Chapter 10: Product Concepts

Benefits of product lines

-Advertising economies of scale -Package uniformity -Efficient sales and distribution (stores inclined to stock more if there is a full line opposed to one item) -Equivalent quality (purchasers expect and believe all products in a line are equal in quantity and quality)

Style Modifications

-Aesthetic chance -Clothing and auto companies use to motivate customers to replace products -Planned Obsolescence: the practice of modifying products so those that have already been sold become obsolete before they actually need replacement (printers, phones, laptops, etc) Some call it wasteful and unethical, some say consumers like modifications and changes in appearance, some say that consumers not manufacturers decide when styles are obsolete

Seven Categories of Business Products

-Major equipment -Accessory equipment -Component parts -Processed materials -Raw materials -Supplies -Services

Adjustments to product items, lines and mixes

1) Modifying Products 2) Repositioning Products 3) Extending or contacting product lines

Global Issues in Branding and Packaging - 3 Options

1) One brand name everywhere -coca cola 2) Adaptions and Modifications -used when one brand name is hard to pronounce in local language, owned by someone else there, or name has negative or vulgar connotation in language -Italian detergent Barf wouldn't do well in US 3) Different brand names in different markets -used when translation or pronunciation problems occur, when marketer wants brand to appear to be local brand, or when regulators require localization -Unilever's Axe line called Lynx in England, Ireland, Australia and New Zealand -PepsiCo is Pecsi to match pronunciation in Argentina Packaging has to fit country (colors, logo, language, info, size - poorer countries might buy smaller sizes bc low purchasing power) Concerns about spillage, spoilage, breakage with long distance shipping

3 Main Purposes for Branding

1) Product Identification 2) Repeat Sales 3) New Sales

Three most important packaging functions

1) To contain and protect products 2) Promote products 3) Facilitate storage, use and convenience Increasingly common: facilitate recycling and reduce environmental damage -46% of consumers say they will buy a package if it is environmentally friendly, 34% say it doesn't matter to them either way

Four Types of Classification for Categorizing Consumer Products

1)Convenience 2)Shopping 3)Specialty 4)Unsought

Captive Brands

A brand manufactured by a third party for an exclusive retailer without evidence of that retailer's affiliation and are sold exclusively at the chains -Allow retailers to ask price similar or equal to manufacturer's brands, and the captive brands are typically displayed alongside mainstream products -Simple Truth is Kroger's line of natural and organic products designed to meet consumer desire for upscale brands. Organic soy milk sells for 20 cents more than Silk

Private Brand

A brand name owned by a wholesaler or retailer Examples: Archer Farms - target, Kirkland - Costco, etc. Increasing in popularity and price - increases loyalty (can get manufacturer's brand at any number of retail stores, can only get private brand at that one store) Private levels have 29% of market share of food and beverage market - 10 points higher than 10 years ago Overhead is low and there are no marketing costs, so private label products bring in 10% higher profit margins on average than manufacturer's brand Trusted store band can differentiate a chain from competitors

Global Brand

A brand that obtains at least 1/3 of its earnings from outside its home country, is recognizable outside its home base of customers, and has publicly available marketing and financial data Yum! Brands is example of company with strong global brand and updates products to fit culture of markets abroad

Product Line Overextension

A company can add too many products, or demand can change for type of products that were introduced over time. -Some products in line do not contribute to profits because low sales or cannibalize sales of other items in line -Manufacturing or marketing resources are disproportionately allocated to slow-moving products -Some items in line are obsolete because of new-product entries in line or new products offered by competitors

Warranty

A confirmation of the quality or performance of a good or service

Product Line

A group of closely related product items example: Campbell's product line: soup line Different container shapes and sizes distinguish lines Diet coke available in cans and in plastic. Each size and container separate line.

