Chapter 1 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 10 Product Concepts © Felipe Dupouy/Stone/Getty Images 1

Define the term product Classify consumer products Define the terms product item, product line, and product mix Describe marketing uses of branding 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 Learning Outcomes

Define the term “product” What Is a Product? 4 1

Product 1 Everything, both favorable and unfavorable, that a person receives in an exchange.  Goods (tangible)  Services  Ideas 5

What Is a Product? Product is the starting point of Marketing Mix Promotion Place (Distribution) Price Product 1 6

Classify consumer products Types of Consumer Products 7 2

Types of Products Consumer Products Consumer Products Business Products Business Products A product bought to satisfy an individual’s personal wants A product bought to satisfy an individual’s personal wants A product used to manufacture other goods or services, to facilitate an organization’s operations or to resell to other customers 2 8

Types of Consumer Products Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products All Products 9 2

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 Product Specialty Product Unsought Product 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 10 2

Define the terms- Product item Product line Product mix Product Items, Lines, and Mixes 11 3

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. 12 3

Campbell’s Product Lines and Product Mix Exhibit 10.1 Campbell’s Product Lines and Product Mix 13

Benefits of Product Lines Equivalent Quality Efficient Sales and Distribution Standardized Components Standardized Components Package Uniformity Advertising Economies 14 3

Adjustments Product Modification Product Repositioning Product Line Extension or Contraction Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes 15 3

Types of Product Modifications Quality Modification Functional Modification Style Modification Planned Obsolescence: The practice of modifying products so those that have already been sold become obsolete before they actually need replacement. 16 3

Repositioning Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands? 17 3

Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry 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 Overextension 18 3

Describe marketing uses of branding Branding 19 4

Branding Brand Name Brand Mark Brand 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 a third of the earnings come from outside its home country 20 4

Benefits of Branding Product Identification Repeat Sales New Product Sales 21 4

Top Ten Global Brands © 2013 by Cengage Learning Inc. All Rights Reserved Coca-ColaU.S. 2.IBMU.S. 3.MicrosoftU.S. 4.GEU.S. 5.NokiaFinland 6.McDonald’sU.S. 7.GoogleU.S. 8.ToyotaJapan 9.IntelU.S. 10.DisneyU.S. Source: Burt Helm, "Best Global Brands," Businessweek September 28,

Branding Strategies BrandNo Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Individual Brand Family Brand Combi- nation 23 4

Branding Strategies Manufacturers’ Brand Private Brand The brand name of a manufacturer. A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand. Captive A brand manufactured by a third party for an exclusive retailer, without evidence of a that retailer’s affiliation. 24 4

Advantages of Manufacturers’ Brands  Heavy consumer ads by manufacturers  Attract new customers  Enhance dealer’s prestige  Rapid delivery, carry less inventory  If the item is bad, customer may simply switch brands and remain loyal to retailer 25 4

Source: Beth Kowitt, “Inside Trader Joe’s,” Fortune, September 6, Trader Joe’s—The Brand About 80 percent of the items offered at Trader Joe’s are private label. Trader Joe’s offers several sub-brands within the Trader Joe’s brand family, such as Trader Ming’s for Chinese food and Trader Darwin’s for vitamins. Trader Joe’s purchases directly from the manufacturer and ships directly to its distribution centers, where many of the products are portioned and packaged. © 2013 by Cengage Learning Inc. All Rights Reserved. 26 4

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 27 4

Advantages of Captive Brands No evidence of store’s affiliation Manufactured by third party Sold exclusively at the chain Can ask price similar to manufacturer’s brands 28 4

Individual Brands Versus Family Brands Individual Brand Family Brand Using different brand names for different products. Marketing several different products under the same brand name. 29 4

Co-branding Ingredient Branding Cooperative Branding Complementary Branding Types of Co- branding 30 4

Trademarks  Many parts of a brand and associated symbols qualify for trademark protection.  Trademark right comes from use rather than registration.  To renew the trademark, the company must prove use of the mark.  Rights continue for as long as the mark is used.  Trademark law applies to the online world Trademark: the exclusive right to use a brand

Describe marketing uses of packaging and labeling Packaging 32 5

Functions of Packaging Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling 33 5

Labeling Persuasive  Focuses on promotional theme  Consumer information is secondary Informational  Helps make proper selections  Lowers cognitive dissonance Greenwashing Attempting to give the impression of environmental friendliness whether or not it is environmentally friendly. 34 5

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. 35 5

Discuss global issues in branding and packaging Global Issues in Branding and Packaging 36 6

Global Issues in Branding Adaptations & Modifications Global Options for Branding One Brand Name Everywhere Different Brand Names in Different Markets 37 6

Global Issues in Branding Aesthetics Global Considerations for Packaging Labeling Climate Conditions 38 6

Describe how and why product warranties are important marketing tools Product Warranties 39 7

Product Warranties Warranty Express Warranty 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 40 7