© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9: Product, Branding, and Packaging Concepts Pride/Ferrell Foundations of Marketing Fourth Edition Prepared by Milton Pressley University of New Orleans

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Objectives 6.Recognize the types of brands and how they are selected and protected. 7.Identify two types of branding policies, and explain brand extensions, 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 o labeling and selected legal issues.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Decisions

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Is a Product? A Product Defined –A good, a service, or an idea received in an exchange –Tangible or intangible or a combination products vs services –Functional, social, and psychological utilities or benefit

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Is a Product? What is a Product? A product can be a service, and idea, goods, or a combination of these. The Houston Museum of Natural Science provides a service.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Consumer Products Product purchased to satisfy personal and family needs - Consumer product categories: Convenience products : inexpensive and frequently purchased Shopping products : buyers willing to expend considerable effort in planning and making the purchase Specialty products : possess one or more unique characteristics and buyers are willing to expend considerable effort to obtain them Unsought products : purchased when a sudden problem must be solved, customers are unaware of them and do not usually think of purchasing them

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Classifying Products Convenience Product and Shopping Product An ice cream bar is a convenience product. Hotels are shopping products.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Business Products Products bought to use in an organization’s operations, to resell, or to make other products –Installations - facilities & non-portable equipment –Accessory equipment - not part of final product –Raw materials - natural materials part of product –Component parts - finished items ready for assembly or need little processing –Process materials -used in production but not identifiable –MRO supplies -maintenance, repair, and operating items not part of final product –Services - intangible products in operations

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Classifying Products Business Product New Holland equipment is a business product designed for use by business customers.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Line and Product Mix Product item - a specific version of a product that can be designated as a distinct offering among a firm’s products Product line - a group of closely related product items viewed as a unit because of marketing, technical or end-use considerations Product mix - the total group of products that an organization makes available to customers Width of product mix - the number of product lines a company has Depth of product mix - the average number of different product items offered in each product line

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Concepts of Product Mix, Width and Depth

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Line Product Line and Product Mix This Hilton ad shows a number of Burberry’s product lines.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Discussion Question Which of these ads shows the company’s product mix? Which shows a product line?

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Four Stages of the Product Life Cycle

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Life Cycle: Introduction The initial stage of a product’s life cycle—its first appearance in the marketplace—when sales start at zero and profits are negative Risk of failure high Buyers must be made aware of: –Features –Uses –Advantages Sellers lack –Resources –Technological knowledge –Marketing know-how

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Life Cycle: Growth The stage of a product’s life cycle when sales rise rapidly and profits reach a peak and then start to decline –More competitors enter the market –Product pricing is aggressive –Brand loyalty becomes important –Gaps in market coverage are filled –Promotion expenditures moderate –Production efficiencies lower costs

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Life Cycle: Maturity The stage of a product’s life cycle when the sales curve peaks and starts to decline and profits continue to fall –Intense competition –Emphasis on improvements and differences in competitors’ products –Weaker competitors lose interest and exit the market –Advertising and dealer-oriented promotions predominate –Distribution sometimes expands to the global market Strategic objectives for maturity stage –Generate cash flow –Maintain market share –Increase share of customer

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Life Cycle: Decline The stage of a product’s life cycle when sales fall rapidly –Pruning items from the product line –Cutting promotion expenditures –Eliminating marginal distributors –Planning to phase out the product

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Life Cycle Notebook computers are in the maturity stage of the product life cycle.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Most New Products Have Their Skeptics

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Adoption Process The five stages of the product adoption process: 1.Awareness: buyer becomes aware of the product 2.Interest: the buyer seeks information and is receptive to learning about the product 3.Evaluation: the buyer considers the product’s benefits and decides whether to try it 4.Trial: the buyer examines, tests, or tries the product to determine if it meets his or her needs 5.Adoption: the buyer purchases the product and can be expected to use it again whenever the need for this general type of product arises

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Adopter Categories Innovators - first adopters of new products Early adopters - careful choosers of new products Early majority - those adopting new products just before the average person Late majority - skeptics who adopt new products when they feel it is necessary Laggards - the last adopters who distrust new products Consumers fall into one of five major categories:

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Distribution of Product Adopter Categories

