Chp 3 the business of product management


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  • Defining “Product”: Key Terms and Ideas Product . Product means the need-satisfying offering of a firm. This definition is important because it reminds managers to focus on consumers and not on the technical and managerial details involved in producing products. Quality . From a marketing perspective, quality means a product’s ability to satisfy a customer’s needs or requirements. Quality may be absolute or relative, but in all cases the customer’s expectations for quality in a given product forms the basis for determining how to achieve customer satisfaction. Goods/Services . A product can be a physical good or an intangible service, or it can be a blend of both. Discussion Note: Consumers are increasingly demanding more services with the goods they buy. For example, in the personal computer business successful companies offer reliable equipment coupled with extensive, free technical telephone support services. Both together are the product the customer buys. Differences Between Goods and Services . Since both are products, this distinction is not usually necessary. But in fine tuning a product’s position, recognizing these differences can aid marketers in planning: Intangible. Goods have a physical existence. Services are deeds performed for a customer. Simultaneous production and consumption. Services are produced and consumed at the same time. Products are produced first then sold for later consumption. Perishable. Services cannot be stored for later use. Transported. Services cannot be transported to another location for sale. Customer presence. Many services require the presence, even participation, of the customer. Summary Overview A modern view of products goes beyond a physical item for sale and focuses on those things that help consumers satisfy needs. Products are need-satisfiers and consumer problem-solvers.
  • Consumer product classes are discussed on this slide. Business product classes are products meant for use in producing other products. These are covered on the following slide. Product Classes: Consumer Products Consumer product classes are based on how consumers think about and shop for products: Convenience Products . Convenience products are needed by consumers but consumers aren’t willing to spend much time and effort shopping for them. These products may be bought often, require little service or selling, be inexpensive and bought out of habit. Types include: Staples. Staples are bought often, routinely, and without much thought. Branding is used for many staples to make them easier to remember and find. Impulse. Impulse products are bought quickly, as unplanned purchases, because of a strongly felt need. These purchases may be strongly affected by the immediate situation. Emergency. Emergency products are purchased immediately when the need is great. Consumers don’t shop around for these products nor ask how much they cost. Shopping Products. Shopping products are those that customers feel are worth the time and effort to compare with competing products. Homogeneous shopping products are those that the customer sees as basically the same and wants at the lowest price. Heterogeneous shopping products are seen as different, perhaps in quality and suitability. Specialty Products . Specialty products are consumer products that the consumer really wants and makes a special effort to find. These are characterized by the consumer’s willingness to search . Unsought Products . Unsought products are those the customer doesn’t want yet or know that he or she can buy. New unsought products represent ideas potential customers don’t know about yet. Regularly unsought products are ones that just don’t motivate customers to seek them out, even though they may need them. Summary Overview Products may be grouped into classes that share important characteristics or functions that marketers must perform or provide to the customer. Consumer products are products meant for the final consumer and fall into four broad classes: convenience, shopping, specialty, and unsought.
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  • Summary Overview Many factors affect strategy planning for business products. Business markets are characterized by derived demand -- the demand for business products derives from the demand for the final consumer products they are used to make. This means that demand tends to be inelastic -- a change in price doesn’t have much effect on the quantity ordered. Business suppliers may face almost pure competition. Tax treatments affect buying too--a capital item lasts for years and is depreciated over its life. An expense item is deducted in the year it is bought. Business Products Business product classes are based on how buyers see products and how they’ll be used: Installations . Installations are important capital items. One of a kind installations such as office buildings and custom-made equipment require special negotiations for each sale. Accessory Equipment . Accessories are short-lived capital items such as tools and production equipment. Raw Materials . Raw materials are unprocessed expense items. They become a physical part of the goods the firm makes. Farm products are grown or raised by farmers. Natural products are those that occur in nature, such as wood and mineral ores. Component Parts and Materials . Components are processed expense items that become part of a finished product. Component parts are finished or nearly finished products in themselves that go into other products, like tires for a car. Component materials are processed goods but require more processing before becoming part of the final product ( wire ). MRO Supplies . MRO stands for Maintenance, Repair, and Operating supplies. Maintenance supplies include products like paint and light bulbs. Repair supplies are parts needed to fix worn or broken equipment. Operating supplies include things needed to do the work, like copier toner and paper clips. Professional Services . These are specialized services that support a firm’s operations, such as management or presentation graphics consulting. Here the service part of the product is emphasized.
