CHAPTER7
Product Positioning, Branding, and Product Line Strategies
The best positioning is put in the context of solving a
problem for a specific buyer. That means that there are
multiple positioning documents, each conveying product
value in terms that resonate with the specific buyer.
— Steve Johnson
in Pragmatic Marketing
Steve Johnson’s observation on positioning could be used to initiate a discussion around product positioning
within the context of a product focus on solving a specific customer problem. This quote also lends itself to a
discussion of customer value and the product line variations needed to solve different buyer problems. As
examples, each car in the Toyota product line and each beer in the Anheuser-Busch product line address a
different customer need and haveunique product positionings.
Introductory Discussion
St. John is legendary among customers of stores that trade in $1,000 women’s suits, but not because the St.
John brand sets fashion trends. In boardrooms, ballrooms, and beyond, St. John has become the standard
bearer among women who want classic style, unwavering high quality, and personal service. Many companies
that have tried to copy the St. John strategy at a lower price have failed. St. John customers remain loyal and
are the company’s best source of marketing communications.
What factors drive the St. John product positioning and price?
Who is the St. John target customer in terms of needs, demographics, and psychographics?
Why have low-cost competitors attempting to imitate St. John failed?
Teaching Objectives
Demonstrate the importance of product positioning, alternative positioning strategies, and the positioning
factors that need to be addressed in developing a successful product positioning strategy:
Present the role of product line positioning and product line extension strategies.
Present product performance and service quality differentiation factors in developing a positioning strategy.
Review different company branding strategies and the development of brand names.
Demonstrate the profit impact of product line extensions and product elimination decisions.
Harvard Business SchoolCase Materials
Dove: Evolution of a Brand― 2008.HBS Case 508047. This case study examines the evolution of Dove
from a functional brand to a brand with a point of view after Unilever designated it as an umbrella brand and
expanded its portfolio to cover entries into a number of sectors beyond the original bath soap category. The
development causes the brand team to take a fresh look at the clichés of the beauty industry. The result is
the controversial Real Beauty campaign. As the campaign unfolds, Unilever learns to use the Internet, and
particularly social network media like YouTube, to manage controversy. 13 pages.
Colgate-Palmolive― The Precision Toothbrush.HBS Case 9-593-064. This excellent case study is built
around the segmentation of the toothbrush market. The case includes market segmentation, segment
strategies, product positioning, and branding. The case could be used to discuss the entire marketing mix for
the Colgate-Palmolive new product opportunity.
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Marketing Antidepressants: Prozac and Paxil.HBS Case 9-502-055. The product positioning strategies
for two well-known brands are presented in this case study. It case also explores counter-positioning
strategies used by competitors with similar products. 29 pages.
E*Trade Securities, Inc.HBS CaseM286. This is a mid-1990s case study of a deep discount brokerage
business that experienced phenomenal growth by making extensive use of technology to achieve a cost
advantage. A flood of new competitors displaced E*Trade as the low-price leader. E*Trade must now
consider how it should move forward, perhaps with either a low-cost price-leader strategy or a low-cost
online service-based business with a discernible differentiation strategy.
Hart Schaffner & Marx―The Market for Separately Ticketed Suits. HBS Case 9-592-134. This case
study calls for a decision on whether Hart Schaffner & Marx, the nation’s leading manufacturer of high-quality
branded suits, should expand its product line by marketing suits that are separately ticketed (i.e., the coat,
vest, and slacks would be sold from individual hangers and priced separately by the retailer rather than sold
and priced as an ensemble). The case study serves as a vehicle for discussing product policy issues in the
context of a fragmented, mature, and highly competitive industry. Related issues of channel management,
pricing, and advertising must be analyzed. It demands a skilled quantitative analysis of a complex
break-even situation. Teaching Note 5-585-056.
Procter & Gamble Co. ― Lenor Refill Package. HBS Case 9-592-016. The assistant brand manager for
Lenor, P&G’s fabric softener brand, prepares a presentation on the national launch of an environmentally
friendly refill package. Teaching Note 5-593-010.
Packaged Goods Company ― Handy-Pak Introduction. The product manager and the market research
director for a new line of snacking nuts are reviewing options regarding the upcoming rollout of the product.
These options include changes in pricing, promotional plans, and sales force incentives intended to build
support for the product across the various distribution and trade channels required for targeted sales goals.
Teaching purpose: This decision-oriented case offers a good look at (1) factors altering marketing and sales
requirements for packaged-goods businesses, and (2) the realignment of one business’s market research
activities in order to deal with these new requirements.Teaching Note 5-595-022.
Performance Curves: Costs, Prices, and Value. HBS Case9-590-010. This case study presents the
concept of cost-performance curves and demonstrates the concept’s usefulness in product positioning and
product line management. The reading also covers price-performance curves. 33 pages.
Market-Based Strategic Thinking
1. What was the logic behind Apple’s product-price strategy for the launch of the iPad?
A pre-launch survey on the amount people would pay for an iPad showed a wide range of results. Prices
ranged from under $600 to over $800,as shown below. A multi-price strategy based on differences in
performance allowed customers withdifferent price sensitivities to select the product that fit their budgets.
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2. Why didn’t Apple use the same launch strategy for the iPod?
