. An illustration would be Amazon,
which is described as "a mass market, multi category brand offering a
large choice of products that are constantly reasonably pr iced for its
marketplace and sold in volume."
The brand's functional and narrative propositions make up its brand
proposition.
For example, Amazon: "The world's biggest online marketplace selling
millions of products to millions of people; 24/7 access, s uperior search and
browse technologies, user reviews and many more sources of in -depth
product information, Amazon.com offers a superior purchase experience."
These components are combined in the brand positioning statement to
create a sentence that succin ctly describes your brand.
2. Brand Values
The direction, behaviours, messages, and ultimately the customer's
relationship with your brand are all influenced by your brand's values.
There are two ways to describe values:
Brand values are the principles up on which a company is built. For
instance, Amazon is straightforward, affordable, convenient, and helpful.
The consumer's interpretation of a brand's values.
For instance, Amazon makes my life simpler because it's simple for me to
find what I want and it' s affordable for me.
“We think that by enabling our customers to quickly locate exactly what
they need at a price they can pay, Amazon will be liked and trusted and an
essential part of everyone's everyday life, written as a phrase and using
Amazon as the example”
Brand voice: Establishing your brand's tone of voice can assist you make
sure that all of your copywriting always reflects your core beliefs. As an
illustration, the copywriting style for a company with "community" as a
fundamental value may be ve ry warm and welcoming as well as in the
first person. For a company whose main value is exclusivity, the tone may
be more formal and in the third person.
Brand character: This is a general description of how the brand behaves
and what makes it distinctive to consumers. It is a way to outline your
overarching strategy for everything you do as well as a statement of the
brand's values.
Example of Amazon
Amazon is (personality) a direct, direct -to-the-point, no -nonsense bundle
of energy. It has a wealth of exp ertise and provides solutions quickly. It is
dependable, helpful, and personal while maintaining a consistent efficient,
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Brand Prism by Kapferer
Model, Brand Anatomy
71 3. Brand Personality
The tone and voice your brand uses to speak with your audience directly is
what is meant by the term "personality"; it is precisely what it sounds like.
It's you speaking. Is it obnoxious or subdued, serious or irreverent?
Whatever it is, it must be consistent in order to complement the supporting
images well. Together, the voic e and tone enhance the graphic
components and create a strong brand impression.
When you employ these two components consistently alongside your
brand, you will establish awareness, familiarity, and ultimately loyalty
with your clients.
How to create stron g brand Anatomy?
It is a distinct person with its own personality, ideas, and ideals. In the
same way that you represent who you are to those around you by your
words, body language, and facial emotions, it is your brand's obligation to
convey these "deep workings" to its audience.
The Head
The face of your brand is your logo.The logo serves as your brand's
doorway. It is the first thing visitors notice about your business. People
will judge your brand based on that initial encounter and determine
whether o r not they want to learn more and ultimately start using it, much
as you may form your first impression of someone new based on their
appearance and decide whether or not to get to know them more.
The Body
Your other visual brand elements make up your body if your logo is your
face. A brand consists of supplementary visual components that combine
with your logo to visually represent your company's characteristics. The
accompanying images' colour, shape, and possibly a sense of movement
add richness to the v isual identity. Similar to how people express
themselves through body language, mannerisms, and gestures, these
supporting aspects portray the essence of your firm.
Benefits of Strong Brand Anatomy
1) Corporate Core Values
Even before going into all the fun a nd exciting visual aspects of a brand, it
needs a strong foundation. While it's true that graphics are important,
building a solid foundation first assures that your brand will be able to
withstand the ups and downs of today's innovative marketing trends.
A solid foundation is made up of three components, including
fundamental values and beliefs, customer perceptions of your brand, and
brand keywords. munotes.in

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72 Product & Brand Management a. The foundation of your brand depends on knowing the basic values
and beliefs of your company. These assist in building identification
and complement your brand's vision.

b. A strong foundation requires taking into account how your clients are
made to feel everytime they interact with your brand. Setting the
foundation for employing visual elements to achieve your desired
feeling when people interact with your brand is deciding how you
want them to feel.

c. Another factor in creating a solid base is choosing the appropriate
keywords to describe your brand. When developing and constructing
the tone you wish to utilis e, you can use keywords that are connected
to your basic principles. Make a list of these words.