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  • Summary Overview New products can be anything that in any way provides the company with another way to meet customer needs. This includes totally new inventions and simple color changes in existing products. Canada limits claims of “newness” to twelve months. Because new product success is important to companies seeking growth, most firms formalize the new- product development process. New-Product Development Process Idea Generation . New product ideas come from all over -- salespeople, production workers, customers, competitors -- anywhere! Sharp companies keep an open mind and eye to many relevant sources of new product ideas. Screening . Screening involves evaluating the new idea in relation to strengths, weaknesses, opportunities, and threats facing the company--and also the company’s objectives and resources. Some companies also weigh ideas for their effect on consumer welfare. Safety must be considered. The Hazardous Products Act encourages safety in product design and better quality control. Also, product liability means that the company has the legal obligation to pay damages to persons injured by defective or unsafe products. Also, return on investment (ROI) forecasts can help prioritize product ideas. Idea Evaluation . Here firms use concept testing -- getting reactions from customers about how well a new product idea fits their needs. Such market research can be informal or a very formal, systematic investigation. Development . Here more research and development is conducted on approved product concepts. Use of computer-aided design software and working models are common. Commercialization . At this stage the product is ready for market. The product form is selected and a complete marketing mix is designed for each target market.
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  • Summary Overview In developing a product concept, a marketing manager must consider the different possible approaches for branding. Brand Strategies Family Brand . This refers to the use of the same brand name for several products, such as Sears’ Craftsmen tools or Kenmore appliances. This is a good approach if the individual products are of a similar quality. A special case of family branding is a Licensed Brand , a well-known brand such as Sunkist that sellers pay a fee to use. Individual Brands . When a company makes very unrelated products that require a separate identity to avoid confusion, developing individual brands for each can be a good idea. Or some companies develop several versions of a product such as toothpaste, each with a unique position in the market. Generic Products . These are products that have no brand at all other than the identification of their contents. Manufacturer Brands . These are brands created by producers. This approach is used to help develop demand for the same product across many markets. Teaching Tip: Consider linking manufacturer brand to promotion “pull,” which is developed in detail later in the course. Dealer Brands . Also called private brands, these brands are created by middlemen (ex: JC Penney’s “Arizona” jeans or Sears’ “Canyon River” jeans). These are usually used to generate higher margins for the middlemen than they can get with the manufacturer brand. This conflict has led to a “battle of the brands” -- a competition between manufacturers and middlemen brands.
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  • Summary Overview Packaging involves promoting and protecting the product. Good packaging makes products easier to identify and promotes the brand at the point of purchase and in use. The Strategic Importance of Packaging Packaging Makes a Difference . Packaging can do more than contain and protect the product. The package can make the product easier to use and more convenient for the customer to store. Packaging Sends a Message . Creative use of design in packaging can visually help to tie the product to other elements of the promotion mix. Packaging May Lower Distribution Costs . Good packages save space and are easier to handle and display. In helping distributors and end-sale retailers, good packages are more welcome by these intermediaries. Universal Product Codes (UPC) Speed Handling . Using these bar codes with register-based computers speeds check-out of customers and vastly improves inventory monitoring. Teaching Tip: Ask students if they have any stories about some of their favourite products that never seem to get scanned at a checkout. Ask them how much more time it takes to hand enter the code. Could that time savings lead to lower costs? How can packages be re-designed? For example, a 25 kilogram bag of dog food at Wal-Mart used to be all but impossible to scan. Now, the UPC tag is a sticker that peels off at checkout. No more lifting the bag out of the cart, no more wrinkled, unreadable tags!
