10 Product Concepts Marketing Lamb, Hair, McDaniel CHAPTER 10 Chapter 10 Product Concepts Product Concepts CHAPTER 10 Marketing Lamb, Hair, McDaniel 10 Designed by Eric Brengle B-books, Ltd. Prepared by Amit Shah Frostburg State University

Learning Outcomes LOI LO2 LO3 LO4 Define the term product Chapter 10 Product Concepts Learning Outcomes LOI Define the term product Classify consumer products Define the terms product item, product line, and product mix Describe marketing uses of branding LO2 LO3 LO4

Learning Outcomes LO5 LO6 LO7 Chapter 10 Product Concepts Learning Outcomes Describe marketing uses of packaging and labeling Discuss global issues in branding and packaging Describe how and why product warranties are important marketing tools LO5 LO6 LO7

Define the term product Chapter 10 Product Concepts What Is a Product? LOI Define the term product

What Is a Product? LOI Product Chapter 10 Product Concepts What Is a Product? LOI Product Everything, both favorable and unfavorable, that a person receives in an exchange. Tangible Good Service Idea

Product is the starting point of Marketing Mix Chapter 10 Product Concepts What Is a Product? LOI Product is the starting point of Marketing Mix Promotion Place (Distribution) Price Product

REVIEW LEARNING OUTCOME LOI REVIEW LEARNING OUTCOME Chapter 10 Product Concepts Define the term product Product Good Service Idea

Types of Consumer Products Chapter 10 Product Concepts Types of Consumer Products LO2 Classify consumer products

A product bought to satisfy an individual’s personal needs or wants Chapter 10 Product Concepts Types of Products LO2 Business Product Consumer A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. A product bought to satisfy an individual’s personal needs or wants

Types of Consumer Products Chapter 10 Product Concepts Types of Consumer Products LO2 Unsought Products Specialty Shopping Convenience Consumer Business

Types of Consumer Products Chapter 10 Product Concepts Types of Consumer Products LO2 Convenience Product Shopping Specialty Unsought A relatively inexpensive item that merits little shopping effort A product that requires comparison shopping, because it is usually more expensive and found in fewer stores A particular item for which consumers search extensively and are reluctant to accept substitutes A product unknown to the potential buyer or a known product that the buyer does not actively seek

REVIEW LEARNING OUTCOME LO2 REVIEW LEARNING OUTCOME Chapter 10 Product Concepts Consumer Products

Product Items, Lines, and Mixes Chapter 10 Product Concepts Product Items, Lines, and Mixes LO3 Define the terms product item, product line, and product mix

Product Items, Lines, and Mixes Chapter 10 Product Concepts Product Items, Lines, and Mixes LO3 Product Item Product Line Product Mix A specific version of a product that can be designated as a distinct offering among an organization’s products. A group of closely-related product items. All products that an organization sells.

Campbell’s Product Lines and Mix Chapter 10 Product Concepts Campbell’s Product Lines and Mix LO3

Benefits of Product Lines Chapter 10 Product Concepts LO3 Benefits of Product Lines Equivalent Quality Efficient Sales and Distribution Standardized Components Package Uniformity Advertising Economies

Product Mix Width LO3 Product Mix Width Diversifies risk Chapter 10 Product Concepts Product Mix Width LO3 Product Mix Width The number of product lines an organization offers. Diversifies risk Capitalizes on established reputations

Product Line Depth LO3 Product Line Depth Chapter 10 Product Concepts Product Line Depth LO3 Product Line Depth The number of product items in a product line. Attracts buyers with different preferences Increases sales/profits by further market segmentation Capitalizes on economies of scale Evens out seasonal sales patterns

LO3 Adjustments Adjustments to Product Items, Lines, and Mixes Chapter 10 Product Concepts Adjustments LO3 Product Modification Product Repositioning Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes

Types of Product Modifications Chapter 10 Product Concepts Types of Product Modifications LO3 Quality Modification Functional Modification Style Modification

Planned Obsolescence LO3 Planned Obsolescence Chapter 10 Product Concepts Planned Obsolescence LO3 Planned Obsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.

LO3 Repositioning Why reposition established brands? Chapter 10 Product Concepts Repositioning LO3 Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands?

Product Line Extension Chapter 10 Product Concepts Product Line Extension LO3 Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry.

Product Line Contraction Chapter 10 Product Concepts Product Line Contraction LO3 Some products have low sales or cannibalize sales of other items Resources are disproportionately allocated to slow-moving products Items have become obsolete because of new product entries Symptoms of Product Line Overextension

REVIEW LEARNING OUTCOME Product item, product line, and product mix LO3 Chapter 10 Product Concepts

Describe marketing uses of branding Chapter 10 Product Concepts Branding LO4 Describe marketing uses of branding

Chapter 10 Product Concepts Brand LO4 Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products.

