Marketing Principles Chapter 10: Product, Branding, and Packaging Decisions Product: anything that is of value to a consumer and

d can be offered through a voluntary marketing exchange COMPLEXITY OF PRODUCTS AND TYPES OF PRODUCTS Core customer value: defines the basic problem-solving benefits that consumers are seeking o Marketers convert core customer value into an actual product o Actual product includes (brand name, quality level, packaging, and features/design) Associated services (augmented product): include the nonphysical aspects of the product, such as product warranty, financing, and product support TYPES OF PRODUCTS Consumer products: products and services used by people for their personal use PRODUCT MIX AND PRODUCT LINE DECISIONS Product mix: complete set of all products offered by a firm o Reflects the breadth and depth of the companys lines Product lines: groups of associated items that consumers tend to use together or think of as part of a group of similar products Breadth: a count of the number of product lines offered by the firm Depth: equals the number of products within a product line Firms expand breadth when it is relatively easy to enter a specific market (entry barriers are low) and/ or when there is a substantial market opportunity CHANGE PRODCUT MIX BREADTH Increase breadth: o To capture new or evolving markets and increase sales Decrease breadth: o Sometime necessary to delete entire product lines to address changing market conditions or meet internal strategic policies CHANGE A PRODUCT LINES DEPTH Increase depth o Might add items to address changing consumer preferences or preempt competitors while boosting sales Decrease depth: o Necessary to realign the firms resources o Eliminate unprofitable or low margin items and refocus their marketing efforts on their profitable items PRODUCT LINE DECISIONG FOR SERVICES Many of the strategies used to make product line decisions for physical products can also be applied to services BRANDING

Brand awareness Differentiate its product offerings from those of its competitors Brand name: the spoken component of branding, it can describe the product or service/product characteristics and/or be composed of words invented or derived from colloquial or contemporary language URLs Logos and symbols Characters Slogans Jingles/sounds VALUE OF BRANDING FOR THE CUSTOMER AND THE MARKETER Brands facilitate purchases Brands establish loyalty Brands protect from competition and price competition o Well established in the market and have a more loyal customer base Brands can reduce marketing costs o Brands sell itself Starbucks Brands are assets o Assets that can legally be protected through trademarks and copyrights and thus constitute a unique form of ownership Brands impact market value o The value of the brand, just one of these assets, refers to the earning potential of the brand over the next 12 months BRAND EQUITY The set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service o Marketing expenditures can result in greater brand recognition, awareness, and consumer loyalty for the brand, enhancing brand equity Licensed brand: one for which there is a contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee Brand awareness: measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about that brand Perceived value: the relationship between a product or services benefits and its cost o Customers usually determine the offerings value in relationship to that of its close competitors o In highly competitive markets for finite consumer dollars, the perceived value of a brand also can mean the difference between life and death for a company Green products: ecologically safer products o Little more costly, but consumers are willing to pay Many customers tend to associate higher prices with higher quality, but they also have become more informed and perceptive in recent years

Brand association: reflect the mental links that consumers make between a brand and its key product attributes, such as logo, slogan, or famous personality o Toyota known to be economical; BMW associated with performance Brand personality: refers to such a set of human characteristics associated with a brand, which has symbolic or self-expressive meanings for consumers Brand loyalty: consumers buy the same brands product or service repeatedly over time rather than buy from multiple suppliers within the same category o 1) such consumers are often less sensitive to price. In return, firms sometimes reward loyal consumers through loyalty or customer relationship management (CRM) programs, such as points customers can redeem for extra discounts or free services, advance notice of sale items, and invitations to special events sponsored by the company. o 2) the marketing costs or reaching loyal consumers are much lower because the firm does not have to spend money on advertising and promotion campaigns to attract these customers o 3) loyal customers tend to praise the virtues of their favorite products, retailers, or services to others o 4) high level of brand loyalty insulates the firm from competition b/c brand loyalty customers do not switch to competitors brands, even when provided with a variety of incentives

BRANDING STRATEGIES BRAND OWNERSHIP manufacturing brands (national brands): owned and managed by the manufacturer o manufacturer develop the merchandise, produces it to ensure consistent quality, and invests in a marketing program to establish an appealing brand image o by owning their brand, manufacturers retain more control over their marketing strategies, are able to choose the appropriate market segments and positioning for the brand, and can build the brand and thereby create their own brand equity private-label brands (store brands, house brands, or own brands): products developed by retailers o retailers develop the design and specifications for their private-label products and then contract with manufacturers work to produce those products o premium brands: offer the consumer a private label that is comparable to, or even superior to, a manufacturers brand equity, sometimes with modest price savings.

o Generic brands: target a price-sensitive segment by offering a nofrills product at a discount price. o Copycat brands: imitate the manufacturers brand in appearance and packaging, generally are perceived as lower quality, and are offered at lower prices Drugstores o Exclusive co-brands: a brand that is developed by a national brand manufacturer, often in conjunction with a retailer, and is sold exclusively by the retailer NAMING BRANDS AND PRODUCT LINES The more the products vary in their usage or performance, the more likely it is that the firm should use individual brands Family brands: the individual brands benefit from the overall brand awareness associated with the family name o Firm uses its own corporate name to brand all its product lines and products Individual brands Brand extensions: refers to the use of the same brand name in a different product line o Increase in the product mixs breadth Line extension: the use of the same brand name within the same product line, and represents an increase in a product lines depth o Advantages: 1. the brand name is already well established, the firm can spend less in developing consumer brand awareness and brand associations for the new product 2. if either the original brand or the brand extension has strong consumer acceptance, that perception will carry over to the other product 3. when brand extensions are used for complimentary products, a synergy exists between the two products that can increase overall sales brand dilution: occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold o marketers should evaluate the fit between the product class of the core brand and that of the extension. If the fit between the product categories is high, consumers will consider the extension credible, and the brand association will be stronger for the extension o brand-specific associations are very important for extensions o firms should refrain from extending the brand name to too many products and categories to avoid diluting the brand and damaging brand equity

o firms should consider whether the brand extension will be distanced from the core brand, especially if the firm wants to use some but not all of the existing brand associations CO-BRANDING the practice of marketing two or more brands together, on the same package, promotion, or store designed to appeal to diverse market segments and to extend the hours in which each restaurant attracts customers fails when customers are vastly different BRAND LICENSING a contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee common for toys, apparel, accessories, and entertainment products the use of characters created in books and other media an effective form of attracting visibility for the brand and thereby building brand equity while also generating additional revenue o for the licensor, the major risk is the dilution of its brand equity through overexposure of the brand, especially if the brand name and characters are used inappropriately o may turn out to be improperly valued if either the licensor or the licensees market value change BRAND REPOSITIONING aka rebranding: refers to a strategy in which marketers change a brands focus to target new markets or realign the brands core emphasis with changing market preferences firms often need to spend tremendous amounts of money to make tangible changes to the product and packages, as well as intangible changes to the brands image through advertising o these costs may not be recovered if the repositioned brand and messages are not credible to the consumer or if the firm has mistaken a fad for a long-term market trend PACKAGING primary package: the one the consumer uses o customer seeks convenience if terms of storage, use, and consumption secondary package: the wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners wrap rage- a great frustration with packaging that makes it almost impossible to get at the actual products PRODUCT LABELING the information required on labels must comply with general and industryspecific laws and regulations, including the constituents or ingredients it is a communication tool