Chapter 11 Product, Branding, and Packaging Decisons

Brand Ownership

-Manufacturer brands or national brands (Kraft, Nike, Coca-Cola) -Retailer/Store Brands (also called Private-label brands) (kroger, costco, trader joes) Unlike Europe, where store brands such as Tesco (U.K. grocery chain) were extremely popular, in the United States, few store brands had achieved such status and were often considered inferior to manufacturer or national brands. Today, many store brands are well established, such as Kirkland, Charter Club, and Trader Joe's store brand.

How does packaging contribute to successful Marketing?

Although often overlooked as a marketing tool, packaging helps determine the success of a product. In some instances, such as Coca-Cola or Aunt Jemima Maple Syrup, the package has become synonymous with the brand. Ask students: What packages are so distinct that it helps make the brand successful? Possible answers are: Perrier, Altoids, and Tiffany's turquoise box. See if you can bring in examples of other bottled water in unusual bottles such as Fuji and Fred.

Brand Equity: Brand Loyalty

An important source of value for firms. Consumers are less sensitive to price. Marketing costs are much lower. Firms are insulated from the competition. Brand loyalty occurs when a consumer buys the same brand's product or service repeatedly over time rather than buying from multiple suppliers within the same category. Brand-loyal customers are an important source of value. Ask students: Once you have chosen an insurance company or a bank, how likely is it that you will switch? How likely is it that you will switch due to an increase in price? Is it important for the firm to spend a lot of money marketing to you, a loyal customer? Do you pay much attention to ads or direct mail pieces from competition? To further illustrate brand loyalty, ask students: Would you leave a store if your particular brand were not in stock? When you order a Sprite in a restaurant and the server asks, "Is 7-Up okay?" do you say no?

Brand Equity for the Owner Exhibit 11.5: The World's 10 Most Valuable Brands

Brand equity cuts both ways; customers dislike some brands because of the firm's actions or their negative perceptions. Nike has been the target of many labor activists, which causes some consumers to refuse to purchase or wear Nike products. Remind students what they have learned about consumer behavior. When consumers recognize a need, they begin with an internal search, during which they consider any brand they already know. If consumers are not aware of the brand, they simply will not purchase it.

Brand and Line Extensions

Brand extension: Same brand name in different product line. it is an increase in the product mix's breadth. (crest and colgate sell toothpaste, toothbrushes, and other dental products) Line Extension: Same brand name within the same product line. Ferrari has licensed its brand name to manufacturer-related apparel that appeals to those who can't afford the automobile. What are the advantages of a brand extension? They should reply that the firm can spend less on brand awareness. The positive consumer acceptance will spread to the new product and a synergy exists between the two products.

What is "cannibalize" brands?

Cannibalize or take away sales from another brand, with no net sales, profit, or market shares BIGGEST DIFFERENCE BETWEEN CANNIBALIZING (introducing product that takes away money from the company *buying 1 product out of many so company is losing money) and BRAND DILUTION (main brand takes a hit on their image *raspberry coke) doesn't look at sales has to do with marketing image of a brand

Naming Brands and Product Lines

Family brands •Corporate name used across brands and product lines. •Example: Kraft cheeses. Kraft uses a family branding strategy in which several product lines are sold under one name. Individual brands •Products have individual identities. Example: Kraft owns Velveeta, Classico, Jello Kraft also uses an individual branding strategy because Velveeta, Classico, Jell-O, Grey Poupon, Heinz, and others are all marketed using separate names. Name a firm that uses a corporate or family brand. A corporate and product line brand? Individual brands? Family brands include Heinz and Del Monte. Detergents are good examples of firms using individual brands: Tide, Bold, Gain and Surf.

Roles of Packaging

Function The purpose of product packaging is to protect the product from damage. Attraction How a product is packaged may be what attracts the consumer to take a look on the product as is sits on store shelves. Promotion Packaging also plays an important role for portraying information about the product. Facilitates Purchase Decision Packaging may also contain ingredients and nutritional information about the product. Differentiation Packaging can also differentiate one brand of product from another brand

Components of Brand Equity: Brand Awareness

How many consumers in a market are familiar with the brand? The more aware consumers are with a brand, the higher the chances of purchase. While Gatorade's brand aware-ness is so strong that the brand name is often used generically, its smaller competitors need to try harder. WTRMLN WTR gains familiarity by highlighting Beyoncé as an investor and supporter of the brand. Familiarity matters most for products that are bought without much thought, such as soap or chewing gum, but brand awareness is also critical for infrequently purchased items or those the consumer has never purchased before. The brands in the image on the slide are so strong that they have become synonymous with the product itself.

What Makes a Brand?