2) Making your brand stand out
Your brand's fundamental values hold the key to differentiating and
differentiating you in today's competitive market when product s and
services are only marginally differentiated. You might believe that your
brand is unique enough compared with your competitors, but without your
brand’s core values there is nothing to help you illustrate that.
Your brand remains consistent by paying attention to crucial aspects like
the text on your website, the posts you make on social media, and your
visual marketing. These can help your brand become more well -known,
which would make your customers more likely to anticipate the kind of
voice or ton e your brand represents.
3) Strengthen internal market
It's critical to realise that your staff also represent your brand. You should
create training materials to ensure that you understand your brand's key
values, beliefs, and personality in order to enable your staff become
internal brand champions for your company.
You can also encourage your staff to participate in online brand advocacy
by posting, sharing, and sparking discussions that adhere to your
organization's policies. Motivate your staff to assist them.






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Brand Prism by Kapferer
Model, Brand Anatomy
73 Implications:

Source: Luxury Marketing by MaartinVaas
7.6 EXERCISE
Questions
1. Write a note on Kapferers Model of Brand identity prism

2. What is Brand Anatomy, Explain with examples

7.7 REFERENCES
1. Brand Management, Co -creating Meaningful Brand s, SECOND
EDITION BY Michael Beverland , SAGE PUBLICATION
2. http://www.eiilmuniversity.co.in/downloads/Brand -Management.pdf
3. http://www.untagsmd.ac.id/files/Perpustakaan_Digital_1/BRAND%20
NAME%20PRODUCTS%20New%20S trategic%20Brand%20Manage
ment%20 -%200749450851.PDF
4. Brand Management. (1998). Singapore: Ashgate.
5. Marketing Management, by Phillip Kotler, Prentice Hall of India, New
Delhi.
6. Marketing Management, Analysis, Planning and Control by Phillip
Kotler, Prentice Hall of India, New Delhi.
7. Marketing Management by RajanSaxsena, Tata McGraw Hill
Publishing Company Ltd., New Delhi.
8. Marketing Management - Planning, Implementation and Control, the
Indian Context by Ramaswami V.S. and Namakumari S., Macmillan
India Ltd., New Delhi. munotes.in

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74 Product & Brand Management 9. Product Management in India by Majumdar, Prentice Hall of India,
New Delhi.
10. Brand Positioning -Strategies for Competitive Advantage by Subroto
Sengupta, Tata McGraw Hill Publishing Company Ltd., New Delhi.

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75 8
BRANDING DECISIONS - LINE
EXTENSIONS, CATEGORY EXTENSION
Unit Structure :
8.0 Objectives
8.1 Introduction
8.2 Brand Positioning
8.3 Types of brands
8.4 Brand Extension
8.5 Exercise
8.6 References
8.0 OBJECTIVES
 To Acquaint the students with concep t and elements of Branding
decisions

 To help students understand Line Extension

 To help students understand Category Extension
8.1 INTRODUCTION
The factors must be considered by the company when considering and
making branding decisions, including target consumer, target markets,
their cultural influences on the market, and the impact of brand on
business strategy. For example, a product that is culturally alien will find it
difficult to get accepted in the market, as in the case of the "Ms" brand of
cigarettes targeted at Indian women failing in the market. In addition, the
company must take target consumers' beliefs, attitudes, and cultural
characteristics into account.
The decisions a company must make about its brand include whether to
use its own name , the name of a marketing organisation or distributors, or
a combination of the two.
The company should make decisions regarding the following as well:
Using a family name as a brand extension for new products, much like
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76 Product & Brand Management Independent Brand Name: This strategy is used by the majority of
consumer goods companies, including P&G, for their personal care and
toiletry items.

8.2 BRAND POSITIONING
Brand positioning refers to how you want c ustomers to view your
company in relation to your rivals. You can place your brand based on the
following three criteria:
• Attributes
When it comes to brand positioning, this can be thought of as the lowest
level. It usually refers to a brand's outside ap pearance, such as the colours
utilised, the general layout, and anything akin. If you were marketing a
car, for instance, the main considerations would be whether you were
selling an SUV or a sedan, as well as the colours that would be offered.
Evidently, given how simple it is to alter and imitate physical
characteristics, this is not exactly something that would significantly
differentiate the brand from its rivals. This is why they must be integrated
with other factors that determine positioning.
 Benefit s
A component of brand positioning would also be the assortment of
advantages that the target market would experience. Using our earlier
example, this would include information about the car's speed limits,
safety features, and other specifications of a si milar nature.
• Values and Beliefs
The issue truly is to build a strong emotional bond between the brand and
the market because features and benefits can be replicated by rivals. At
this point, a brand's set of values and principles would be relevant.
Coca -Cola is a fantastic illustration of this. Their yearly Christmas
campaigns have established themselves as a cultural phenomenon and are
beloved by families everywhere. This demonstrates that they cherish
tradition, which increases brand popularity over th e Christmas season.

