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6 Product Concepts Essentials of Marketing Lamb, Hair, McDaniel
Chapter 9 Product Concepts Product Concepts CHAPTER 9 Essentials of Marketing Lamb, Hair, McDaniel 6 Designed by Eric Brengle B-books, Ltd. Prepared by Deborah Baker Texas Christian University
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Learning Outcomes LO5 LO6 LO7 LO8
Chapter 9 Product Concepts Learning Outcomes LO5 Define the terms product item, product line, and product mix Describe marketing uses of branding Describe marketing use of packaging and labeling Describe how and why product warranties are important marketing tools LO6 LO7 LO8
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Product Items, Lines, and Mixes
Chapter 9 Product Concepts LO5 Product Items, Lines, and Mixes Define the terms product item, product line, and product mix
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Product Items, Lines, and Mixes
Chapter 9 Product Concepts LO5 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. Rarely does a company sell a single product. Instead, it sells a variety of things that may be categorized into product lines and product mixes.
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Campbell’s Product Lines and Mix
Chapter 9 Product Concepts LO5 Campbell’s Product Lines and Mix Notes: All of Campbell’s products constitute its product mix. Each product in the product mix may require a separate marketing strategy. In some cases, product lines and mixes share some marketing strategy components. Consider Nike’s theme, “Just Do It.” An example of Campbell’s product lines and product mix is shown in Exhibit 9.2. Discussion/Team Activity: Identify a few companies with extensive product lines and product mixes. Pick one and create a matrix similar to Exhibit Evaluate the marketing strategies in use.
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Benefits of Product Lines
Chapter 9 Product Concepts LO5 Benefits of Product Lines Equivalent Quality Efficient Sales and Distribution Standardized Components Package Uniformity Advertising Economies Notes: Advertising economies: economies of scale in advertising (more impact for equivalent spending). Package uniformity: packages may have a common look but maintain individual identities. Standardized components: reductions in manufacturing and inventory costs. Efficient sales and distribution: a product line enables a full range of choices to customers, and as a result, better distribution and retail coverage. Equivalent quality: all products in a line are perceived as having similar quality. Discussion/Team Activity: Discuss product lines that demonstrate the above benefits. Some ideas include: Gillette, General Motors, Procter & Gamble, Mary Kay Cosmetics
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Product Mix Width LO5 Product Mix Width Diversifies risk
Chapter 9 Product Concepts LO5 Product Mix Width Product Mix Width The number of product lines an organization offers. Diversifies risk Capitalizes on established reputations Notes: In Exhibit 9.2, Campbell’s product mix width is represented by the five product lines. Product mix width diversifies risk across many product lines rather than depend on one or two lines. Widening the mix also capitalizes on established reputations.
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Product Line Depth LO5 Product Line Depth
Chapter 9 Product Concepts LO5 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 Notes: In Exhibit 9.2, product line depth can be seen in Campbell’s product items in its soup division.
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LO5 Adjustments Adjustments to Product Items, Lines, and Mixes
Chapter 9 Product Concepts LO5 Adjustments Product Modification Product Repositioning Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes Notes: Over time, updates in technical or product developments or environmental changes warrant changes to product items, lines, and mixes. The three strategies for making these changes are: Product Modification Product Repositioning Product Line Extension or Contraction
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Types of Product Modifications
Chapter 9 Product Concepts LO5 Types of Product Modifications Quality Modification Functional Modification Style Modification Notes: Marketing managers must decide if and when to modify products. Product modification changes one or more of a product’s characteristics: Quality modification: change in a product’s dependability or durability. Functional modification: change in a product’s versatility, effectiveness, convenience, or safety. Style modification: an aesthetic product change (like color) rather than a quality or functional change. Planned obsolescence is a style modification change to make old products “obsolete” to the consumer.
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Planned Obsolescence LO5 Planned Obsolescence
Chapter 9 Product Concepts LO5 Planned Obsolescence Planned Obsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement. Discussion/Team Activity: Debate the advantages and disadvantages of the practice of planned obsolescence. What products become obsolete in a short period?
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LO5 Repositioning Why reposition established brands?
Chapter 9 Product Concepts LO5 Repositioning Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands? Notes: The second way of adjusting product items, lines, and mixes is by repositioning. Repositioning changes consumers’ perceptions of a brand. Changing demographics, declining sales, or changes in the social environment often motivate firms to reposition established brands.
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Product Line Extension
Chapter 9 Product Concepts LO5 Product Line Extension Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry. Notes: The third way of adjusting product items, lines, and mixes is by product line extensions.
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Product Line Contraction
Chapter 9 Product Concepts Product Line Contraction 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 Notes: When a firm contracts overextended product lines, the benefits that are likely include: * Resource concentration on the most important products. * No waste of resources on poorly performing products. * Greater likelihood of the success of new product items due to more financial and human resources to manage them. LO5
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REVIEW LEARNING OUTCOME Product item, product line, and product mix
Chapter 9 Product Concepts LO5 REVIEW LEARNING OUTCOME Product item, product line, and product mix
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Describe marketing uses of branding
Chapter 9 Product Concepts LO6 Branding Describe marketing uses of branding
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Chapter 9 Product Concepts
LO6 Brand Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. Notes: A product’s success depends on the target market’s ability to distinguish one product from another. Marketers use branding as the major tool in distinguishing their product from the competition. Discussion/Team Activity: Name products with strong brand recognition.
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The elements of a brand that The value of company and brand names
Chapter 9 Product Concepts LO6 Branding Brand Name Mark 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 Discussion/Team Activity: What attributes make a good brand name, based on the names of strongly recognized brands? Discuss examples of strong global brands.
