Marketing Chapter 10

Describe the role of packaging and labeling in the marketing of a product.

Packaging and labeling play numerous roles in the marketing of a product. The packaging component of a product refers to any container in which it is offered for sale and on which label information is conveyed. Manufacturers, retailers, and consumers acknowledge that packaging and labeling provide communication, functional, and perceptual benefits. Contemporary packaging and labeling challenges include (1) the continuing need to connect with customers, (2) environmental concerns, (3) health, safety, and security issues, and (4) cost reduction.

Recognize the importance of branding and alternative branding strategies.

A basic decision in marketing products is branding, in which an organization uses a name, phrase, design, symbols, or a combination of these to identify its products and distinguish them from those of its competitors. Product managers recognize that brands offer more than product identification and a means to distinguish their products from competitors. Successful and established brands take on a brand personality and acquire brand equity—the added value a given brand name gives to a product beyond the functional benefits provided—that is crafted and nurtured by marketing programs that forge strong, favorable, and unique consumer associations with a brand. A good brand name should suggest the product benefits, be memorable, fit the company or product image, be free of legal restrictions, and be simple and emotional. Companies can and do employ several different branding strategies. With multiproduct branding, a company uses one name for all its products in a product class. A multibranding strategy involves giving each product a distinct name. A company uses private branding when it manufactures products but sells them under the brand name of a wholesaler or retailer. Finally, a company can employ mixed branding, where it markets products under its own name(s) and that of a reseller.

How do high-learning and low-learning products differ?

Answer: A high-learning product requires significant customer education and there is an extended introductory period. A low-learning product requires little customer education because the benefits of purchase are readily understood, resulting in immediate sales.

What is the difference between a line extension and a brand extension?

Answer: A line extension uses a current brand name to enter a new market segment in its product class, whereas a brand extension uses a current brand name to enter a completely different product class.

Explain the role of packaging in terms of perception.

Answer: A package's shape, color, and graphics distinguish one brand from another, convey a brand's positioning, and build brand equity.

How does a product manager manage a product's life cycle?

Answer: A product manager shepherds a product through its life cycle by (1) modifying the product, which involves altering one or more of its characteristics to increase its value to customers and thus increase sales; (2) modifying the market, which involves finding new customers, increasing a product's use among existing customers, or creating new use situations; and (3) repositioning the product, which involves changing the place it occupies in consumers' minds relative to competitive products.

What does "creating a new use situation" mean in managing a product's life cycle?

Answer: Creating a new use situation means finding new uses or applications for an existing product.

How do service businesses use off-peak pricing?

Answer: Service businesses charge different prices during different times of the day or days of the week to reflect variations in demand for the service.

What are the five categories of product adopters in the diffusion of innovations?

Answer: The five categories of product adopters based on the diffusion of innovation are: (1) innovators—2.5 percent; (2) early adopters—13.5 percent; (3) early majority—34 percent; (4) late majority—34 percent; and (5) laggards—16 percent.

Explain the difference between trading up and trading down in product repositioning.

Answer: Trading up involves adding value to the product (or line) through additional features or higher-quality materials. Trading down involves reducing the number of features, quality, or price or downsizing—reducing the content of packages without changing package size and maintaining or increasing the package price.

Advertising plays a major role in the __________ stage of the product life cycle, and __________ plays a major role in the maturity stage.

Answer: introductory; product differentiation

Identify ways that marketing executives manage a product's life cycle.

Marketing executives manage a product's life cycle in three ways. First, they can modify the product itself by altering its characteristics, such as product quality, performance, or appearance. Second, they can modify the market by finding new customers for the product, increasing a product's use among existing customers, or creating a new use situation for the product. Finally, they can reposition the product using any one or a combination of marketing mix elements. Four factors trigger a repositioning action. They include reacting to a competitor's position, reaching a new market, catching a rising trend, and changing the value offered to consumers.

Recognize how the four Ps framework is expanded in the marketing of services.

The four Ps framework also applies to services with some adaptations. Because services cannot be patented, unique offerings are difficult to protect. In addition, because services are intangible, brands and logos (which can be protected) are particularly important. The inseparability of production and consumption of services means that capacity management is important to services. The intangible nature of services makes price an important indication of service quality. Distribution has become an important marketing tool for services, and electronic distribution allows some services to provide global coverage. In recent years, service organizations have increased their promotional activities. Finally, the performance of people, the appearance of the physical environment, and the process involved in delivering a service are recognized as central to the customer experience.

Explain the product life-cycle concept.

The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. Product sales growth and profitability differ at each stage, and marketing managers have marketing objectives and marketing mix strategies unique to each stage based on consumer behavior and competitive factors. In the introductory stage, the need is to establish primary demand, whereas the growth stage requires selective demand strategies. In the maturity stage, the need is to maintain market share; the decline stage necessitates a deletion or harvesting strategy. Some important aspects of product life cycles are (a) their length, (b) the shape of the sales curves, and (c) the rate at which consumers adopt products.