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Branding Decisions - Line
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77 Brand Name selection
Making the right choice throughout this extremely difficult procedure
could make or break your success. The brand's name needs to be
distinctive, memorable, and snappy.
Brands that prioritise grabbing attention ha ve become more common in
recent years; Yahoo! and Google are prime examples. But this pattern has
undergone a significant alteration. Many brands these days go for names
with actual definitions. For instance, Quora is the plural form of
"quorum," which ref ers to the bare minimum of participants necessary for
a group to take any action or conduct business.
8.3 TYPES OF BRAND NAMES
 Individual brand name
Many businesses abide by this guideline. Here, each of the company's
products is given a unique brand name.
For instance, Hindustan Unilever has created a brand for each product,
such as the Lux, Dove, and Pears bath soap line, as well as additional
brands for infant products and hair care.
 Umbrella/Blanket Family
In this kind of branding, a wide range of produ ct categories use the
company name.
For instance, Tata has adopted umbrella branding for a variety of products,
including tea, coffee, automobiles, steel, and others.
 Separate family names for every product
Companies that produce a variety of goods may cho ose a different family
name.
Aditya Birla Group, for instance, used this tactic as given below:
1. Hindalco for an aluminum product.
2. Ultratech for cement.
3. Grasim for suiting.
4. The idea for cellular service.
5. Birla for educational institutes.
 Company name combi ned with an individual product name
This sub -branding technique uses the parent brand and adds product
names to it.
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78 Product & Brand Management  Brand Sponsorship
You would have to consider selecting from four possibilitie s when it
comes to brand sponsorship. Would you prefer it to be a co -brand, a
licenced brand, a private brand, or a manufacturer's brand?
 Manufacturer's Brand
Choosing a manufacturer's brand would require you to advertise your own
products. For instance, S ony would continue to market the goods they
produce as Sony TVs or Sony cameras. Now, if they begin producing
goods to be distributed to resellers who won't be employing the Sony
brand, then these resellers would be Private Brand.
Because customers have be come less brand -conscious and more pragmatic
in recent years, private brands have grown in size. Obviously, anything
with a well -known brand name would cost more than private brands
 Licensed Brand
Companies using names or symbols that were not necessarily invented by
a single producer are known as licenced brands. Disney, Star Wars, and
Hello Kitty are excellent examples of licenced brands. There are hundreds
of producers who use these brands to make things.
 Cobranding
Co-branding entails combining two bran ds to create one product. Nestle's
coffee makers would be a perfect illustration of this. Nespresso was
undoubtedly not produced by Nestle. As an alternative, they employed
firms like Siemens and DeLonghi to develop these machines.
4. Brand Development
Four different sectors are included in brand development:
 Line Extension
A product might be regarded as a line extension if it is simply an addition
to an existing offering. This implies that you are spared from having to
come up with a unique brand name for the new product. Cherry Coke is a
prime illustration.
Although this might be a viable solution, it is strongly advised against
using it if you currently have a sizable number of products under one
brand. In addition to the potential for confusion, there is a chance that the
original branding will lose its true meaning.
8.4 BRAND EXTENSION
Brand extension is the use of an established brand name to new product
categories. It's possible that the brand's entry into this new category has
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79 successful brand can help a company introduce products into other
categories more easily. For instance, the brand's primary offering is
footwear. It now now applies to eyewear, golf equipment, soccer balls and
baske tballs. A well -known brand that serves as the model for a brand
extension is referred to as the "parent brand". Customers in the new
business are more likely to support a brand if it embodies these values and
aspirations and if their beliefs and objectives coincide with or are similar
to those of the main business.When you talk about brand expansion, what
you mean is creating a completely new product range while still using the
same brand. With their Special K brand, which includes an extensive
selection of cereals, biscuits, and other such products, Kellogg's did this.
The benefit of doing it this way is that you can classify the products
appropriately, eliminating any confusion that a straightforward line
extension would cause. There is a chance that the o riginal brand will
suffer if the new product line is unsuccessful or receives negative press.
Multiple brands
Large businesses use the multibrand strategy, which entails marketing
multiple brands under each category while maintaining independent
product li nes. Procter & Gamble, for instance, offers five distinct shampoo
brands only in the USA. This enables businesses to provide distinct brands
to various market segments.
New Brand
Evidently, this market would include any new brands. If their new product
does not fit into the brands they already have, older manufacturers and
enterprises may also employ this strategy. This can also be employed
when the already -existing brands lack the strength or allure that their
owners had hoped they would.
Line Extension an d Category Extension
The product category is the primary distinction between brand expansions
and product line extensions. It is seen as a brand extension if the product
category is new to the brand. However, if the category is the same as
previous product s for the brand, it is only an expansion of the current line.
When a company applies an existing brand name to a new product
category, this is known as a category extension.
Category extension “ Applies an existing brand name to a product
category that is new to the firm” (Farquhar 1989
When a business adds new products in the same product category under
the same brand name, such as new flavours, forms, colours, added
components, or packaging sizes, this is known as a line extension. As
contrast to brand e xtension, which is the creation of a new product in a
completely unrelated product category. Line extension happens when a
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80 Product & Brand Management product line in either a down -market or up -market directi on, or in both
directions.
Product line extensions are a procedure used by businesses with a well -
known brand to change the characteristics of a product or products to
appeal to a more specialised market group.
Extended Product Line
An existing product lin e is expanded when a line extension is used. For
instance, a soft drink producer might add a "Diet" or "Cherry" variety to
its cola range, while a toy producer might add new action figure
accessories or characters. To put it simply, line extensions provide
variation to an existing product in order to attract a wider range of
customers and entice existing ones with fresh offerings.
Extended Product Category
Brand extension is the spread of the brand into other markets or regions.
For instance, brand extensio n might occur if a soft drink producer
introduced a line of juices or bottled water products under its corporate
name. The brand, or company, is an established name, and so the name
alone can serve to drive customers to try new products completely
unrelate d to the older product lines.
Benefits of Brand Extension
A line extension can revitalise a product line, putting it back into the
spotlight by luring in new clients and generating increased earnings. By
enabling businesses to enter new markets and provide a wider variety of
products, brand extensions can boost earnings. Because the new lines or
brands benefit from being a part of an existing name, line extensions and
brand extensions both enable businesses to promote new products with
lower promotional exp enses.
The benefits of brand extension include:
 It facilitates consumer adoption of new products.

