Marketing Chp 11 - Product Concepts, Branding, and Packaging

Brand Licensing

an agreement whereby a company permits another organization to use its brand on other products for a licensing fee the licensee is responsible for all manufacturing, selling, and advertising functions and bears the costs if the licensed product fails

Product Adoption Process: Awareness

The buyer becomes aware of the product

Manufacturer Brands

A brand initiated by producers to ensure that producers are identified with their products at the point of purchases Examples: Dell Computers or Levi's Jeans usually requires a producer to become involved in distribution, promotion, and to some extent, pricing decisions

Generic Brands

A brand that indicates only the product category and does not include the company name or other identifying terms. These items are typically staples that would be marketed using an undifferentiated strategy because they lack special features. Usually sold at lower prices than comparable branded items and compete on the basis of price and value. Examples: sugar, salt, aluminum foil

4 Types of Consumer Products

- Convenience Products - Shopping Products - Specialty Products - Unsought Products

7 Types of Business Products

-Installations -Accessory Equipment -Raw Materials -Component Parts -Process Materials -MRO Supplies -Business Services

Three Degrees of Brand Loyalty

1) Brand Recognition 2) Brand Preference 3) Brand Insistence

5 Major Adopter Categories

1) Innovators 2) Early adopters 3) Early majority 4) Late majority 5) Laggards

Three Categories of Brands

1) Manufacturer 2) Private distributor 3) Generic

Two Categories to Classify Products

1. Consumer Products 2. Business Products

Product

A a good, a service, or an idea received in an exchange.

Core Product

A product's fundamental utility or main benefit which usually addresses a fundamental need of the consumer

Symbolic or experiential benefits

AESTHETIC!! Benefits based on their experiences with the product, which give symbolic meaning to many products and brands for buyers. For some buyers, the simple act of shopping gives them pleasure, which lends to its symbolic value and improves their attitudes about the products they consider buying. Some retailers capitalize on this by striving to create a special, individual experience for customers. The atmosphere and décor of a retail store, the variety and depth of product choices, the customer support, and even the sounds and smells all contribute to the experiential element.

Raw Materials

Basic natural materials that become part of a physical product Example: minerals, chemicals, agricultural products, and materials from forests and oceans

Family Branding

Branding all of a firms products with the same name or part of the name the promotion of one item in the family promotes the other products in the family

Accessory Equipment

Equipment that does not become a part of the final physical product, but is used in production or office activities -less expensive than major equipment -purchased with less negotiation and are treated as expensive items rather than capital items as they are not expected to last as long -more outlets are required for distribution of accessory equipment than for installations, but sellers do not have to provide the multitude of services expected of installations marketers Examples: file cabinets, fractional horsepower mothers, calculators, and tools

Installations

Facilities and non portable major equipment. -expensive and intended to be used for a long time -purchased by high level management -marketers of installations must frequently provide a variety of services, including training, repairs, maintenance assistance, and aid in financing Examples: Facilities (office buildings, factories, warehouses) or Non Portable Equipment (production lines, very large machines)

Depth of Product Mix

The average number of different products offered in each product line

Hierarchy of Protection for Brand Names

From most protectable to least protectable: 1) Fanciful - Exxon 2) Arbitrary - Dr. Pepper 3) Suggestive - Spray n Wash 4) Descriptive - Minute Rice

Two Types of Branding Strategies

Individual and Family

Business Services

Intangible products that many organizations use in their operations -firms must decide whether to provide these services internally or obtain them from outside the organization. These decisions depend on the costs associated with each alternative and how frequently the services are needed Examples: financial, legal, marketing research, information technology, and janitorial services

Shopping Products

Items for which buyers are willing to expend considerable effort in planning and making purchases -buyers spend time comparing stores and brands -expected to last a long time -more expensive -purchased less frequently = low inventory turn ver and higher gross margins examples: appliances, bikes, furniture, stereos, cameras, shoes

Component Parts

Items that become a part of the physical product and are either finished items ready for assembly or items that need little processing before assembly -buyers purchase component parts according to their own specification or industry standards, and they expect the parts to be of a specified quality and delivered on time so that production is not slowed or stopped -producers that are primarily assemblers, such as auto or computer manufacturers, depend heavily on suppliers of component parts Examples: Spark plugs, tires, clocks, brakes, an headlights are all component parts of an automobile

Specialty Product

Items with unique characteristics that buyers are willing to expend considerable effort to obtain -most expensive category of products -- buyers conducts research, plan the purchase, know exactly what they want, and will not accept substitutes -buyers do not compare alternatives and are unlikely to base their decision on price -distributed through a very limited number of retail outlets -purchased infrequently -- low inventory turnover and high gross margins Examples: Fine jewelry, limited edition collector's items