  • Summary Overview Branding means the use of a name, term, symbol, or design to identify a product. Some companies use a combination of some or all of these when branding. A brand name is a word, letter, or a group of letters. A trademark includes only those words, symbols, or marks that are legally registered for use by a single company. A service mark is a trademark that refers to a service offering. Brands developed to help identify quality with a specific product. Branding Brand familiarity means how well customers recognize and accept a company’s brand. Five levels of brand familiarity are useful for strategy planning: Rejection . Brand rejection means that potential customers won’t buy a brand unless its image is changed. Nonrecognition . Brand nonrecognition means final consumers don’t recognize a brand at all even though middlemen may use it for identification and control. Recognition . Brand recognition means that customers remember the brand. Discussion Note: Reaching this level can be critically important. For example, a supermarket may hold 20,000 different products and many varieties of a single type of product. Recognition may be all that is necessary to induce purchase. Preference . Brand preference means that target customers usually choose the brand over other brands. Insistence . Brand insistence means customers insist on a firm’s branded product and are willing to search for it. Most marketers seek to develop brand insistence for their products. Brand equity--which refers to the value of the brand’s overall strength in the market--can lead to high brand equity. Teaching Tip: You might tell students to remember this relationship when new-product development is discussed.
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  • Chp 3 the business of product management

    2. 2. Part 1 of 3 Product Concept
    3. 3. Strategic Planning for Product Place Product Price Promotion Target Market Brand Type of Brand: Individual or family Manufacturer or dealer Warranty None, full, or limited Package Protection, Promotion, (or both) Product Idea Physical good/service Features Quality level Accessories Installation Instructions Product line
    4. 4. What Is A Product? <ul><li>It can be anything that can be offer to consumer. </li></ul><ul><li>Good- Tangible physical entity </li></ul><ul><li>Service- Intangible result of the application of human and mechanical efforts to people or objects </li></ul><ul><li>Idea- Concept, philosophy, image, or issue </li></ul>
    5. 5. Classifying Products <ul><li>Consumer- products purchased to satisfy personal and family needs </li></ul><ul><li>Business- products brought to use in an organization’s operations, to resell, or to make other products </li></ul>
    6. 6. Consumer Product Classes Consumer Product Classes Convenience Specialty Unsought Shopping
    7. 7. Basic Categories of Consumer Products Category Convenience Type of Purchase Decision Shopping Specialty Relatively low Price Promotion Placement or Distribution Moderate Relatively expensive Little information sought Mass media Mass media; some emphasis on personal selling Widely available More information sought Lots of information sought Mass media; more emphasis on personal selling Selectively available Exclusively available Unsought Immediate Decision It might be low or high More emphasis on personal selling Selected
    8. 8. Convenience Products <ul><li>Relatively inexpensive, frequently purchased items for which buyers exert only minimal purchasing effort </li></ul>
