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Chapter 9 Version 6e 1©2002 South-Western
chapterProduct ConceptsProduct Concepts
9
Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 9 Version 6e 2©2002 South-Western
chapter
Learning ObjectivesLearning Objectives
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1.1. Define the term Define the term product.product.
2. Classify consumer products.2. Classify consumer products.
3. Define the terms 3. Define the terms product item, product line, product item, product line, andand product mix product mix..
4.4. Describe marketing uses of branding.Describe marketing uses of branding.
Chapter 9 Version 6e 3©2002 South-Western
chapter
Learning Objectives (continued)Learning Objectives (continued)
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5. Describe marketing uses of packaging 5. Describe marketing uses of packaging and labeling.and labeling.
6. Discuss global issues in branding 6. Discuss global issues in branding and packaging.and packaging.
7.7. Describe how and why product warranties Describe how and why product warranties are important marketing tools.are important marketing tools.
Chapter 9 Version 6e 4©2002 South-Western
Learning Objective Learning Objective 1
Define the term Define the term product.product.
Chapter 9 Version 6e 5©2002 South-Western
ProductProduct
Everything, both favorable and unfavorable, that
a person receives in an exchange.
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Chapter 9 Version 6e 6©2002 South-Western
What is a Product?What is a Product?
Promotion
Product Product is
the “heart” ofMarketing
Mix
Place (Distribution)
Price
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Learning Objective Learning Objective 2
Classify consumer products.Classify consumer products.
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Product ClassificationsProduct Classifications
BusinessBusinessProductProduct
Consumer Consumer ProductProduct
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
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Types of Consumer ProductsTypes of Consumer Products
UnsoughtProducts
SpecialtyProducts
ShoppingProducts
ConvenienceProducts
ConsumerProducts
BusinessProducts
PRODUCTS
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Chapter 9 Version 6e 10©2002 South-Western
Types of Consumer ProductsTypes of Consumer Products2
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 that consumerssearch 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.
Chapter 9 Version 6e 11©2002 South-Western
Types of Consumer ProductsTypes of Consumer Products
SpecialtyProducts
ConvenienceProducts
ShoppingProducts
UnsoughtProducts
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Learning Objective Learning Objective
Define the terms Define the terms product item, product item, product line, product line, andand product mix product mix..
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Chapter 9 Version 6e 13©2002 South-Western
Product Items, Lines, and MixesProduct 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.
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Chapter 9 Version 6e 14©2002 South-Western
Gillette’s Product Lines and MixGillette’s Product Lines and Mix3
Blades and Writingrazors Toiletries instruments Lighters
Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. Dupont Trac II ToniAtra Right GuardSwivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry LookTwin Injector Dry Idea Techmatic Brush Plus
Width of the product mixWidth of the product mix
Dep
th o
f the
pro
duct
line
sD
epth
of t
he p
rodu
ct li
nes
Chapter 9 Version 6e 15©2002 South-Western
Benefits of Product LinesBenefits of Product Lines
Equivalent Quality
Efficient Sales andDistribution
Standardized Components
Package Uniformity
Advertising Economies
Why Form Why Form Product Lines?Product Lines?
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Chapter 9 Version 6e 16©2002 South-Western
Product Mix WidthProduct Mix Width
Diversifies risk Capitalizes on established reputations
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The number of product lines an organization offers.
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Product Line DepthProduct Line Depth
Attracts buyers with different preferencesIncreases sales/profits by further
market segmentation Capitalizes on economies of scaleEvens out seasonal sales patterns
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The number of product items in a product line.
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Adjustments Adjustments
Product Modification
ProductRepositioning
Product LineExtension or Contraction
Adjustments to Adjustments to Product Items,Product Items,
Lines, and MixesLines, and Mixes
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Product ModificationsProduct Modifications3
Types of Types of Product Product
ModificationsModifications
Quality Modification
Functional Modification
Style Modification
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Planned ObsolescencePlanned Obsolescence
The practice of modifying products so those that have already been sold become obsolete before
they actually need replacement.
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RepositioningRepositioning
Changing Demographics
Declining Sales
Changes in Social Environment
Why reposition Why reposition established brands?established brands?
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Product Line ExtensionProduct Line Extension
Adding additional products to an existing product line in order to compete more broadly in the industry.
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Product Line ContractionProduct Line Contraction3
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 Symptoms of Product Line Product Line
OverextensionOverextension
Chapter 9 Version 6e 24©2002 South-Western
Learning Objective Learning Objective
Describe marketing uses of branding.Describe marketing uses of branding.
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Chapter 9 Version 6e 25©2002 South-Western
BrandBrand
A name, term, symbol, design, or combination thereof that identifies a seller’s products and
differentiates them from competitors’ products.
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Chapter 9 Version 6e 26©2002 South-Western
BrandingBrandingBrand Name
BrandMark
Brand Equity
MasterBrand
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.
