chapter 9 manage the product. 12-2 chapter material 1.product lines & product mixes 2.overview...

Chapter 9

Manage the Product

12-2

Chapter Material

1. Product Lines & Product Mixes

2. Overview of Branding

3. The concept of Brand Equity

4. Types of Brands

5. Legal Protection for Brands

6. Packaging and Labeling

7. Product Quality

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-3

Product Planning

Product planning means developing product line and product mix strategies

– Product line: Firm’s total product offering designed to satisfy a single need or desire of target customers

– Product mix: The total set of all products that a firm offers for sale

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-4

Figure 9.3Product Line Length and Product Mix Width

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Product Lines & the Product Mix

Why have a product line vs. one product in a category?

1. Increased market share

2. Importance in the marketplace

3. Synergy between products

4. Spread the costs among products

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Product Mix Decisions

Some possibilities are… Add product lines Add variations within product lines Cancel products or entire lines due to poor

sales or cannibalization Alter products to extend their life

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Overview of Branding

Brand - a name, term, symbol, design or some combination that identifies the products of one company while differentiating it from the competitions’ products.

Firms build and maintain consumer loyalty and competitive advantage through branding

Branding is the process of creating a product’s or a product line’s identity

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-8

Brand Names

A “good” brand name:– Creates a positive, memorable connotation– Positions a product by conveying an image or

personality (Ford Mustang) or by describing how it works (Weedeater)

– Is easy to say, spell, read, and remember– Fits the target market, product benefits, customer’s

culture, and legal requirements

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-9

Evaluate This Brand Name!

How does the brand name “PowerBar” stack-up against the criteria that distinguish a “good” brand name?

How would you rate this name compared to those that are used by the competition?

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Brands Create a strong identity for products

Buyers respond to branding by making repeat purchases because they identify the item with the name of its producer.

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Brand Elements

Brand Name Domain Name Slogan Character Jingle Symbol

Can you provide an example or two for each brand element type?

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Q. What Brand elements for Budweiser were in this ad? What

other brand elements exist for Budweiser?

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Q. What Brand elements of Pepsi were in this ad? What

other types of brand elements exist for Pepsi?

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Brands provide “Brand Equity”

Brand equity: added value that a certain brand gives to a productIncreases the likelihood that consumers will

recognize the firm’s product when they make purchase decisions

Places products on consumers’ consideration list (or “selector” list)

Strong brand equity to can contribute to buyers’ perceptions of product quality

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Brands provide “Brand Equity”

McDonald’s – one of the strongest Brands worldwide…

Video_Ch 9\McDonalds1.mpg

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Stages of Brand Acceptance

1.1. Brand recognitionBrand recognition: consumer knows of a brand but does not prefer it to competing brands

2.2. Brand preferenceBrand preference: consumer selects one brand over competing offerings based on previous experiences with that brand

3.3. Brand insistenceBrand insistence: consumer refuses to accept alternatives and searches extensively for the desired good or service

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Types of Brands

Manufacturers’ brand: brand name which is the same as the name of the manufacturer

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Manufacturers’ brandManufacturers’ brand:

Phillips products, such as light bulbs

Video_Ch 9\Phillips.mpg

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Private brandPrivate brand: brand name placed on products marketed by wholesalers and retailers– Craftsman

A private brand for Sears

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Captive brand: national brands that are sold exclusively by a retail chain– Kmart’s captive

brands include the Jaclyn Smith Label

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Family brand:Family brand: brand name that identifies several related products– Heinz

A well known family brand

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Individual brand: Unique brand name that identifies a specific offering within a firm’s product line

Irish Spring Sport:Colgate-Palmolive using individual branding for soaps

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Generic Brand

Generic Brand: branded name that has become a generically descriptive term for a class of products (ex: Kleenex)

Q. What other Generic names can you think of?

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Generic Brands

SCOTCH TAPE HANDI-WIPES

JELL-O SARAN WRAP

CHAPSTICK VASELINE

K-Y XEROX

BANDAID KLEENEX

ZIPLOC TUPPERWARE

BRILLO Q-TIPS

Popsicle ASPIRIN

GOOGLE KOOL-AID

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Can you imagine where Pepsi would be today if it had not developed a brand name that is easy to pronounce, recognize, and remember? Finding someone in the world who is not aware of the Pepsi brand could be difficult.

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Co-brandingCo-branding: practice of combining two strong brands, perhaps owned by different companies, to sell a product– Example: Compaq

computer company teams with AMD processors

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You see co-branding at work in this commercial between two well know products and services: Playstation and the NFL.

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Brand extensionBrand extension: application of a popular brand name to a new product in another product category

Utility Lighter – A Bic Brand Extension

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Brand licensingBrand licensing: practice allowing other companies to use a brand name in exchange for a payment

Nabisco Licenses Its Oreo Brand to Post Cereal

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Legal ProtectionLegal Protection

TrademarkTrademark: legal protection which confers the exclusive right to use a brand name, trade mark, and any slogan or product name abbreviation– The red disk, brand

name, and distinctive bottle design are all Coca-Cola trademarks

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Oscar MayerReceived trademark protection for its slogan and Wienermobile.

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Legal ProtectionLegal Protection

Trade DressTrade Dress: visual cues related to color selections, physical layout, package shapes, labeling, and symbols used in branding to create an overall look. – Protection is comparable to trademarks– Ex: Chuck E. Cheese’s layout

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-33

Create Product Identity:The Package and The Label

Package: The covering or container for a product that provides product protection, facilitates product use and storage, and supplies important marketing communication

Label: descriptive part of a product’s package that list the brand-name or symbol, name and address of manufacturer or distributor, product composition in size, and recommended uses

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Packaging and Labeling

Packaging has 3 major objectives:

1. Protect against damage, spoilage, & theft

2. Save money wherever possible

3. Assist in marketing the product! Together with the Label – a “3 second ad”

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-35

Figure 9.8Functions of Packaging

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Designing Effective Packaging

Effective packaging considers: – Packaging of other brands in same product category

– Choice of packaging material and image it projects

– Environmental impact of packaging

– Shape and color influences on brand image

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-37

Labeling Regulations

Federal Fair Packaging and Labeling Act of 1966: – Aims at making labels more helpful to

consumers by providing useful information Food and Drug Administration:

– Requires food labels to tell how much fat, trans fat, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in each product serving

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Quality as a product strategy

Q. How do you define quality?!

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-39

Figure 9.4Product Quality

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Importance of Quality

QualityQuality is a key component to a firm’s success in a competitive marketplace:

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Quality Programs

1.1. Total quality managementTotal quality management (TQM): Approach that involves all employees in continually improving products and work processes to achieve customer satisfaction and world-class performance

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2.2. Worldwide Quality ProgramsWorldwide Quality Programs – Malcolm Baldrige National Quality Award– ISO 9002: set of standards for quality

management and quality assurance developed by the International Standards Organization in Switzerland for countries in the European Union

– Six Sigma methodology: Process allowing no more than 3.4 defects per million (getting it right 99.9997% of the time)

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3.3. Benchmarking:Benchmarking: Process in which an organization improves performance by continually comparing and measuring itself against the leading firms in an industry and implementing changes for quality improvement