    9. 9. Convenience Product Strategy Implications <ul><li>Retail outlets </li></ul><ul><li>Low per-unit gross margins </li></ul><ul><li>Little promotion effort </li></ul><ul><li>Packaging important </li></ul>
    10. 10. Shopping Products <ul><li>Items for which buyers are willing to expend considerable effort in planning and making purchases </li></ul>
    11. 11. Shopping Product Marketing Implications <ul><li>No brand loyalty </li></ul><ul><li>Fewer retail outlets than convenience </li></ul><ul><li>Lower inventory turnover </li></ul><ul><li>Higher gross margins </li></ul><ul><li>Personal selling </li></ul><ul><li>Channel member cooperation </li></ul>
    12. 12. Specialty Products <ul><li>Items with unique characteristics that buyers are willing to expend considerable effort to obtain. </li></ul>
    13. 13. Specialty Product Marketing Implications <ul><li>Limited retail outlets </li></ul><ul><li>Lower inventory turnover </li></ul><ul><li>High gross margins </li></ul>
    14. 14. Unsought Products <ul><li>Products purchased to solve a sudden problem, products of which customers are unaware, and products that people do no necessarily think of buying. </li></ul>
    15. 15. Unsought Products Marketing Implications <ul><li>Build trust with consumer by: </li></ul><ul><li>Recognizable brand </li></ul><ul><li>Superior performance </li></ul>
    16. 16. Business Products Business Product Classes Installations Component Parts and Materials Accessories Professional Services Raw Materials MRO Supplies
    17. 17. Basic Categories of Industrial Products Category Installation Type of Purchase Decision Accessory equipment Raw materials Not as important Price Promotion Very important Multiple members of buying center Personal Selling Few members of buying center May be important Advertising Component Parts and materials Several members of buying center May be important Personal selling Frequent; complexity varies Supplies Simple; frequent; may be a single buyer Important Personal selling Advertising Business services Varies Varies Varies
    18. 18. Business Products <ul><li>Installations- facilities & nonportable equipment </li></ul><ul><li>Accessory equipment- not part of final product </li></ul><ul><li>Raw materials- natural materials part of product </li></ul><ul><li>Component parts- finished items ready for assembly or need little processing </li></ul><ul><li>Process materials-used in production but not identifiable </li></ul><ul><li>MRO supplies-maintenance, repair, and operating items not part of final product </li></ul><ul><li>Services-intangible products in operations </li></ul>
    19. 19. Product Based Classifications <ul><li>Durable goods: refers to tangible good that get used repetitively over a long period of time (eg. computers, cars, electrical items, furniture, etc.) </li></ul><ul><li>Non-durable goods: tangible goods that are normally consumed relatively fast in one or few uses. Repeat purchase might be occur (eg. Groceries, foods, stationeries, etc.) </li></ul>
    20. 20. <ul><li>Services: refers to activities, benefits or satisfactions that are on offer by a company. It is tangible and does not result in the ownership of anything (eg. Hair cut, consultancy, dentist, etc.) </li></ul><ul><li>4 unique characteristics: </li></ul><ul><li>Intangibility </li></ul><ul><li>Inseparability </li></ul><ul><li>Vaiability </li></ul><ul><li>perishability </li></ul>
    21. 21. Goods and Services Durable Goods Non-Durable Goods Services Fantastic Sam’s Haircut Airline Taxi Ride Restaurant Meal Kleenex Tissues Scott Towels Pair of Glasses Sealy Mattress Maytag Washer Auto Repair
    22. 22. Levels of Product
    23. 23.
