Copyright John Wiley & Sons 2007 Presentation prepared by Robin Roberts, Griffith University and Mike Spark, Swinburne University of Technology

Copyright John Wiley & Sons 2007 Chapter 8 Product branding and packaging concepts

Copyright John Wiley & Sons 2007 Chapter 8 Chapter Objectives 1.Understand the concept of a product and how products are classified 2.Explain the concepts of product item, product line and product mix, and understand how they are connected 3.Understand the product life cycle and its impact on marketing strategies 4.Describe the product adoption process 5.Explain the value of branding and the major components of brand equity

Copyright John Wiley & Sons 2007 Chapter 8 Chapter Objectives 6. Recognise the types of brands and how they are selected and protected 7.Identify three types of branding policies and explain co-branding and brand licensing 8.Describe the major packaging functions and design considerations and how packaging is used in marketing strategies 9.Understand the functions of labelling and selected legal issues

Copyright John Wiley & Sons 2007 Chapter 8 What is a product? A product is a good, a service, or an idea received in an exchange It can be tangible (a good) or intangible (a service or an idea) or a combination of both It can include functional, social, and psychological utilities or benefits It also includes supporting services, such as installation, guarantees, product information and repairs and maintenance

Copyright John Wiley & Sons 2007 Chapter 8 Product augmentation Products consist of many elements that provide buyers with value: –Core (or generic) product – the content that is the basis for the purchase –Expected product – the buyer’s most basic expectations –Augmented product – a bundle of benefits that the buyer may not expect, and which differentiates the market offering from its competitors The potential product may also be considered.

Copyright John Wiley & Sons 2007 Chapter 8 What are the three product layers for Lexus GS? Dial-UpBroadband

Copyright John Wiley & Sons 2007 Chapter 8 Classifying products Products fall into one of 2 categories: Consumer Products –Products purchased to satisfy personal and family needs Business Products –Products bought to use in an organisation’s operations, to resell, or to make other products (raw materials and components)

Copyright John Wiley & Sons 2007 Chapter 8 Consumer products There are 4 traditional categories of Consumer Products: 1.Convenience products 2.Shopping products 3.Specialty products 4.Unsought products

Copyright John Wiley & Sons 2007 Chapter 8 Consumer products (cont’d) Convenience Products Relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort –Characteristics: Marketed through many retail outlets Relatively low per-unit gross margins Packaging has a major role

Copyright John Wiley & Sons 2007 Chapter 8 Consumer products (cont’d) Shopping Products Items for which buyers are willing to expend considerable effort in planning and making purchases –Characteristics: Expected to last a long time; less frequently purchased Require fewer retail outlets Inventory turnover is lower, and gross margins are higher

Copyright John Wiley & Sons 2007 Chapter 8 Consumer products (cont’d) Specialty Products Items with unique characteristics that buyers are willing to expend considerable effort to obtain –Characteristics: Pre-selected by the consumer, and no close substitutes or alternatives Available in a limited number of outlets Purchased infrequently Have high gross margins, low turnover

Copyright John Wiley & Sons 2007 Chapter 8

Copyright John Wiley & Sons 2007 Chapter 8 Consumer products (cont’d) Unsought Products Products purchased to solve a sudden problem, products of which the customers are unaware, and products that people do not necessarily think about buying –Characteristics: Speed and problem resolution are far more important than price Generally no consideration of substitutes or alternatives

Copyright John Wiley & Sons 2007 Chapter 8 Business products Business products can be classified into 7 categories according to their characteristics and intended uses — 1.Installations 2.Accessory equipment 3.Raw materials 4.Component parts 5.Process materials 6.MRO supplies 7.Business services

Copyright John Wiley & Sons 2007 Chapter 8 Product line and product mix Following concepts help describe the relationships among an organisation’s products: Product Item –A specific version of a product that can be designated as a distinct offering among an organisation’s products Product Line –A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations

Copyright John Wiley & Sons 2007 Chapter 8 Product line and product mix (cont’d) Product Mix –The composite or total group of products that an organisation makes available to customers Width of Product Mix –The number of product lines a company offers Depth of Product Mix –The average number of different products offered in each product line

Copyright John Wiley & Sons 2007 Chapter 8 Product life cycle

Copyright John Wiley & Sons 2007 Chapter 8 The product life cycle (cont’d) Introduction — the initial stage of a product’s life cycle = its first appearance in the marketplace Growth — the second stage of a product’s life cycle where sales rise rapidly and profits reach a peak and then start to decline

Copyright John Wiley & Sons 2007 Chapter 8 The introduction and growth phases of the product life cycle New Water Dial-UpBroadband

Copyright John Wiley & Sons 2007 Chapter 8 The product life cycle (cont’d) Maturity — the third stage of a product’s life cycle where the sales curve peaks and starts to decline and profits continue to fall Decline — the fourth stage of a product’s life cycle where sales fall rapidly or taper off

