Exam 2

Occurs when a consumer no longer associates with a brand of a specific or highly similar set of products and start thinking less of the brand. When a firm launches extensions consumers deem inappropriate and question the integrity of the brand, become confused or even frustrated. This is a disadvantage for a brand extension. - Which version of the product is the "right one" for them? - Do they know the brand as well as they thought they did? Example: Cadbury's expansion into instant mashed potatoes created a new revenue stream and even generated more sales for them, but it damaged their upscale brand as a whole. When Cadbury started producing low-end food products, like instant mashed potatoes, the association with the finest chocolates weakened.

Brand dilution

The marketing effects or outcomes that accrue to a product with its brand name compared to those that would accrue if the same product did not have that brand name.

Brand equity

Using an established brand to launch a new product. Example: Coca Cola launching different flavors.

Brand extension

All products, including line and category extensions, sold under a particular brand.

Brand line

Part of the brand that cannot be spoken such as symbols and drawings.

Brand mark

The set of all brand lines sold by a particular seller. Example: Michelin manufactures and sells tires under its own name, but it also allows the retail giant Sears to place its name on Michelin tires.

Brand mix

Part of the brand that can be spoken such as letters, words, and numbers.

Brand name

Requires that the brand should always move forward, in the right direction, with new compelling offerings and ways to market them. When change is necessary, marketers should vigorously preserve and defend sources of brand equity.

Brand reinforcement

To express what products it represents, core benefits it supplies, and needs it satisfies. To display how the brand makes the product superior and which strong, favorable, and unique brand associations should exist in the consumer's mind.

Brand reinforcement

Any new development in the marketing environment can affect a brand's fortunes. - Are positive associations losing their strength or uniqueness? - Have negative associations become linked to the brand?

Brand revitalization

Specific brand lines supplied to specific retailers or distribution channels.

Branded variants

Reflects the number and nature of both common and distinctive brand elements.

Branding strategy or brand architecture

The production of certain goods that often yields and should be priced on their value. Income from this product will make it easier for the company to charge less for its main product if competition forces it to do so.

By-product pricing

Some products require the use of ancillary or captive products. If the captive product is priced too high, counterfeiting and substitutions can erode sales. Example: Manufacturers of razors often price them low and set high markups on razor blades.

Captive-product pricing

Some brands may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support. - Companies can effectively milk these brands by capitalizing on their reservoir of brand equity. Example: iPhone of Apple. Its return on assets is far greater than its market growth rate. Apple can invest the excess cash generated by iPhone into other projects or products.

Cash cows

Using a parent brand on a new product to enter a new category, different from the one it currently serves. Example: Sony which started out as a player in Walkman, now offers mobile phones, smartwatches, speakers, headphones and other extended products.

Category extension

The most common type of innovation. Little or no disruptive effect. Existing products are improved incrementally. New features may be added or quality may be increased. The risk to the buyer is lower, but so is the profit potential to the seller. Example: The development of the Sensor razor (2 blades), followed by the Mach 3 (3 blades), the Quattro (4 blades) and the Fusion (five blades).

Continuous Innovation

Purchased frequently, immediately, with minimal effort and usually inexpensive. When a customer goes shopping for a gallon of milk, they tend to purchase out of habit. If the brand they typically buy is not available, they are likely to accept a comparable substitute brand. There are two types: staple items (milk, bread, car wash, dry cleaning) and impulse items (candy, gum, tabloid magazines). Example: Soft drinks

Convenience goods

Many firms use their brand name across their entire range of products. Development costs are lower, and sales of the new product are likely to be strong if the manufacturer's name is good. Example: Apple or Samsung

Corporate umbrella or company brand name

All sellers are legally responsible for fulfilling a buyer's normal or reasonable expectations. It reduces the buyer's perceived risk, provide assurance that the company and its offerings are dependable. Helpful when the company or product is not well known or when the product's quality is superior to that of competitors.