    24. 24. Product Line And Product Mix <ul><li>Item- specific version of product </li></ul><ul><li>Line- closely related items viewed as a unit </li></ul><ul><li>Mix- total group of products </li></ul><ul><li>Width of mix- number to lines </li></ul><ul><li>Depth of mix- number of different products in line </li></ul>
    25. 25. Product Mixes and Product Lines Source: Courtesy of P. Gayle Fuguitt, Marketing Research Director, Big “G” Division, General Mills Ready-to-Eat Cereals Convenience Foods Snack Foods Baking Products Dairy Products Total Wheaties Lucky Charms Cinnamon Toast Crunch Cheerios Kix Trix Hamburger Helper Suddenly Salad Betty Crocker Cake Mixes Creamy Deluxe Frosting Dessert Mixes Pop Secret Popcorn Fruit Rollups Nature Valley Granola Bars Bisquick Gold Medal Flour Yoplait Yogurt Colombo Yogurt Width (MIX) D E P T H LINE
    26. 26. Product Width/Depth Of Proctor & Gamble
    27. 27. Stages Of Product Adoption Process <ul><li>Awareness </li></ul><ul><li>Interest </li></ul><ul><li>Evaluation </li></ul><ul><li>Trial </li></ul><ul><li>Adoption </li></ul>
    28. 28. Adopter Categories <ul><li>Innovators- first adopters </li></ul><ul><li>Early Adopters- careful choosers </li></ul><ul><li>Early Majority- deliberate and cautious </li></ul><ul><li>Late Majority- skeptics who only adopt when necessary </li></ul><ul><li>Laggards- distrust new products </li></ul>
    29. 29. Product Adopter Categories
    30. 30. Why Some Products Fail/Succeed <ul><li>Failure to match product to needs </li></ul><ul><li>Failure to send right message </li></ul><ul><li>Technical/design problems </li></ul><ul><li>Poor timing </li></ul><ul><li>Overestimate market </li></ul><ul><li>Ineffective promotion </li></ul><ul><li>Insufficient distribution </li></ul>
    31. 31. Can you list any product success and fail in the market? <ul><li>Success </li></ul><ul><li>Failed </li></ul>
    32. 32. Part 2 of 3 Developing and Managing Products
    33. 33. Managing Existing Products <ul><li>Line Extensions </li></ul><ul><li>Product Modifications </li></ul><ul><li>Quality Modifications </li></ul><ul><li>Functional Modifications </li></ul><ul><li>Aesthetic Modifications </li></ul>
    34. 34. Line Extension <ul><li>Development of a product that is closely related to existing products in the line but is designed specifically to meet different customer needs. </li></ul>
    35. 35. Purpose of Line Extensions <ul><li>Focus on different segment </li></ul><ul><li>More precisely satisfy needs of current segment </li></ul><ul><li>Capture market share from competitors </li></ul><ul><li>Might result in negative view of core product </li></ul>
    36. 36. Product Modification <ul><li>Changes in one or more characteristics of a product. </li></ul>
    37. 37. Conditions Of Product Modification <ul><li>Must be modifiable </li></ul><ul><li>Perceive modification has occurred </li></ul><ul><li>Makes product more consistent with customers’ desires </li></ul><ul><li>Risk = previous purchaser may view as riskier purchase </li></ul>
    38. 38. Methods Of Product Modification <ul><li>Quality </li></ul><ul><li>Functional </li></ul><ul><li>Aesthetic </li></ul>
    39. 39. Quality Modifications <ul><li>Changes relating to a product’s dependability and durability. </li></ul><ul><ul><li>Reducing quality = lower price </li></ul></ul><ul><ul><li>Increasing quality = competitive edge </li></ul></ul>
    40. 40. The Eight Dimensions of Quality Chrysler DuraCell Sears Die Hard Singapore Airlines Walt Disney World Perceived Quality Ralph Lauren Midas Performance Features Overall Evaluation Conformance Durability Reliability Serviceability Aesthetics
    41. 41. Functional Modifications <ul><li>Changes affecting a product’s versatility, effectiveness, convenience, or safety. </li></ul>
    42. 42. Benefits Of Functional Modifications <ul><li>Stronger competitive position </li></ul><ul><li>Achieve/maintain progressive image </li></ul><ul><li>Reduce possibility of product liability lawsuits </li></ul>
    43. 43. Aesthetic Modifications <ul><li>Changes relating to the sensory appeal of a product. Such as taste, texture, sound, smell, and appearance. </li></ul>
    44. 44. Aesthetic Modifications <ul><li>Benefit </li></ul><ul><li>Differentiate product </li></ul><ul><li>Drawback </li></ul><ul><li>Value is subjective </li></ul>
    45. 45. Developing New Products <ul><li>New product development process </li></ul><ul><ul><li>A seven-phase process for introducing products: idea generation, screening, concept testing, business analysis, product development, test marketing, and commercialization </li></ul></ul>
    46. 46. Types of New Products New-to-the-World Products New Category Entries Additions to the Product Line Product Improvement Repositionings New!
