Chapter 9Copyright ©2009 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian.

Chapter 9 Copyright ©2009 Cengage Learning Inc. All rights reserved 1

MKTG

Designed byAmy McGuire, B-books, Ltd.

Prepared byDeborah Baker, Texas Christian University

Lamb, Hair, McDaniel 2008-2009

9CHAPTER 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


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



What Is a Product?What Is a Product?LO1


LO1

What Is a Product?

Everything, both favorable

and unfavorable, that a

person receives in an

exchange.

Tangible Good

Service

Idea

ProductProduct


LO1

What Is a Product?

Product is the starting point of Marketing Mix

PromotionPromotion

Place (Distribution)Place (Distribution)

PricePrice

Product Product


REVIEW LEARNING OUTCOMELO1


ProductProduct

•Good•Service•Idea

•Good•Service•Idea


Classify consumer products

Types of Consumer ProductsTypes of Consumer ProductsLO2


LO2

Types of Products

BusinessProduct

BusinessProduct

Consumer Product

Consumer Product

A product used to manufacture other goods or services, to facilitate an

organization’s operations, or to resell to other consumers.

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

A product bought to satisfy an individual’s personal needs or wants


LO2

Types of Consumer Products

UnsoughtProducts

UnsoughtProducts

SpecialtyProductsSpecialtyProducts

ShoppingProducts

ShoppingProducts

ConvenienceProducts

ConvenienceProducts

ConsumerProducts

ConsumerProducts

BusinessProductsBusinessProducts

ProductsProducts


LO2

Types of Consumer Products

MarketDevelopment

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

ConvenienceProduct

ShoppingProduct

SpecialtyProduct

UnsoughtProduct

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



Consumer Products


Define the terms product item, product line,

and product mix

Product Items, Lines, and MixesProduct Items, Lines, and MixesLO3


Product Items, Lines, and MixesLO3

Product ItemProduct Item

Product LineProduct Line

Product MixProduct Mix

A specific version of a product that can be designated as a distinct offering among an organization’s products.

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.

A group of closely-related product items.

All products that an organization sells.

All products that an organization sells.


Campbell’s Product Lines and MixLO3

{ }


Benefits of Product LinesLO3

Equivalent QualityEquivalent Quality

Efficient Sales andDistribution

Efficient Sales andDistribution

Standardized Components

Standardized Components

Package UniformityPackage Uniformity

Advertising EconomiesAdvertising Economies


Product Mix WidthLO3

The number of product lines an organization offers.

Diversifies risk Capitalizes on established

reputations

The number of product lines an organization offers.

Diversifies risk Capitalizes on established

reputations

Product MixWidth

Product MixWidth


Product Line DepthLO3

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

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

Product LineDepth

Product LineDepth


AdjustmentsLO3

Product Modification

Product Modification

ProductRepositioning

ProductRepositioning

Product LineExtension or Contraction

Product LineExtension or Contraction

Adjustments to Product Items,

Lines, and Mixes

Adjustments to Product Items,

Lines, and Mixes


Types of Product ModificationsLO3

Quality ModificationQuality Modification

Functional ModificationFunctional Modification

Style ModificationStyle Modification


Planned ObsolescenceLO3

PlannedObsolescence

The practice of modifying

products so those that have

already been sold become

obsolete before they actually

need replacement.


RepositioningLO3

Changing Demographics

Changing Demographics Declining SalesDeclining Sales

Changes in Social

Environment

Changes in Social

Environment

Why reposition Why reposition established brands?established brands?

Why reposition Why reposition established brands?established brands?


Product Line ExtensionLO3

Product Line Extension

Product Line Extension

Adding additional products to

an existing product line in

order to compete more broadly

in the industry.


Product Line ContractionLO3

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 OverextensionSymptoms of Product Line Overextension



Product item, product line, and product mix


Describe marketing uses of branding

BrandingBrandingLO4


LO4

Brand

A name, term, symbol,

design, or combination

thereof that identifies a

seller’s products and

differentiates them from

competitors’ products.

