chapter 8: product strategy copyright © 2010 pearson education canada total product concept 1 a...

Chapter 8: Product Strategy

Copyright © 2010 Pearson Education Canada

Total Product Concept

1

A product is a combination of tangible and intangible benefits.

The product is a “package of benefits” that includes the physical item, brand name, service guarantee, and image presented via the package and advertising.



Product Mix

2

The product mix includes items and product lines that a firm tries to market.



Product Item

• A unique product offered for sale; the product has a USP. (unique selling point)

Dove soap has built its success around one fundamental unique selling point

Gentleness



Product Line

• A grouping of product items that share major attributes but may differ in size, form or flavor or other characteristics.

• Cheerios was once a standalone product in a few different package sizes. Now cheerios offers several varities…including

• Frosted cheerios, • Honey nut cheerios,• multi grain cheerios etc.



Product Mix: Width and Depth

5

Width

DepthNumber of product lines in the mix.

Number of items in the product line.

All items and lines collectively form a firm’s product mix




• Colgate- Palmolive markets product in many categories….

• Oral care• Household care• Fabric care• Pet NutritionWithin each category there is a product line

width and depth




• The personal care category Width is described by various brands:

Irish SpringPalmolive Soft soap



Width and Depth• Within the Irish spring

line depth is described by scent:

• Irish spring original• Irish spring Aloe• Irish spring Sport



Product Classifications

9

Consumer Goods

Goods and services purchased by consumers for personal use.

Industrial (Business) Goods

Goods and services purchased by businesses, institutions and governments that are used directly or indirectly in the production of other goods and services.



Consumer Goods

10

Consumer goods can be subdivided further based on factors such as time spent making a buying decision and the price of the item.

Convenience Goods

Shopping Goods

Specialty Goods



Convenience Goods

11

Kellogg’s CerealsKleenex Facial TissuesMaxwell House CoffeeKraft Peanut ButterDove SoapRuffles Potato ChipsMcCain’s Crescendo Pizza

Make sure product has an attractive. Eye-catching package and readily available

Key Marketing Considerations

Brand Name Image Reputation USP Price Availability



Shopping Goods

12

More time is spent on the decision; people shop around and compare items.

Apple iPodBlackberryMaytag AppliancesGuess JeansSeiko Watch


Quality Price Style Suitability Dependability Service

Buying behaviour is more rational.



Specialty Goods

13

Goods that possess unique characteristics that a customer will make an effort to find. Typically, but not always, these goods tend to be expensive and not readily available, unlike less expensive competitors.


Superior Quality Image Reputation Location



Industrial (Business) Goods

14

These goods are classified by the function the good has in the production of another good.

Capital Items

Parts and Materials

Supplies and Services



Capital Items

15

Expensive goods with a long life span.

Installations include buildings, production equipment and computer systems.

Accessory equipment are items that facilitate an organization’s operations such as computers, copiers, tools and furnishings.

Buying committees and buying centres play a role in decision.



Parts and Materials

16

Less expensive goods that enter the buyer’s production process.

Raw materials: Crude oil, wheat, fruits vegetables milk

Processed materials; Nylon, synthetic fyber

Component parts: The tire, dashboards, seat etc.

Supply chain management practices influence purchase decisions; product availability on a sustained basis is critical for the marketing organization.



Supplies and Services

17

Goods that do not enter production but facilitate other operations of an organization.

• Supplies are routinely purchased standardized products.

• Services are intangible offerings required too operate a business (e.g., consulting services, gardening services).

Established order routine specifications are usually followed.



Branding Strategies

18

A branding strategy involves decisions in unique yet closely related product areas.

Brand name and logo

Design of package including label information

Design of the product itself if a durable good



A Brand Defined

19

“An identifying mark, symbol, words, or combination of same that separates one company’s product from another.” A brand’s key components include:

Brand Name

Brandmark or Logo

Trademark

Coca-Cola, the stylized font, and the shape of the bottle are registered trademarks of the Coca-Cola Company.



Brand Name Strategy

20

National brands (brands owned by private and publically-owned companies) have several brand name options:

Individual Brands – each product has a brand name.. P&G

.