    47. 47. New-Product Development Process Idea Generation Ideas from: Customers and users Marketing research Competitors Other markets Company people Intermediaries Screening Strengths and weaknesses Fit with objectives Market trends Rough ROI estimate Idea Evaluation Concept testing Customer reactions Rough estimates of cost, sales, profits Development R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Commercial -ization Finalize product and marketing plan Start production and marketing “ Roll out” in select markets Final ROI estimate
    48. 48. Idea Generation <ul><li>Seeking product ideas to achieve organizational objectives. </li></ul>
    49. 49. Technique Delphi Method Benefit Analysis Description A panel of experts fills out a questionnaire; a researcher tabulates the results and sends them to panel members. Repeat the process until the panel reaches a consensus or an impasse. Use Analysis Relative Brand Profile Unique properties Techniques for Generating Ideas List all the benefits customers receive from the product under study. Think of benefits that are currently missing from the list. Ask customers how they use the product under study. List the various uses. Ask target markets whether the brand name makes sense for other product categories under consideration. A stretch of the brand name that makes sense to potential buyers can be the basis for a new product. List all the properties held in common by a product or material currently on the market. Look for unique properties of the organization’s product.
    50. 50. Technique Achilles heel Free Association Description List the weaknesses of a product or product line (for the organization and its competitors). Prune the list to the one or two weaknesses most likely to inspire a response from competitors. Identify product concepts that could result from correcting these weaknesses. Study of other people’s failures Study products that have failed. Look for ways to solve the problems that led to failure. Stereotype activity Write down one aspect of the product situation–a product attribute, use or user. Let the mind roam and jot down every idea that surfaces. Repeat the process for other aspects of the product situation. Ask, “How would ________do it?” –referring to how a member of some group or a particular person would use the product. Example: What type of bicycle would a senator ride? Can also ask what the stereotype would not do. Techniques for Generating Ideas
    51. 51. Screening <ul><li>Selecting the ideas with the greatest potential for further review. </li></ul>
    52. 52. Concept Testing <ul><li>Seeking a sample of potential buyers’ responses to a product idea. </li></ul>
    53. 53. Business Analysis <ul><li>Evaluating the potential impact of a product idea on the firm’s sales, costs, and profits </li></ul>
    54. 54. Product Development <ul><li>Determining if producing a product is feasible and cost effective. </li></ul>
    55. 55. Test Marketing <ul><li>A limited introduction of a product in geographic areas chosen to represent the intended market. </li></ul>
    56. 56. <ul><li>• A standard test market is the practice of offering a new product through normal distribution channels in a limited area. </li></ul><ul><li>• A controlled test market is the practice of offering a new product through a set of retailers who have been paid to set aside shelf space for the product in a desirable area of the store. </li></ul><ul><li>• A simulated test market is an experiment in which a sample of consumers has an opportunity to select products. </li></ul>Types of Test Markets
    57. 57. Benefits Of Test Marketing <ul><li>Expose product to marketing environment and assess sales performance </li></ul><ul><li>Identify weaknesses in product or marketing mix </li></ul><ul><li>Experiment with variations in marketing mix </li></ul><ul><li>Reduce risk of failure </li></ul>
    58. 58. Commercialization <ul><li>Refining and finalizing plans and budgets for full-scale manufacturing and marketing of a product </li></ul>
    59. 59. Product Differentiation through Quality, Design, and Support Services <ul><li>Product Differentiation </li></ul><ul><ul><li>Creating and designing products so that customers perceive them as different from competing products. </li></ul></ul>
