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Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 1
MKTG
Designed byAmy McGuire, B-books, Ltd.
Prepared byDeborah Baker, Texas Christian University
Lamb, Hair, McDaniel 2008-2009
9CHAPTER Product Concepts
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 2
Learning Outcomes
Define the term product
Classify consumer products
Define the terms product item, product line, and product mix
Describe marketing uses of branding
LO1
LO2
LO3
LO4
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 3
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
LO5
LO6
LO7
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 4
Define the term product
What Is a Product?What Is a Product?LO1
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 5
LO1
What Is a Product?
Everything, both favorable
and unfavorable, that a
person receives in an
exchange.
Tangible Good
Service
Idea
ProductProduct
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 6
LO1
What Is a Product?
Product is the starting point of Marketing Mix
PromotionPromotion
Place (Distribution)Place (Distribution)
PricePrice
Product Product
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 7
REVIEW LEARNING OUTCOMELO1
Define the term product
ProductProduct
•Good•Service•Idea
•Good•Service•Idea
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 8
Classify consumer products
Types of Consumer ProductsTypes of Consumer ProductsLO2
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 9
LO2
Types of Products
BusinessProduct
BusinessProduct
Consumer 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 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
A product bought to satisfy an individual’s personal needs or wants
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 10
LO2
Types of Consumer Products
UnsoughtProducts
UnsoughtProducts
SpecialtyProductsSpecialtyProducts
ShoppingProducts
ShoppingProducts
ConvenienceProducts
ConvenienceProducts
ConsumerProducts
ConsumerProducts
BusinessProductsBusinessProducts
ProductsProducts
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 11
LO2
Types of Consumer Products
MarketDevelopment
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
ConvenienceProduct
ShoppingProduct
SpecialtyProduct
UnsoughtProduct
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
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 12
REVIEW LEARNING OUTCOMELO2
Consumer Products
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 13
Define the terms product item, product line,
and product mix
Product Items, Lines, and MixesProduct Items, Lines, and MixesLO3
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 14
Product Items, Lines, and MixesLO3
Product ItemProduct Item
Product LineProduct Line
Product MixProduct Mix
A specific version of a product that can be designated as a distinct offering among an organization’s products.
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.
A group of closely-related product items.
All products that an organization sells.
All products that an organization sells.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 15
Campbell’s Product Lines and MixLO3
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Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 16
Benefits of Product LinesLO3
Equivalent QualityEquivalent Quality
Efficient Sales andDistribution
Efficient Sales andDistribution
Standardized Components
Standardized Components
Package UniformityPackage Uniformity
Advertising EconomiesAdvertising Economies
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 17
Product Mix WidthLO3
The number of product lines an organization offers.
Diversifies risk Capitalizes on established
reputations
The number of product lines an organization offers.
Diversifies risk Capitalizes on established
reputations
Product MixWidth
Product MixWidth
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 18
Product Line DepthLO3
The number of product Items in a product line.
Attracts buyers with different preferences
Increases sales/profits by further market segmentation
Capitalizes on economies of scale Evens out seasonal sales patterns
The number of product Items in a product line.
Attracts buyers with different preferences
Increases sales/profits by further market segmentation
Capitalizes on economies of scale Evens out seasonal sales patterns
Product LineDepth
Product LineDepth
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 19
AdjustmentsLO3
Product Modification
Product Modification
ProductRepositioning
ProductRepositioning
Product LineExtension or Contraction
Product LineExtension or Contraction
Adjustments to Product Items,
Lines, and Mixes
Adjustments to Product Items,
Lines, and Mixes
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 20
Types of Product ModificationsLO3
Quality ModificationQuality Modification
Functional ModificationFunctional Modification
Style ModificationStyle Modification
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 21
Planned ObsolescenceLO3
PlannedObsolescence
The practice of modifying
products so those that have
already been sold become
obsolete before they actually
need replacement.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 22
RepositioningLO3
Changing Demographics
Changing Demographics Declining SalesDeclining Sales
Changes in Social
Environment
Changes in Social
Environment
Why reposition Why reposition established brands?established brands?
Why reposition Why reposition established brands?established brands?
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 23
Product Line ExtensionLO3
Product Line Extension
Product Line Extension
Adding additional products to
an existing product line in
order to compete more broadly
in the industry.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 24
Product Line ContractionLO3
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
Symptoms of Product Line OverextensionSymptoms of Product Line Overextension
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 25
REVIEW LEARNING OUTCOMELO3
Product item, product line, and product mix
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 26
Describe marketing uses of branding
BrandingBrandingLO4
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 27
LO4
Brand
A name, term, symbol,
design, or combination
thereof that identifies a
seller’s products and
differentiates them from
competitors’ products.
