Chapter Nine Product II Product Strategy Branding and

Chapter Objectives • Discuss the different product objectives and strategies a firm may choose • Understand how firms manage products throughout the product life cycle • Explain how branding and packaging strategies contribute to product identity • Discuss how marketers structure organizations for new and existing products Copyright © 2016 Pearson Education, Inc. 9 2

Real People, Real Choices: Decision Time at General Mills • Which option should David pursue? • Option 1: Own the position of “Fiber Superiority” through messaging that emphasizes the advantages of Fiber One cereal compared to alternative sources of dietary fiber. • Option 2: Own the position of “Great Tasting High Fiber, ” emphasizing the good taste of the Fiber One cereal rather than its high fiber content. • Option 3: Own the position of “Digestive Health, ” by emphasizing the digestive efficiency of Fiber One cereal, an approach likely to appeal to older consumers but draw ridicule from younger ones. Copyright © 2016 Pearson Education, Inc. 9 3

Product Planning • What makes one product succeed while another fails? • Effective product planning is guided by a continuous process of product management A systematic and usually team based approach to coordinating all aspects of a product’s strategy development and execution Copyright © 2016 Pearson Education, Inc. 9 4

Figure 9. 1: Steps to Manage Products Copyright © 2016 Pearson Education, Inc. 9

Getting Product Objectives Right • Clearly stated product objectives provide focus and direction Should support broader marketing objectives of business unit Should be consistent with the firm’s overall mission. • To be effective, objectives must be: Measureable Clear Realistic Indicate a specific time frame Copyright © 2016 Pearson Education, Inc. 9 6

Figure 9. 2: Objectives for Single and Multiple Products Copyright © 2016 Pearson Education,

Objectives and Strategies for Individual Products • Objectives and strategies for individual products: Successful introduction of new products Taking regional product nationwide Breathing new life into mature products while maintaining a distinct brand personality Copyright © 2016 Pearson Education, Inc. 9 8

Objectives and Strategies for Multiple Products • A product line is the firm’s total product offering designed to satisfy a single need or desire of target customers Product line length is determined by the number of stock keeping units (SKUs) • Product line strategies: Full line vs. limited line strategies Upward, downward, or two way line stretch Filling out or contracting a product line • Cannibalization is a risk Copyright © 2016 Pearson Education, Inc. 9 9

Product Mix Strategies • A product mix is the total set of products a firm offers for sale • Product mix strategies Width of product mix must be considered Product lines in mix usually have some things in common Copyright © 2016 Pearson Education, Inc. 9 10

Ethical/Sustainable Decisions in the Real World • Levi Strauss has made great strides toward going green, but how green is green enough? 20% of Levi’s new “Waste<Less” product line is made from recycled waste Levi’s has reduced water consumption by 96% in its denim finishing process for some styles Realizing that no product can be 100% green, is it ethical for marketers to promote a product to customers as “green” anyway? Copyright © 2016 Pearson Education, Inc. 9 11

Quality as a Product Objective • Product quality is often a key objective • A philosophy of total quality management (TQM) can help companies achieve quality objectives TQM at Motorola Copyright © 2016 Pearson Education, Inc. 9 12

Quality Guidelines • ISO 9000: Standards for quality management • ISO 14000 Standards for environmental management • Six Sigma methodology Process allows no more than 3. 4 defects per million units (getting it right 99. 997% of the time) Quality Management at Motorola Copyright © 2016 Pearson Education, Inc. 9 13

Figure 9. 3: Product Quality Copyright © 2016 Pearson Education, Inc. 9 14

Use Product Objectives to Decide on a Product Strategy • Product management systematically guides product strategy development and execution • Process begins with clear product objectives Objective setting underlies product line/mix decisions and quality management efforts How can you apply criteria for effective objective setting to attainment of your personal career and educational goals? Copyright © 2016 Pearson Education, Inc. 9 15

Marketing throughout the Product Life Cycle • Many products have long lives, while others are fads that are “here today, and gone tomorrow” • The product life cycle (PLC) is a useful way to explain how market response and marketing activities change over the life of a product Copyright © 2016 Pearson Education, Inc. 9 16

Figure 9. 4: The Product Life Cycle Copyright © 2016 Pearson Education, Inc. 9

Introduction Phase of PLC • New products that are offshoots of well known brands have an advantage. • Many products never make it out of the introduction phase due to low awareness As many as 95% of new products ultimately fail! Effective advertising and promotion is essential New product failures Copyright © 2016 Pearson Education, Inc. 9 18

Growth, Maturity, and Decline Stages of the PLC • Growth stage of the PLC The product is accepted and sales rapidly increase • Maturity stage of the PLC Typically longest phase Sales peak while profit margins narrow • Decline stage of the PLC Sales decrease as customer needs change Copyright © 2016 Pearson Education, Inc. 9 19

Figure 9. 5: Marketing Mix Strategies Throughout the Product Life Cycle Copyright © 2016

Product Life Cycles Phases • PLC framework a useful tool to think about how marketing tactics change over time Sometimes hard to know when a product passes from one stage to the next Some companies are now using social media to bring products “back from the dead” Up to 95% of new products ultimately fail. What are some implications of this statistic for marketers? Copyright © 2016 Pearson Education, Inc. 9 21

Branding and Packaging: Create Product Identity • What do you think of when you hear the word “Disney? ” ? ? ? • Disney achieved its strong identity through decades of great branding Copyright © 2016 Pearson Education, Inc. 9 22

What’s in a Name (or Symbol)? • A “good” brand name: Maintains relationships with customers Positions a product by: (1) portraying an image or (2) describing how the product works Is easy to say, spell, read, and remember Fits the target market, product benefits, customer’s culture, and legal requirements Copyright © 2016 Pearson Education, Inc. 9 23

