Notes: The product offering is the heart of an organization’s marketing program. Price, distribution, and promotion strategies can not be determined until the firm has a product to sell. A product is everything, both favorable and unfavorable, that a person receives in an exchange. Well-conceived price, distribution, and promotion strategies have little value without a strong product offering.
Notes: Products can be classified as either business or consumer products. The classification as a business or consumer product depends on the buyer’s intentions.
Notes: Chapter 6 described seven categories of business products: (have students name these) major equipment, accessory equipment, component parts, processed materials, raw materials, supplies, and services. Consumer products are classified into four types: convenience products, shopping products, specialty products, and unsought products. This approach organizes products by the effort used to shop for them.
Discussion/Team Activity: Name products and services that fall into each of the consumer product categories: Convenience: candy, soft drinks, deodorant, aspirin, hardware, dry cleaning. Shopping: Homogeneous shopping products such as washers, dryers, televisions. Decisions are based on the lowest-priced brand with the desired features. Heterogeneous shopping products are essentially different, for example furniture, clothing, housing, universities. Decisions are highly-individual and based on “finding the best product for me.” Specialty: fine watches, expensive automobiles, gourmet restaurants. Unsought: new products, insurance, burial plots, encyclopedias.
Rarely does a company sell a single product. Instead, it sells a variety of things that may be categorized into product lines and product mixes.
Notes: All of Campbell’s products constitute its product mix. Each product in the product mix may require a separate marketing strategy. In some cases, product lines and mixes share some marketing strategy components. Consider Nike’s theme, “Just Do It.” An example of Campbell’s product lines and product mix is shown in Exhibit 9.2. Discussion/Team Activity: Identify a few companies with extensive product lines and product mixes. Pick one and create a matrix similar to Exhibit 9.2. Evaluate the marketing strategies in use.
Notes: Advertising economies: economies of scale in advertising (more impact for equivalent spending). Package uniformity: packages may have a common look but maintain individual identities. Standardized components: reductions in manufacturing and inventory costs. Efficient sales and distribution: a product line enables a full range of choices to customers, and as a result, better distribution and retail coverage. Equivalent quality: all products in a line are perceived as having similar quality. Discussion/Team Activity: Discuss product lines that demonstrate the above benefits. Some ideas include: Gillette, General Motors, Procter & Gamble, Mary Kay Cosmetics
Notes: In Exhibit 9.2, Campbell’s product mix width is represented by the five product lines. Product mix width diversifies risk across many product lines rather than depend on one or two lines. Widening the mix also capitalizes on established reputations.
Notes: In Exhibit 9.2, product line depth can be seen in Campbell’s product items in its soup division.
Notes: Over time, updates in technical or product developments or environmental changes warrant changes to product items, lines, and mixes. The three strategies for making these changes are: Product Modification Product Repositioning Product Line Extension or Contraction
Notes: Marketing managers must decide if and when to modify products. Product modification changes one or more of a product’s characteristics: Quality modification: change in a product’s dependability or durability. Functional modification: change in a product’s versatility, effectiveness, convenience, or safety. Style modification: an aesthetic product change (like color) rather than a quality or functional change. Planned obsolescence is a style modification change to make old products “obsolete” to the consumer.
Discussion/Team Activity: Debate the advantages and disadvantages of the practice of planned obsolescence. What products become obsolete in a short period?
Notes: The second way of adjusting product items, lines, and mixes is by repositioning. Repositioning changes consumers’ perceptions of a brand. Changing demographics, declining sales, or changes in the social environment often motivate firms to reposition established brands.
Notes: The third way of adjusting product items, lines, and mixes is by product line extensions.
Notes: When a firm contracts overextended product lines, the benefits that are likely include: * Resource concentration on the most important products. * No waste of resources on poorly performing products. * Greater likelihood of the success of new product items due to more financial and human resources to manage them.
Notes: A product’s success depends on the target market’s ability to distinguish one product from another. Marketers use branding as the major tool in distinguishing their product from the competition. Discussion/Team Activity: Name products with strong brand recognition.
Discussion/Team Activity: What attributes make a good brand name, based on the names of strongly recognized brands? Discuss examples of strong global brands.
Notes: Exhibit 9.4 diagrams the decisions made in branding. The lack of a brand name, a generic product, can be a selling point. If a brand is used, the choice is made between a manufacturers’ brand, a private brand, or both. With either a manufacturers’ brand or a private brand, a decision is made among: Individual brand—different brands for different products Family brand—common names for different products or a Combination of individual branding and family branding. Discussion/Team Activity: Name brands that fall into each of the categories shown on this slide and in Exhibit 9.4.