Guarantees

Fairly revolutionary and changes buyer behavior patterns. These products address needs that have previously gone unmet or change the ways that the customer satisfies the need. Example: 3D printing is where you download a digital file for a design you like, the printer reads the file and then shoots out layer upon layer of specialized plastic through a heated nozzle in the specified shape. The technology is about 30 years old, but only recently became cheaply available and widespread.

Discontinuous Innovation

Tangible goods that survive by many users, require more personal selling and service, command a higher margin, and require more seller guarantees. Example: Refrigerators

Durable goods

Has some disruptive effects. The improvement of performance and similar consumption pattern. Example: The electric typewriter and the cellular phone, when each was introduced.

Dynamically Continuous Innovation

- Brand extensions offering a similar value proposition. - For multiple segments to gain margin and volume. - Useful for growing and mature markets with heterogeneous customer needs (every single customer differs from another). Example: Crest offers multiple product categories with different features and benefits such as toothpaste, mouthwash, and toothbrushes.

Family Brand Strategy

A fighter brand that positions with respect to competitors' brands so that the more important and more profitable flagship brands can retain their desired positioning. Must neither be so attractive that they take sales away from their higher-priced comparison brands nor designed so cheaply that they reflect poorly on them. These brands compete with themselves in their one segment, but prevents a direct competitor from taking market share away. Example: MillerCoors created brands around their Miller Lite brand such as Miller 64, Keystone Light, and Coors Light.

Flankers

Brands that are all different and the consumer is shopping around for the best bundle of attributes. You would not buy the cheapest sofa you can find; rather you look at style, size, comfort, price, color, and etc.

Heterogeneous shopping goods

The role of a relatively high-priced brand is to add prestige and credibility to the entire portfolio. Example: Marriott: Ritz-Carlton (high-end), Renaissance (in-between), and Residence Inn (low-end).

High-end prestige

Products where the major brands all appear to be about the same and so the consumer is shopping around for the best price. Example: Washers, dryers, microwave ovens, and refrigerators.

Homogeneous shopping goods

New Product Development: The new-product development process starts with the search for ideas. Marketing experts believe we find the greatest opportunities and highest leverage for new products by uncovering the best possible set of unmet customer needs or technological innovation.

Idea Generation

New Product Development: The purpose is to drop poor ideas as early as possible because product-development costs rise substantially at each successive development stage. Companies require new-product ideas to be described on a standard form for a committee's review. The description states the product idea, target market, and competition and estimates market size, product price, development time and costs, manufacturing costs, and rate of return. It is used eliminate ideas that are inconsistent with organizational objectives or otherwise inappropriate.

Idea Screening

Simply replicating someone else's innovation. Example: 3M introduced Post-It Notes many years ago, a number of competitors came out with virtually identical notepads.

Imitation

The seller offers optional products, features, and services with the main product. The challenge is which options to include in the standard price and which to offer separately. Example: The way automakers offer different trim levels.

Optional-feature pricing

Companies often use different brand names for different quality lines within the same product class. A major advantage is that if a product fails or appears low quality, the company has not tied its reputation to it. Example: Proctor and Gamble offers different brands of laundry detergent such as Tide, Gain, Ivory, Era, and Cheer.

Individual or separate family brand names

A special case of co-branding, which creates brand equity for materials, components, or parts that are necessarily contained within other branded products. Is any brand inside of another brand. Example: Chocolate chip cookie mix that advertises "Real Nestles Chocolate Chips", Westin Hotels that offer "Heavenly Beds", computers that say "Intel inside". For host products whose brands are not that strong, it can provide differentiation and important signals of quality.

Ingredient branding

Using the brand name from one firm on a product made by another firm. Example: Acura uses auto parts made by Honda.

Licensed product

Using a parent brand on a new product within a category it currently serves, such as new flavors or colors. Example: Coca Cola offering multiple sub-brands and flavors.

Line extension

Companies seeking high market share and market growth will generally carry longer product lines. A firm lengthens its product line by adding more items within the present range. The goals are to reach incremental profits, satisfy dealers who complain about lost sales because of items missing from the line, utilize excess capacity, try to become the leading full-line company, and plug holes to keep out competitors.