Business Products

Products bought to use in a firm's operations, to resell, or to make other products

Unsought Products

Products purchased to solve a sudden problem, products of which customers are unaware until they see them in a store or online, and products that people do not necessarily think of buying or plan to buy -speed of problem resolution is more important than the price or other features a buyer might normally consider with more time to make a decision Examples: emergency medical services or automobile repairs

Supplemental Features

Provide added value or attributes that are in addition to the product's core utility or benefits. Often include perks such as free installation, guarantees, product information, promise of repair or maintenance, delivery, training, or financing. Supplemental features are not required to make the core product function effectively, but they help to differentiate one product brand from another and may increase customer loyalty.

Laggards

The last adopters, who distrust new products. they are oriented toward the past and typically once they adopt a product, a newer product has already replaced it.

Product Adoption Process

The process by which customers come to accept new products. This occurs in five stages: 1) Awareness 2) Interest 3) Evaluation 4) Trial 5) Adoption Entering the adoption stage does not mean that the person will eventually adopt the new product. Rejection may occur at any stage. Both product adoption and product rejection can be temporary or permanent.

Decline Stage of the Product Life Cycle

The stage of a product's life cycle when sales fall rapidly -the marketer should consider eliminating items from the product line that no longer earn a profit. They may cut promotion costs, eliminate marginal distributors, or plan to phase out the product -decide whether to reposition the product to extend its life or to eliminate it

Maturity Stage of the Product Life Cycle

The stage of a product's life cycle when the sales curve peaks and starts to decline, and profits continue to fall. -characterized by intense competition bc many brands are now in the market -competitors emphasize improvements and differences in their versions of the product. weaker competitors are squeezed out. -producers who remain in the market are likely to change their promotional and distribution efforts. -buyers knowledge of the product is likely to be high -to increase sales, introduce a new use for a product -advertising focuses on differentiation from competitors

Private Distributor Brands

a brand initiated and owned by a reseller-- wholesalers or retailers. the manufacturers are not identified on the products. Retailers and wholesalers use private distributor brands to develop more efficient promotion, generate higher gross margins, and change store image. Private distributor brands give retailers or wholesalers freedom to purchase products of a specified quality at the lowest cost without disclosing the identities of the manufacturers. examples: Target's Archer Farms or Whole Food's 365 Everyday Value

Individual Branding

a branding strategy in which each product is given a different name advantage--> if an org introduces an inferior product, the negative images associated w it do not influence the other products disadvantage--> vice versa, a firm cannot capitalize on the positive image associated with successful products can also facilitate market segmentation

Idea

a concept, philosophy, image, or issue

Brand Loyalty

a customer's favorable attitude toward a specific brand reduces a buyer's risks and shortens the time spent deciding which product to purchase reduces a brand's vulnerability to competitor's actions and allows products to be at a premium price, avoiding severe price competition

Product Line

a group of closely related product items viewed as a unit because of marketing, technical, or end use considerations Specific product items in a product line usually reflect the desires of different target markets or the varying needs of consumers. (ex: oily hair vs. damage shampoo) To develop the optimal product line, marketers must understand buyers' goals. Firms with high market share are more likely to expand their product lines aggressively, as are marketers with relatively high prices or limited product lines.

Trademark

a legal designation of exclusive use of a brand

Brand

a name, term, design, symbol, or any other feature that identifies one marketer's product as distinct from those of other marketers. A brand may identify a single item, a family of times, or all items of that seller. Indicates a quality level and image to the buyer and reduces perceived risk of purchase.

Product Item

a specific version of a product that can be designated as a distinct offering among a firm's products example: gap t-shirt

Good

a tangible physical entity

innovative packaging

a unique cap, design, applicator, or other features to make a product distinctive.

Service

an intangible result of the application of human and mechanical efforts to people or objects

Brand Extension

an organization uses one of its existing brands to brand a new product in a different product category example: HGTV cable channel extended its brand to HGTV HOME plant collection (aka seeds not a tv channel)

A total product offering has three interdependent elements:

core product, supplemental features, & symbolic or experiential benefits

Early Majority

individuals who adopt a new product just prior to the average person

MRO Supplies

maintenance, repairs, and operating items that facilitate production and operations but do not become a part of the finished product -sold through numerous outlets and purchased frequently -to ensure supplies are available when needed, buyers often deal with more than one seller Examples: paper, pencils, cleaning supplies, and paints

Process Materials

materials that are used directly in the production of other products, but are not readily identifiable -purchased according to the purchasers specification or industry standards example: vinegar is a process material in making salad dressing

multiple packaging

not a single unit of a product-- twin packs, six packs, etc

secondary use packaging

packaging that can be reused for purposes other than its initial function. customers view secondary use packaging as faffing value to products.