 It improves brand perception.

 The clients' perception of risk decreases.

 There is a higher chance of receiving distribution and a trial.
Consumer curiosity and willingness to test new products with an
established brand name are increased.

 Spending on advertising becomes more effective. Costs for selling,
promoting, and advertising are decreased. Because the advertising for
the main brand and its extensions reinforces one another, there are
economies of scale.

 it enables Savings on building a new brand.

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Branding Decisions - Line
Extensions, Category Extension
81  It penetrates more potential customers

 It facilatates marketing effectiveness

 It results in higher productio n effectiveness

 It helps in lowering advertising expenses
Since line extensions are tiny experiments within markets where the
company is already profitable, they are safer bets for brands. A small bit
of variety in the product lineup rarely detracts from the original. However,
because the risk is low, the profit is usually likewise modest. For newer
firms or well -established brands that have not significantly modified their
product offerings over the course of their many years in existence, this can
be a s mart place to start.
On the other hand, category extension completely departs from the
primary business. However, it can be quite profitable if the new line is
completely in line with the brand and what buyers want. If you have a
very strong brand, you sho uld use this tactic.A brand may try to add a new
product Category because they have built up enough brand recognition
and loyalty to be able to venture out to other product categories that their
customers have asked for.
Implications

Source: https://www.mbaskool.com/business -concepts/marketing -and-
strategy -terms/8453 -category -extension.html
8.5 EXERCISE
Questions:
1) What is Branding decision? E xplain Brand Extension with examples

