Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Total Product Concept 1 A product is a combination of tangible and intangible benefits. The product is a “package of benefits” that includes the physical item, brand name, service guarantee, and image presented via the package and advertising.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Product Mix 2 The product mix includes items and product lines that a firm tries to market.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Product Item A unique product offered for sale; the product has a USP. (unique selling point) Dove soap has built its success around one fundamental unique selling point Gentleness

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Product Line A grouping of product items that share major attributes but may differ in size, form or flavor or other characteristics. Cheerios was once a standalone product in a few different package sizes. Now cheerios offers several varities…including Frosted cheerios, Honey nut cheerios, multi grain cheerios etc.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Product Mix: Width and Depth 5 Width Depth Number of product lines in the mix. Number of items in the product line. All items and lines collectively form a firm’s product mix

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Product Mix: Width and Depth Colgate- Palmolive markets product in many categories…. Oral care Household care Fabric care Pet Nutrition Within each category there is a product line width and depth

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Product Mix: Width and Depth The personal care category Width is described by various brands: Irish Spring Palmolive Soft soap

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Width and Depth Within the Irish spring line depth is described by scent: Irish spring original Irish spring Aloe Irish spring Sport

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Product Classifications 9 Consumer Goods Goods and services purchased by consumers for personal use. Industrial (Business) Goods Goods and services purchased by businesses, institutions and governments that are used directly or indirectly in the production of other goods and services.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Consumer Goods 10 Consumer goods can be subdivided further based on factors such as time spent making a buying decision and the price of the item.  Convenience Goods  Shopping Goods  Specialty Goods

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Convenience Goods 11 Kellogg’s Cereals Kleenex Facial Tissues Maxwell House Coffee Kraft Peanut Butter Dove Soap Ruffles Potato Chips McCain’s Crescendo Pizza Make sure product has an attractive. Eye-catching package and readily available Key Marketing Considerations Brand Name Image Reputation USP Price Availability

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Shopping Goods 12 More time is spent on the decision; people shop around and compare items. Apple iPod Blackberry Maytag Appliances Guess Jeans Seiko Watch Key Marketing Considerations Quality Price Style Suitability Dependability Service Buying behaviour is more rational.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Specialty Goods 13 Goods that possess unique characteristics that a customer will make an effort to find. Typically, but not always, these goods tend to be expensive and not readily available, unlike less expensive competitors. Key Marketing Considerations Superior Quality Image Reputation Location

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Industrial (Business) Goods 14 These goods are classified by the function the good has in the production of another good.  Capital Items  Parts and Materials  Supplies and Services

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Capital Items 15 Expensive goods with a long life span.  Installations include buildings, production equipment and computer systems.  Accessory equipment are items that facilitate an organization’s operations such as computers, copiers, tools and furnishings. Buying committees and buying centres play a role in decision.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Parts and Materials 16 Less expensive goods that enter the buyer’s production process.  Raw materials: Crude oil, wheat, fruits vegetables milk  Processed materials; Nylon, synthetic fyber  Component parts: The tire,  dashboards, seat etc. Supply chain management practices influence purchase decisions; product availability on a sustained basis is critical for the marketing organization.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Supplies and Services 17 Goods that do not enter production but facilitate other operations of an organization. Supplies are routinely purchased standardized products. Services are intangible offerings required too operate a business (e.g., consulting services, gardening services). Established order routine specifications are usually followed.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Branding Strategies 18 A branding strategy involves decisions in unique yet closely related product areas. Brand name and logo Design of package including label information Design of the product itself if a durable good

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada A Brand Defined 19 “An identifying mark, symbol, words, or combination of same that separates one company’s product from another.” A brand’s key components include: Brand Name Brandmark or Logo Trademark Coca-Cola, the stylized font, and the shape of the bottle are registered trademarks of the Coca-Cola Company.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Brand Name Strategy 20 National brands (brands owned by private and publically-owned companies) have several brand name options: Individual Brands – each product has a brand name.. P&G.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Multibrands different brand names for similar products in the same product category Unilever Canada makes and markets tea under variety of brands– Red rose, Slada and Lipton tea

