Insert Chapter Picture Here Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 1 Designed by Eric Brengle B-books, Ltd. CHAPTER 9 Product Concepts Prepared by Deborah Baker Texas Christian University Marketing Lamb, Hair, McDaniel 9

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 2 Learning Outcomes LO I LO 2 LO 3 Define the term product Classify consumer products Define the terms product item, product line, and product mix Describe marketing uses of branding LO 4

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 3 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 LO 5 LO 6 LO 7

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 4 Define the term product What Is a Product? LO I

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 5 LO I What Is a Product? Product Everything, both favorable and unfavorable, that a person receives in an exchange.  Tangible Good  Service  Idea

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 6 LO I What Is a Product? Promotion Place (Distribution) PriceProduct Product is the starting point of Marketing Mix

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 7 REVIEW LEARNING OUTCOME LO I Define the term product Product Good Service Idea Good Service Idea

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 8 Classify consumer products Types of Consumer Products LO 2

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 9 LO 2 Types of Products Business Product Business Product Consumer Product Consumer Product A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. A product bought to satisfy an individual’s personal needs or wants A product bought to satisfy an individual’s personal needs or wants

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 10 LO 2 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

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 11 LO 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

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 12 REVIEW LEARNING OUTCOME LO 2 Consumer Products

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 13 Define the terms product item, product line, and product mix Product Items, Lines, and Mixes LO 3

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 14 LO 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.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 15 LO 3 Campbell’s Product Lines and Mix

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 16 LO 3 Equivalent Quality Efficient Sales and Distribution Standardized Components Standardized Components Package Uniformity Advertising Economies Benefits of Product Lines

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 17 LO 3 Product Mix Width The number of product lines an organization offers. Product Mix Width  Diversifies risk  Capitalizes on established reputations

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 18 LO 3 Product Line Depth Product Line Depth The number of product items in a product line.  Attracts buyers with different preferences  Increases sales/profits by further market segmentation  Capitalizes on economies of scale  Evens out seasonal sales patterns Product Line Depth

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 19 LO 3 Adjustments Product Modification Product Repositioning Product Line Extension or Contraction Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 20 LO 3 Types of Product Modifications Quality Modification Functional Modification Style Modification

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 21 LO 3 Planned Obsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 22 LO 3 Repositioning Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands?

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 23 LO 3 Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 24 LO 3  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 Product Line Overextension Product Line Contraction

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 25 REVIEW LEARNING OUTCOME Product item, product line, and product mix LO 3

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 26 Describe marketing uses of branding Branding LO 4

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 27 LO 4 Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. Brand

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 28 LO 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 20 percent of the product is sold outside its home country

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 29 LO 4 Benefits of Branding Product Identification Repeat Sales New Product Sales

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 30 Biz Flix 30 LO 4 Josie and the Pussycats

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 31 LO 4 Top Five Global and North American Brands Global 1. Apple 2. Google 3. IKEA 4. Starbucks 5. Al Jazeera North American 1. Apple 2. Google 3. Target 4. Starbucks 5. Pixar SOURCE: Deborah L. Vence, “Not Taking Care of Business,” Marketing News, March 15, 2005, p. 19.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 32 LO 4 Branding Strategies BrandNo Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Individual Brand Family Brand Combi- nation

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 33 LO 4 Generic Product Generic Product A no-frills, no-brand-name, low-cost product that is simply identified by its product category. Generic Brand

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 34 LO 4 Manufacturers’ Brands Versus Private Brands 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.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 35 LO 4 Advantages of Manufacturers’ Brands  Heavy consumer ads by manufacturers  Attract new customers  Enhance dealer’s prestige  Rapid delivery, carry less inventory  If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 36 LO 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

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 37 LO 4 Individual Brand Family Brand Using different brand names for different products. Marketing several different products under the same brand name. Individual Brands Versus Family Brands

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 38 LO 4 Cobranding Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding Online

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 39 LO 4 Trademarks  Many parts of a brand and associated symbols qualify for trademark protection.  Trademark right comes from use rather than registration.  The mark has to be continuously protected.  Rights continue for as long as the mark is used.  Trademark law applies to the online world. A Trademark is the exclusive right to use a brand.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 40 REVIEW LEARNING OUTCOME Marketing Uses of Branding LO 4

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 41 Describe marketing uses of packaging and labeling Packaging LO 5

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 42 LO 5 Functions of Packaging Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling Online

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 43 LO 5 Online Labeling Persuasive  Focuses on promotional theme  Consumer information is secondary Informational  Helps make proper selections  Lowers cognitive dissonance  Includes use/care

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 44 LO 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.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 45 REVIEW LEARNING OUTCOME Packaging and Labeling LO 5

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 46 Discuss global issues in branding and packaging Global Issues in Branding and Packaging LO 6

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 47 LO 6 Global Issues in Branding Adaptations & Modifications Global Options for Branding One Brand Name Everywhere Different Brand Names in Different Markets

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 48 LO 6 Global Issues in Packaging Aesthetics Global Considerations for Packaging Climate Considerations Labeling

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 49 REVIEW LEARNING OUTCOME Global Issues in Branding and Packaging LO 6 Branding Choices: 1 name Modify or adapt 1 name Different names in different markets Packaging Considerations: Labeling Aesthetics Climate

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 50 Describe how and why product warranties are important marketing tools Product Warranties LO 7

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 51 LO 7 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. (UCC) Product Warranties

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 9 52 REVIEW LEARNING OUTCOME Product Warranties LO 7 Express warranty=written guarantee Implied warranty=unwritten guarantee