2) Distinguish between Line Extension and Category Extension

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82 Product & Brand Management 8.6 REFERENCES
1. Brand Management, Co -creating Meaningful Brands, SECOND
EDITION by Micha el Beverland , SAGE PUBLICATION
2. http://www.eiilmuniversity.co.in/downloads/Brand -Management.pdf
3. http://www.untagsmd.ac.id/files/Perpustakaan_Digital_1/BRAND%20
NAME%20PRODUCTS%20New%20Strategic%20Brand%20Manage
ment%20 -%200749450851.PDF
4. Brand Management. (1998). Singapore: Ashgate.
5. Marketing Management, by Phillip Kotler, Prentice Hall of India, New
Delhi.
6. Marketing Management, Analysis, Planning and Control by Phillip
Kotler, Prentice Hall of India, New Delhi.
7. Marketing Management by RajanSaxsena, Tata McGraw Hill
Publishing Comp any Ltd., New Delhi.
8. Marketing Management - Planning, Implementation and Control, the
Indian Context by Ramaswami V.S. and Namakumari S., Macmillan
India Ltd., New Delhi.
9. Brand Positioning -Strategies for Competitive Advantage by Subroto
Sengupta, Tata McG raw Hill Publishing Company Ltd., New Delhi.

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83 9
BRAND EQUITY –
CONCEPT AND MEASURE
Unit Structure :
9.0 Objective
9.1 Concept of Brand Equity
9.2 Brand Equity – Components and Advantages
9.3 Measurement of Brand Equity
9.4 Exercise
9.5 References
9.0 OBJECTIVES

