Lamb Hair Mc Daniel 2010 2011 CHAPTER 10

Lamb, Hair, Mc. Daniel 2010 -2011 CHAPTER 10 Product Concepts 1

Learning Outcomes LO 1 Define the term product LO 2 Classify consumer products LO 3 Define the terms product item, product line, and product mix LO 4 Describe marketing uses of branding 2

Learning Outcomes LO 5 Describe marketing uses of packaging and labeling LO 6 Discuss global issues in branding and packaging LO 7 Describe how and why product warranties are important marketing tools 3

What Is a Product? Define the term product LO 1 4

What Is a Product? Product LO 1 Everything, both favorable and unfavorable, that a person receives in an exchange. u Tangible Good u Service u Idea 5

What Is a Product? Product is the starting point of Marketing Mix Product Price LO 1 Promotion Place (Distribution) 6

Types of Consumer Products Classify consumer products LO 2 7

Types of Products Business Product A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. Consumer Product A product bought to satisfy an individual’s personal needs or wants LO 2 8

Types of Consumer Products Convenience Products LO 2 Shopping Products Business Products Specialty Products Unsought Products 9

Types of Consumer Products Convenience Product Shopping Product Increase market share among A relatively existinginexpensive customers item that merits little shopping effort Attract new customers to A product that requires comparison shopping, because it is usually more existing products expensive and found in fewer stores A particular itemproducts for whichfor Create new Specialty Market consumers extensively and presentsearch markets Diversification Product Development are reluctant to accept substitutes Unsought Product LO 2 A product unknown to the potential new products buyer. Introduce or a known product that the new buyerinto does notmarkets actively seek 10

Product Items, Lines, and Mixes Define the terms product item, product line, and product mix LO 3 11

Product Items, Lines, and Mixes Product Item A specific version of a product that can be designated as a distinct offering among an organization’s products. Product Line A group of closely-related product items. Product Mix All products that an organization sells. LO 3 12

Campbell’s Product Lines and Mix { LO 3 } 13

Benefits of Product Lines Advertising Economies Package Uniformity Standardized Components Efficient Sales and Distribution Equivalent Quality LO 3 14

Adjustments to Product Items, Lines, and Mixes Product Modification LO 3 Product Repositioning Product Line Extension or Contraction 15

Types of Product Modifications Quality Modification Functional Modification Style Modification Planned Obsolescence: The practice of modifying products so those that have already been sold become obsolete LO 3 before they actually need replacement. 16

Repositioning Why reposition established brands? Changing Demographics LO 3 Declining Sales Changes in Social Environment 17

Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry. Symptoms of Overextension • Some products have low sales or cannibalize sales of other items • Resources are disproportionately allocated to slow-moving products • Items have become obsolete because of new product entries LO 3 18

Branding Describe marketing uses of branding LO 4 19

Branding Brand Name That part of a brand that can be spoken, including letters, words, and numbers Brand Mark The elements of a brand that cannot be spoken Brand Equity The value of company and brand names Global Brand A brand where at least 20 percent of the product is sold outside its home country LO 4 20

Benefits of Branding Product Identification Repeat Sales New Product Sales LO 4 21

Top Ten Global Brands 1. Coca-Cola U. S. 2. IBM U. S. 3. Microsoft U. S. 4. GE U. S. 5. Nokia Finland 6. Mc. Donald’s U. S. 7. Google U. S. 8. Toyota Japan 9. Intel U. S. 10. Disney U. S. Source: Burt Helm, "Best Global Brands, " Business. Week September 28, 2009 LO 4 22

Branding Strategies Brand Manufacturer’s Brand Individual Brand LO 4 Family Brand No Brand Private Brand Combination Individual Brand Family Brand Combination 23

Branding Strategies Manufacturers’ Brand The brand name of a manufacturer. Private Brand A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand. Captive A brand manufactured by a third party for exclusive retailer, without evidence of a that retailer’s affiliation LO 4 24

Advantages of Manufacturers’ Brands u Heavy consumer ads by manufacturers u Attract new customers u Enhance dealer’s prestige u Rapid delivery, carry less inventory u If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer LO 4 25

Advantages of Private Brands u Earn higher profits on own brand u Less pressure to mark down price u Manufacturer can become a direct competitor or drop a brand/reseller u Ties customer to wholesaler or retailer u Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brands LO 4 26

Advantages of Captive Brands • No evidence of store’s affiliation • Sold exclusively at the chain • Can ask price similar to manufacturer’s brands LO 4 27

Individual Brands Versus Family Brands Individual Brand Family Brand LO 4 Using different brand names for different products. Marketing several different products under the same brand name. 28

Cobranding Ingredient Branding Types of Cobranding Cooperative Branding Complementary Branding LO 4 http: //www. bose. com Online 29

Trademarks A Trademark is the exclusive right to use a brand. u Many parts of a brand associated symbols qualify for trademark protection. u Trademark right comes from use rather than registration. u The mark has to be continuously protected. u Rights continue for as long as the mark is used. u Trademark law applies to the online world. LO 4 30

Marketing Uses of Branding LO 4 31

Packaging Describe marketing uses of packaging and labeling LO 5 32

Functions of Packaging Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling LO 5 http: //www. levesquedesign. com/ http: //www. design 4 packaging. com Online 33

Packaging Innovations • Packages tend to have the same shapes and sizes – Easy consumer comparison – Innovations for ease of use can be a competitive advantage • Collection of some great innovations in 2009: – http: //packaginguniversity. com/blog/2009/11/04/my-bestpackaging-picks-for-october/ LO 5 • Great packaging does not make up for an unsatisfactory product 34

Beyond the Book 100 Percent Recyclable Coca-Cola is building the largest recycling plant in the world. The plant will produce 100 million pounds of foodgrade recycled plastic for reuse each year. That’s enough plastic to produce two billion 20 -ounce Coke bottles. Coca-Cola’s goal is to recycle or reuse 100 percent of the company’s plastic bottles in the U. S. market. By meeting that goal over the next ten years, the Coca-Cola recycling plant will eliminate the production of one million metric tons of CO 2 emissions—the equivalent of removing 215, 000 cars from American highways. SOURCE: Press Release, The Coca-Cola Company, Atlanta, GA, September 5, 2007 LO 5 35

Labeling Persuasive § § Focuses on promotional theme Consumer information is secondary Informational § Helps make proper selections § Lowers cognitive dissonance § Includes use/care http: //www. fda. gov LO 5 Online 36

Universal Product Codes (UPCs) LO 5 A series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products. 37

Global Issues in Branding and Packaging Discuss global issues in branding and packaging LO 6 38

Global Issues in Branding One Brand Name Everywhere Global Options for Branding Adaptations & Modifications Different Brand Names in Different Markets LO 6 39

Global Issues in Packaging Labeling Global Considerations for Packaging Aesthetics Climate Considerations LO 6 40

Global Package designs 2009 European Design Awards • Creative global packaging – Some of the winners • Blog highlighting interesting global packaging – http: //packagingworld. blogspot. com/ LO 6 41

Product Warranties Describe how and why product warranties are important marketing tools LO 7 42

Product Warranties Warranty A confirmation of the quality or performance of a good or service. Express Warranty A written guarantee. An unwritten guarantee that the good or Implied service is fit for the purpose for which it was Warranty sold. (UCC) LO 7 43