1. 1 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Concepts 8 Canadian Adaptation prepared by Don Hill, Langara College

2. 2 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objectives 1.Define the term product 2. Classify consumer products 3. Define the terms product item, product line, and product mix 4.Describe marketing uses of branding

3. 3 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objectives (continued) 5. Describe marketing uses of packaging and labeling 6. Discuss global issues in branding and packaging 7.Describe how and why product warranties are important marketing tools

4. 4 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objective Define the term product Online www.nestle.ca 1 1 1

5. 5 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Product 1 Product Everything, both favorable and unfavorable, that a person receives in an exchange. Good Service Idea

6. 6 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 What Is a Product? Promotion Place (Distribution) PriceProduct Product is the “heart” of Marketing Mix 1

7. 7 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 What Is a Product? 1 CoreProductCoreProduct AugmentedProductAugmentedProduct The basic item offered for sale. Complete product – includes warranty, installation, delivery, etc.

8. 8 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objective Classify consumer products 2 2 2

9. 9 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Classifications BusinessProductBusinessProduct ConsumerProductConsumerProduct A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. Product bought to satisfy an individual’s personal wants Product bought to satisfy an individual’s personal wants 2

10. 10 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Types of Consumer Products Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products PRODUCTS 2

11. 11 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Types of Consumer Products Convenience Product Convenience Product Shopping Product Shopping Product Specialty Product Specialty Product Unsought Product Unsought Product 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 that consumers search extensively for and are reluctant to accept substitutes. A particular item that consumers search extensively for and are reluctant to accept substitutes. A product unknown to the potential buyer or a known product that the buyer does not actively seek. 2

12. 12 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objective Define the terms product item, product line, and product mix 3 3 3

13. 13 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 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. Online www.bombardier.com 3

14. 14 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Gillette’s Product Lines and Mix 3 Width of the product mix Depth of the product lines Blades andWriting razorsToiletriesinstrumentsLighters Mach 3 Series Paper Mate Cricket SensorAdorn Flair S.T. Dupont Trac IIToni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus

15. 15 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Benefits of Product Lines Equivalent Quality Efficient Sales and Distribution Standardized Components Standardized Components Package Uniformity Advertising Economies 3

16. 16 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Mix Width 3 The number of product lines an organization offers.  Diversifies risk  Capitalizes on established reputations

17. 17 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Line Depth 3 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

18. 18 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Adjustments Online www.unilever.ca 3 Product Modification Product Repositioning Product Line Extension or Contraction Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes

19. 19 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Types of Product Modifications Quality Modification Functional Modification Style Modification 3

20. 20 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Planned Obsolescence 3 The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.

21. 21 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Repositioning 3 Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands?

22. 22 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Line Extension 3 Adding additional products to an existing product line in order to compete more broadly in the industry.

23. 23 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Line Contraction Symptoms of Product Line 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 3

24. 24 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Line Mix 3

25. 25 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objective Describe marketing uses of branding 4 4 4

26. 26 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Brand 4 Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products.

27. 27 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Branding Brand Name Brand Name Brand Mark Brand Mark Brand Equity Brand 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 elements of a brand that cannot be spoken. The value of company and brand names. 4

28. 28 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Benefits of Branding Product Identification Repeat Sales New Product Sales Online http://www.hormel.com http://www.spam.com 4

29. 29 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 The World’s Most Valuable Brands 1.Coca-Cola 2.Microsoft 3.IBM 4.GE 5.Intel 6.Nokia 7.Disney 8.McDonald’s 9.Marlboro 10.Mercedes 4 Source: “The 100 Top Brands,” BusinessWeek, August 4, 2003, 72-78. Online www.businessweek.com

30. 30 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Branding Strategies Brand No Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Individual Brand Family Brand Combi- nation 4

31. 31 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Generic Brand 4 A no-frills, no-brand-name, low-cost product that is simply identified by its product category.

32. 32 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Manufacturers’ Brands Versus Private Brands Manufacturers’BrandManufacturers’BrandPrivateBrandPrivateBrand The brand name of a manufacturer. A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand. 4

33. 33 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Advantages of Manufacturers’ Brands 4 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

34. 34 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Advantages of Private Brands 4 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

35. 35 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Individual Brands Versus Family Brands IndividualBrandIndividualBrandFamilyBrandFamilyBrand Using different brand names for different products. Marketing several different products under the same brand name. Marketing several different products under the same brand name. 4

36. 36 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Cobranding Online www.bose.com 4 Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding

37. 37 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Trademarks  Many parts of a brand and associated symbols qualify for trademark protection  The mark has to be continuously protected  Rights continue for as long as the mark is used  Trademark law applies to the online world A Trademark is the exclusive right to use a brand 4

38. 38 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objective Describe marketing uses of packaging and labeling 5 5 5

39. 39 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Functions of Packaging Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Storage, Use, and Convenience Facilitate Recycling 5 Online www.bizlink.com/canadianpackaging.htm www.pac.ca

40. 40 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8Labeling Persuasive  Focuses on promotional theme  Consumer information is secondary Informational  Helps make proper selections  Lowers cognitive dissonance  Includes use/care 5

41. 41 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Universal Product Codes 5 A series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products.

42. 42 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Packing Example 5

43. 43 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objective Discuss global issues in branding and packaging 6 6 6

44. 44 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Global Issues in Branding Adaptations & Modifications Global Options for Branding One Brand Name Everywhere Different Brand Names in Different Markets 6 Online www.frenchconnection.com

45. 45 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Global Issues in Packaging Aesthetics Global Considerations for Packaging Climate Considerations Labeling 6 Online www.industrycanada.ca www.strategis.ic.gc.ca/sc_consu/engdoc/homepage.html

46. 46 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Learning Objective Describe how and why product warranties are important marketing tools 7 7 7

47. 47 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 8 Product Warranties Warranty Express Warranty Express Warranty 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) An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC) 7