4/15 - Growth and New Products

Fundamentally, to grow business:

People buy more
More people buy
Choose a business and think of growth strategies under each category

Growth Strategies

Line extensions

Diversity - adds variety and removes barriers
- New flavors
- New forms (ex. spray vs. cream sunscreen)
- New sizes
Finer segmentation
- Age of consumer
- More specific benefits (shampoo: dandruff, split ends, thin hair)
- Level of ingredient (SPF levels)
Complementary products
- Shampoo and conditioner
- Skis and ski poles
Pros
- Help capture multiple market segments
- Can help stay current with the marketplace trends
- They can create competitive barriers in the distribution channels
Cons
- Cannibalization
- Truly in the interest of the consumer? Retailer?
- Choice paralysis

Brand extensions

Physical category difference
- Yamaha motorcycles and pianos
Major target differences
- Diet Coke
- Gillette for Women (Gillette endorsed)
Major benefit differences
- Evian
Strategic questions for brand extensions
- Does the extension leverage the essence and what value does it add back to the brand (extension looking back)?
- Is the essence relevant in the new category?
- Is there a sustainable competitive advantage in the new category?
Reasons for failure
- Brand equity may be overestimated or misunderstood (Healthy Choice Cereal)
- Spending is not sufficient
- Competitive reaction under-forecasted
- May lack perception of new industry “know-how”

A line extension introduces new variations or products within an existing product category under the same brand name, like different flavors of a soft drink. A brand extension, on the other hand, extends the brand to a new, unrelated product category, such as a clothing brand launching a line of cosmetics.

Brand core/essence

Personality
Customer Benefits
Identity Assets or Symbols
Heritage
Quality Dimension
Brand Features
Relationships with Customers

Creating New Products - Idea Generation

Brainstorming

Absolutely no evaluation
Wildest possible ideas
Quantity vs. Quality
Build on other ideas
Record ALL ideas, even repeats
Short time period
Keep groups smaller
Laughter is a good thing
Casual environment
Diverse group (demographically, functionally, insiders/outsiders)

How to spark ideas?

Randomly generated words - Idea Generator website

Blue Oceans Strategy - Developing Winning Ideas

New market space
No competition
Higher profitability
How to create
- Create - raise - eliminate - reduce in a cycle
- Through this, you create a new value curve
Example - Cirque de Soleil vs. an actual circus