Copyright John Wiley & Sons 2007 Chapter 8 Product adoption process Customers who eventually accept a new product do so through an adoption process which has 5 stages: 1.Awareness 2.Interest 3.Evaluation 4.Trial 5.Adoption

Copyright John Wiley & Sons 2007 Chapter 8 Product adoption process (cont’d) Marketers should be aware that there are 5 key factors that influence the rate at which consumers adopt new products: 1.Relative advantage 2.Compatibility 3.Complexity 4.Divisibility 5.Communicability

Copyright John Wiley & Sons 2007 Chapter 8 Product adoption process (cont’d) Categories of Product Adopters: –Innovators — First adopters of new products –Early adopters — Careful choosers of new products, often opinion leaders –Early majority — Those adopting new products just prior to the average person. –Late majority — Skeptics who adopt from economic necessity or social pressure –Laggards — The last adopters

Copyright John Wiley & Sons 2007 Chapter 8 Branding Marketers must make many decisions about products, especially related to branding Brand –A name, term, design or symbol that identifies one seller’s product from those of other sellers –It may identify one item, a family of items, or all items of a seller Brand Name –The part of a brand that can be spoken –Includes words, letters, numbers

Copyright John Wiley & Sons 2007 Chapter 8 Branding (cont’d) Brand Mark –The part of a brand not made up of words –Often symbols or designs Trademark –A legal designation indicating the owner has exclusive use of a brand Trade Name –Full and legal name of an organisation

Copyright John Wiley & Sons 2007 Chapter 8 The value of branding Value of branding for consumers: –helps speed consumer purchases by identifying specific preferred products –form of self-expression and status –denotes product quality Value of branding for marketers: –Identifies and differentiates a firm’s products from competing products –Helps introduce new products –Facilitates promotion of same-brand products

Copyright John Wiley & Sons 2007 Chapter 8 Major elements of brand equity

Copyright John Wiley & Sons 2007 Chapter 8 Branding (cont’d) Brand Equity –The marketing and financial value associated with a brand’s strength in a market Brand Loyalty –A customer’s favourable attitude toward a specific brand Brand Recognition –A customer’s awareness that a brand exists and is an alternative purchase

Copyright John Wiley & Sons 2007 Chapter 8 Branding (cont’d) Brand Preference –The stronger degree of brand loyalty in which a customer prefers one brand over competitive offerings Brand Insistence –The degree of brand loyalty in which a customer strongly prefers a specific brand and will accept no substitute, and is willing to spend effort to purchase the required brand

Copyright John Wiley & Sons 2007 Chapter 8 Types of brands Manufacturer Brands –Brands initiated by producers Private Distributor Brands –Brands initiated and owned by resellers (also known as dealer brands, private brands or store brands) Generic Brands –Brands indicating only product category –Usually sold at lower prices than branded items

Copyright John Wiley & Sons 2007 Chapter 8 Selecting a brand name A brand name should: –be easy to say, spell and recall –indicate the product’s major benefits –suggest the product’s major uses and special characteristics –be distinctive, setting it apart from competing brands –be compatible with all the products in the product line

Copyright John Wiley & Sons 2007 Chapter 8 Protecting a brand The brand should be designed so that it can be protected easily Surnames and common feature names are difficult to protect Check that the name is not on the Trademarks Register Don’t allow your name to become ‘generic’ by overuse Use the symbol TM on your product and all advertising

Copyright John Wiley & Sons 2007 Chapter 8 Branding policies Individual Branding –A policy of naming each product differently Family Branding –Branding all of a firm’s products with the same name Brand-Extension Branding –Using an existing brand name for an improved or new product

Copyright John Wiley & Sons 2007 Chapter 8 Co-branding Co-branding is the use of two or more brands on one product The aim is to capitalise on the brand equity (the customer’s confidence and trust) of multiple brands Brands involved must represent a complementary fit in the minds of consumers Brands should not lose their individual identities

Copyright John Wiley & Sons 2007 Chapter 8 Packaging Packaging involves the development of a container and a graphic design for a product Packaging Functions: –Protect the product from damage –Maintain its functional form –Convenience –Prevent waste –Easy storage

Copyright John Wiley & Sons 2007 Chapter 8 Packaging and marketing strategy Altering the Package –update style, meet increased competition Secondary-Use Packaging –Reusable packaging adds customer value Category-Consistent Packaging –Packaging reflects customer expectations Innovative Packaging –Unique features Multiple Packaging Handling-Improved Packaging

Copyright John Wiley & Sons 2007 Chapter 8 Labeling Providing identifying, promotional, legal or other information on package labels Purposes of labels: –Help identify the product, display brand name and any unique graphics –Support promotional efforts for the product –Provide legally required labeling information - ANZFSC –Provide information on product origin i.e. ‘Made in Australia’

Copyright John Wiley & Sons 2007 Chapter 8 Should product labelling be part of the marketing message? What are the ethical considerations? Dial-UpBroadband

Copyright John Wiley & Sons 2007 Chapter 8