1. CHAPTER 10 Product Concepts
Lamb, Hair, McDaniel
Chapter 9 Product Concepts
CHAPTER 10
Product Concepts
Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.

2. Learning Outcomes LO 1 Define the term product
Chapter 9 Product Concepts
Learning Outcomes
LO 1 Define the term product
LO 2 Classify consumer products
LO 3 Define the terms product item, product line, and product mix
LO 4 Describe marketing uses of branding

3. Chapter 9 Product Concepts
Learning Outcomes
LO 5 Describe marketing uses of packaging and labeling
LO 6 Discuss global issues in branding and packaging
LO 7 Describe how and why product warranties are important marketing tools

4. Define the term product
Chapter 9 Product Concepts
What Is a Product?
Define the term product
LO1

5. What Is a Product? LO1 Product
Chapter 9 Product Concepts
What Is a Product?
Product
Everything, both favorable and unfavorable, that a person receives in an exchange.
Tangible Good
Service
Idea
LO1

6. Product is the starting point of Marketing Mix
Chapter 9 Product Concepts
What Is a Product?
Product is the starting point of Marketing Mix
Promotion
Place (Distribution)
Price
Product
Notes:
The product offering is the heart of an organization’s marketing program. Price, distribution, and promotion strategies can not be determined until the firm has a product to sell.
A product is everything, both favorable and unfavorable, that a person receives in an exchange.
Well-conceived price, distribution, and promotion strategies have little value without a strong product offering.
LO1

7. Types of Consumer Products
Chapter 9 Product Concepts
Types of Consumer Products
Classify consumer products
LO2

8. A product bought to satisfy an individual’s personal needs or wants
Chapter 9 Product Concepts
Types of Products
Business
Product
Consumer
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
Notes:
Products can be classified as either business or consumer products. The classification as a business or consumer product depends on the buyer’s intentions.
LO2

9. Types of Consumer Products
Chapter 9 Product Concepts
Types of Consumer Products
Unsought
Products
Specialty
Shopping
Convenience
Consumer
Business
Notes:
Chapter 6 described seven categories of business products: (have students name these) major equipment, accessory equipment, component parts, processed materials, raw materials, supplies, and services.
Consumer products are classified into four types: convenience products, shopping products, specialty products, and unsought products. This approach organizes products by the effort used to shop for them.
LO2

10. Types of Consumer Products
Chapter 9 Product Concepts
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
Specialty
Unsought
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
Discussion/Team Activity:
Name products and services that fall into each of the consumer product categories:
Convenience: candy, soft drinks, deodorant, aspirin, hardware, dry cleaning.
Shopping: Homogeneous shopping products such as washers, dryers, televisions. Decisions are based on the lowest-priced brand with the desired features. Heterogeneous shopping products are essentially different, for example furniture, clothing, housing, universities. Decisions are highly-individual and based on “finding the best product for me.”
Specialty: fine watches, expensive automobiles, gourmet restaurants.
Unsought: new products, insurance, burial plots, encyclopedias.
LO2

11. Product Items, Lines, and Mixes
Chapter 9 Product Concepts
Product Items, Lines, and Mixes
Define the terms product item, product line,
and product mix
LO3

12. Product Items, Lines, and Mixes
Chapter 9 Product Concepts
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.
Notes:
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.
LO3

13. Campbell’s Product Lines and Mix
Chapter 9 Product Concepts
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 9.1.
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.
LO3

14. Benefits of Product Lines
Chapter 9 Product Concepts
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
LO3

15. Adjustments LO3 Adjustments to Product Items, Lines, and Mixes
Chapter 9 Product Concepts
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
LO3

16. Types of Product Modifications
Chapter 9 Product Concepts
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.
Planned Obsolescence: The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.
LO3

17. Repositioning LO3 Why reposition established brands?
Chapter 9 Product Concepts
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.
LO3

18. Product Line Extension
Chapter 9 Product Concepts
Adding additional products to an existing product line in order to compete more broadly in the industry.
Symptoms of Overextension
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
Notes:
The third way of adjusting product items, lines, and mixes is by product line extensions, such as Coke’s seemingly endless line of diet colas, such as Diet Coke, Diet Coke with Splenda, Diet Coke with Lemon, Diet Vanilla Coke, Coke Light, Coke Zero, etc.
A product’s line can also be extended by another industry. For example, a secondary industry to Nintendo’s new game console, Wii, has grown around one of the games’ most popular features—the Mii. The Mii lets users create their own on-screen game characters for certain games. One Tokyo entrepreneur has built a Web-based service, miistation.com, which will create look-alike characters for users based on a photograph. Other businesses create sculptures based on Mii characters or clothing with individual’s Miis printed on them.
LO3

19. Describe marketing uses of branding
Chapter 9 Product Concepts
Branding
Describe marketing uses of branding
LO4

20. The elements of a brand that The value of company and brand names
Chapter 9 Product Concepts
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.
LO4

21. Product Identification
Chapter 9 Product Concepts
Benefits of Branding
Product Identification
Repeat Sales
New Product Sales
LO4

