Lamb Hair Mc Daniel 2011 2012 CHAPTER 10

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 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 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 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 3

What Is a Product? Define the term product LO 1 Chapter 10 Copyright ©

What Is a Product? Product Everything, both favorable and unfavorable, that a person receives in an exchange. u Tangible Good u Service u Idea LO 1 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 5

What Is a Product? Product is the starting point of Marketing Mix Product Price

Types of Consumer Products Classify consumer products LO 2 Chapter 10 Copyright © 2012

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 customers Consumer Product A product bought to satisfy an individual’s personal wants LO 2 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 8

Types of Consumer Products Convenience Products Shopping Products Business Products Specialty Products Unsought Products

Types of Consumer Products Convenience Product Shopping Product Increase market share among A relatively existinginexpensive customers item that merits little shopping effort Attract customers to A product thatnew requires comparison shopping, because it is usually more existing products expensive and found in fewer stores A particular item for which for Create new products Specialty Market consumers extensively and presentsearch markets Diversification Product Development are reluctant to accept substitutes LO 2 Chapter 10 Unsought Product A product unknown to the potential new products buyer. Introduce or a known product that the new buyerinto does notmarkets actively seek Copyright © 2012 by Cengage Learning Inc. All rights reserved 10

Product Items, Lines, and Mixes Define the terms product item, product line, and product

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 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 12

Exhibit 10. 1 Campbell’s Product Lines and Product Mix LO 3 Chapter 10 Copyright

Benefits of Product Lines Advertising Economies Package Uniformity Standardized Components Efficient Sales and Distribution LO 3 Chapter 10 Equivalent Quality Copyright © 2012 by Cengage Learning Inc. All rights reserved 14

Adjustments to Product Items, Lines, and Mixes Product Modification Product Repositioning Product Line Extension or Contraction LO 3 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 15

Types of Product Modifications Quality Modification Functional Modification Style Modification LO 3 Chapter 10 Planned Obsolescence: The practice of modifying products so those that have already been sold become obsolete before they actually need replacement. Copyright © 2012 by Cengage Learning Inc. All rights reserved 16

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

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 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 18

Branding Describe marketing uses of branding LO 4 Chapter 10 Copyright © 2012 by

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 a third of the earnings come from outside its home country LO 4 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 20

Benefits of Branding Product Identification Repeat Sales LO 4 Chapter 10 New Product Sales

Beyond the Book LO 4 Chapter 10 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 Copyright © 2012 by Cengage Learning Inc. All rights reserved 22

Branding Strategies Brand Manufacturer’s Brand Individual Brand Family Brand No Brand Private Brand Combination Individual Brand Family Brand Combination LO 4 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 23

LO 4 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. Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 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 4 LO Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 25

Beyond the Book LO 4 Trader Joe’s—The Brand • About 80 percent of the items offered at Trader Joe’s are private label. • Trader Joe’s offers several subbrands withing the Trader Joe’s brand family, such as Trader Ming’s for Chinese food and Trader Darwin’s for vitamins. • Trader Joe’s purchases directly from the manufacturer and ships directly to its distribution centers, where many of the products are portioned and packaged. Source: Beth Kowitt, “Inside Trader Joe’s, ” Fortune, September 6, 2010. 86 -96 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 26

Advantages of Private Brands u Earn higher profits on own brand u Less pressure to mark down price Courtesy Chapel House Photography 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 4 LO Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 27

Advantages of Captive Brands • No evidence of store’s affiliation • Manufactured by third party • Sold exclusively at the chain • Can ask price similar to manufacturer’s brands LO 4 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 28

Individual Brands Versus Family Brands Individual Brand Family Brand Using different brand names for different products. Marketing several different products under the same brand name. LO 4 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 29

Cobranding Ingredient Branding Types of Cobranding Cooperative Branding Complementary Branding LO 4 Chapter 10

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 To renew the trademark, the company must prove use of the mark. u Rights continue for as long as the mark is used. LO 4 u Chapter 10 Trademark law applies to the online world. Copyright © 2012 by Cengage Learning Inc. All rights reserved 31

Packaging Describe marketing uses of packaging and labeling LO 5 Chapter 10 Copyright ©

Functions of Packaging Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling

Labeling Informational Persuasive § § LO 5 Chapter 10 Focuses on promotional theme Consumer information is secondary § Helps make proper selections § Lowers cognitive dissonance Greenwashing When a product or company attempts to give the impression of environmental friendliness whether or not it is environmentally friendly. Copyright © 2012 by Cengage Learning Inc. All rights reserved 34

Universal Product Codes (UPCs) A series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products. LO 5 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 35

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

Global Issues in Branding One Brand Name Everywhere Global Options for Branding Adaptations & Modifications Different Brand Names in Different Markets LO 6 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 37

Global Issues in Packaging Labeling Global Considerations for Packaging LO 6 Chapter 10 Aesthetics

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

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. LO 7 Chapter 10 Copyright © 2012 by Cengage Learning Inc. All rights reserved 40

Chapter 10 Videos Beyond the Book Kodak – Product Concepts Chapter 10 List the attributes of the Kodak brand. What benefits of branding has the company experienced over time? Have there been pitfalls to having a brand with such strong associations? http: //www. cengage. com/marketing/boo k_content/1439039429_lamb/company_c lips/ch 10. html Copyright © 2012 by Cengage Learning Inc. All rights reserved 41