On-Line: Bose Many automobile manufacturers tout the fact that their cars include audio systems engineered by Bose. Visit the Bose Web site and search for the list of vehicles that offer Bose stereos as standard or optional equipment. What types of brands are they? How do the relationships benefit Bose? What is the payoff for the auto manufacturers? Notes: Cobranding is placing two or more brand names on a product or its package. Ingredient branding identifies the brand of a part that makes up the product. Examples: Intel in Dell computers, Coach interiors in Lincoln automobiles. Cooperative branding occurs when two brands receive equal treatment. Examples: Promotional contest sponsored by Ramada Inns, American Express, and Continental Airlines. Complementary branding refers to products advertised or marketed together to suggest usage. The benefits of cobranding include: Enhancement of prestige or value of a product and increased market presence in markets with little or no market share.
Notes: A trademark is the exclusive right to use a brand or part of a brand. Others are prohibited to use without permission. A service mark performs the same function for services. Parts of a brand or other product identification may qualify for trademark protection. Some of the best known trademarked features include the Coca-Cola bottle and the Nike “Swoosh,” the Jeep front grille, and the Levi’s pocket tag. Companies that fail to protect trademarks face the risk of product names becoming generic. This list includes aspirin, cellophane, thermos, monopoly, cola, and shredded wheat. Discussion/Team Activity: Discuss some heavily-protected product brands that are used generically in conversations. Examples might include Kleenex, Xerox, Band-Aid Brand Adhesive Bandages, etc.
Online Levesque Design Design 4 Packaging What does it take to design a successful package? Visit the Web sites of Levesque Design and Design 4 Packaging to find out. What is the most innovative or eye-catching package you see? Notes: Packaging serves not only the practical function of containing and protecting products as they travel through the distribution channel, but it is also a container for promoting the product and making it safer and easier to use.
Online: Just what does the label on your snack foods have to say? What about your makeup/ go to the food and Drug Administration's Web site to read the exact requirements for labeling various products. Pick a product and report back to the class. Notes: Package labeling takes two forms: persuasive or informational.
Notes: Universal product codes, often called bar codes, were first introduced in 1974. UPCs help retailers prepare records of customer purchases, control inventories, and track sales.
Notes: When entering a foreign market with an existing product a firm has three options for handling the brand name: One brand name everywhere. Coca-Cola uses this strategy in 195 countries around the world. This strategy allows greater recognition of the product and easier promotional coordination from market to market. Adaptations and modifications are used when the name cannot be pronounced or interpreted successfully in a different language. Different brand names for different markets: Local brand names are used when translation or pronunciation problems occur, when the marketer wants the brand to appear to be a local brand, or when regulations require localization.
Notes: Labeling concern is translation of ingredient, promotional, and instructional information on labels. Package aesthetics are important from a cultural perspective. For example, colors may have different and often negative connotations. Package size is influenced by availability of refrigeration, amount of storage space, and even the purchasing power of buyers. On the other hand, simple visual elements of the brand, such as a logo or symbol, can be a standardizing element across products and countries. Extreme climates and long-distance shipping necessitate sturdier packages. Packages may need a longer shelf life.
CHAPTER 9 Product Concepts Designed by Eric Brengle B-books, Ltd. Prepared by Deborah Baker Texas Christian University Introduction to Marketing McDaniel, Lamb, Hair 9
Learning Outcomes LO I LO 2 LO 3 Define the term product Classify consumer products Define the terms product item, product line, and product mix Describe marketing uses of branding LO 4
Learning Outcomes Describe marketing uses of packaging and labeling Discuss global issues in branding and packaging Describe how and why product warranties are important marketing tools LO 5 LO 6 LO 7
What Is a Product? Define the term product LO I
What Is a Product? LO I Product <ul><li>Everything, both favorable and unfavorable, that a person receives in an exchange. </li></ul><ul><li>Tangible Good </li></ul><ul><li>Service </li></ul><ul><li>Idea </li></ul>
What Is a Product? LO I Product is the starting point of Marketing Mix Promotion Place (Distribution) Price Product
REVIEW LEARNING OUTCOME LO I Define the term product Product Good Service Idea
Types of Consumer Products Classify consumer products LO 2
Types of Products LO 2 Business Product Consumer Product A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. A product bought to satisfy an individual’s personal needs or wants
Types of Consumer Products LO 2 Unsought Products Specialty Products Shopping Products Convenience Products Consumer Products Business Products Products
Types of Consumer Products LO 2 Market Development Diversification Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets Convenience Product Shopping Product Specialty Product Unsought Product A relatively inexpensive item that merits little shopping effort A product that requires comparison shopping, because it is usually more expensive and found in fewer stores A particular item for which consumers search extensively and are reluctant to accept substitutes A product unknown to the potential buyer or a known product that the buyer does not actively seek
REVIEW LEARNING OUTCOME LO 2 Consumer Products
Product Items, Lines, and Mixes Define the terms product item, product line, and product mix LO 3
Product Items, Lines, and Mixes LO 3 Product Item Product Line Product Mix A specific version of a product that can be designated as a distinct offering among an organization’s products. A group of closely-related product items. All products that an organization sells.