Line filling

Companies seeking high market share and market growth will generally carry longer product lines. Occurs when a company lengthens its product line beyond its current range.

Line stretching

The role of a relatively low-priced brand in the portfolio as a way to attract customers to the brand franchise. - Retailers like to feature these as "traffic builders" because they are able to trade up customers to a higher-priced brand. Example: Marriott: Ritz-Carlton (high-end), Renaissance (in-between), and Residence Inn (low-end).

Low-end entry level

An element of product strategy. Includes all the activities of designing and producing the container for a product. The most important because it is the buyer's first encounter with the product.

Packaging

New Product Development: Concept Development and Testing Following a successful concept test, the firm develops a preliminary three-part strategy for introducing the new product. - The first part described the target market's size, structure, and behavior; planned brand positioning, sales, market shares, and profit goals sought in the first few years. - The second part outlines the planned price, distribution strategy, and marketing budget for the first year. - The third part describes the long-run sales and profit goals and marketing-mix strategy over time.

Marketing Strategy Development

A parent brand that is already associated with multiple products through brand extensions. Example: Nike

Master (or family) brand

Tangible goods that is normally consumed once or a few uses. These are purchased frequently and the appropriate strategy is to make them available in many locations, charge a small markup, and advertised to induce trail and build preference. Example: Shampoo

Nondurable goods

An existing brand name that gives birth to a brand extension or sub-brand. Example: Nestle KitKat or Sony PlayStation.

Parent brand

- Each brand offering a different value proposition. - For multiple segments to gain margin and volume. - Useful for growing and mature markets with heterogeneous customer needs (every single customer differs from another). Example: Proctor and Gamble offers different brands of laundry detergent such as Tide, Gain, Ivory, Era, and Cheer.

Portfolio Brand Strategy

New Product Development: Represents a jump in investment that dwarfs the costs incurred so far. The company will determine whether the product idea can translate into a technically and commercially feasible product.

Product Development

In planning its market offering the marketer needs to address five product levels. Each level adds more customer value.

Product Levels: The Customer-Value Hierarchy

The seller introduces price steps within a product line and strives to establish perceived quality differences that justify the price differences.

Product line pricing

Pure bundling occurs when a firm offers its products only as a bundle.

Product-bundling pricing

Intangible, inseparable, variable, and perishable products that normally require more quality control, supplier credibility, and adaptability. Example: Haircuts

Services

Consumers compare on such bases as suitability, quality, price and style. They are purchased infrequently and tend to cost more, so consumers spend considerable time comparing the various alternatives. Example: Furniture, clothing, cars, and houses.

Shopping goods

Useful for emerging markets with homogeneous customers (customers with fairly similar common needs). Bad idea to market one brand to different segments. - One brand offering and value proposition. - For mass market to gain greater volume. - For smaller segments to gain greater margin. Example: Qtips

Single brand strategy

Unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort. The customer knows what brand they want to buy before they leave the house and the customer will exert considerable effort to obtain the brand. Brand name and brand quality are very important; customers will not accept a substitute. Example: Rolex, Rolls Royce, Mont Blanc Pen. A Rolls Royce is a car, but cars are shopping goods. The Rolls Royce brand is a: Pens are convenience goods, but Mont Blanc Pens are:

Specialty goods

Looking at the concentric-circle model of a product, the marketer can think about the many ways a product can be changed or customized to reflect market conditions or the needs of individual customer segments.

Strategic Implications

Combining a new brand with an existing brand. Example: Coke "Zero" or FedEx "Express".

Sub-brand

Combine two or more of the corporate brands, family brand, or individual product brand names. Example: Kellogg does this by combining the corporate brand with individual product brands such as Kellogg with Rice Krispies.

Sub-brand name

Many service firms charge a fixed fee plus a variable usage fee. The challenge is deciding how much to charge for basic service and variable usage. Example: Cell phone users often pay a monthly fee plus charges for calls that exceed their allotted minutes.

