R&D projects may be used as soon as they are completed to launch new brands or to modify existing ones. They may also be shelved for future use. Brand portfolio decisions are summarized below and are detailed in section V.6.
A new brand is introduced on the market by entering a brand name which has not been used in the past. This brand name is completely independent of the code used for the R&D project. An existing brand is modified by keeping its current name and using the physical characteristics corresponding to a new completed project. Using a new brand name will facilitate the product’s positioning, but its brand awareness will have to be completely built from scratch. Using an existing brand name makes its repositioning more difficult, since consumers are familiar with the brand at its previous position. However, as the awareness level is maintained, the brand’s purchase intentions are likely to be higher than with a new brand.
The same product can be marketed under different names. The presence of multiple brands targeted at the same segment is a good strategy to build barriers to entry of new brands by competitors. A company may also market multiple brands based on the same project to different segments which are willing to pay different prices while having similar technical needs.
When a brand is modified, the Production department will immediately start producing the new version of the product. Lowering the cost of a brand is considered a brand modification. Obsolete inventories are sold by the Production department to a trading company at a fixed percentage of their value, usually 80%. This company will then export the old products outside the Markstrat world. Consequently, a loss of x% (the given percentage) of the inventory value is charged to the marketing department. The same rule applies if inventories remain when a brand is withdrawn from the market.