Trademarks • Trademark is the legal term for a brand name, brand mark, or trade character Trademarks legally registered by a government obtain protection for exclusive use in that country ® is the trademark symbol used in the U. S. Common law protection Visit the U. S. Patent and Trademark Office (USPTO) Copyright © 2016 Pearson Education, Inc. 9 24

Why Brands Matter • A brand is a lot more than just the product it represents Strong brands build emotional connections with customers • Brand equity refers to a brand’s value to its organization over and above the value of the generic version of the product Brand equity provides competitive advantage Brand equity results in brand loyal consumers and attachment Copyright © 2016 Pearson Education, Inc. 9 25

Brand Relationships • Successful brands build true bonds with their customers So much so that people feel that they have a relationship with the brand! • Brand relationships may be based on: Self concept attachment Nostalgic attachment Interdependence Love Copyright © 2016 Pearson Education, Inc. 9 26

Brand Meaning • Strong brands forge lasting bonds with customers based on brand meaning Brand meaning encompasses the beliefs and associations a consumer has about the brand • Today, brand meaning builds virally as people spread its story online Through brand storytelling, marketers seek to engage consumers with compelling stories about brands Copyright © 2016 Pearson Education, Inc. 9 27

Characteristics of World Class Brands 1. The brand excels at delivering the benefits customers desire 2. The brand stay relevant 3. The pricing strategy is based on consumer’s perceptions of value 4. The brand is properly positioned 5. The brand is consistent 6. The brand portfolio and hierarchy make sense 7. The brand coordinates a full repertoire of marketing activities to build equity 8. The brand’s managers understand what the brand means to consumers 9. The brand is given proper support 10. The company monitors sources of equity Copyright © 2016 Pearson Education, Inc. 9 29

Brand Extensions and Sub-Branding • Products with strong brand equity provide exciting opportunities for marketers Brand extensions arise from a firm leveraging brand equity to sell new products using the same brand name Sub-branding occurs when a firm creates a secondary brand to help differentiate a product line (e. g. , Virgin Mobile, Virgin Atlantic, Virgin Galactic) Copyright © 2016 Pearson Education, Inc. 9 30

Figure 9. 6: Branding Strategies Copyright © 2016 Pearson Education, Inc. 9 31

Individual vs. Family Brands • Family brand strategy is when product items share a common brand name. • Family brands such as Campbell’s provides an umbrella under which multiple products can be effectively marketed Copyright © 2016 Pearson Education, Inc. 9 32

National and Store Brands • National brands are those produced and marketed by a manufacturer. • Store (or private label) brands are those which are offered by a retail store or chain under an exclusive trade name Costco: Kirkland’s Wal Mart: Sam’s Choice Others? Copyright © 2016 Pearson Education, Inc. 9 33

Generic Brands and Licensing • Generic brands is a strategy in which products are not branded and are sold at lowest price possible Typically packaged in white with black letters that only names product itself (“Green Beans”) • Licensing is when one firm sells another firm the right to use a brand name for a specific purpose for a specific period of time Copyright © 2016 Pearson Education, Inc. 9 34

Cobranding • Cobranding: Two brands agree to work together to market a new product • Ingredient branding: Branded materials become “component parts” of other branded products Copyright © 2016 Pearson Education, Inc. 9 35

Packages and Labels: Brandings Little Helpers • A package is the covering or container for a product • Serves both functional and communication purposes Branding UPC codes Copyright © 2016 Pearson Education, Inc. 9 36

Figure 9. 7: Functions of Packaging Copyright © 2016 Pearson Education, Inc. 9 37

Design Effective Packaging • Effective packaging design entails many decisions How are other products in category packaged and displayed? Copycat packaging Copyright © 2016 Pearson Education, Inc. 9 38

Design Effective Packaging • Effective packaging also considers: Choice of packaging material and the image it projects Environmental impact of packaging Shape and color influences on image Graphic information to be portrayed Copyright © 2016 Pearson Education, Inc. 9 39

Labeling Regulations • Fair Packaging and Labeling Act (1966): Federal legislation aimed at making labels more helpful to consumers by providing useful information • Nutrition Labeling and Education Act (1990) Law requires food labels to state how much fat, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in each product serving Copyright © 2016 Pearson Education, Inc. 9 40

Branding and Packaging • Branding and packaging decisions play an essential role in shaping how consumers view a product While there are many types of decisions to be made, each should conform with the overall product strategy and needs of target markets Is it fair for retailers like Walgreens and Wal-Mart to use copy-cat packaging on store branded products? Copyright © 2016 Pearson Education, Inc. 9 41

Organize for Effective Product Management • Product strategies re only as effective as the managers that create them and carry them out • In larger firms, various types of managers may be involved in the process: Brand managers Product category managers Market managers Copyright © 2016 Pearson Education, Inc. 9 42

Figure 9. 8: Types of Product Management Copyright © 2016 Pearson Education, Inc. 9

Organize for New Product Development • Launching new products is so important, many firms pay special attention to the introductory phase of the PLC • Within larger companies, cross functional teams are formed by enlisting specialists from different areas Skunk works: venture teams located away from traditional company offices Copyright © 2016 Pearson Education, Inc. 9 44

Real People, Real Choices: Decision Made at General Mills • David chose option 2 • Implementation: David chose to position Fiber One as a great-tasting, high-fiver product. By emphasizing Fiber One’s great taste, General Mills would offer a solution to the biggest obstacle people associated with eating fiber. • Measuring Success: Under the “Surprisingly Great-Tasting High-Fiver” campaign, Fiber One has expanded to over eight product categories and sales have increased 10 X over four years, to more than $500 million in retail sales per year. Copyright © 2016 Pearson Education, Inc. 9 45

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America Copyright © 2016 Pearson Education, Inc. 9 46