Chapter 11 Product, Branding, and Packaging Decisions PDF

Preview

Summary

Professor: Victor Piscitello...

Description

Chapter 11

MKTG 361

Book Notes

Product, Branding, and Packaging Decisions KEY TERMS Product: Anything that is of value to a consumer and can be offered through a voluntary marketing exchange Core Customer Value: The basic problem-solving benefits that consumers are seeking Actual Product: The physical attributes of a product including the brand name, features/design, quality level, and packaging Associated Services: The nonphysical attributes of the product, including product warranties, financing, product support and after-sale service Augmented Product: (SAME AS ASSOCIATED SERVICES) Consumer Products: Products and services used by people for their personal use Specialty Products/Services: Products and services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers Shopping Products/Services: Products and services for which consumers will spend time comparing alternatives such as apparel, fragrances and appliances Convenience Products/Services: Products and services for which the consumer is not willing to spend any effort to evaluate prior to purchase Unsought Products/Services: Products and services consumers either do not normally think of buying or do not know about it Product Mix: The complete set of all products offered by a firm Product Lines: Groups of associated items such as those that consumers use together or think of as part of a group of similar products Breadth: Number of product lines offered by a firm (also known as variety) Depth: Number of categories within a product line

Chapter 11

MKTG 361

Book Notes

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 Brand Awareness: Measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm’s communications to consumers Perceived Value: The relationship between a product or service’s benefits and its cost Brand Associations: The mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality Brand Loyalty: Occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buying from multiple suppliers within the same category Manufacturer Brands: Brands owned and managed by the manufacturer National Brands: (SAME AS MANUFACTURER) Retailer/Store Brands: Products developed by retailers Private-Label Brands: (SAME AS RETAILER/STORE BRANDS) Family Brand: A firm’s own corporate name used to brand its product lines and products Individual Brand: The use of individual brand names for each of a firm’s products Brand Extension: The use of the same brand name for new products being introduced to the same or new markets Line Extension: The use of the same brand name within the same product line and represents an increase in a product line’s depth Brand Dilution: Occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold Co-Branding: The practice of marketing two or more brands together on the same package or promotion Brand Licensing: A contractual arrangement between firms whereby one firm allows another to use its brand name, logo, symbols, or characters in exchange for a negotiated fee

Chapter 11

MKTG 361

Book Notes

Brand Repositioning (or Rebranding): A strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences Primary Package: The packaging the consumer uses such as the toothpaste tube from which he or she typically seeks convenience in 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; can contain additional product information that may not be available on the primary package QUIZ-YOURSELF QUESTIONS Q: One key feature of the value of a brand is that ________________. A: Q: It is almost impossible to watch a sporting event on television without seeing Nike’s “swoosh” check mark, which is Nike’s ___________. A: COMPLEXITY AND TYPES OF PRODUCTS o Product  Anything that is of value to a consumer and can be offered through a voluntary marketing exchange  Can be goods, services, places, ideas, organizations, people, or communities  Create value for consumers in their respective competitive marketing arenas o Complexity of Products  Core Customer Value  The basic problem-solving benefits that consumers are seeking  What are customers looking for?  Actual Product  Converted from the core customer value  Attributes such as the brand name, features/design, quality level, and packaging are important  But the level of their importance varies, depending on the product  Associated Services (Augmented Product)  The non-physical aspects of the product  Product warranties  Financing  Product support

Chapter 11

MKTG 361

Book Notes

 After-sale service  Varies with the product o Types of Products  Affect how markets will promote, price, and distribute their products  Two primary categories of products/services that reflect who buys them:  Consumers  Businesses  Consumers Products  Used by people for their personal use  Classified by the way they are used and how they are purchased  Four classifications:  Specialty  Shopping  Convenience  Unsought  Specialty Products/Services  Customers express strong preference for  Will expend considerable effort to search for best suppliers  Examples:  Luxury cars  Legal or medical professionals  Designer Apparel  Shopping Products/Services  Consumers will spend a fair amount of time comparing alternatives  Examples:  Furniture  Apparel  Fragrances  Appliances  Travel alternatives  Go from store to store shopping, comparing alternatives, chatting with salespeople  Convenience Products/Services  Consumer is not willing to expend any effort to evaluate prior to purchase  Frequently purchased commodity items  Usually bought with very little thought  Examples:  Common beverages  Bread  Soap  Unsought Products/Services  Consumers either do not normally think of buying or do not know about  Require lots of marketing effort and various forms of promotion  E.g. new-to-the-world products when first introduced