BrandBrand


LO4

Branding

Brand Name

BrandMark

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 value of company and brand names

GlobalBrand

A brand where at least 20 percent of theproduct is sold outside its home country


LO4

Benefits of Branding

Product Identification

Product Identification

Repeat SalesRepeat Sales

New Product Sales

New Product Sales


LO4B

eyond

the

Book

Product Identification = Brand Equity?

SOURCE: Mary Ellen Lloyd, “That Pottery Barn Look Isn’t So Unique Any More,” Wall Street Journal, 3/21/07 B1

When new, Pottery Barn had a unique style in the home-furnishing market. But lately, the success of the “Pottery Barn” look—slipcovered sofas and updated leather club chairs—has resulted in so much competition that Pottery Barn has lost its trend-setting status. P

RN

ew

sFo

to/C

otto

n I

nco

rpo

rate

d)

This isn’t Pottery Barn, but it sure looks like it.


Biz Flix

LO4Josie and the Pussycats


LO4

Top Ten Global Brands

Top Ten Global Brands

1. Coca-Cola U.S. 2. Microsoft U.S. 3. IBM U.S. 4. GE U.S. 5. Nokia Finland 6. Toyota J apan 7. Intel U.S. 8. McDonald's U.S. 9. Disney U.S. 10. Mercedes-Benz Germany SOURCE: David Kiley, "Best Global Brands," Business Week, August 6, 2007


LO4

Branding Strategies

Brand No Brand

Manufacturer’s Brand Private Brand

IndividualBrand

Family Brand

Combi-nation

IndividualBrand

Family Brand

Combi-nation


LO4

Generic Brand

GenericProduct

GenericProduct A no-frills, no-brand-

name,

low-cost product that is

simply identified by its

product category.


LO4

Manufacturers’ Brands VersusPrivate Brands

Manufacturers’ Brand

Private Brand

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.


LO4

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

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

Individual Brands Versus Family Brands

Individual Brand

Family Brand

Using different brand names for different products.

Marketing several different products under the same brand name.


LO4

Cobranding

IngredientBranding

IngredientBranding

Cooperative Branding

Cooperative Branding

Complementary Branding

Complementary Branding

Types of Types of CobrandingCobranding

http://www.bose.com

Online


LO4

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.



Marketing Uses of Branding


Describe marketing uses of packaging

and labeling

PackagingPackagingLO5


Functions of PackagingLO5

Contain and Protect

Promote

Facilitate Storage, Use, and Convenience

Facilitate Recyclinghttp://www.levesquedesign.com/http://www.design4packaging.com

Online


LO5B

eyond

the

Book

100 Percent Recyclable

SOURCE: Press Release, The Coca-Cola Company, Atlanta, GA, September 5, 2007

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.


LabelingLO5

Online

http://www.fda.gov

Persuasive

Focuses on promotional theme

Consumer information is secondary

Informational

Helps make proper selections

Lowers cognitive dissonance

Includes use/care


Universal Product CodesLO5

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.



Packaging and Labeling


Discuss global issues in branding

and packaging

Global Issues in Global Issues in Branding and PackagingBranding and PackagingLO6


Global Issues in BrandingLO6

Adaptations & Modifications

Adaptations & Modifications

Global Options Global Options for Brandingfor Branding

One Brand NameEverywhere

One Brand NameEverywhere

Different Brand Names in Different

Markets

Different Brand Names in Different

Markets


Global Issues in PackagingLO6

AestheticsAesthetics

Global Global Considerations Considerations for Packagingfor Packaging

Climate Considerations

Climate Considerations

LabelingLabeling



Global Issues in Branding and Packaging

Branding Choices:

1 nameModify or adapt 1 nameDifferent names in

different markets

Packaging Considerations:

LabelingAestheticsClimate


Describe how and why product

warranties are important

marketing tools

Product WarrantiesProduct WarrantiesLO7


Product Warranties

LO7

Warranty

ExpressWarranty

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)



Product Warranties

Express warranty = written guarantee

Implied warranty = unwritten guarantee

Chapter 9Copyright ©2009 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian.

Documents

product mix product

product warranties

product unknown

known product

chapter product concepts

number of product lines

number of product items

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