Product differentiation and brand Management

Product Differentiation

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Competitive Differentiation & PositioningCompetitive Advantage: Companies achieve competitive

advantage in the market either bya) Offering the products at a low cost and gain cost

leadership, orb) Differentiate their products

How Companies achieve Product Differentiation? – Physical attributes of products– Services– Types of distribution– Positioning A Key Important decision for a Marketer

– How to position their products as positioning influences

other elements of Marketing-mix such as advertising, pricing etc.

– Repositioning involves high costs.

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Scope of differentiation– Little scope of differentiation in case of commodities

such as meat, steel, cement etc.– Products like home appliances, electronic equipments

etc provide wider scope for differentiation. Basis of Differentiation– Form– Features– Quality– Durability– Reliability– Reparability– Style &Design

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Product form

Product formProduct form is sum total of the physical

attributes of the product.– Products can be differentiated based on size,

shape, and any other physical attributes of the products.

For example, medicine in the form of tablet, syrup or injection. Soap in the form of liquid or bar etc.

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DesignDesign– Design takes care of functionality or usefulness such

as easy to use, easy to maintain etc.– Important for products such as Apparels, packaged

goods, Audios, Automobiles etc. For example, Tata Motors differentiating Indica on the

basis of 1400cc engine, easy shift gears, better suspensions, wide tread tyers, sporty new look, stylish interiors, chrome-lined grill, etc

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FeaturesFeatures – Product characteristics to allow a product to perform

certain functions.– Adding new features enhances the value of the

product. For example, Indigo having features like independent

three-link suspension shock absorbers and new front seats providing additional lumbar and thigh support; fire preventing inertia switch to minimize fuel leakage and a steel monochrome frame to offset frontal impact in case of an accident.

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Size of Package

Size of Package– Firms differentiate their products on the basis

of size and weight of the pack. For example, Pepsi captured sizeable part of

Cola market in India by changing the packaging of their products.

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Product QualityProduct QualityQuality refers to conformance of the product to the

expectations of customer and leads to repeat purchases, customer loyalty and word of mouth publicity.

For example, Sony Corporation enjoys a competitive edge over its rivals because it is reputed for manufacturing products of excellent quality.

- Companies try to achieve ‘six sigma’ level in quality to eliminate products defects totally.

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Durability

Durability– Customers are willing to pay premium if the

product is durable.– Advantage of durability gets reduced if the

technology and hence the product becomes obsolete.

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Reliability

Reliability– A measure of the probability that a product

will not malfunction or fail within a specified period.

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Reparability

Reparability– A measure of the ease of fixing a product

when it malfunctions or fails.– Many computer hardware and software

companies offer technical support over the phone or advise the user how to correct them.

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StyleStyle– Describes the product’s look and feel to the buyer.– Aesthetics play a key role in certain brands of Pens,

Motorbikes etc.– Creates distinctiveness that is difficult to copy but

may not always mean high performance. – Packaging is used as a styling weapon especially in

food products, cosmetics, toiletries, and small consumer appliances etc.

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Service DifferentiationService Differentiation– Companies are now beginning to differentiate their products

on the basis of services they offer along with their products.– In fact service is becoming a part of the corporate vision

thereby companies calling themselves service companies that also manufacture products.

Customer services can include the following:(1) Ease of ordering: refers to the ease with which customer

can place the order for the product.Example, Dell computers and Amzon.com

(2) Delivery: refers to how well the product has been delivered to customer. Speed and care are important factors.

Example, FedEx, Domino’s Pizza.

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(3) Installation: vital differentiation factor in Industrial markets particularly when heavy equipment is purchased.

a) Ease of installation helps a company to capture a significant share of market.

b) Software companies offering step by step instructions on how to install the software in the system.

c) Heavy machinery manufacturers provide free installation of transformers, control and relay panels for transmission of electric power.

(4) Guarantees– Companies differentiate their services through guarantees.

The normal guidelines followed are:• Service guarantee should be unconditional.• Guarantee should be comprehensive & communicative.

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(5) Financial arrangements(a) Companies tie up with financial institutions that offer loans to help

customers purchase new products through easy installments schemes.

Example, MUL has tied up with financial institutions such as Citicorp, ICICI, HDFC Bank, ABN-AMRO Bank, Kotak Mahindra , Sundaram Finance to help its customers with car finance.

(6) Customer Training Companies also train their customers or customers’ employees to use

the equipment.(7) Maintenance and repairs(a) Increasingly repeat purchases by customers are affected to a large

extent on whether his experiences of maintenance and repair services from the company have been good or bad.

(8) Disposal(a) Companies also differentiate their products on the basis of

disposability of the product after use.(b) This strategy helps to increase the sales as well as establishing it as

an environment-friendly organization.

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Personnel Differentiation– People in the organization can provide

sustainable advantage.– A well trained employee can serve customers

efficiently and effectively.– Organizations differentiate themselves on the

basis of the characteristics of their employees.(a) Competence (b) Courteousness (c) Credibility

(d) Reliability and responsiveness, (e)Good communication skills

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Channel DifferentiationChannel Differentiation– A firm’s choice of distribution channel, its coverage, expertise

and performance helps to differentiate itself from it competitors.

– Involves making the product available to customers in places where competitors have not entered.

• Availability of products everywhere makes the customer’s search process less complicated, less expensive and more habitual.