Identify a brand that you recognize primarily by each of these elements. A company lives or dies based on brand awareness. Consumers cannot buy products that they don't know exists. Brand Name: Most brands URLs: www.eBay.com Logos & Symbols: TAG Heuer Characters: Toucan Sam Slogans: State Farm—Like a Good Neighbor Sound: Law & Order "Doink" Brand Name: spoken component of branding, it can describe the product/service characteristics and/or be composed of words invented or derived from colloquial or contemporary language (comfort inn - suggests product characteristics) (apple - no association with the product) (zillow.com - invented term) URL: locations of pages on the internet Logos/symbols: visual branding elements that stand for corporate names/trademarks. symbols are logos without words, mcdonalds arches. Characters: brand symbols that could be human, animal, or animated. energizer bunny Slogans: short phrases "America Runs on Dunkin'" Jingles/Slogans: Intels four-note sound signature that accompanies the intel inside slogan

Branding

Increases awareness and provides a way to differentiate from competitors. Brand identification takes many forms. Ask students: How many of you can sing the Oscar Meyer jingle? Students will get a kick out of the YouTube ad (always check before class), which is the one of the original 1965 Oscar Meyer ads. One of America's Best Ads YouTube link: http://www.youtube.com/watch?v=aNddW2xmZp8

Exhibit 11.1 Product Complexity

Marketers involved with the development, design, and sale of products think of them in an interrelated fashion. At the center is the core customer value, which defines the basic problem-solving benefits that customers are seeking, next is the actual product, followed by associated services. Marketers convert core customer value into an actual product. The associated services also referred to as the augmented product, include the non-physical aspects of the product, such as product warranties, financing, product support, and after-sale service.

Co-Branding

Marketing two or more brands together. Can enhance perceptions of quality through links between brands. Example: Yum! Brands •Combines two or more of its restaurant chains (A&W, KFC, Long John Silver's, Pizza Hunt, and Taco Bell) into one store space. Co-branding benefits the participating brands by attracting the consumers of one brand to the others. Remind students of the Yum! Brands example. This co-branding strategy is designed to appeal to diverse market segments and extend the hours during which each restaurant attracts customers.

Brand Dilution

Not all brand extensions are successful: •Evaluate the fit between the product class of the core brand and the extension. • Evaluate consumer perceptions of the attributes of the core brand and seek out extensions with similar attributes. • Refrain from extending the brand name to too many products. • Is the brand extension distanced enough from the core brand? Zippo suffered brand dilution when it extended its brand by introducing a perfume for women. It turns out that women don't associate lighters with perfume A brand is only as good as its last extension. Many firms try to take their brands just one more step, only to find the extension hurts rather than helps the parent brand. For example, McDonald's agreed to license a McKids line of clothing, but the line was not as successful as it had hoped it would be. What do you think McDonald's did wrong? They should comment that this was not a great fit. Consumers' perceptions might not have been of the highest quality.

Product Labeling

Provides information the consumer needs. Many labeling requirements stem from various laws. Is a communication tool. Label information is determined by regulations, and labeling rules vary from country to country. Certain terms convey specific meanings, such as "natural," "organic," "made in the USA," and products must meet specific tests before placing such terms on their label. Group activity: Look at the label of a snack or drink you may have brought to class. What information does it provide? How does it support the marketing of this item?

Brand Licensing

The NBA team, the New Orleans Pelicans (licensor), provides the right to use its brand to apparel manufacturers (licensee) in return for royalty payments. Brand licensing is common for toys, apparel, accessories, and entertainment products such as video games. The NBA licenses products like these New Orleans Pelicans hats to a manufacturer in exchange for a negotiated fee.

Exhibit 11.2: Abbreviated List of Daimler AG Product Mix

The complete set of all products and services offered by a firm is called its product mix. This chapter uses Daimler-AG, the company that owns Mercedes-Benz, as an example. Many students may be familiar with Mercedes-Benz but not know Daimler-AG has so many other products. Daimler AG clearly maintains the most products under its Mercedes-Benz line of cars, and it adds more as needed to appeal to various consumers.

Product Mix and Product Line Decisions (1 of 2)

The complete set of all products and services offered by a firm is called its product mix. The product mix typically consists of various product lines, which are groups of associated items that consumers tend to use together or think of as part of a group of similar products or services. ex: product mix for Daimler AG, the company that owns Mercedes-Benz, showing various product lines

Brand Equity: Brand Association

The mental and emotional links that consumers make between a brand and its key attributes. Brand associations are often the result of a firm's advertising and promotional efforts. State Farm Insurance: "like a good neighbor, State Farm is there" Brand associations reflect the mental and emotional links that consumers make between a brand and its key product attributes, such as a logo and its color, slogan, or famous personality Ask students what brands have personalities - they might mention McDonald's and Pepsi (young). Consumers develop links between brands and their own identity. Some brands are just "not for them." Ask students: How many of you proudly wear Abercrombie & Fitch clothing? How many choose never to wear this brand? How do you perceive this brand's message?

Product Mix and Product Line Decisions (2 of 2)

The product mix reflects the breadth and depth of the company's product lines. A firm's product mix breadth represents a count of the number of product lines offered by the firm. Product line depth, in contrast, equals the number of products within a product line. Breadth number of product lines in a product mix --> may be too costly to maintain Depth number of categories within a product line --> may cannibalize brands

Brand Equity: Perceived Value

The relationship between a product's benefits and its costs. How do discount retailers like Target, T.J. Maxx, and H&M create value for customers? These retailers offer designer products at reduced prices. In some cases, they use high-fashion designers for their lines of clothing.

Value of Branding for the Customer and the Firm

facilitate purchasing, establish loyalty, protect from competition, reduce marketing costs, are assets, impact market value For example, consider eBay. The brand facilitates instant recognition, consumers are avidly loyal, which reduces competition from other online auctions and reduces expensive marketing ads. The brand is a valuable asset that they protect through copyrights and directly affects their profits.

CRM: Customer Relationship Management programs

firms such as airlines, hotels, retailers, ect., reward loyal customers with loyalty or CRM programs, such as points customers can redeem.