    60. 60. Product Differentiation <ul><li>Quality- characteristics to perform as expected </li></ul><ul><ul><li>Level </li></ul></ul><ul><ul><li>Consistency </li></ul></ul><ul><li>Design and features </li></ul><ul><ul><li>Styling </li></ul></ul><ul><ul><li>Features </li></ul></ul><ul><li>Support services- add value </li></ul>
    61. 61. Product Quality <ul><li>Quality – characteristics of a product allowing it to perform as expected in satisfying customer needs </li></ul><ul><li>Level of quality – the amount of quality a product possesses </li></ul><ul><li>Consistency of quality – the degree to which a product has the same level of quality over time </li></ul>
    62. 62. Product Design and Features <ul><li>Product design – conception, plan, and production of a product </li></ul><ul><li>Styling – physical appearance of a product </li></ul><ul><li>Product features – specific design characteristics that allow a product to perform certain tasks </li></ul><ul><li>Customer services – human or mechanical efforts or activities that add value to a product </li></ul>
    63. 63. Product Deletion <ul><li>Eliminating a product from the product mix when it no longer satisfies a sufficient number of customers. </li></ul>
    64. 64. Product Deletion Process
    65. 65. Part 3 of 3 Branding And Packaging
    66. 66. Branding Terminology <ul><li>Brand - a name, term, design, symbol, or another feature that identifies one seller’s good or service as distinct from other sellers. (e.g. Coca Cola) </li></ul><ul><li>Brand Name - that part of a brand that can be spoken. (e.g. the word Coke ) </li></ul><ul><li>Brand Mark - that part of a brand that cannot be spoken. (e.g. the flowing script used to write Coca Cola) </li></ul><ul><li>Trademark - a brand that has legal status by virtue of it’s being registered with the federal government. (e.g. Coca Cola) </li></ul><ul><li>Trade name - the legal name under which a company operates. (e.g. The Coca Cola Company) </li></ul><ul><li>Brand extension - the practice of using an existing brand name for a new product. (e.g. Cherry Coke, Diet Coke, Caffeine Free Coke ) </li></ul><ul><li>Service mark - a brand for a service that has legal status by virtue of its being registered with the federal government. </li></ul><ul><li>Family brand - the use of the same brand name for an entire product line. </li></ul>
    67. 67. Brand Structure Private Brands Generic Brands Sambal Sambal Machang Types of Brands Manufacturer’s Brands Sambal Machang Cek Nab
    68. 68. Value of Branding – Buyer <ul><li>Identify specific products </li></ul><ul><li>Form of self-expression </li></ul><ul><li>Evaluate product </li></ul><ul><li>Reduce perceived risk of purchase </li></ul><ul><li>Status </li></ul>
    69. 69. Value Of Branding – Seller <ul><li>Identify product </li></ul><ul><li>Aids in new product introduction </li></ul><ul><li>Facilitates promotion </li></ul><ul><li>Fosters brand loyalty </li></ul><ul><li>Cultural branding </li></ul>
    70. 70. Brand Loyalty <ul><li>A customer’s favorable attitude toward a specific brand. </li></ul><ul><li>Recognition – aware brand exists and is alternative if preferred brand unavailable </li></ul><ul><li>Preference – preferred over competitive offerings </li></ul><ul><li>Insistence – strongly preferred, no substitute </li></ul>
    71. 71. Brand Equity <ul><li>The marketing and financial value associated with a brand’s strength in a market. </li></ul>
    72. 72. Elements of Brand Equity Provides value to customer by Enhancing Customer’s: Interpretation/Processing of information Confidence in the Purchase Decision Use Satisfaction Provides value to firm by Enhancing: Efficiency and effectiveness of Marketing Programs Brand Loyalty Prices/Margins Brand Extensions Trade Leverage Competitive Advantage Brand Loyalty Name Awareness Perceived Quality Brand Associations Other Proprietary Brand Assets Brand Equity Name Symbol
    73. 73. Major Elements Of Brand Equity Adapted with the permission of The Free Press, a division of Simon & Schuster Adult Publishing Group, from Managing Brand Equity: Capitalizing on the Value of a Brand Name by David A. Aaker. Copyright © 1991 by David A. Aaker. All rights reserved.