 To Acquaint the students with concept and elements of Brand Equity
 To help students understand advantages of Brand Equity
 To sensitize students about how to measure brand Equity.
9.1 CONCEPT OF BRAND EQUITY
When compared to a generic alternative, a corporation can command a
higher price for a product with a well -known brand. This is known as
brand equity. Making items unique, instantly recognisable, superior in
quality, and dependable helps businesses build brand equity for their
goods. Campaigns for mass marketing can aid in building brand equity.
Customers would happily pay a premium price for a company's products
when it has strong brand equity, even though they could buy the same
thing for less from a rival. Customers essentially pay a higher price to
work with a compan y they trust and respect.
The price differential flows to the margin of the company with brand
equity because it does not cost it more than its rivals to produce and
promote the product. Due to the company's strong brand recognition, each
sale results in a higher profit.
9.2 COMPONENTS OF BRAND EQUITY
Brand loyalty, brand awareness, brand associations, and perceived quality
are the four dimensions of brand equity, and each one adds value to a
company in different ways. A brand can use a brand equity roadmap to
manage the potential worth of its brand equity once it has determined its
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84 Product & Brand Management a. Brand Loyalty
Loyalty implies patrons who would keep purchasing the product. It stands
for a potential source of income. It also suggests a lower rate of customer
attritio n or defection. Therefore, businesses with a higher percentage of
repeat clients would experience cheaper marketing expenses (lower
advertising expenses) and more income (from increased purchases, price
premiums).
While other brand equity assets like aware ness, affiliations, and perceived
quality may not be related to usage experience, brand loyalty is typically a
result of product consumption experience. However, loyalty is also
influenced by these factors. All brand equity dimensions seem to be
connected to one another causally. One may result in the other (for
instance, associations with symbols or perceived quality may influence
consciousness).When a brand takes on a personal meaning for a consumer,
they become loyal to it. When customers consider it to be a part of
themselves, it happens. They are attached to the brand. It turns into a
means of expression. Strong identification may be based on the object's
functionality or the imagery or symbolism it represents.
b. Brand Awareness
The second component of br and equity is brand recognition. Brand recall
and brand recognition are included. Brand recall is the capacity to
remember the brand when a product category is considered, whereas brand
recognition is the capacity to confirm prior exposure (Yes, I've seen that
earlier). A brand must have this level of awareness in order to influence
the decision -making process. Brand recognition, brand recall, and top -of-
mind recall are the three different levels of brand awareness that can exist.
The awareness pyramid's ba se level is brand recognition. The brand is
deemed to have been recognised when a person can confirm prior
exposure. It is evaluated using assisted recall metrics.Particularly when
decisions are made in -store or at the time of purchase, brand awareness is
crucial in minimal participation buying circumstances. Recognition entails
some familiarity, which can occasionally be sufficient in making a
judgement. When provided a clue regarding a particular product class, a
person's unaided recall of a brand demonst rates an even higher level of
awareness. (For instance, "mention tyre brands"). It suggests a more solid
brand position in consumers' minds. The top -of-the-mind recall, or the
brand that immediately comes to mind, represents an even higher level of
awarene ss.
c. Brand Associations
The brand association network includes everything a brand is associated
with. For instance, a brand may be associated with certain emotions,
personalities, symbols, lifestyles, users, etc. Strong associations are
common. The brand ma y be associated with certain strong connotations
and weak ones. Brand image is how potential customers view a brand in
light of these associations. Brand perception might not always correspond
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Brand Equity – Concept
and measure
85 equity perspective. Brands are purchased for the associations they have.
Additionally, customers show loyalty for the same factors.
Associations create a chunk of information that encapsulates the essence
of the brand. It is generally simple to p rocess, store, and retrieve
information in chunks.
d. Perceived Quality
The quality could be perceived or objective. The term "objective quality"
refers to a product or service's genuine superiority. However, perceived
quality refers to the belief that a good or service is superior to what it is
meant to do. Customer perception of quality is important. People place
varying values on various things. It entails making decisions based on
what the customers value.
It's important to distinguish between quality and satisfaction. Even with
subpar quality, a buyer could still be happy. Expectations determine
satisfaction. Perceived quality, in general, refers to how a buyer generally
feels about a certain brand. The performance or delivery of the product is
typically p redicated on some underlying quality characteristics (product
qualities or advantages).A buyer bases their buying decision on perceived
quality. Second, perceived quality enables a brand to establish its position
or point of difference. Based on where they fall on the quality spectrum,
brands are differentiated. Premium brands can be distinguished from one
another based on perceived quality. Brands with a greater reputation for
quality may afford to charge more money. The premium may also be used
in brand -building initiatives like research and development, raising
awareness, and bolstering associations. Value perceptions are enhanced by
offering a premium brand at affordable costs. Increased brand loyalty, a
larger customer base, and improved marketing effic acy and efficiency
would all result from this. Trade partners are more ready to carry brands
with better perceived quality since they are more popular with them.
Advantages of Brand Equity
Despite the fact that brand equity is mostly intangible, its benefi ts are
everything but. Your organisation can get very tangible and quantifiable
benefits from having a strong brand identity. They include:
enlarged margins Because people are prepared to pay more for your name
than for jewellery that arrives in a tiny blu e box or electronics with an
apple on top, you may charge more for your product or service if your
brand equity is strong. Are such products' qualities noticeably better than
those of their rivals' products? Perhaps, perhaps not. But that's how people
seem to see it. And when clients are prepared to spend more for a brand
they believe in or value, that boosts your profit margins.
a. Customer adherence :
Customers are not only willing to pay more for a product with a strong
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86 Product & Brand Management by making repeat purchases from it over the course of several years. In
fact, some businesses have achieved such high levels of brand loyalty that
their customers are even prepared to continue with them in the event of a
setback, such as a product malfunction or a poor customer experience.
b. Expansion possibilities:
A company's long -term growth may be facilitated by strong brand equity.
You can more easily add new products to your range and consumers will
be more eager t o try your new product if you take advantage of the value
of your brand. You can extend into new areas and regions, where
consumers will be familiar with your brand.
c. Negotiating Power:
Gaining a competitive edge in negotiations with suppliers, manufacture rs,
and distributors can be made possible by strong brand equity. Suppliers
will want to partner with you if they realise that customers are
passionately looking for and purchasing your products. And that naturally
puts you in a favourable negotiating posi tion where you might reduce your
cost of goods sold.
d. Competitive Advantage:
When clients are eager to spend more money on your goods or services,
thats where competitive advantage is gauged based on strong brand equity.
9.3 MEASURING BRAND EQUITY
When the financial worth of a brand is measured, the CFO typically
becomes a fervent booster of the brand and the business starts to regard
brands as assets that need to be developed, built, and leveraged. David
Aaker discusses many methods of brand asset valua tion in his book,
Managing Brand Equity. Public and commercial companies can measure
the values of their brands with the use of Interbrand's approach. The Coca -
Cola brand was estimated to be worth $48 billion in 1997 by the now -
defunct newspaper Financial World, which published an annual ranking of
the best brands based on their financial valuations.
Knowing how to raise both the "A" and the "R" in the brand's "ROA"
through brand equity measurement can allow you to sustain, grow, and
leverage brand equity.
The value that a brand brings to an organization's goods and services, both
positively and negatively, is known as brand equity. Brand equity can
ultimately take many different forms. The price premium (to consumers or
the trade), the enduring loyalty the brand inspires, and the increase in
market share are three of the most crucial ways .

