Brand Development Strategies

                                        Final Notes

Brand Development Strategies (p.334 figure 9.1)

 [pic 1]

In general, a company has four options when it comes to developing a brand:

Line extension:

• occurs when a company extends existing brand names to new forms, colours, sizes, ingredient of an existing product category
• Want to meet customer desires for variety
• However, an overextended brand name might lose its specific meaning
• Ex: Doritos with its 20 other flavours than the original (with all these new flavours, the original flavour just seem like a normal flavour)

Brand extension:

• extend a current brand name to new or modified products in a new category
• For ex: Campbell soup extended its V8 brand to a line of soup and Ritz extended its brand to min Ritz Bits Sandwiches
• Ex: Kitkat has made Kitkat Chunky Peanut butter, Kitkat chunky
• It gives a new product instant recognition and faster acceptance
• Less expensive than creating a new brand

Multibrands:

• brand strategy in which the same manufacturer produces many different brands in a given product category.
• Major drawback of multi branding is that each brand obtain only a small market share, and none of them may be very profitable
• Ex: Procter and Gamble sells a lot of different brands like Pampers, Tide, Gilette, etc.

New brands:

• Company that has a long established name and has been in business for many years decide to adopt a new strategy—> to brand itself and its products
• More often, an established company creates a new brand when it develops a new product or product line (Ex: Toyota created the Scion brand)

Price adjustment strategies (p.371 table 10.2)

[pic 2]

Companies usually adjust their basic prices to account for various customers differences and changing situations

Discount and allowances pricing:

• Ex: ‘’2/10, net 30’’
• Ex: discount of buyers buy in large quantities
• Ex: seasonal discount
• Ex of allowances: turning old item for a new one

Segmented pricing:

• Ex: museum can charge a lower admissions for students and children
• Ex of product-form pricing: Economy seat in airlines cost 1200$ and the business class cost 5000$. Although the business class offer better confort and extras, it does not cost as much to the company than the difference between 1200 and 5000.
• Ex of location-based pricing: Seats in the bell center (more expensive when you go closer to the ice)
• Ex of time-based pricing: Movie theatres charges less in the matinee

In order to make the segmented pricing work, the market must be segmental and the segments must show different degrees of demand. Also, it can not exceed the extra revenue obtained for the price difference

Psychological pricing:

• Price says something about the product
• Ex: who is the better lawyer? the one at 50$ an hour or the one at 500$ a hour?
• Ex: a 100$ perfume seems nice because the price say so, but it can contains only 3$ of materials
• Ex: the tv at 499.99$ and the one at 500$

Promotional Pricing:

• seller may simply offer discounts from normal prices to increase sales and reduces inventories
• Ex: Bestbuy discounts in november-december for christmas
• Some manufacturer offers longer warranties, low-interest financing to reduce customers prices

Geographical pricing:

• Ex: Ebay or Amazon can charge different shipping prices depending on where you live
• Ex of uniform delivered pricing: Amazon prime charge the same price to all customers whatever locations you are
• Ex of zone pricing: different zone pays more or less depending on where you are

Dynamic pricing:

• Ex: internet allows online seller to instantly and constantly adjust prices on a wide range of goods
• Ex: customers control pricing with bidding (ebay)
• Ex: sites that offers the differences in price for the same products (shopbot.ca)

International Pricing:

• company can charge different price in different locations
• Ex: Bombardier sells its jetliners the same price everywhere, but other companies don’t

Product Mix Pricing (p.369 table 10.1)

[pic 3]

Product line pricing:

• Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations, etc.
• They should account for the positioning of the brand
• Ex: Apple iPad wifi 16gb offers basic features while Apple iPad 4G 256gb offer extra features. Same item but different options

Optional-Product Pricing:

• where main product is sold at low margin or near cost price
• Marketers focus on promoting the extras and upgrades (optional products)
• Ex: New car offers sound systems, Bluetooth, GPS system

Captive-Product Pricing

• Companies that make products that must be used along with main products
• Ex: razor blade cartridges, games for a video-games console

By-Product pricing:

• The main product is expensive and the by-product is less expensive to let the main product seems more attractive and competitive
• Ex: the timber industry and the paperwork industry

Product Bundle Pricing:

• sellers often combine many of their products and offer the bundle at a reduced price
• Ex: McDonald trio (fries, burger and soft drinks) is less expenseive, Videotron trio of internet, telephone and cable
• Price bundling can promote the sale of products that consumers might not otherwise buy, but with the combined price, they think about it twice

The Three distinctive distribution channels (p. 407-409)

Intensive distribution:

• stocks their products as in many outlets as possible (Soft drinks or snack food)
• often impulses purchases so make them available everywhere for customers
• Ex: toothpaste and toilet paper are bought when customers run out of them so make them available in pharamcies, grocery stores, etc.

Selective distribution:

• the marketers select a set of retailers that specialize in their product category
• Ex: Le Creuset sells its cookware through specialize store and independent retailers of the fine cookware. They wont choose WalMart.
• Ex: Bose, Sony wont be found in discount stores and Burberry clothes wont ever be seen in Tigre Giant
• Ex: Stihl does not sell their products in Home depot or other big box stores

Exclusive distribution:

• marketing strategy when brands wish to associate themselves with exclusivity
• Ex: Rolex and Tiffany give exclusivity to their customers
• Ex: Ikea distributes its products in only one store

Another form of exclusivity distribution occurs when the manufacturer of a line of products makes those products available through only one store