Benefits of Product Lines LO 3 Equivalent Quality Efficient Sales and Distribution Standardized Components Package Uniformity Advertising Economies
Product Mix Width LO 3 The number of product lines an organization offers. <ul><li>Diversifies risk </li></ul><ul><li>Capitalizes on established reputations </li></ul>Product Mix Width
Product Line Depth LO 3 The number of product items in a product line. <ul><li>Attracts buyers with different preferences </li></ul><ul><li>Increases sales/profits by further market segmentation </li></ul><ul><li>Capitalizes on economies of scale </li></ul><ul><li>Evens out seasonal sales patterns </li></ul>Product Line Depth
Adjustments LO 3 Product Modification Product Repositioning Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes
Types of Product Modifications LO 3 Quality Modification Functional Modification Style Modification
Planned Obsolescence LO 3 Planned Obsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.
Repositioning LO 3 Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands?
Product Line Extension LO 3 Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry.
Product Line Contraction LO 3 <ul><li>Some products have low sales or cannibalize sales of other items </li></ul><ul><li>Resources are disproportionately allocated to slow-moving products </li></ul><ul><li>Items have become obsolete because of new product entries </li></ul>Symptoms of Product Line Overextension
REVIEW LEARNING OUTCOME Product item , product line , and product mix LO 3
Branding Describe marketing uses of branding LO 4
Brand LO 4 Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products.
Branding LO 4 Brand Name Brand Mark Brand Equity That part of a brand that can be spoken, including letters, words, and numbers The elements of a brand that cannot be spoken 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
Benefits of Branding LO 4 Product Identification Repeat Sales New Product Sales
Top Five Global and North American Brands LO 4 SOURCE: Deborah L. Vence, “ Not Taking Care of Business ,” Marketing News, March 15, 2005, p. 19. Global 1. Apple 2. Google 3. IKEA 4. Starbucks 5. Al Jazeera North American 1. Apple 2. Google 3. Target 4. Starbucks 5. Pixar
Branding Strategies LO 4 Brand No Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Individual Brand Family Brand Combi- nation
Generic Brand LO 4 A no-frills, no-brand-name, low-cost product that is simply identified by its product category. Generic Product
Manufacturers’ Brands Versus Private Brands LO 4 Manufacturers’ Brand Private Brand The brand name of a manufacturer. A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand.
Advantages of Manufacturers’ Brands LO 4 <ul><li>Heavy consumer ads by manufacturers </li></ul><ul><li>Attract new customers </li></ul><ul><li>Enhance dealer’s prestige </li></ul><ul><li>Rapid delivery, carry less inventory </li></ul><ul><li>If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer </li></ul>
Advantages of Private Brands LO 4 <ul><li>Earn higher profits on own brand </li></ul><ul><li>Less pressure to mark down price </li></ul><ul><li>Manufacturer can become a direct competitor or drop a brand/reseller </li></ul><ul><li>Ties customer to wholesaler or retailer </li></ul><ul><li>Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brands </li></ul>
Individual Brands Versus Family Brands LO 4 Individual Brand Family Brand Using different brand names for different products. Marketing several different products under the same brand name.
Cobranding LO 4 Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding http://www.bose.com Online
Trademarks LO 4 TM <ul><ul><li>Many parts of a brand and associated symbols qualify for trademark protection. </li></ul></ul><ul><ul><li>Trademark right comes from use rather than registration. </li></ul></ul><ul><ul><li>The mark has to be continuously protected. </li></ul></ul><ul><ul><li>Rights continue for as long as the mark is used. </li></ul></ul><ul><ul><li>Trademark law applies to the online world. </li></ul></ul>A Trademark is the exclusive right to use a brand.
REVIEW LEARNING OUTCOME Marketing Uses of Branding LO 4
Packaging Describe marketing uses of packaging and labeling LO 5
Functions of Packaging LO 5 Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling http://www.levesquedesign.com/ http://www.design4packaging.com Online
Labeling LO 5 http://www.fda.gov Online Persuasive <ul><li>Focuses on promotional theme </li></ul><ul><li>Consumer information is secondary </li></ul>Informational <ul><li>Helps make proper selections </li></ul><ul><li>Lowers cognitive dissonance </li></ul><ul><li>Includes use/care </li></ul>
Universal Product Codes LO 5 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.
REVIEW LEARNING OUTCOME Packaging and Labeling LO 5
Global Issues in Branding and Packaging Discuss global issues in branding and packaging LO 6
Global Issues in Branding LO 6 Adaptations & Modifications Global Options for Branding One Brand Name Everywhere Different Brand Names in Different Markets
Global Issues in Packaging LO 6 Aesthetics Global Considerations for Packaging Climate Considerations Labeling
REVIEW LEARNING OUTCOME Global Issues in Branding and Packaging LO 6 Branding Choices: 1 name Modify or adapt 1 name Different names in different markets Packaging Considerations: Labeling Aesthetics Climate
Product Warranties Describe how and why product warranties are important marketing tools LO 7
Product Warranties LO 7 Warranty Express Warranty Implied Warranty A confirmation of the quality or performance of a good or service. A written guarantee. An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC)
REVIEW LEARNING OUTCOME Product Warranties LO 7 Express warranty = written guarantee Implied warranty = unwritten guarantee