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Brand Equity – Concept
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87 Measures can be in the following ways:
1) Brand Awareness
Consumers must first be aware of the competition in the product
categories where your brand competes. They must a lso be familiar with
your brand. Your brand should ideally be the first one that people think of
when considering particular product categories and advantages for
consumers.
2) Accessibility
Consumers must be able to purchase your brand where they shop. If yo ur
brand is widely accessible, people will be far more likely to demand it.
When a brand is widely accessible, even a slight brand preference might
lead to insistence. In today's society, the value of convenience cannot be
overstated.
3) Value
Does your compa ny offer good value for the money spent? Do customers
think the pricing was worthwhile? Whether it is pricey or cheap, high -end
or low -end, it must at least provide a good value.
4) Significant Difference
The most crucial thing a brand can offer is this. Toda y's relevant
distinctiveness is a cutting -edge predictor of future profitability and
market share. Does your brand offer distinctive, believable benefits that
are relevant to consumers?
5) Emotional Connection
The consumer must first be aware of your brand. T hen your brand must
appeal to them. The customer must lastly have emotional ties to your
brand and trust it. Achieving this emotional connection can be done in a
variety of creative ways, from advertising to the effectiveness of in -person
interactions with customers to consumer membership clubs and company -
sponsored events.
Keep the following in mind while measuring brand equity:
 Measures for awareness, preference, accessibility, value, relevance,
distinctiveness, vibrancy, emotional connection, loyalty, an d insistence
should be included.

 Include behavioural and attitude measures (especially for loyalty).

 Adjust the study to your industry and product categories (especially
benefit structure)

 Include benchmarks used by rivals

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88 Product & Brand Management These are some of the more r evealing metrics:
 Position in the consideration set
 Emotional connection to the brand
 Perceived brand vitality
 Perceived points of difference (open ended question)
 Specialized delivery for key benefit
Brand Equity Measures as per Aaker
Seven various bra nd equity components, all of which are connected to
customer brand equity, are recommended by Aaker (2004). These linked
components must constantly be modified to meet the particular product
category being targeted. How well customers know the brand, how a ware
they are of it, as well as the brand's reputation and differentiation, are
factors to be taken into account in order to determine the brand's strengths
and weaknesses. How well -liked is it, and how does it stand out from the
competition? Do buyers bel ieve the brand to be relevant? Does the brand
have energy? Are the customers brand loyal, and if so, what factors
contribute to this loyalty?
The brand's potential for expansion must also be taken into account.
Which associations may the brand potentially use to expand into other
product categories? (Aaker 2004) This is a framework that Aaker has been
gradually building; if we compare the brand equity components he gave in
1991 with the aspects discussed above in 2004, one difference relates to
the variable "extendibility." In 1991, "extendibility" was a characteristic
that was only a small component of the larger idea of brand associations;
in 2004, it is one of the crucial factors to take into account when
calculating the equity of a brand. This might indi cate that brand
expansions are becoming more significant.

Brand Equity Measures as per Aaker (1991 and 2004)
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Brand Equity – Concept
and measure
89 9.4 EXERCISE
Questions:
1) What is Brand Equity? Explain its components

2) Describe how to measure brand equity.

9.5 REFERENCES
1. Brand Manag ement, Co -creating Meaningful Brands, SECOND
EDITION by Michael Beverland , SAGE PUBLICATION
2. http://www.eii lmuniversity.co.in/downloads/Brand -Management.pdf
3. http://www.untagsmd.ac.id/files/Perpustakaan_Digital_ 1/BRAND%20
NAME%20PRODUCTS%20New%20Strategic%20Brand%20Manage
ment%20 -%200749450851.PDF
4. Brand Management. (1998). Singapore: Ashgate.
5. Marketing Management, by Phillip Kotler, Prentice Hall of India, New
Delhi.
6. Marketing Management, Analysis, Planning and C ontrol by Phillip
Kotler, Prentice Hall of India, New Delhi.
7. Marketing Management by RajanSaxsena, Tata McGraw Hill
Publishing Company Ltd., New Delhi.
8. Marketing Management - Planning, Implementation and Control, the
Indian Context by Ramaswami V.S. and N amakumari S., Macmillan
India Ltd., New Delhi.
9. Brand Positioning -Strategies for Competitive Advantage by Subroto
Sengupta, Tata McGraw Hill Publishing Company Ltd., New Delhi.

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