1. Chapter 12 Category and Brand Management, Product Identification, and New-Product Development

2. 12-2 Chapter Objectives 1.Explain the benefits of category and brand management. 2.Identify the different types of brands. 3.Explain the strategic value of brand equity. 4.Discuss how companies develop strong identities for their products and brands. 5.Identify and briefly describe each of the four strategies for new-product development. 6.Describe the consumer adoption process. 7.List the stages in the process for developing new products. 8.Explain the relationship between product safety and product liability.

3. 12-3 Creating and Protecting a Strong Identity for Products Branding is the process of creating that identity. Buyers respond to branding by making repeat purchases because they identify the item with the name of its producer. Pillsbury’s Doughboy creates an identity for the brand.

4. 12-4 Managing Brands for Competitive Advantage Brand: Brand: name, term, sign, symbol, design, or some combination that identifies the products of a firm while differentiating them from the competition’s

5. 12-5 Rolex Rolex Several examples of the Rolex® brand can be seen in this advertisement

6. 12-6 Brand Loyalty Brand Loyalty Brand recognition Brand recognition: Consumer awareness and identification of a brand. Brand preference Brand preference: Consumer reliance on previous experiences with a product to choose that product again. Brand insistence Brand insistence: Consumer refusals of alternatives and extensive search for desired merchandise.

7. 12-7 Types of Brands Generic product Generic product: item characterized by plain label, with no advertising and no brand name SODA SOAP

8. 12-8 Manufacturers’ brand or National Brand Manufacturers’ brand or National Brand: brand name owned by a manufacturer or other producer Tabasco A manufacturer’s brand

9. 12-9 Private brands Private brands: brand name placed on products marketed by wholesalers and retailers Figure 12.2: Figure 12.2: Arizona private brand at JCPenney

10. 12-10 Craftsman and Kenmore: Craftsman and Kenmore: private brands at Sears

11. 12-11 Captive brands Captive brands: national brands that are sold exclusively by a retail chain Kmart Kmart’s captive brands include women’s clothing with the Jaclyn Smith Label (from TV’s Charlie’s Angels)

12. 12-12 Family brand Family brand: brand name that identifies several related products Heinz A well known family brand

13. 12-13 Figure 12.3 Figure 12.3 Products Marketed by Honda Using a Family Brand

14. 12-14 Individual brand Individual brand: unique brand name that identifies a specific offering within a firm’s product line and that is not grouped under a family brand Irish Spring Sport Colgate-Palmolive using individual branding for soaps

15. 12-15 Brand equity Brand equity: added value that a respected, well-known brand name gives to a product in the marketplace. Brand equity increases the likelihood that consumers will recognize the firm’s product when they make purchase decisions A strong brand equity can contribute to buyers’ perceptions of product quality Branding can also reinforce customer loyalty and repeat purchases

16. 12-16 Brand Equity Brand Equity The Young & Rubicam Model: Brand Asset Valuator  90,000 consumers  Four dimensions of brand personality as viewed by consumers

17. 12-17 The Role of Category and Brand Managers The Role of Category and Brand Managers Brand manager Brand manager: Marketing professional charged with planning and implementing marketing strategies and tactics for a brand Category management Category management: Product management system in which a category manager—with profit and loss responsibility—oversees a product line [sometimes within a customer].

18. 12-18 Product Identification Brand name Brand name: part of a brand consisting of words or letters that form a name that identifies and distinguishes a firm’s offering from those of its competitors Brand mark Brand mark: symbol or pictorial design that identifies a product Generic name Generic name: branded name that has become a generically descriptive term for a class of products (e.g., nylon, aspirin, kerosene, and zipper)

19. 12-19 Slinky Slinky An effective brand name

20. 12-20 Trademark Trademark: legal protection which confers the exclusive right to user brand name, trade mark, and any slogan or product name abbreviation The red disk, brand name, and distinctive bottle design are all Coca-Cola trademarks

21. 12-21 Oscar Mayer Oscar Mayer Received trademark protection for its slogan and Wienermobile.