Multibrands

• different brand names for similar products in the same product category

Unilever Canada makes and markets tea under variety of brands– Red rose, Slada and Lipton tea



Family Brand

including the company name or major product family name in the brand name

Heinz, Campbell’s



Co-Branding

23

Using the equity of one brand name to market another branded product.

1. Nestle ice cream includes brand names such as Rolo and Coffee Crisp (popular brands in another Nestle category).

2. Two restaurants such as Swiss Chalet and Harvey’s share facilities to attract customers they have in common.



Private Label Brands

Pearson Education Canada Inc. 24

Brands produced by a manufacturer that meet precise specifications established by the retail distributor.

SearsKenmoreCraftsmanDie Hard

LoblawsPC or President’s Choice

SafewayLucerneEmpress



Licensed Brands

25

Another organization is granted permission to use an organization’s brand name or symbol in return for a royalty.

1. Professional sports leagues like the NHL, NFL and NBA actively market the rights of their trademarks to clothing companies.

2. NASCAR licenses its brand out to private companies. NASCAR branded goods net $2 billion in sales annually.



Cult Brands

26

Unique brands that capture the imagination of a small group of devotees (initially) who in turn spread the word about the brand.

Apple: I-pod

Harley-Davidson

Miata (MX-5)

Starbucks

Miata owners are so emotionally-connected to their car that they wave to each other on the road.

Harley-Davidson has a 1-million member strong Harley Owners Group (HOGs).



Packaging and Labeling Strategies

27

In a crowded retail environment a package must capture attention in the blink of an eye. Influences like colour and shape are important.

80% of purchase decisions at a supermarket are made in the store, and 60% of those are made on impulse.

1.Coca-Cola is red; Pepsi-Cola is blue.

2.Molson “Cold Shots” are sold in a slim silver can. The can helps differentiate the brand from other brands.



Packaging Strategies

28

The objective of a design is always to breakthrough the clutter—shelf clutter. Designers recommend several tips:

1. A brand should own a colour.

2. The colour should stand out in the product category.

3. Offer a unique shape.

4. Consider white space.



Components of a Package

29

Primary package

Secondary package

Label

Shipping Carton



Functions of a Package

30

Communications with customers start and end with the package.

A good package:

Protects the product

Markets the product

Provides convenience

Meets social concerns

Design elements must blend together to make a positive impression.



Brand Design of Durables

31

The design of the product is the package.

Brand design….everything starts and ends with the brand.



Brand Design

32

Brand design is about building the brand experience into the product or service.

1. Apple’s iPod was an overwhelming success due to its sleek and sexy design.

2. The bold new design of the Chrysler 300 was an instant hit with the hip-hop crowd and middle-aged men (contrasting targets to say the least).

3. Technology is a key influencer of design. Sleek flat screen TVs have replaced square box TVs.



Brand Design Process

33

The brand design process has four stages:

1. Imagination

2. Innovation

3. Operationalization

4. Renovation

Mazda’ brand design experience is captured as follows: “the spirit of a sports car (Miata MX5) is built into every car we make.”



Brand Loyalty

34

“The degree of attachment a customer has to a particular brand.”

BrandRecognition

Brand Preference

BrandInsistence



Brand Equity

35

“The value a consumer derives from a brand over and above the value derived from the physical attributes.”

Equity is the result of good marketing and is measured by four variables:

1.Name awareness2.Loyal customer base3.Perceived quality4.Association with a certain attribute



Leading Canadian Brands

36

In terms of brand equity Canada’s top four brands are:

RBC Financial Cirque de Soleil Roots Toronto Maple Leafs

Apologies to non-Leaf fans.

On a global scale the undisputed leader is Coca-Cola.



Benefits of Branding

37

Good brand design:

1.Effectively communicates the differential advantage (USP) and highlights the distinctive value added.

2.Enables the marketer to create and develop an image for the brand.

3.Encourages brand loyalty by building a trusting relationship with the consumer—the brand name is a “stamp of quality.”

chapter 8: product strategy copyright © 2010 pearson education canada total product concept 1 a...

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