Early Adopters

people who adopt new products early, choose new products carefully, and are viewed as "the people to check with" by later adopters

Consumer Products

products purchased to satisfy personal and family needs

Packaging Functions

protect the product, maintain its functional form, and offer convenience to customers. Also, promote a product by communicating its features, uses, benefits, and image.

labeling

providing identifying, promotional, or other information on package labels. typically feature the brand name and brand marks (Coke), promotional messages, or info on the product

Convenience Products

relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort -buyer spends little time planning the purchase of comparing available brands or sellers -marketed through many retail outlets -low brand loyalty -packaging and displays = important -high inventory turnover, relatively low per-unit gross margins Examples: bread, soda, chewing gum, gas, newspapers

Late Majority

skeptics who adopt new products when they feel it is necessary or because of economic necessity or social pressure

Brand Insistence

strongest and least common level of brand loyalty the degree of brand loyalty in which a customer strongly prefers a specific brand and will accept no substitute they are willing to spend a great deal of time and effort to acquire that brand

Product Adoption Process: Evaluation

the buyer considers the product's benefits and decides whether to try it considering its value vs. the competition

Product Adoption Process: Trial

the buyer examines, tests, or tries the product to determine if it meets his or her needs

Product Adoption Process: Adoption

the buyer purchases the product and can be expected to use it again whenever the need for this product arises

Product Adoption Process: Interest

the buyer seeks information and is receptive to learning about the product

Product Mix

the composite group of products that an organization makes available to customers

Brand Recognition

the degree of brand loyalty in which a customer is aware that a brand exists and views the brand as an alternative purchase if their preferred brand is unavailable weakest form of brand loyalty

Brand Preference

the degree of brand loyalty in which a customer prefers one brand over competitive offerings the customer will purchase this brand if it is available, but if it is not, they will accept a substitute

Innovators

the first to adopt a new product bc they enjoy trying new products and do not mind taking a risk

Trade Name

the full legal name of an organization

Introduction Stage of the Product Life Cycle

the initial stage of a product's life cycle; its first appearance in the marketplace, when sales start at zero and profits are negative because companies must invest in product development and launch prior to selling. -profits may remain low bc initial revenues will be low while the company covers large expenses for promotion and distribution -sales may be low at first because potential buyers myst be made aware of new product features, uses, and advantages through marketing -marketing strategy should be designed to attract the segment that is most interested in, able, and wiling to buy the product Two difficulties that may arise in the intro stage: 1) sellers may lack resources, technical knowledge, and marketing expertise to launch the product successfully 2) the initial product price may have to be high to recoup expensive marketing research or development costs, which can depress sales

Brand Equity

the marketing and financial value associated with a brand's strength in a market. In addition to actual proprietary brand assets, such as patents and trademarks, four major elements underlie brand equity: 1) brand name awareness 2) brand loyalty 3) perceived brand quality 4) brand associations

Width of Product Mix

the number of product lines a company offers

Brand Name

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

Brand Mark

the part of a brand that is not made up of words, such as a symbol or design example: mcdonalds arches or nike swoosh

Category consistent packaging

the product is packaged in line with the packaging associated with a particular product category ex: all ketchups are the same shape when marketers introduce a new product they usually use category consistent packaging so consumers recognize the new product as being in that product category

Growth Stage of the Product Life Cycle

the product life-cycle stage when sales rise rapidly, profits reach a peak, and then they start to decline. The growth stage is critical to a product's survival because competitive reactions to the product's success during this period will affect the product's life expectancy. -profits begin to decline late in the growth stage as more competitors enter the market-- creates the need for heavy promotional activities -marketing strategy seeks to strengthen the market share and position the product favorably against competitors by emphasizing its benefits to encourage adoption and create brand loyalty. Marketers should look at competing brands product positions relative to theirs and make changes based on this. -promotional expenditures in this stage may be slightly lower than during intro, but are still large. As sales increase, promotional costs decrease.

Product Life Cycle

the progression of a product through four stages: 1) introduction 2) growth 3) maturity 4) decline As the product moves through each cycle, the strategies relating to competition, pricing, distribution, promotion, and market information must be evaluated and possibly adjusted.

Family Packaging

using similar packaging for all of a firms products or packaging that has one common design element

Co-Branding

using two or more brands on one product capitalizes on the brand equity of multiple brands example: cinnabon partnered with Kellog's cereal

handling improved packaging

when packaging is changed to make it easier to handle in the distribution channel