A brand so dominant that it comes to mind immediately when a product category,
use, attribute, or benefit is mentioned.
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Chapter 9 Version 6e 27©2002 South-Western
Benefits of BrandingBenefits of Branding4
Product Identification
Repeat Sales
New Product Sales
Branding Branding distinguishes distinguishes products from products from competitioncompetition
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An Effective Brand NameAn Effective Brand Name
Is easy to pronounce Is easy to recognize and remember Is short, distinctive, and unique Describes the product, use, and benefits Has a positive connotation Reinforces the product image Is legally protectable
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Chapter 9 Version 6e 29©2002 South-Western
Master BrandsMaster BrandsBaking Soda Adhesive Bandages
Rum
Gelatin
Soup
Cream Cheese
Crayons
Petroleum Jelly
Arm & Hammer Band-Aid
Bacardi
Jell-O
Campbell’s
Philadelphia
Crayola
Vaseline
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Chapter 9 Version 6e 30©2002 South-Western
Branding StrategiesBranding Strategies
Brand No Brand
Manufacturer’s Brand Private Brand
IndividualBrand
Family Brand
Combi-nation
IndividualBrand
Family Brand
Combi-nation
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Chapter 9 Version 6e 31©2002 South-Western
Generic BrandGeneric Brand
A no-frills, no-brand-name, low-cost product that is simply identified by its
product category.
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Manufacturers’ Brands VersusManufacturers’ Brands VersusPrivate BrandsPrivate Brands
Manufacturers’ Manufacturers’ BrandBrand
Private Private BrandBrand
The brand name of a manufacturer.
A brand name owned by a wholesaler or a retailer.
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Chapter 9 Version 6e 33©2002 South-Western
Advantages of Advantages of Manufacturers’ BrandsManufacturers’ Brands
Develop customer loyalty Attract new customers Enhance prestige Offer rapid delivery, can carry less
inventory Ensure dealer loyalty
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Advantages of Advantages of Private BrandsPrivate Brands
Earn higher profits Less pressure to mark down prices Manufacturer may drop a brand or
become a direct competitor to dealers Ties to wholesaler or retailer No control over distribution of
manufacturers’ brands
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Chapter 9 Version 6e 35©2002 South-Western
Individual Brands VersusIndividual Brands VersusFamily BrandsFamily Brands
Individual Individual BrandBrand
Family Family BrandBrand
Using different brand names for different products.
Marketing several different products under the same
brand name.
4
Chapter 9 Version 6e 36©2002 South-Western
CobrandingCobranding
IngredientBranding
Cooperative Branding
Complementary Branding
Types of CobrandingTypes of Cobranding
4
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TrademarksTrademarks
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 it is used
A Trademark is the exclusive A Trademark is the exclusive right to use a brandright to use a brand
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Chapter 9 Version 6e 38©2002 South-Western
Learning Objective Learning Objective
Describe marketing uses of Describe marketing uses of packaging and labeling.packaging and labeling.
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Chapter 9 Version 6e 39©2002 South-Western
PackagingPackaging
Contain and Protect
FunctionsFunctionsofof
PackagingPackaging
Promote
Facilitate Storage, Use, and Convenience
Facilitate Recycling
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Chapter 9 Version 6e 40©2002 South-Western
LabelingLabeling
Persuasive
Focuses on promotional theme
Information is secondary
Informational
Helps make proper selections
Lowers cognitive dissonance
Includes use/care
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Chapter 9 Version 6e 41©2002 South-Western
Universal Product CodesUniversal Product Codes
A series of thick and thin vertical lines (bar codes), readable by computerized
optical scanners, that represent numbers used
to track products.
5
Chapter 9 Version 6e 42©2002 South-Western
Learning Objective Learning Objective 6
Discuss global issues in Discuss global issues in branding and packaging.branding and packaging.
Chapter 9 Version 6e 43©2002 South-Western
Global Issues in BrandingGlobal Issues in Branding
Adaptations & Modifications
Global Options Global Options for Brandingfor Branding
One Brand NameEverywhere
Different Brand Names for
Different Markets
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Chapter 9 Version 6e 44©2002 South-Western
Global Issues in PackagingGlobal Issues in Packaging
Aesthetics
Global Global Considerations Considerations for Packagingfor Packaging
Climate Considerations
Labeling
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Chapter 9 Version 6e 45©2002 South-Western
Learning Objective Learning Objective
Describe how and why Describe how and why product warranties are product warranties are
important marketing tools.important marketing tools.
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Chapter 9 Version 6e 46©2002 South-Western
Product WarrantiesProduct Warranties
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)
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Chapter 9 Version 6e 47©2002 South-Western
Product WarrantiesProduct Warranties
WarrantiesWarranties
Written Guarantee
Implied Implied WarrantyWarranty
Express Express WarrantyWarranty
Unwritten Guarantee
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