Brand

A name, term, symbol, design, or combo thereof that identifies a sellers' products and differentiates them from competitors' products

Specialty Products

A particular item for which consumers search extensively and are very reluctant to accept substitutes -Bose speakers, Ruth's Chris steak house, omega watches, rolls-royce car, etc. -Distribution limited to one or a few outlets in a geographic area -Quality of service and brand names important -Consumers more highly invested/put in more effort

Consumer Product

A product bought to satisfy an individual's personal wants or needs Sometime an item can be either business or consumer product depending on use (lightbulbs, pencils, paper, computers, etc.)

Shopping Products

A product that requires comparison shopping because it is usually more expensive than convenience product and is found in fewer stores -Compare brands, stores, styles, practicality, price, lifestyle compatibility -Willing to invest more effort to get benefits -Two types: 1) Homogenous -products basically similar (tv, washers, dryers, fridge, etc.) -Look for lowest priced brand with desirable features 2)Heterogeneous -essentially different (furniture, clothing, houses, universities) -have trouble comparing bc prices, quality and features vary -benefit of comparing is finding best brand for you -decision highly individual

Unsought Products

A product unknown to the potential buyer or a known product that the buyer does not actively seek -new products until ads increase consumer awareness of them -some goods always marketed like this like insurance, burial plots, home repair, legal services, etc. -require aggressive personal selling and highly persuasive advertising -salespeople seek out potential buyers

Business Product (Industrial Product)

A product used to manufacture other goods or services to facilitate an organization's operations, or to resell to other customers

Convenience Products

A relatively inexpensive item that merits little shopping effort -unwilling to shop extensive for item -candy, soft drinks, aspirin, etc. -require wide distribution to sell sufficient quantities

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. Introduced in 1974, help track sales, inventory control, consumer purchasing

Product Item

A specific version of a product that can be designated as a distinct offering among an organization's product example: campbell's cream of chicken soup

Service Mark

A trademark for a service -Performs same function for services like H&R Block and Weight Watchers Parts of a brand or other product IDs may qualify for trademark protection like: -MGM lion roar -Jeep front grille shape and Coke bottle shape -Ornamental colors or designs like black and copper color combo of Duracell battery, Levi's small tag in rear pocket of jeans, cutoff cone on top of Cross pens -Catchy phrases like Just Do It or This Is How We Dew It -Abbreviations like Bud, Coke, or the Met

Informational Labeling

A type of package labeling designed to help consumers make proper product selections and lower their cognitive dissonance after purchase Nutritional Labeling and Education Act of 1990 mandated nutrition info on food packages, FDA has guidelines

Persuasive Labeling

A type of packaging labeling that focuses on a promotional theme or logo, and consumer information is secondary

Express Warranty

A written guarantee i.e. 100% cotton or complete satisfaction guaranteed

Product Line Extension

Adding additional products to an already existing product line in order to compete more broadly in the industry -Yoplait adding a Greek yogurt and frozen yogurt line Can overextend as well (see next card)

Product Mix

All products that an organization sells Examples: Campbell's product mix: soups, sauces, frozen entrees, beverages, biscuits Each product may require separate marketing strategy Some product lines and entire product mixes share strategy

Implied Warranty

An unwritten guarantee that the good or service is fit for the purpose for which it is sold All sales have implied warranty under Uniform Commercial Code

Quality Modification

Change in product's dependability or durability - Reducing quality may let manufacturer lower price and appeal to target markets unable to afford before -Increasing quality can help firm compete with rival firms -Increasing quality can result in increased brand loyalty, greater ability to raise prices, new opportunities for market segmentation

Functional Modification

Change in product's versatility, effectiveness, convenience, or safety Men's swim trunks functional change over time to better fit events they wore swim trunks to Convenience chances (velcro or zipper instead of buttons)

Repositioning

Changing consumers' perceptions of brand Playboy moving away from pornographic images toward high fashion and lifestyle Changing demographics, declining sales, changes in social environment motivate this

Product Modification

Changing one or more of a product's characteristics 3 kinds: Quality Functional Style

Brand Loyalty

Consistent preference for one brand over all others -Best generator of repeat sales is satisfied customers -Many choose brands used at home rather by price -More than half of consumers in product categories like cigarettes, mayo, toothpaste, coffee, headache relief, soap, ketchup, etc. are brand loyal -Having a recognizable brand name helps facilitate new product sales