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Family Brand including the company name or major product family name in the brand name Heinz, Campbell’s

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Co-Branding 23 Using the equity of one brand name to market another branded product. 1.Nestle ice cream includes brand names such as Rolo and Coffee Crisp (popular brands in another Nestle category). 2.Two restaurants such as Swiss Chalet and Harvey’s share facilities to attract customers they have in common.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Private Label Brands Pearson Education Canada Inc.24 Brands produced by a manufacturer that meet precise specifications established by the retail distributor. Sears Kenmore Craftsman Die Hard Loblaws PC or President’s Choice Safeway Lucerne Empress

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Licensed Brands 25 Another organization is granted permission to use an organization’s brand name or symbol in return for a royalty. 1.Professional sports leagues like the NHL, NFL and NBA actively market the rights of their trademarks to clothing companies. 2.NASCAR licenses its brand out to private companies. NASCAR branded goods net $2 billion in sales annually.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Cult Brands 26 Unique brands that capture the imagination of a small group of devotees (initially) who in turn spread the word about the brand.  Apple: I-pod  Harley-Davidson  Miata (MX-5)  Starbucks Miata owners are so emotionally- connected to their car that they wave to each other on the road. Harley-Davidson has a 1-million member strong Harley Owners Group (HOGs).

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Packaging and Labeling Strategies 27 In a crowded retail environment a package must capture attention in the blink of an eye. Influences like colour and shape are important. 80% of purchase decisions at a supermarket are made in the store, and 60% of those are made on impulse. 1.Coca-Cola is red; Pepsi-Cola is blue. 2.Molson “Cold Shots” are sold in a slim silver can. The can helps differentiate the brand from other brands.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Packaging Strategies 28 The objective of a design is always to breakthrough the clutter—shelf clutter. Designers recommend several tips: 1.A brand should own a colour. 2.The colour should stand out in the product category. 3.Offer a unique shape. 4.Consider white space.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Components of a Package 29 Primary package Secondary package Label Shipping Carton

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Functions of a Package 30 Communications with customers start and end with the package. A good package: Protects the product Markets the product Provides convenience Meets social concerns Design elements must blend together to make a positive impression.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Brand Design of Durables 31 The design of the product is the package. Brand design….everything starts and ends with the brand.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Brand Design 32 Brand design is about building the brand experience into the product or service. 1.Apple’s iPod was an overwhelming success due to its sleek and sexy design. 2.The bold new design of the Chrysler 300 was an instant hit with the hip-hop crowd and middle-aged men (contrasting targets to say the least). 3.Technology is a key influencer of design. Sleek flat screen TVs have replaced square box TVs.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Brand Design Process 33 The brand design process has four stages: 1.Imagination 2.Innovation 3.Operationalization 4.Renovation Mazda’ brand design experience is captured as follows: “the spirit of a sports car (Miata MX5) is built into every car we make.”

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Brand Loyalty 34 “The degree of attachment a customer has to a particular brand.” Brand Recognition Brand Preference Brand Insistence

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Brand Equity 35 “The value a consumer derives from a brand over and above the value derived from the physical attributes.” Equity is the result of good marketing and is measured by four variables: 1.Name awareness 2.Loyal customer base 3.Perceived quality 4.Association with a certain attribute

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Leading Canadian Brands 36 In terms of brand equity Canada’s top four brands are:  RBC Financial  Cirque de Soleil  Roots  Toronto Maple Leafs Apologies to non-Leaf fans. On a global scale the undisputed leader is Coca-Cola.

Chapter 8: Product Strategy Copyright © 2010 Pearson Education Canada Benefits of Branding 37 Good brand design: 1.Effectively communicates the differential advantage (USP) and highlights the distinctive value added. 2.Enables the marketer to create and develop an image for the brand. 3.Encourages brand loyalty by building a trusting relationship with the consumer—the brand name is a “stamp of quality.”