BrandBrand
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 28
LO4
Branding
Brand Name
BrandMark
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
GlobalBrand
A brand where at least 20 percent of theproduct is sold outside its home country
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 29
LO4
Benefits of Branding
Product Identification
Product Identification
Repeat SalesRepeat Sales
New Product Sales
New Product Sales
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 30
LO4B
eyond
the
Book
Product Identification = Brand Equity?
SOURCE: Mary Ellen Lloyd, “That Pottery Barn Look Isn’t So Unique Any More,” Wall Street Journal, 3/21/07 B1
When new, Pottery Barn had a unique style in the home-furnishing market. But lately, the success of the “Pottery Barn” look—slipcovered sofas and updated leather club chairs—has resulted in so much competition that Pottery Barn has lost its trend-setting status. P
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to/C
otto
n I
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This isn’t Pottery Barn, but it sure looks like it.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 31
Biz Flix
LO4Josie and the Pussycats
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 32
LO4
Top Ten Global Brands
Top Ten Global Brands
1. Coca-Cola U.S. 2. Microsoft U.S. 3. IBM U.S. 4. GE U.S. 5. Nokia Finland 6. Toyota J apan 7. Intel U.S. 8. McDonald's U.S. 9. Disney U.S. 10. Mercedes-Benz Germany SOURCE: David Kiley, "Best Global Brands," Business Week, August 6, 2007
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 33
LO4
Branding Strategies
Brand No Brand
Manufacturer’s Brand Private Brand
IndividualBrand
Family Brand
Combi-nation
IndividualBrand
Family Brand
Combi-nation
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 34
LO4
Generic Brand
GenericProduct
GenericProduct A no-frills, no-brand-
name,
low-cost product that is
simply identified by its
product category.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 35
LO4
Manufacturers’ Brands VersusPrivate Brands
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.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 36
LO4
Advantages of Manufacturers’ Brands
Heavy consumer ads by manufacturers
Attract new customers
Enhance dealer’s prestige
Rapid delivery, carry less inventory
If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 37
LO4
Advantages of Private Brands
Earn higher profits on own brand
Less pressure to mark down price
Manufacturer can become a direct competitor or drop a brand/reseller
Ties customer to wholesaler or retailer
Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brands
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 38
LO4
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.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 39
LO4
Cobranding
IngredientBranding
IngredientBranding
Cooperative Branding
Cooperative Branding
Complementary Branding
Complementary Branding
Types of Types of CobrandingCobranding
http://www.bose.com
Online
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 40
LO4
Trademarks
A Trademark is the exclusive right to use a brand.
Many parts of a brand and associated symbols qualify for trademark protection.
Trademark right comes from use rather than registration.
The mark has to be continuously protected. Rights continue for as long as the mark is used. Trademark law applies to the online world.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 41
REVIEW LEARNING OUTCOMELO4
Marketing Uses of Branding
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 42
Describe marketing uses of packaging
and labeling
PackagingPackagingLO5
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 43
Functions of PackagingLO5
Contain and Protect
Promote
Facilitate Storage, Use, and Convenience
Facilitate Recyclinghttp://www.levesquedesign.com/http://www.design4packaging.com
Online
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 44
LO5B
eyond
the
Book
100 Percent Recyclable
SOURCE: Press Release, The Coca-Cola Company, Atlanta, GA, September 5, 2007
Coca-Cola is building the largest recycling plant in the world. The plant will produce 100 million pounds of food-grade 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 CO2 emissions—the equivalent of
removing 215,000 cars from American highways.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 45
LabelingLO5
Online
http://www.fda.gov
Persuasive
Focuses on promotional theme
Consumer information is secondary
Informational
Helps make proper selections
Lowers cognitive dissonance
Includes use/care
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 46
Universal Product CodesLO5
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.
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 47
REVIEW LEARNING OUTCOMELO5
Packaging and Labeling
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 48
Discuss global issues in branding
and packaging
Global Issues in Global Issues in Branding and PackagingBranding and PackagingLO6
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 49
Global Issues in BrandingLO6
Adaptations & Modifications
Adaptations & Modifications
Global Options Global Options for Brandingfor Branding
One Brand NameEverywhere
One Brand NameEverywhere
Different Brand Names in Different
Markets
Different Brand Names in Different
Markets
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 50
Global Issues in PackagingLO6
AestheticsAesthetics
Global Global Considerations Considerations for Packagingfor Packaging
Climate Considerations
Climate Considerations
LabelingLabeling
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 51
REVIEW LEARNING OUTCOMELO6
Global Issues in Branding and Packaging
Branding Choices:
1 nameModify or adapt 1 nameDifferent names in
different markets
Packaging Considerations:
LabelingAestheticsClimate
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 52
Describe how and why product
warranties are important
marketing tools
Product WarrantiesProduct WarrantiesLO7
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 53
Product Warranties
LO7
Warranty
ExpressWarranty
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)
Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 54
REVIEW LEARNING OUTCOMELO7
Product Warranties
Express warranty = written guarantee
Implied warranty = unwritten guarantee
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