    74. 74. Types Of Brands <ul><li>Manufacturer- initiated by its producer </li></ul><ul><li>Private distributor- initiated and owned by a reseller </li></ul><ul><li>Generic- indicating only a product category </li></ul>
    75. 75. What Kind of Brand to Use? Generic Family Brand Individual Brand Brand Choices Manufacturer Dealer ? ? ? ? ? ? ?
    76. 76. Consumer Perceptions Of Brands “ Store Brands at the Turning Point,” Consumer Research Network, 3624 Market Street, Philadelphia, PA.
    77. 77. Selecting A Brand Name <ul><li>Easy to say, spell, recall </li></ul><ul><li>Indicate major benefits- suggest in positive way products’ uses and special characteristics </li></ul><ul><li>Recognizable in all types of media </li></ul>
    78. 78. <ul><li>1. It should imply product benefits. </li></ul><ul><li>2. It should be positive, distinctive, easy to say and easy to remember. </li></ul><ul><li>3. It should be consistent with the image of the product and manufacturer. </li></ul><ul><li>4. It should be legally protectable and permissible. </li></ul><ul><li>5. It should translate well, if the product is to be offered globally. </li></ul>Selecting a Brand A good brand name has several characteristics:
    79. 79. Branding Policies <ul><li>Individual- each product given a different name </li></ul><ul><li>Family- all of a firm’s products with the same name or part of the name </li></ul><ul><li>Extension- organization uses one of its existing brands to brand a new product in a different category </li></ul>
    80. 80. Co-Branding <ul><li>Using two or more brands on one product. </li></ul>Brand Licensing <ul><li>An agreement whereby a company permits another organization to use its brand on other products for a licensing fee. </li></ul>
    81. 81. Brand Licensing <ul><li>An agreement whereby a company permits another organization to use its brand on other products for a licensing fee. </li></ul>
    82. 82. Packaging Functions <ul><li>Protect product and maintain functional form </li></ul><ul><li>Offer convenience </li></ul><ul><li>Promote product </li></ul><ul><li>Communicate quality or premium nature of product </li></ul>
    83. 83. The Strategic Importance of Packaging Convenient packages are easier to use, making purchase decisions easier for the customer as well.
    84. 84. Packaging Considerations <ul><li>Cost </li></ul><ul><li>Tamper-resistant </li></ul><ul><li>Design consistency </li></ul><ul><li>Promotional role- color </li></ul><ul><li>Needs of resellers </li></ul><ul><li>Environmentally responsible </li></ul>
    85. 85. Companies That Spend The Most On Packaging
    86. 86. Packaging And Marketing Strategies <ul><li>Altering </li></ul><ul><li>Secondary-Use </li></ul><ul><li>Category-Consistent </li></ul><ul><li>Innovative </li></ul><ul><li>Multiple Packs </li></ul><ul><li>Handling -Improved </li></ul>
    87. 87. Criticisms Of Packaging <ul><li>Not functional </li></ul><ul><li>Safety </li></ul><ul><li>Deceptive </li></ul><ul><li>Cost </li></ul>
    88. 88. Labeling <ul><li>Labeling- identifying, promotional, or other information on package </li></ul><ul><li>Universal Product Code (UPC)- electronically readable lines identifying product and inventory/pricing information </li></ul>
    89. 89. Labeling Laws <ul><li>Fair Packaging and Labeling Act (1966) </li></ul><ul><li>Nutrition Labeling Act (1990) </li></ul>
    90. 90. Branding Rejection Nonrecognition Recognition Preference Insistence Change Position Increase Awareness Continue Education Maintain Availability Develop High Brand Equity Focus: Focus: Focus: Focus : Focus :
    91. 91. Universal Product Codes 0 12345 67890 5 Identify Manufacturer Assigned by the Uniform Code Council Identify Product Assigned by the Manufacturer Check Digit