Chapter 11

MKTG 361

Book Notes

PRODUCT MIX AND PRODUCT LINE DECISIONS o Product Mix  The complete set of all products and services offered by a firm  Consists of various product lines  Groups of associated items that consumers tend to use together or think of as part of a group of similar products or services  Reflects the breadth and depth of company product lines  Breadth: Number of product lines  Depth: Number of products within a product line  Consequences of too much breadth:  Costly to maintain product mix  Too many brands may weaken the firm’s reputation  Must keep track of trends and developments of various industries  Uses up resources  Increase Depth  Add items to:  Address changing consumer preferences  Preempt competitors while boosting sales  Decrease Depth  Delete products within a product line to:  Realign the firm’s resources  Eliminate unprofitable or low margin items  Refocus marketing efforts on more profitable items  Eliminate alternatives that undermine the brand/diminish brand equity  Decrease Breadth  Delete entire product lines to:  Address changing market conditions  Meet internal strategic priorities o E.g. Focus on other lines  Increase Breadth  Add new product lines to:  Capture new or evolving markets  Increase sales  May be a complementary product to a firm’s existing product line  E.g. a jelly product line to complement a bread product line BRANDING o Branding  A company lives or dies on brand awareness  Consumers cannot buy products they don’t know exist

Chapter 11

MKTG 361

Book Notes

Consumer must know what products are available under a brand name Brand Elements:  Brand Names  Logos  Symbols  Characters  Slogans  Jingles  Distinctive Packages o Value of Branding for the Customer  Brands add value to merchandise and services  For both consumers and sellers  Beyond physical and functional characteristics  Brands Facilitate Purchases  Brands are often easily recognized by consumers, because they:  Signify a certain quality level  Contain familiar attributes  Brands help consumers make quick decisions  Especially about their purchases  Brands enable customers to differentiate one firm or product from another  Brands Establish Loyalty  Over time and with continued use  Consumers learn to trust certain brands  Wouldn’t consider switching  Feel a strong affinity to them  Brands Protect from Competition and Price Competition  Strong brands are somewhat protected from competition from other firms and price competition  More established in the market  Have a more loyal customer base  Competitive pressures are less threatening  Brands Are Assets  Can be legally protected though trademarks and copyrights  Constitute a unique form of ownership  Firms sometimes have to fight to ensure their brand names are not being used, directly or indirectly, by others  Brands Affect Market Value  Well-known brands can impact bottom line  When a brand loses value, it threatens other assets  Value of a brand = the earning potential of that brand over the next 12 months o Brand Equity for the Owner  Brand Equity  

Chapter 11



Book Notes

The set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service  Translated from the value of the brand  Brand are assets a firm can build, manage, and harness over time to increase its revenue, profitability, and overall value  Firms spend millions of dollars on promotion, advertising, and other marketing efforts through a brand’s life cycle  Can enhance brand equity by increasing: o Brand recognition o Awareness o Perceived value o Consumer loyalty  Four aspects of a brand to determine its equity:  Brand Awareness  Perceived Value  Brand Associations  Brand Loyalty Brand Awareness  Measures how many consumers in a market are familiar with the brand and what It stands for and have an opinion about it  The more aware or familiar consumers are = easier decision-making process  Improves the chances of purchase  Why it matters:  Familiarity matters most for products that are bought without much thought  Also critical for infrequently purchased items or those the consumer has never purchased before  If the consumer recognizes the brand, it probably has attributes that make it valuable and can help facilitate a purchase  Markets create brand awareness through repeated exposures of the various brand elements (brand name, logo, slogan, etc.) in the firm’s communications to consumers through advertising, publicity or other methods  Some brands become so predominant in a market that their brand name starts being used as the generic product category  E.g. Kleenex tissues, Band-Aid adhesive bandages  Can cause a brand to lose its trademark status  Bad for competitors because consumers never consider other options Perceived Value  The relationship between a product’s or service’s benefits and its cost  Usually determined by consumers in relationship to that of close competitors  E.g. if a consumer perceives a low quality brand to be the same quality as a premium brand, they perceive the low quality brand to be of higher value 