22. Top Ten Global Brands LO4 1. Coca-Cola U.S. 2. IBM 3. Microsoft 4. GE
Chapter 9 Product Concepts 1.
Coca-Cola
U.S. 2.
IBM 3.
Microsoft 4. GE 5.
Nokia
Finland 6.
McDonald’s 7.
Google 8.
Toyota
Japan 9.
Intel
10.
Disney
Source: Burt Helm, "Best Global Brands," BusinessWeek September 28, 2009
LO4

23. Branding Strategies LO4 Brand No Brand Manufacturer’s Brand
Chapter 9 Product Concepts
Branding Strategies
Brand
No Brand
Manufacturer’s Brand
Private Brand
Individual Brand
Family Brand
Combi- nation
Notes:
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.
LO4

24. The brand name of a manufacturer.
Branding Strategies
Chapter 9 Product Concepts
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.
Captive
A brand manufactured by a third
party for exclusive retailer,
without evidence of a that
retailer’s affiliation
LO4

25. Advantages of Manufacturers’ Brands
Chapter 9 Product Concepts
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
LO4

26. Advantages of Private Brands
Chapter 9 Product Concepts
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
LO4

27. Advantages of Captive Brands
No evidence of store’s affiliation
Sold exclusively at the chain
Can ask price similar to manufacturer’s brands
LO4

28. Individual Brands Versus Family Brands
Chapter 9 Product Concepts
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.
LO4

29. 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

30. A Trademark is the exclusive right to use a brand.
Trademarks
Chapter 9 Product Concepts
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.
LO4

31. Marketing Uses of Branding
Chapter 9 Product Concepts
Marketing Uses of Branding
LO4

32. Describe marketing uses of packaging and labeling
Chapter 9 Product Concepts
Packaging
Describe marketing uses of packaging and labeling
LO5

33. Functions of Packaging
Chapter 9 Product Concepts
Functions of Packaging
Contain and Protect
Promote
Facilitate Storage, Use,
and Convenience
Facilitate Recycling
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.
Online
LO5

34. Packaging Innovations
Packages tend to have the same shapes and sizes
Easy consumer comparison
Innovations for ease of use can be a competitive advantage
Collection of some great innovations in 2009:
Great packaging does not make up for an unsatisfactory product
LO5

35. Beyond the Book 100 Percent Recyclable LO5
Chapter 9 Product Concepts
100 Percent Recyclable
Coca-Cola is building the largest recycling plant in the world. The plant will produce 100 million pounds of food-grade recycled plastic for reuse each year. That’s enough plastic to produce two billion 20-ounce Coke bottles.
Coca-Cola’s goal is to recycle or reuse 100 percent of the company’s plastic bottles in the U.S. market. By meeting that goal over the next ten years, the Coca-Cola recycling plant will eliminate the production of one million metric tons of CO2 emissions—the equivalent of removing 215,000 cars from American highways.
Beyond the Book
Notes:
SOURCE: Press Release, The Coca-Cola Company, Atlanta, GA, September 5, 2007
LO5

36. Labeling LO5 Persuasive Informational Focuses on promotional theme
Chapter 9 Product Concepts
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
LO5

37. Universal Product Codes
Chapter 9 Product Concepts
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.
LO5

38. Global Issues in Branding and Packaging
Chapter 9 Product Concepts
Global Issues in Branding and Packaging
Discuss global
issues in branding and packaging
LO6

39. Global Issues in Branding
Chapter 9 Product Concepts
Global Issues in Branding
Adaptations & Modifications
Global Options for Branding
One Brand Name Everywhere
Different Brand Names in Different Markets
Notes:
When entering a foreign market with an existing product a firm has three options for handling the brand name:
One brand name everywhere. Coca-Cola uses this strategy in 195 countries around the world. This strategy allows greater recognition of the product and easier promotional coordination from market to market.
Adaptations and modifications are used when the name cannot be pronounced or interpreted successfully in a different language.
Different brand names for different markets: Local brand names are used when translation or pronunciation problems occur, when the marketer wants the brand to appear to be a local brand, or when regulations require localization.
LO6

40. Global Issues in Packaging
Chapter 9 Product Concepts
Global Issues in Packaging
Aesthetics
Global Considerations for Packaging
Climate Considerations
Labeling
Notes:
Labeling concern is translation of ingredient, promotional, and instructional information on labels.
Package aesthetics are important from a cultural perspective. For example, colors may have different and often negative connotations. Package size is influenced by availability of refrigeration, amount of storage space, and even the purchasing power of buyers. On the other hand, simple visual elements of the brand, such as a logo or symbol, can be a standardizing element across products and countries.
Extreme climates and long-distance shipping necessitate sturdier packages. Packages may need a longer shelf life.
LO6

41. Global Package designs
2009 European Design Awards
Creative global packaging
Some of the winners
Blog highlighting interesting global packaging
LO6

42. and why product warranties are important
Chapter 9 Product Concepts
Product Warranties
Describe how
and why product warranties are important
marketing tools
LO7

43. A confirmation of the quality or performance of a good or service.
Chapter 9 Product Concepts
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)
LO7