For use only with Perreault and McCarthy texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin CHAPTER NINE Elements of Product Planning for Goods and Services

1. Understand what “Product” really means. 2. Know the key differences between goods and services. 3. Know the differences among the various consumer and business product classes. 4. Understand how the product classes can help a marketing manager plan marketing strategies. 5. Understand what branding is and how to use it in strategy planning. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin When we finish this lecture you should

6. Understand the importance of packaging in strategy planning. 7. Understand the role of warranties in strategy planning. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin When we finish this lecture you should

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Product Area Involves Many Strategy Decisions Exhibit 9-1

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Quality and Customer Needs +

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Relative Quality +

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Goods and/or Services Are the Product Exhibit 9-2

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Differences in Goods and Services +

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Exercise: Attribute Ratings

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Whole Product Lines Must Be Developed Too +

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Assortment, Product Line or Individual Product?

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Classes Help Plan Marketing Strategy Consumer ProductsBusiness Products

Homogeneous Shopping Products Heterogeneous Shopping Products Shopping Products Homogeneous Shopping Products Heterogeneous Shopping Products Shopping Products Specialty Products Convenience Products Impulse Products Emergency Products Staples New Unsought Products Regular Unsought Products Unsought Products Convenience Products Impulse Products Emergency Products Specialty Products Staples © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumer Product Classes

One Product May Be Seen Several Ways © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Inelastic Industry Demand Derived Demand Business Products Are Different © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Tax Treatments Differ

Business Product Classes – How They Are Defined © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin MRO Supplies Component Parts & Materials Raw Materials Accessories Installations Professional Services Business Product Classes Business Product Classes

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Exercise: Business Product Classes

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Branding Needs a Strategy Decision, Too Exhibit 9-5

Conditions Favorable to Branding © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Economies of Scale Market Price Can Be High Enough Dependable, Widespread Availability Best Value for the Price Easy to Identify Easy to Identify Easy to Label and Identify Easy to Label and Identify Favorable Shelf or Display Space Key Issues Key Issues

Brand Rejection Brand Non- Recognition Brand Recognition Brand Preference Achieving Brand Familiarity Is Not Easy © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Brand Insistence

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Brand Familiarity +

Short & Simple Easy to Spell & Read Easy to Recognize & Remember Easy to Pronounce Can Pronounce in Only One Way Can Pronounce in All Languages Suggests Product Benefits Meets Packaging/Labeling Needs No Undesirable Imagery Always Timely Adapts to Any Advertising Medium Legally Available for Use © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Right Brand Name Can Help

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A Good Brand Name?

You Must Protect Your Own Lanham Act Counterfeiting Is Accepted In Some Cultures Protecting Brand Names & Trademarks © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Individual Brand Individual Brand Individual Brand Individual Brand Licensed Brand Licensed Brand Licensed Brand Licensed Brand Family Brand Brand Choices Family Brand What Kind of Brand to Use? © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Generic “Brand” Generic “Brand”

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Battle of the Brands Manufacturer Brands Manufacturer Brands Also called national brands Created/owned by producers Develop demand across many markets Dealer Brands Also called private brands or store brands Created/owned by middlemen Create higher margins for dealers Who Should Do the Branding?

Packaging Can Lower Distribution Costs Packaging Can Lower Distribution Costs Packaging Can Lower Distribution Costs Packaging Can Lower Distribution Costs Packaging Sends a Message Packaging Sends a Message Packaging Sends a Message Packaging Sends a Message Packaging Can Enhance the Product Packaging Can Enhance the Product Packaging Can Enhance the Product Packaging Can Enhance the Product © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Strategic Importance of Packaging UPC Codes Speed Handling UPC Codes Speed Handling

Laws Reduce Confusion & Clutter Ethical Issues Remain Unit Pricing May Help © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin What Is Socially Responsible Packaging?

May Improve Marketing Mix Promises in Writing Promises in Writing Service Guarantees Promises in Writing Promises in Writing Service Guarantees May Improve Marketing Mix Magnuson- Moss Act Support May Be Costly © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Warranty Policies Are a Part of Strategy Planning

Product Quality Service Product assortment Product line Individual product Consumer products Business products Convenience products Staples Impulse products © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Terms Emergency products Shopping products Homogeneous shopping products Heterogeneous shopping products Specialty products Unsought products New unsought products Regularly unsought products Derived demand

Expense item Capital item Installations Accessories Raw materials Farm products Natural products Components Supplies Professional services Branding © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Terms Brand name Trademark Service mark Brand familiarity Brand rejection Brand nonrecognition Brand recognition Brand preference Brand insistence Brand equity Lanham Act

Family brand Licensed brand Individual brands Generic products Manufacturer brands Dealer brands Private brands Battle of the brands Packaging Universal Product Code (UPC) © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Terms Federal Fair Packaging and Labeling Act Unit-pricing Warranty Magnuson-Moss Act