MKTG 361

Chapter 11 



MKTG 361

Book Notes

Brand Associations  Reflects the mental and emotional links that consumers make between a brand and its key product attributes (e.g. logo, color, slogan, famous personality, etc.)  Often result from a firm’s advertising and promotional efforts  Example associations:  Economical, a good value, stylish, environmentally friendly  Positive emotions such as fun, friendship, good feelings, family gatherings, parties, etc.  Jingles can establish strong associations when catchy Brand Loyalty  Occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category  CRM / loyalty programs  Costs less to advertise to loyal customers  Loyal customers tend to spread positive word of mouth about their favorite products to others  Insulates the firm from competition because brand-loyal customers do not switch  Lifetime Satisfaction Guarantees  Expensive to maintain  But helps achieve strong brand loyalty

BRANDING STRATEGIES o Brand Ownership  Two strategies:  Manufacturer brands  Retailer / Store brands  Brands can be marketed using a common/family name or as individual brands o Manufacturer Brands  A.K.A National Brands  Owned and managed by the manufacturer  Developed, produced, and marketed by the manufacturer  E.g. Nike, Coca-Cola, Kitchen Aid, Sony  ***The majority of brands in the U.S.  Benefits:  Retain more control over marketing strategy  Able to choose the appropriate market segments and positioning for the brand  Can build the brand and thereby create their own brand equity o Retailer / Store Brands  A.K.A Private-Label Brands  Developed by retailers  Manufactured by retailers in some cases  Contract with manufacturers in some cases

Chapter 11

MKTG 361

Book Notes

Some national brand manufacturers work with retailers to develop a special version of their standard merchandise offering to be sold exclusively by the retailer o Naming Brands and Product Lines  Family Brands  A firm uses its own corporate name to brand all product lines and products  Individual products benefit from brand awareness  Individual Brands  Individual brand names for each product  Good for when products differ greatly or have significantly different target markets o Brand and Line Extensions  Brand Extension  The use of the same brand name in a different product line  An increase in the product mix’s breadth  Line Extension  Use of the same brand name within the same product line  An increase in the product line’s depth  Advantages to using the same brand name for new products:  Spend less to develop consumer brand awareness and brand associations for the new product  Strong consumer acceptance of either the original brand or the brand extension can lead to acceptance/use of the other  When brand extensions are used for complementary products, a synergy exists between the two 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  To prevent negative consequences of brand extensions, firms should:  Evaluate the fit between the core brand and the extension  Evaluate consumer perceptions of the attributes of the core brand and seek out similar attributes for the extension  Refrain from extending the brand name to too many products and categories  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  E.g., not use the core name in the extension  Co-Branding  The practice of marketing two or more brands together on the same package, promotion, or store  Can enhance consumers’ perceptions of product quality by signaling unobservable product quality through links between the firm’s brand and a well-known quality brand  Can fail when: 

Chapter 11





MKTG 361

Book Notes

 Customers of each of the brands are vastly different  There are disputes or conflicts of interest between the co-brands Brand Licensing  A contractual agreement 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 firm that provides the right to use its brand (licensor) obtains revenues through royalty payments from the firm that has obtained the right to use the brand (licensee)  E.g. the use of characters created in books and other media  Effective way of attracting visibility for the brand  Building brand equity  Generating additional revenue  Risks:  Dilution of the licensor’s brand equity through overexposure of the brand Brand Repositioning  A.K.A Rebranding  The strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences  Costs and Risks:  Need to spend tremendous amounts of money to make tangible changes to the product and packages as well as intangible changes to the brand’s image through promotion  Costs may not be recovered if the repositioned brand and messages are not credible to consumers or if the firm has mistaken a fad for a long-term market trend

PACKAGING o Primary Package  The one the consumer uses  Consumers typically seek convenience from it in terms of storage, use and consumption  E.g. a toothpaste tube o Secondary Package  The wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners  Used by consumers to find additional product information that may not be available on the primary package  Facilitate the convenience of carrying, using, and storing the product o Packaging  Attracts the consumers’ attention  Enables products to stand out from their competitors  Offers a promotional tool

Chapter 11

MKTG 361

Book Notes

Allows for the same product to appeal to different markets with different sizes Package changes can be subtle ways of repositioning products Sustainable packaging = ecologically responsible  Recent development in packaging o Product Labeling  Labels provide information the consumer needs for his or her purchase decision and consumption of the product  Labels identify the products and brand and can be used for promotion and branding  Labels are communication tools  Highlight product benefits, etc.  Must comply with laws and regulations  E.g. regarding ingredients, where the product was made, directions for use, safety requirements, etc.  Federal Trade Commission Act of 1915  Fair Packaging and Labeling Act of 1967  Nutrition Labeling Act of 1990  Food and Drug Administration (FDA) — “watchdog”   ...