22. 12-22 Developing Global Brand Names and Trademarks Developing Global Brand Names and Trademarks Potentially an acute problem for international marketers An excellent brand name or symbol in one country may prove disastrous in another Trademarks that are effective in their home countries may fare less well in other cultures

23. 12-23 Figure 12.6 Figure 12.6 The World’s 10 Most Valuable Brands

24. 12-24 Packaging A package serves three major objectives: Protection against damage, spoilage, and pilferage Assistance in marketing the product Cost effectiveness Labeling Label Universal Product Code (UPC)

25. 12-25 Clean Shower Clean Shower Labels performing an informational function

26. 12-26 Brand extension Brand extension: application of a popular brand name to a new product in an unrelated product category Example: Utility Lighter – A Bic Brand Extension

27. 12-27 Line extensions Line extensions refers to new sizes, styles, or related products Coca-Cola line extensions

28. 12-28 Brand licensing Brand licensing: practice allowing other companies to use a brand name in exchange for a payment Nabisco Licenses Its Oreo Brand to Post Cereal

29. 12-29 New Product Planning As a firm’s offerings enter the maturity and decline stages of the product life cycle, it must add new items to continue to prosper Alternative Product Development Strategies

30. 12-30 Product Development Strategies Product Development Strategies Product positioning: consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages in relation to those of competing brands Cannibalization: a loss of sales of the current product due to competition from a new product in the same line

31. 12-31 Good Seasons Good Seasons Promoting new ways to use a salad dressing

32. 12-32 The Consumer Adoption Process Adoption process: Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again. Awareness Interest Evaluation Trial Adoption or rejection

33. 12-33 Consumer innovator Consumer innovator: People who purchase new products almost as soon as the products reach the market Diffusion process Diffusion process: Process by which new goods or services are accepted in the marketplace

34. 12-34 Figure 12.8 Figure 12.8 Categories of Adopters Based on Relative Times of Adoption

35. 12-35 Identifying Early Adopters Identifying Early Adopters Substantial benefits may be obtained by locating the likely first buyers of new products (innovators and early adopters) Suggestions for modifying the product may be obtained from these individuals Acceptance or rejection of the innovation by innovators and early adopters can help forecast sales

36. 12-36 Rate of Adoption Determinants Rate of Adoption Determinants Characteristics of a product innovation that influence its adoption rate include:  Relative advantage – a far superior innovation  Compatibility – fits with potential adopters values and experiences  Complexity – relative difficulty of understanding the innovation  Possibility of trial use – reduce risk  Observability – ability to observe the innovation’s superiority [demonstrations]

37. 12-37 Organizing for New Product Development Organizing for New Product Development New-Product Committees New-Product Departments Product Managers Venture Teams Task forces

38. 12-38 New Product Development Process New product development process: six stages through which new product ideas progress before being introduced to the overall market

39. 12-39 Idea Generation Idea Generation New product ideas come from many sources including: Sales force, Customers, Employees, R&D specialists, The competition, Suppliers, Retailers, Independent inventors Screening Screening Screening separates ideas with commercial potential from those that cannot meet company objectives Checklists of development standards can be helpful at this stage

40. 12-40 Business Analysis Business Analysis The business analysis consists of assessing the new product’s market potential, growth rate, likely competitive strengths, and compatibility of the proposed product with organizational resources Concept testing Development Development Converting an idea into a physical product Requires interaction among many of the firm’s departments Prototypes may go through many changes

41. 12-41 Test Marketing Test Marketing Test marketing: Introduction of a trial version of a new product supported by a complete marketing campaign to a selected city of television coverage area Some firms skip this stage, moving directly to full-scale commercialization Commercialization Commercialization In this stage, the firm establishes marketing strategies, and funds outlays for production and marketing The sales force, marketing intermediaries and potential customers are acquainted with the new product

42. 12-42 End of Chapter Twelve