Apple pursued a classic skim price strategy when launching the iPod. With the high-price skim strategy,
Apple was targeting potential customers who were not price sensitive. The company later lowered the price
of the basic iPod and introduced higher-priced performance models to capture a wide range of customers
3. What is the product line strategy for both the iPad and the iPod?
Apple’s strategy for both products is to offer full-priceperformance options that allow buyers to purchase
4. How did Intel’s branding strategy help the company grow, and how does the strategy help the
company maintain a dominant market share?
As low-priced personal computers became part of the PC market in the late 1990s, Intel could have
lowered the price of the Pentium to compete in this segment. Instead, Intel maintained the Pentium as a
5. What role does a“fighter brand” play in Intel’s product line strategy?
Intel’s fighter brand is Celeron. Its role is to fight low-price competitors from eroding Pentium’s market
6. Does Apple have fighter brands for the iPod and the iPad?
Yes. For the iPod, Apple quickly introduced higher price-performance iPods and moved the price of the
original model lower and lower. The basic iPod now is Apple’s fighter brand.It helps protect the
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7. How would you evaluate the product line positioning of Black & Decker relative to Sears in terms of
customer choice and customer value?
At each level of voltage (from light duty to heavy duty), Black & Decker is priced considerably lower and in
most cases has a much lower overall performance rating. Customers buying on price would most likely
8. Why did Samsung’s repositioning strategy yield higher sales and profits?
Samsung shifted its consumer electronics from a low-priced and low-margin position to a higher priced and
higher margin position. The Samsung repositioning required major changes in product quality and brand
9. How does General Electric use product performance quality differentiation in its product line of
household appliances?
In Figure 7-9 we can see how GE positionsits basic product line as “Affordable Household Appliances” that
serve building contractors and price-sensitive consumers. The GE Profile series offers a higher quality line
10. How does a business such as McDonald’s develop a positioning strategy around some aspect of
service differentiation? How would this strategy compare with the service differentiation achieved
by Les Schwab Tire Centers?
Using the eight dimensions of service quality shown in Figure 7-10, we could argue that McDonald’s has
positioned itself with respect to service quality in the following ways:
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11. Why do brand names like Kodak, Disney, or Coca-Cola create customer value and provide a basis
for product line positioning and differentiation?
Each of these brand names communicates a certain image and expected level of quality. Each name
12. Why does the occupancy of a Fairfield Inn increase by 15 percent when the Marriott name is added
to the building?
Without the Marriott name, the Fairfield Inn has no established image or expected level of quality and
13. Why does an extension of a product line to include a small number of related products contribute
to higher levels of profitability?
A product line extension of related products, if built around unmet customer needs, enables a business to
offer a better solution to the customer consumption problem. This could be expected to translate into a
14. What does Starbucks hope to achieve by dropping its name and word “coffee” from the company’s
logo?
The old Starbucks Coffee name limited Starbucks’ ability to expand its branded products beyond coffee
15. What is the logic of Textron in branding the Cessna product line? Why doesn’t Textron use its
company name as a major part of the branding and product line strategy?
Textron has acquired many well-known brands, as shown in Figure 7-15,but Textron as a company is a
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branded. In many ways, Textron has created a separate company brand with different levels of
subbranding.
16. Why would a business use an experiential brand name versus an evocative brand name?
A business whose product offers an important experiential benefit would leverage the benefit in the brand
17. What are morphemes and how were they used in developing brand names such as InfoSeek,
Duraflame, and Compaq Computer?
Morphemes are whole or parts of words that are combined to make a new word. InfoSeek is derived from
18. What is the marketing logic that underlies Anheuser-Busch’s product line and the company’s
marketing strategy for the beer market?
As illustrated in Figure 7-25, Anheuser-Busch has elected to unbundled its beer products and make each a
19. What are the advantages of a strong core brand when a company wishes to develop a marketing
strategy for new products, either as product line extensions in the same market or as products for
an altogether different market? Under what conditions could this strategy fail?
A strong core brand name can serve as an umbrella brand under which a business can add additional
brands in the same market or expand into other markets. This strategy has the advantage of
20. Why are vertical brand extensions less expensive than horizontal brand extensions?
Vertical brand product line extensions are less expensive because they are modifications of the existing
21. How does a well-known brand help in the marketing and profitability of new products?
Product line extensions and other new brands gain awareness at a lower marketing communications cost.
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22. Why did Healthy Choice cobrand with Kellogg’s to introduce a new breakfast cereal? How did
Kellogg’s also benefit?
Kellogg’s, while a well-known brand, did not have the image of a low-calorie breakfast cereal. Healthy
23. How might product line substitution effects have contributed to the sales of Intel Pentium
microprocessors when the Xeon and Celeron brands were introduced?
The higher price of the Xeon probably influenced many current customers to stay with the mid-priced
Pentium when repurchasing, especially if they saw they could meet their performance needs with the
24. Frito-Lay introduced Stax to compete with Pringles in 2003. Assuming the company had excess
production capacity, how would the profits of other Frito-Lay chip products be affected by the
success of Stax?
Any business with excess production capacity can lower the average cost of all products made in that
facility by introducing another brand to be made in the same facility. A large portion of the cost of goods
25. Under what conditions would eliminating a brand with a negative pre-tax profit from a product line
result in lower overall pre-taxprofit?
Thedifferent brands in a company’s product line often share the same manufacturing operations.When
manufacturing capacity is underutilized, the strategy is to add brands to take advantage of the excess
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