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Branding Brand–A name, term, design, symbol, or other feature that identifies a seller’s products and differentiates them from competitors’ products. –Corvette, Chevrolet, General Motors Brand Name–The part of a brand that can be spoken, including letters, words, and numbers –Union 76, NBA, 49’ers Brand Mark–Part not made up of words, such as a symbol or design –Nike swoosh, Mercedes star, McDonald’s arches Trademark–legal designation of exclusive use of a brand Trade name–full legal name of organization Brand Mark The red and white target is the brand mark for Target stores.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Value of Branding To Buyers –Helps speed consumer purchases by identifying specific preferred products –Provides a form of self-expression and status –Evaluates product quality to reduce the risk of purchase To Sellers –Identifies and differentiates a firm’s products from competing products –Helps in the introduction of new products –Facilitates the promotion of all same-brand products –Fosters the development of brand loyalty

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Brand Loyalty A customer’s favorable attitude toward a specific brand. –Recognition: aware brand exists and is alternative if preferred brand unavailable –Preference: preferred over competitive offerings –Insistence: strongly preferred, no substitute

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Brand Equity

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Branding Stimulating Brand Association Geiko uses the gecko as its trade character to stimulate favorable brand associations.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Top Ten Most Valuable Brands in the World

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Most Valuable Non-Profit Brands Organization Brand Value $ Million YMCA of the USA6,394 Salvation Army4,703 United Way of America4,517 American Red Cross3.146 Goodwill Industries International2,535 Catholic Charities USA2.361 Habitat for Humanity International1,768 American Cancer Society1,360 The Arc of the United States1,224 Boys & Girls Clubs of America1,168 Source: (Accessed 9/14/2009)

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Brands Manufacturer –Brands initiated by producers –Green Giant, IBM, Levis Private Distributor –Brands initiated and owned by resellers –Sears’ Kenmore Generic –Do not include the company name or other identifying terms –Aspirin

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Protecting a Brand Brands should be designed to that it can be protected easily through registration Protecting a Brand: Companies try to protect their brands by using certain phrases and symbols in their advertisements. Note the term “brand” after Ziploc, and the use of the ® symbol

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Selecting a Brand Name The 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 products in line. –be designed for use and recognition in all types of media.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Protecting a Brand Degree of Brand Protection Through Registration –Fanciful –Arbitrary –Suggestive –Descriptive –Generic Surnames and descriptive, geographic, or functional names are also difficult to protect. Registration with the U.S. Patent and Trademark Office protects a brand for ten years with indefinite renewals.MostLeast

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Branding Policies, Extensions and Co-Branding 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 Extensions - using an existing brand to brand a new product Co-Branding - using two or more brands on one product Co-Branding Lunchables is a co-branded item consisting of Oscar Mayer and Kraft products.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Brand Licensing Brand licensing - an agreement whereby a company permits another organization to use its brand on other products for a licensing fee

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Packaging Involves the development of a container and a graphic design for a product Packaging Functions –Protect the product from damage –Offer convenience to consumers –Prevent waste and make storage easier –Promote the product by communicating its features, uses, Convenience Packaging Some companies compete by designing packages that are convenient to use.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Packaging and Marketing Strategy Altering the Package Secondary-Use Packaging Category-Consistent Packaging Innovative Packaging Multiple Packaging Handling-Improved Packaging

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Major Packaging Considerations Cost Tamper-resistant Design consistency –Family Packaging Promotional Role –Verbal and nonverbal symbols –Size, shape, texture, color, and graphics Reseller Needs Environmentally responsible RFID

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Criticisms of Packaging Not functional Safety issues Deceptive Excessive cost

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Labeling Providing identifying, promotional, or other information on package labels

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Labeling Providing identifying, promotional, legal, or other information on package labels –Help identify the product –Support promotional efforts for the product –Provide legally required labeling information –Provide information on product origin

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Perceived Quality and Value of Products Based on Country of Origin

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. After Reviewing This Chapter You Should: 1.Understand the concept of a product and how products are classified. 2.Be able to 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.Know how to describe the product adoption process. 5.Be able to explain the value of branding and the major components of brand equity.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. After Reviewing This Chapter You Should: 6.Recognize the types of brands and how they are selected and protected. 7.Be able to identify two types of branding policies, and to explain brand extensions, co-branding, and brand licensing. 8.Know the major packaging functions and design considerations and how packaging is used in marketing strategies. 9.Understand the functions o labeling and selected legal issues.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Concepts Good Service Idea Consumer products Business products Convenience products Shopping products Specialty products Unsought products Installations Accessory equipment Raw materials Component parts Process materials MRO supplies Business services Product item Product line Product mix Width of product mix Depth of product mix Product life cycle Introduction stage Growth stage Maturity stage Decline stage Product adoption process Innovators Early adopters Early majority Late majority Laggards

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Concepts (cont’d) Brand Brand name Brand mark Trademark Trade name Brand equity Brand loyalty Brand recognition Brand preference Brand insistence