1. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter 12 Category and Brand Management, Product Identification, and New-Product Development

2. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 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. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-3 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. Brand: Brand: name, term, sign, symbol, design, or some combination that identifies the products of a firm while differentiating them from the competition’s Managing Brands for Competitive Advantage

4. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-4 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.

5. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-5 Types of Brands Generic product Generic product: item characterized by plain label, with no advertising and no brand name Manufacturers’ brand or National Brand Manufacturers’ brand or National Brand: brand name owned by a manufacturer or other producer Private brands Private brands: brand name placed on products marketed by wholesalers and retailers Captive brands Captive brands: national brands that are sold exclusively by a retail chain

6. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-6 Family brand Family brand: brand name that identifies several related products 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

7. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-7 Brand equity Brand equity: added value that a respected, well-known brand name gives to a product in the marketplace. Young & Rubicam Model: Brand Asset Valuator (see text)

8. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-8 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.

9. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-9 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)

10. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-10 Trademark Trademark: legal protection which confers the exclusive right to user brand name, trade mark, and any slogan or product name abbreviation

11. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-11 Trade Dress Trade Dress: visual cues used in branding to create an overall look The McDonald’s arches provide an example of trade dress Developing Global Brand Names and Trademarks Developing Global Brand Names and Trademarks An excellent brand name or symbol in one country may prove disastrous in another

12. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-12 Packaging Packaging: A package serves three major objectives: Protection against damage, spoilage, and pilferage Assistance in marketing the product Cost effectiveness Labeling Labeling Label Universal Product Code (UPC)

13. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-13 Brand extension Brand extension: application of a popular brand name to a new product in an unrelated product category Line extensions Line extensions refers to new sizes, styles, or related products

14. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-14 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

15. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-15 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 New Product Planning

16. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-16 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

17. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-17 Consumer innovator Consumer innovator: People who purchase new products almost as soon as the products reach the market Identifying Early Adopters Identifying Early Adopters Substantial benefits may be obtained by locating the likely first buyers of new products (innovators and early adopters) Diffusion process Diffusion process: Process by which new goods or services are accepted in the marketplace

18. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-18 Rate of Adoption Determinants Rate of Adoption Determinants Characteristics of a product innovation that influence its adoption rate include:  Relative advantage  Compatibility  Complexity  Possibility of trial use  Observability

19. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-19 Organizing for New Product Development Organizing for New Product Development New-Product Committees New-Product Departments Product Managers Venture Teams  Task forces

20. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-20 Idea Generation Idea Generation Sales force, Customers, Employees, R&D specialists, The competition, Suppliers, Retailers, Independent inventors Screening Screening Separates ideas with commercial potential from those that cannot meet company objectives Business Analysis 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 New Product Development Process

21. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-21 Development Development Converting an idea into a physical product 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 Commercialization Commercialization The firm establishes marketing strategies, and funds outlays for production and marketing

22. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-22 Product Safety and Liability Product Liability Product Liability: responsibility of manufacturers and marketers for injuries and damages caused by their products