Example: Maruti Udyog Ltd opened ‘True Value Outlets’ for catering to second hand car markets.

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Image DifferentiationImage Differentiation – Many customers base their purchase decision on the image of

the company.– Companies create and promote features that foster a unique

image or value for their products.– Companies communicate their image through:a) Ethical management practices such as accurate and transparent

company audits, corporate social responsibility e.g. Infosys, Wipro

b) Symbols help differentiate the company from its competitors on the basis of its image.

c) Logos project certain public image though emblem, graphic picture or a sign. Used in audio-visuals or print media.

d) Atmosphere by creating right ambience, colour and lighting, furnishings, and architecture.

e) Events: Company builds its image based on the type of events it sponsors.

If you are asked to select one of two chocolates kept in front of you one with Cadbury's brand name visible on it & other also Cadbury's brand name hidden on it ,which one will you prefer?

What is brand?

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Brand: a name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

Brand Decisions

Brand Name

Words, letters, or symbols that make up a name used to identify and distinguish the firm’s offerings from those of its competitors.

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• Individual Name s : E.g P&G - Vicks ( health Care ) , Ariel and Tide (Fabric care ) Pantene , Head and Shoulders , Rejoice ( Shampoo) , and Pampers ( Baby care )

• Blanket Family names : Policy followed by Tata – Salt , Tea , Automobile ,and Steel

• Separate Family names for all products – Aditya Birla group follows this policy to a great extent like Hinadlco Aluminium , Ultra Tech Cement , Grasim Suiting and Graviera suiting

• Corporate names combines with Individual product names : by Kellogg's – Kellogg's Rice Krispies , Kellogg's Raisin Bran , and Kellogg's Cornflakes

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Brand Extensions

Car Motor Cycle

EnginesMarine

Acquire competitor’s customers Stimulate demand among current non-users.

Related Brand extension/Category extension - Maggi Noodles to Maggi Ketchup ,Maggi soup etc.Dettol soap -----antiseptic soap , Dettol plaster-------Antiseptic bandage , Dettol Hand wash…..antiseptic washPond’s Dreamflower Talc , Pond’s Dreamflower Talc Magic , Sandal Talc , Pond’ Dreamflower soap , Pond’s cold soap ,Pond’s face wash , Pond’s cold cream ,Pond’s complexion defense moisturizer , Pond’s Moisturizing lotion

Unrelated Brand extension or Category extension Anchor electrical switches to Toothpaste (Gut feeling of CEO Atul Shah) “Line Extension trap”

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Multi Branding

Seiko

Seiko LasalleSeiko Pulsar

Two or more brands in same product category.

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New Brands

National-Household

Panasonic-Audio

New CategoryNew Brands

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Brand Decisions• Brand Rejuvenation – Adding value to existing brand by

improving product attributes and enhancing its overall appeal. New lifebuoy , New Horlicks , Nestle’s New Nescafe , New Bournvita , P&G’s New Vicks Vaporub.

• Brand relaunch – Wipro’s Santoor , Godrej’s Marvel , Close-up , P&G’s Action 500 (brand leader with 30% market share) , Dabur Chyawanprash.

• Brand Proliferation (exposition) – it is opposite of brand extension . E.g Unilever has more than 25 brands of ice-cream and P&G has more than a dozen brands of Detergent

It helps expand the market share but leads to Brand Cannibalization.

Popsicle, Klondike, Ocean Spray ice cream, Slim Fast ice cream, Breyers, Starbucks and Ben & Jerry's .

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Brand Decisions

• Brand Development through Acquisition/Takeover

• Pepsi acquire Duke• Godrej acquire Good Knight

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Co-branding/Dual Branding- two or more well known brands are combined for a offer

• Examples:Volvo Advertises That it uses

Michelin Tires• PC manufacturers - IBM, Dell,

Compaq –purchase their chips from Intel at a premium price.

• Hero- Honda• Maruti- Suzuki

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Co-branding: Count the BrandsNotice all the brands:

1. Ingredient co-branding – Maruti car using JK tyres, Compaq’s PC using Intel chips

2. Same company co branding – Cosmetic companies linking their product brands with each other

3. Joint venture/post-merger co branding – HP, Compaq4. Multiple sponsor co-branding- When the product has more than

one sponsor e.g. Jet airway, citibank card5. McDonald's India is entering into a co-branded strategic tie-up

with Multi Vision - releasing Teenage Mutant Ninja Turtles (TMNT) movie in India this April,

Elements of Brand Management

Brand Identity

Brand Image

Brand Personality

BrandCommunication Awareness

BRAND EQUITY

Positioning

Aspects of a Brand

Image Celebrity Product

Attractiveness Elegant

Beautiful

Classy

Priyanka chopra

Katrina Kaif

Amir Khan

Scooty , Garniear eye care

Lux

Titan watches

Trustworthiness Dependable

Honesty

Reliable

Amitabh Bacchan

Lara Dutta

Sachin TendulkarHema Malini

Polio dose

Kellog’s cornflex

Max insurance KEN Purifiers

Expertise Knowledge

Qualified

Skilled

Amitabh Bacchan

Shilpa shetty, Priyanka Chopra,

Sanjeev kapur

Incredible India

Shampoo, skin cream Ariel washing podwer

Sugar free

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