1. 9 MKTG CHAPTER Lamb, Hair, McDaniel 2007-2008 Product Concepts
Chapter 9 Product Concepts
MKTG
Lamb, Hair, McDaniel 9
CHAPTER
Product Concepts
Designed by
Amy McGuire, B-books, Ltd.
Prepared by
Deborah Baker, Texas Christian University

2. Learning Outcomes LO1 LO2 LO3 LO4 Define the term product
Chapter 9 Product Concepts
Learning Outcomes
Define the term product
Classify consumer products
Define the terms product item, product line, and product mix
Describe marketing uses of branding
LO1
LO2
LO3
LO4

3. Learning Outcomes LO5 LO6 LO7 Describe marketing uses of
Chapter 9 Product Concepts
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
LO5
LO6
LO7

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

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

6. What is a Product?
A set of tangible and intangible attributes that may include packaging, color, price, quality, and brand, plus the services and reputation of the seller.
Products go from being tangible objects to pure services
Most products fall somewhere in the middle.
May include goods, services, places, persons, or ideas
Provide want-satisfaction in the form of benefits

7. Layers of Product Concept

8. Chapter 9 Product Concepts
The Core Product
Consists of all the benefits the product will provide for consumers or business customers
A customer purchases a 1/2” drill bit. What does s/he want?
A 1/2” hole!
Marketing is about supplying benefits, not products.

9. The Actual Product
Consists of the physical good or delivered service that supplies the desired benefit
Example:
A washing machine’s core product is the ability to get clothes clean, but the actual product is a large, square, metal apparatus
Actual product also includes appearance, styling, packaging, and the brand

10. The Augmented Product
Consists of the actual product plus other supporting features such as warranty, credit, delivery, installation, and repair service after the sale

11. NetFlix Example Core Product: access to movies
Actual Product: rental of DVDs
Augmented Product: rentals unlimited, 3 movies out at a time, monthly subscription fee, no late fees, no shipping fees, movie recommendation service

12. 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

13. REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts
REVIEW LEARNING OUTCOME
LO1
Define the term product
Product
Good
Service
Idea

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

15. 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

16. 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

17. 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

18. Convenience Product

19. Shopping Product

20. Specialty Products

21. Unsought Products

22. REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts
REVIEW LEARNING OUTCOME
LO2
Consumer Products

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

24. Product Items, Lines, and Mixes
Chapter 9 Product Concepts
LO3
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.

25. Campbell’s Product Lines and Mix
Chapter 9 Product Concepts
LO3 { }
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.

26. Benefits of Product Lines
Chapter 9 Product Concepts
LO3
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

27. The number of product lines an organization offers.
Product Mix Width
Chapter 9 Product Concepts
LO3
Product Mix Width
The number of product lines an organization offers.
Diversifies risk
Capitalizes on established reputations
Notes:
In Exhibit 9.1, 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.

28. Product Line Depth LO3 Product Line Depth The number of product
Chapter 9 Product Concepts
LO3
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 9.1, the product line depth of Campbell’s sauces is 4; of entrees is 3; and of frozen beverages is 3.
Product line depth gives people more options for a particular product. Think about Campbell’s depth in soup. The line is so deep that it can meet the needs and wants of people who only like brothy soup and those who only like creamy soups.

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

30. Types of Product Modifications
Chapter 9 Product Concepts
LO3
Quality Modification
Functional 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.
Style Modification

31. Planned Obsolescence LO3 Planned Obsolescence
Chapter 9 Product Concepts
LO3
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?

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

33. Product-Mix Strategies
Product mix expansion—increasing the number of product lines and/or depth within a line.
Line extension—adding a similar item to an existing product line
Brand extension—adding a new product line to the present assortment
Contraction of product mix—elimination of product lines or simplifying the selection within a product line.

34. Brand Strategy
Product mix expansion—increasing the number of product lines and/or depth within a line.
Line Extension - Existing brand names extended to new forms, sizes, and flavors of an existing product category.
Brand Extension - Existing brand names extended to new product categories.
New Brands - New brand names in new product categories.

35. Product Line Extension
Chapter 9 Product Concepts
LO3
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.

36. Product Line Extension

37. Product Mix Extensions

38. New Brands

39. Product Line Contraction
Chapter 9 Product Concepts
LO3
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.

40. REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts
REVIEW LEARNING OUTCOME
LO3
Product item, product line, and product mix

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

42. Chapter 9 Product Concepts
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.
LO4

43. 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

44. Brand Name
Brand name—consists of words, letters, and/or numbers that can be vocalized.
Michigan Business School
Brand mark—the part of the brand that appears in the form of a symbol, design, or distinctive coloring or lettering.

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

46. Chapter 9 Product Concepts
Biz Flix
Josie and the Pussycats
LO4

47. Top Five Global and North American Brands
Chapter 9 Product Concepts
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
LO4
SOURCE: Deborah L. Vence, “Not Taking Care of Business,” Marketing News, March 15, 2005, p. 19.

48. 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

49. Generic Brand LO4 Generic Product
Chapter 9 Product Concepts
Generic Brand
Generic
Product
A no-frills, no-brand-name, low-cost product that is simply identified by its product category.
LO4

50. Generic Brands

51. Manufacturers’ Brands Versus Private Brands
Chapter 9 Product Concepts
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.
LO4

52. Manufacturers’ Brands Versus Private Brands

53. 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

54. 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

55. 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

56. Individual Brands Versus Family Brands

57. 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.
LO4
Online

58. Cobranding
Ingredient Branding
Cooperative Branding

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

60. Genericized Trademarks
Escalator
Aspirin
moving staircase
Cellophane
vacuum-insulated bottles

61. REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts
REVIEW LEARNING OUTCOME
LO4
Marketing Uses of Branding

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

63. Functions of Packaging
Chapter 9 Product Concepts
Functions of Packaging
LO5
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

64. Functions of Packaging

65. Co-branding or dual branding
Ford Explorer
Eddie Bauer Edition

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

67. Universal Product Codes
Chapter 9 Product Concepts
Universal Product Codes
LO5
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.

68. REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts
REVIEW LEARNING OUTCOME
LO5
Packaging and Labeling

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

70. Global Issues in Branding
Chapter 9 Product Concepts
LO6
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.

71. Global Issues in Packaging
Chapter 9 Product Concepts
LO6
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.

72. REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts
REVIEW LEARNING OUTCOME
LO6
Global Issues in Branding and Packaging
Branding Choices:
1 name
Modify or adapt 1 name
Different names in different markets
Packaging Considerations:
Labeling
Aesthetics
Climate

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

74. 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

75. REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts
REVIEW LEARNING OUTCOME
LO7
Product Warranties
Express warranty = written guarantee
Implied warranty = unwritten guarantee