Product Line Contraction

Contracting is strategic way to deal with overextension 3 major benefits: -Resources become concentrated on most important products -Managers no longer waster resources trying to improve sales and profits of poorly performing products -New product items have a greater chance of being successful because more financial and human resources are available to manage them

Product

Everything, both favorable and unfavorable, that a person receives in an exchange Can be tangible or intangible, or a service Packaging, style, color, size, etc. some typical product features as is seller's image, manufacturer's reputation, way a consumer believes others will view product Can be a business (industrial) product or a consumer product depending on use

Why Increase Product Mix Width and Product Line Depth?

Firms can: -diversify risk -generate sales and boost profits by spreading risk across many product categories -widen product mix to capitalize on established brand reputation (people know Campbell's so they might buy their beverages or crackers based on brand name association. If they make good soup, they probably make good things in other categories too) -firms increase depth of product lines to attract buyers with different preferences, to increase sales and profits by further segmenting market, capitalize on economies of scale in production and marketing, even out seasonal sales patterns

Generic Product Name

Identifies a product by class or type and cannot be trademarked Companies that fail to protect trademarks will face possibility that product names will become generic Aspirin, cellophane, linoleum, thermos, kerosene, monopoly, cola, shredded wheat

Ingredient Co-Branding

Identifies brand of a part that makes up the product -Arm and Hammer with OxiClean -Crest with Scope etc.

Family Branding

Marketing several different products under the same brand name -Jack Daniel's family brand includes whiskey, coffee, BBQ sauce, heat and serve meat products, mustard, playing cards, clothing lines

Cooperative Co-Branding

Occurs when two brands receiving equal treatment in context of ad borrow from each other's brand equity -Promo contests sponsored by Ramada Inn, American Express and United Airlines -American Express and Walmart partnership with prepaid card targeting middle and lower income individuals who want to avoid fees at bank

Co-Branding

Placing two or more brand names on a product or its package -Useful strategy when combo of brand names enhances prestige or perceived value or product or when it benefits brand owners and users -ay be used to increase company's presence in markets where there is little room for differentiation or has limited marketshare -Small companies associate with larger more recognizable companies 3 Kinds: -Ingredient Branding -Cooperative Branding -Complementary Branding

Complementary Co-Branding

Products are advertised or marketed together to suggest linked usage, such as spirits brand (Seegrams) and a compatible mixer (7Up)

Manufacturer's Brand

The brand name of a manufacturer Kodak, Tylenol, La-Z-Boy, Fruit of the Loom, Kleenex, Band-Aid, etc. Sometimes national brand is used as synonym for manufacturer;s brand Term is not always accurate, however, because many manufacturers serve only regional markets Using manufacturer's brand precisely defines brand owner

Trademark

The exclusive right to use a brand or part of a brand Rights come from use rather than registration Protection usually lasts 10 years To renew, must prove company is using mark Rights to trademark last long after mark is used. If firm does not use it for 2 years, it is abandoned and a new user can claim ownership Violations have steep penalties to stem infringements, but still common Whole stores and brands faked in other countries

Product Line Depth

The number of product items in a product line Example: Within soup line, depth includes all the flavors of soup (i.e. chicken noodle, cream of mushroom, vegetable soup, french onion, etc.)

Product Mix Width (or breadth)

The number of product lines an organization offers Example: Campbell's offers 5: soups, sauces, frozen entrees, beverages, biscuits

Brand Name

The part of a brand that can be spoken, including letters, words and numbers

Brand Mark

The part of a brand that cannot be spoken, like a symbol

Brand Equity

The value of a company or brand name -A brand with high awareness, perceived quality and brand loyalty among customers has high brand equity, which is a valuable asset

Individual Branding

Using different brand names for different products P&G targets different segments of laundry detergent market with Bold, Cheer, Dash, Dreft, Gain, Era and Tide

Greenwashing

When a product or a company attempts to give the impression of environmental friendliness whether it is environmentally friendly or not