Two-part pricing

The consumer does not know about or normally think of buying. Example: Smoke detectors, various kinds of insurance, coffins or gravesites.

Unsought goods

All sellers are legally responsible for fulfilling a buyer's normal or reasonable expectations. Are formal statements of expected product performance by the manufacturer. Products can be returned to the manufacturer or designated repair center for repair, replacement, or refund. Whether expressed or implied, it is legally enforceable.

Warranties

Product Levels: The Customer-Value Hierarchy The fourth level, the marketer includes all the added attributes or benefits that exceeds customer expectations. - It depends on not being expected. - Differentiating from competitive brands. - May include unique aspects of packaging, services, advice, financing, delivery, etc. Example: A hotel may include fresh baked cookies upon check-in, terrycloth bathrobes in the bathroom, complimentary newspaper in the morning, grab-n-go breakfast bag in the morning, or complimentary shuttle service. Example: HP lets you easily access and replace toner with a superb touchscreen that makes it easy to navigate through tasks.

augmented product

Product Levels: The Customer-Value Hierarchy The second level, the marketer must turn the core-benefit into: To build the tangible product to deliver the core product. It includes the physical design, styling, packaging, features, quality and reliability. Example: The hotel room includes a bed, bathroom, and towels. Example 2: An all-in-one HP printer/scanner/fax/Wi-Fi

basic product or actual product.

New Product Development: Idea Generation Ideas come from many sources: customers, employees, suppliers, distributors, etc. The group comes up with as many ideas as possible, and none are evaluated or criticized. Example: To come up with new products, Proctor and Gamble leverages technologies across product lines to come up with entirely new ideas. Example 2: Crest White Strips, they adapted bleaching methods from Proctor and Gamble's laundry business, film technology from the food wrap business, and glue technologies from the paper business.

brainstorming

The basic principle is to maximize market coverage so no potential customers are being ignored, but minimize brand overlap so brands are not competing for customer approval.

brand portfolio

The set of all brands and brand lines that a particular firm offers for sale in a particular category or market segment.

brand portfolio

Is a real or fictional animated being or animated object that has been created for the promotion of a product. - To give meaning to the brand by symbolizing the brand's character. - To provide an emotional appeal for the brand. Example: Flo for Progressive Insurance or the Test Guy for Verizon, "Can you hear me now?" Do not confuse brand spokescharacters (created) with advertising spokespersons or endorsers who are real people such as celebrities, company representatives, or famous athletes, etc.

brand spokescharacter

New Product Development: Concept Development and Testing A perceptual map showing the current positions of existing brands which preferences are clustered around the points on the map. - Helps the company decide how much to charge and adjustments needed to make the product. - Concept testing means presenting the product concept to target consumers, physically or symbolically, to get consumer reactions. - The more the tested concepts resemble the final product or experience, the more dependable concept testing is.

brand-positioning map

If sales of a brand extension meet high targets, the revenue may be coming from consumers switching from existing parent-brand offerings. - Intrabrand shifts in sales may not be desirable. Example: Coke launched sub products like Minute Maid, Sprite, Fanta etc.

cannibalizing the parent brand

Describes how closely related the various product lines are end use, production requirements, distribution channels, or some other way. Permits the company to expand by pursuing more product line:

consistency of the product mix

Product Levels: The Customer-Value Hierarchy The first fundamental level, the service or benefit the customer is really buying. Example: The hotel offers a room for rest and sleep. Example 2: An HP scanner with the ability to transfer hard copy documents to the computer.

core-benefit

New Product Development: Idea Generation Through Internet-based (...), paid or unpaid outsiders can offer needed expertise or a different perspective on a new-product project that might otherwise be overlooked.

crowdsourcing

Refers to how many variants are offered by each product in the line. Permits the company to expand by adding more product variants to deepen its product mix.

depth of a product mix

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. It might (...) the product: who made it, where and when, what it contains, how it is to be used, and how to use it safely.

