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New Product and Brand extension
Transcript of New Product and Brand extension
-Ansoff’s Growth Share Matrix is an essentials tool for companies when they are looking for brand extension or launching new products. This involves developing new products for existing markets. Product development involves thinking about how new products can meet customer needs more closely and outperform the products of competitors. For example desktop computers into laptops for easy portability. There are two types of diversification, namely related and unrelated diversification. –
• Related diversification
• Unrelated diversification -Any company would fall in any of the following four categories in terms future expansion strategies.
• With current products and current market companies deal with market penetration strategy
• With new product and current market companies deal with product development strategy
• With current product and new market companies deal with market development strategy
• With new product and new market companies deal with diversification strategy - When a firm introduces a new product, it has three choices for branding it.
1. It can develop a new brand, individually chosen for the new product. For example Milo of Nestle Company. It is a Category Extension. 2. It can apply in some way one of its existing brand. For example Maggi instant noodles have different flavor. It is a Line Extension. 3. It can use a combination of a new brand and existing brand. For example Nescafe. It is a Category Extension. In this presentation, we will concentrate on Product Development Strategy and Diversification Strategy. - The basic idea or concept of a product development can be easily understood by seeing the following diagram. -The product development takes place:
• Creation of new product or existing product (into a new version) to explore the various possible and improved outcomes.
• Innovation of new product or existing product to deliver better and enhanced services to the end-user.
• Continuous improvement of new product or existing product to give importance or significance to the needs of end-user.
• Enhancing utility of new product or existing product for the personal and/or commercial use to expand the defined goal (objective).
-A well-planned product development is necessary. A good product development will create business opportunities (growth), boost profitability (productivity) of the company, and will also enhance the satisfaction levels of the consumers. Diversification Strategy - Diversification is a strategy for company growth through starting up or acquiring businesses outside the company's current products and markets.
For example The New NESCAFE DOLCE GUSTO GENIO Unrelated diversification is where companies have no previous industry nor market experience. For example Samsung company was in LCD business, then move to smartphone business. There is no direct fit with the existing business. -Related diversification means that the companies remain in a market or industry with which we are familiar. For example, Nestle company manufacture milo and diversified into Nestea manufacture (both are beverages category) Introducing and Naming New Product and Brand Extensions Conclusion Brand extensions are a means for companies to make economics on advertising, marketing which account a lot when a company wants to create a new brand because it has to make this brand known by customers.
Marketers need to carefully consider brand extension strategies by applying managerial judgement and consumer research to make sure the strategy is best fit for the company product Next , Lets look for our journal Market Penetration Strategy -
• Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling • Secure dominance of growth markets
• Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors • Increase usage by existing customers – for example by introducing loyalty schemes A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Market development Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.
There are many possible ways of approaching this strategy, including:
• New geographical markets; for example exporting the product to a new country
• New product dimensions or packaging: for example • New distribution channels (e.g. moving from selling via retail to selling using e-commerce and mail order)
• Different pricing policies to attract different customers or create new market segments Market development is a more risky strategy than market penetration because of the targeting of new markets. NESCAFÉ Dolce Gusto is the only single-cup coffee machine to deliver a professional 15 bar pressure for a perfect Espresso, and fine milk froth for a velvety Cappuccino all in one. It prepares each drink variety in less than a minute. A strategy where the business focuses on selling existing products into existing markets.
-Market penetration seeks to achieve four main objectives:
Maintain or increase the market share of current products
Secure dominance of growth markets
Restructure a mature market by driving out competitors
Increase usage by existing customers