The elements of a brand that The value of company and brand names Chapter 10 Product Concepts Branding LO4 Brand Name Mark Equity That part of a brand that can be spoken, including letters, words, and numbers The elements of a brand that cannot be spoken The value of company and brand names Global Brand A brand where at least one-third of the product is sold outside its home country

Product Identification Chapter 10 Product Concepts Benefits of Branding LO4 Product Identification Repeat Sales New Product Sales

Top Ten Global Brands LO4 Chapter 10 Product Concepts SOURCE: Reprinted from the August 6, 2007 issue of ‘BusinessWeek’ by special permission, Copyright 2007 by The McGraw-Hill Companies, Inc.

Branding Strategies LO4 Brand No Brand Manufacturer’s Brand Chapter 10 Product Concepts Branding Strategies LO4 Brand No Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation

Generic Brand LO4 Generic Product Chapter 10 Product Concepts Generic Brand LO4 Generic Product A no-frills, no-brand-name, low-cost product that is simply identified by its product category.

Manufacturers’ Brands Versus Private Brands Chapter 10 Product Concepts LO4 Manufacturers’ Brand The brand name of a manufacturer. Private Brand A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand.

Advantages of Manufacturers’ Brands Chapter 10 Product Concepts Heavy consumer ads by manufacturers Attract new customers Enhance dealer’s prestige Rapid delivery, carry less inventory If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer LO4

Advantages of Private Brands Chapter 10 Product Concepts Advantages of Private Brands Earn higher profits on own brand Less pressure to mark down price Manufacturer can become a direct competitor or drop a brand/reseller Ties customer to wholesaler or retailer Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brands LO4

Individual Brands Versus Family Brands Chapter 10 Product Concepts LO4 Individual Brand Using different brand names for different products. Family Brand Marketing several different products under the same brand name.

Complementary Branding Chapter 10 Product Concepts LO4 Cobranding Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding

A Trademark is the exclusive right to use a brand. Chapter 10 Product Concepts Trademarks A Trademark is the exclusive right to use a brand. Many parts of a brand and associated symbols qualify for trademark protection. Trademark right comes from use rather than registration. The mark has to be continuously protected. Rights continue for as long as the mark is used. Trademark law applies to the online world. TM LO4

REVIEW LEARNING OUTCOME Marketing Uses of Branding LO4 Chapter 10 Product Concepts

Describe marketing uses of packaging and labeling Chapter 10 Product Concepts Packaging LO5 Describe marketing uses of packaging and labeling

Functions of Packaging Chapter 10 Product Concepts Functions of Packaging LO5 Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling

Labeling LO5 Persuasive Informational Focuses on promotional theme Chapter 10 Product Concepts Labeling LO5 Persuasive Focuses on promotional theme Consumer information is secondary Informational Helps make proper selections Lowers cognitive dissonance Includes use/care http://www.fda.gov Online

Universal Product Codes Chapter 10 Product Concepts Universal Product Codes LO5 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.

REVIEW LEARNING OUTCOME Packaging and Labeling LO5 Chapter 10 Product Concepts

Global Issues in Branding and Packaging Chapter 10 Product Concepts Global Issues in Branding and Packaging LO6 Discuss global issues in branding and packaging

Global Issues in Branding Chapter 10 Product Concepts Global Issues in Branding LO6 Adaptations & Modifications Global Options for Branding One Brand Name Everywhere Different Brand Names in Different Markets

Global Issues in Packaging Chapter 10 Product Concepts Global Issues in Packaging LO6 Aesthetics Global Considerations for Packaging Climate Considerations Labeling

REVIEW LEARNING OUTCOME Global Issues in Branding and Packaging Chapter 10 Product Concepts Branding Choices: 1 name Modify or adapt 1 name Different names in different markets Packaging Considerations: Labeling Aesthetics Climate

Describe how and why product warranties are important marketing tools Chapter 10 Product Concepts Product Warranties LO7 Describe how and why product warranties are important marketing tools

A confirmation of the quality or performance of a good or service. Chapter 10 Product Concepts Product Warranties LO7 Warranty Express Implied Warranty A confirmation of the quality or performance of a good or service. A written guarantee. An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC)

REVIEW LEARNING OUTCOME Product Warranties LO7 REVIEW LEARNING OUTCOME Product Warranties Chapter 10 Product Concepts Express warranty = written guarantee Implied warranty = unwritten guarantee