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Product Identification
Chapter 9 Product Concepts LO6 Benefits of Branding Product Identification Repeat Sales New Product Sales
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Top Five Global and North American Brands
Chapter 9 Product Concepts LO6 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.
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Branding Strategies LO6 Brand No Brand Manufacturer’s Brand
Chapter 9 Product Concepts Branding Strategies LO6 Brand No Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Notes: Exhibit 9.4 diagrams the decisions made in branding. The lack of a brand name, a generic product, can be a selling point. If a brand is used, the choice is made between a manufacturers’ brand, a private brand, or both. With either a manufacturers’ brand or a private brand, a decision is made among: Individual brand—different brands for different products Family brand—common names for different products or a Combination of individual branding and family branding. Discussion/Team Activity: Name brands that fall into each of the categories shown on this slide and in Exhibit 9.4.
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Generic Brand LO6 Generic Product
Chapter 9 Product Concepts LO6 Generic Brand Generic Product A no-frills, no-brand-name, low-cost product that is simply identified by its product category.
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Manufacturers’ Brands Versus Private Brands
Chapter 9 Product Concepts LO6 Manufacturers’ Brands Versus Private Brands Manufacturers’ Brand The brand name of a manufacturer. Private Brand A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand.
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Advantages of Manufacturers’ Brands
Chapter 9 Product Concepts LO6 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
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Advantages of Private Brands
Chapter 9 Product Concepts LO6 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
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Individual Brands Versus Family Brands
Chapter 9 Product Concepts LO6 Individual Brands Versus Family Brands Individual Brand Using different brand names for different products. Family Brand Marketing several different products under the same brand name.
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Complementary Branding
Chapter 9 Product Concepts Cobranding Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding On-Line: Bose Many automobile manufacturers tout the fact that their cars include audio systems engineered by Bose. Visit the Bose Web site and search for the list of vehicles that offer Bose stereos as standard or optional equipment. What types of brands are they? How do the relationships benefit Bose? What is the payoff for the auto manufacturers? Notes: Cobranding is placing two or more brand names on a product or its package. Ingredient branding identifies the brand of a part that makes up the product. Examples: Intel in Dell computers, Coach interiors in Lincoln automobiles. Cooperative branding occurs when two brands receive equal treatment. Examples: Promotional contest sponsored by Ramada Inns, American Express, and Continental Airlines. Complementary branding refers to products advertised or marketed together to suggest usage. The benefits of cobranding include: Enhancement of prestige or value of a product and increased market presence in markets with little or no market share. Online LO4
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A Trademark is the exclusive right to use a brand.
Chapter 9 Product Concepts LO6 Trademarks A Trademark is the exclusive right to use a brand. 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. Notes: A trademark is the exclusive right to use a brand or part of a brand. Others are prohibited to use without permission. A service mark performs the same function for services. Parts of a brand or other product identification may qualify for trademark protection. Some of the best known trademarked features include the Coca-Cola bottle and the Nike “Swoosh,” the Jeep front grille, and the Levi’s pocket tag. Companies that fail to protect trademarks face the risk of product names becoming generic. This list includes aspirin, cellophane, thermos, monopoly, cola, and shredded wheat. Discussion/Team Activity: Discuss some heavily-protected product brands that are used generically in conversations. Examples might include Kleenex, Xerox, Band-Aid Brand Adhesive Bandages, etc. TM
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REVIEW LEARNING OUTCOME Marketing Uses of Branding
Chapter 9 Product Concepts LO6 REVIEW LEARNING OUTCOME Marketing Uses of Branding
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Describe marketing uses of packaging and labeling
Chapter 9 Product Concepts LO7 Packaging Describe marketing uses of packaging and labeling
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Functions of Packaging
Chapter 9 Product Concepts Functions of Packaging LO7 Contain and Protect Promote Facilitate Storage, Use, and Convenience Online Levesque Design Design 4 Packaging What does it take to design a successful package? Visit the Web sites of Levesque Design and Design 4 Packaging to find out. What is the most innovative or eye-catching package you see? Notes: Packaging serves not only the practical function of containing and protecting products as they travel through the distribution channel, but it is also a container for promoting the product and making it safer and easier to use. Facilitate Recycling Online
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Labeling LO7 Persuasive Informational Focuses on promotional theme
Chapter 9 Product Concepts LO7 Labeling Persuasive Focuses on promotional theme Consumer information is secondary Informational Helps make proper selections Lowers cognitive dissonance Includes use/care Online: Just what does the label on your snack foods have to say? What about your makeup/ go to the food and Drug Administration's Web site to read the exact requirements for labeling various products. Pick a product and report back to the class. Notes: Package labeling takes two forms: persuasive or informational. Online
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Universal Product Codes
Chapter 9 Product Concepts LO7 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. Notes: Universal product codes, often called bar codes, were first introduced in 1974. UPCs help retailers prepare records of customer purchases, control inventories, and track sales.
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REVIEW LEARNING OUTCOME Packaging and Labeling
Chapter 9 Product Concepts LO7
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Describe how and why product warranties are important marketing tools
Chapter 9 Product Concepts LO8 Describe how and why product warranties are important marketing tools
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A confirmation of the quality or performance of a good or service.
Chapter 9 Product Concepts LO8 Product Warranties Warranty Express 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)
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REVIEW LEARNING OUTCOME Product Warranties
Chapter 9 Product Concepts LO8 REVIEW LEARNING OUTCOME Product Warranties Express warranty = written guarantee Implied warranty = unwritten guarantee
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