CHAPTER 10 Product Concepts Lamb, Hair, McDaniel Chapter 9 Product Concepts CHAPTER 10 Product Concepts Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.

What Is a Product? Product Chapter 9 Product Concepts What Is a Product? Product Everything, both favorable and unfavorable, that a person receives in an exchange. Tangible Good Service Idea

Core and Augmented Components of a Product SUPPORT SERVICES COMPONENT PACKAGING COMPONENT  Repair and maintenance  Deliveries CORE COMPONENT  Trademark  Price  Product platform  Design features  Functional features  Legal  Installation  Quality  Warranty  Brand name  Package  Instructions  Spare parts  Legal  Styling  Other related services  Legal

Types of Products(Goods) Chapter 9 Product Concepts Types of Products(Goods) Unsought Products Specialty Shopping Convenience Consumer Business Notes: Chapter 6 described seven categories of business products: (have students name these) major equipment, accessory equipment, component parts, processed materials, raw materials, supplies, and services. Consumer products are classified into four types: convenience products, shopping products, specialty products, and unsought products. This approach organizes products by the effort used to shop for them.

Types of Consumer Products Chapter 9 Product Concepts Types of Consumer Products Market Development Diversification Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets 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 Discussion/Team Activity: Name products and services that fall into each of the consumer product categories: Convenience: candy, soft drinks, deodorant, aspirin, hardware, dry cleaning. Shopping: Homogeneous shopping products such as washers, dryers, televisions. Decisions are based on the lowest-priced brand with the desired features. Heterogeneous shopping products are essentially different, for example furniture, clothing, housing, universities. Decisions are highly-individual and based on “finding the best product for me.” Specialty: fine watches, expensive automobiles, gourmet restaurants. Unsought: new products, insurance, burial plots, encyclopedias.

Distinguishing Consumer Products Type/ Criteria Convenience Shopping Specialty Distribution Intensive Selective Exclusive Retail margin low medium High Consumer Shopping time Purchase frequency high Inventory turnover Support services

Product Items, Lines, and Mixes Chapter 9 Product Concepts Product Items, Lines, and Mixes 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. Notes: Rarely does a company sell a single product. Instead, it sells a variety of things that may be categorized into product lines and product mixes.

Campbell’s Product Lines and Mix Chapter 9 Product Concepts Campbell’s Product Lines and Mix { } Notes: All of Campbell’s products constitute its product mix. Each product in the product mix may require a separate marketing strategy. In some cases, product lines and mixes share some marketing strategy components. Consider Nike’s theme, “Just Do It.” An example of Campbell’s product lines and product mix is shown in Exhibit 9.1. Discussion/Team Activity: Identify a few companies with extensive product lines and product mixes. Pick one and create a matrix similar to Exhibit 9.1. Evaluate the marketing strategies in use.

Factors Affecting the Optimum Product Mix Decision of Company Level of market/economic development Sales/Profit Competition Market characteristics Product characteristics Legal considerations

Product Modification, Repositioning, and Extension Product Modification: quality modification, functional modification, style modification Product Repositioning Product Line Extension or Deletion/Contraction Planned Obsolescence

Branding Concepts A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. Why branding-benefits of branding Manufacturer’s vs. Private Brands Individual vs. Family Brands Co-branding Trademark, Patent Brand Equity Warranties-benefits of warranties Global Branding

Branding Concepts and Use Chapter 9 Product Concepts Branding Concepts and Use

Packaging and Labeling Chapter 9 Product Concepts Why packaging-Functions/benefits of packaging: containing and protecting products facilitating storage, use, convenience facilitating recycling and reducing environmental damage Why labeling-benefits of labeling Information and persuasion issue Government regulations Notes: A trademark is the exclusive right to use a brand or part of a brand. Others are prohibited to use without permission. A service mark performs the same function for services. Parts of a brand or other product identification may qualify for trademark protection. Some of the best known trademarked features include the Coca-Cola bottle and the Nike “Swoosh,” the Jeep front grille, and the Levi’s pocket tag. Companies that fail to protect trademarks face the risk of product names becoming generic. This list includes aspirin, cellophane, thermos, monopoly, cola, and shredded wheat. Discussion/Team Activity: Discuss some heavily-protected product brands that are used generically in conversations. Examples might include Kleenex, Xerox, Band-Aid Brand Adhesive Bandages, etc.

Universal Product Codes Chapter 9 Product Concepts Universal Product Codes 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. Notes: Universal product codes, often called bar codes, were first introduced in 1974. UPCs help retailers prepare records of customer purchases, control inventories, and track sales.

Global Issues in Branding Chapter 9 Product Concepts Global Issues in Branding Adaptations & Modifications Global Options for Branding One Brand Name Everywhere Different Brand Names in Different Markets Notes: When entering a foreign market with an existing product a firm has three options for handling the brand name: One brand name everywhere. Coca-Cola uses this strategy in 195 countries around the world. This strategy allows greater recognition of the product and easier promotional coordination from market to market. Adaptations and modifications are used when the name cannot be pronounced or interpreted successfully in a different language. Different brand names for different markets: Local brand names are used when translation or pronunciation problems occur, when the marketer wants the brand to appear to be a local brand, or when regulations require localization.

A confirmation of the quality or performance of a good or service. Chapter 9 Product Concepts Product Warranties 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)

Ch 10: Discussion Questions What is a product? How marketers define Core and Augmented Product? Define the four types of consumer products. How can we classify them using various criteria? Explain. Explain the concept of product item, product line, and product mix. What is an optimum product mix? Explain the factors affecting optimum product mix of a company. Define branding and explain the rationale for branding.