describe

Companies that fail to develop new products leave themselves vulnerable to changing customer needs and tastes, shortened product life cycles, increased domestic and foreign competition, and especially new technologies. New companies create (...) that are cheaper and more likely to alter the competitive space.

disruptive technologies

In line stretching, introduces a lower-priced line to attract shoppers who want value-priced goods, battle low-end competitors, or avoid a stagnating middle market.

down-market stretch

Product Levels: The Customer-Value Hierarchy The third level, the marketer prepares a set of attributes and conditions buyers normally expect when they purchase this product. Example: The hotel guests expect a clean bed, fresh towels, and so on. Example: Buyers expect HP scanners to scan, print, and copy documents.

expected product

With a branded house strategy, it is often useful to have a well-defined product one that best represents or embodies the brand as a whole to consumers. - Often the first product where the brand gained fame by a widely accepted best-seller, highly admired or award-winning product. Example: Apple's iPhone, iPad, and iMac.

flagship product

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. It might (...) the product. Example: Canned peaches are grade labeled A, B, and C.

grade

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. It (...) the product or brand. Example: The name Sunkist stamped on oranges.

identifies

Companies that fail to develop new products leave themselves vulnerable to changing customer needs and tastes, shortened product life cycles, increased domestic and foreign competition, and especially new technologies. Focusing on (...) to enter new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems.

incremental innovation

Referred to as a "house of brands" strategy.

individual or separate family brand names

Refers to the total number of items in the mix. Permits the company to expand by lengthening each product line.

length of a product mix

The seller offers goods both individually and in bundles, normally charging less for the bundle than for the items purchased separately. Savings on the price bundle must be enough to induce customers to buy it.

mixed bundling pricing

Anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

product

New Product Development: Concept Development and Testing Is an elaborated version of the idea expressed in consumer terms. - Who will use this product? - What primary benefit should this product provide? - When will people consume or use it? By answering these questions, a company can form several concepts, select the most promising, and create a product-positioning map for it

product concept

New Product Development: Concept Development and Testing The (...) is a possible product the company might offer to the market. During concept testing, it is evaluated before any prototype of the product has been developed. Example: Focus group research involving members of the target market is often used to evaluate new product ideas and adjust the plan based on the findings. Ideas that are not acceptable to consumers are discarded.

product idea

Group of products that are all similar in some way.

product line

In offering a product line, companies normally develop a basic platform and modules that can be added to meet different customer requirements. Product line managers need to know the sales and profits of each item in each line to determine which ones to build, maintain, harvest, or digest. To see which competitors' items are competing against their own items and to identify market segments so they can gauge how well their items are positioned to serve the needs of each segment.

product map

Is the set of all products and items a particular firm offers for sale.

product mix or product assortment

The firm searches for a set of prices that maximizes profits on the total mix. The process is challenging because the various products have demand and cost interrelationships which are subject to different degrees of competition.

product mix pricing

Product Levels: The Customer-Value Hierarchy The fifth level stands with all the possible augmentations and transformations of the product or offering in the future.

product potential

It is a group of diverse but related items that function in a compatible manner.

product system

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. The label might (...) the product through attractive graphics.

promote

New Product Development: Concept Development and Testing In the past, creating physical prototypes was costly and time consuming, but firms today can use (...) to design products on a computer and then produce rough models to show potential consumers for their reactions.

rapid prototyping

Referred to as a "branded house" strategy.

umbrella corporate or company brand name

In line stretching, the firm aims to achieve more growth, realize higher margins, or simply position itself as a full-line manufacturer.

up-market stretch

New Product Development: Concept Development and Testing Companies use (...) to test product concepts. Consumer reactions indicate whether the concept has a broad and strong consumer appeal, what products it competes against, and which consumers are the best targets.

virtual reality

Refers to how many different product lines the company carries. Permits the company to expand by adding new product lines to its product mix.

width of a product mix

A company's product mix has a certain:

width, length, depth and consistency.