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Transcript of 1 Lamb, Hair, McDaniel Chapter 10 Product Concepts 2014-2015 © Cengage Learning 2015. All Rights...
1
Lamb, Hair, McDaniel
Chapter 10
Product Product ConceptsConcepts
2014-2015
© Cengage Learning 2015. All Rights Reserved.
• Define the term product• Classify consumer products• Define the terms product item, product line, and
product mix• Describe marketing uses of branding, packaging
and labeling • Discuss global issues in branding and packaging• Describe how and why product warranties are
important marketing tools
© 2015 by Cengage Learning Inc. All Rights Reserved. 2
© 2015 by Cengage Learning Inc. All Rights Reserved. 3
What Is a Product?What Is a Product?
Everything, both favorable and
unfavorable, that a person receives in an
exchange.
• Tangible Good
• Service
• Idea
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Core Vs. Augmented Product
Repair and maintenance
SUPPORT SERVICESCOMPONENT
CORECOMPONENT
Installation
Instructions
Other related services
Deliveries
Warranty
Spare parts
Legal
Trademark
Brand name
Legal
Product platform
Design features
Functional features
Legal
PACKAGINGCOMPONENT
Price
Quality
Package
Styling
© 2015 by Cengage Learning Inc. All Rights Reserved. 5
Types of Consumer ProductsTypes of Consumer Products
UnsoughtProducts
UnsoughtProducts
SpecialtyProductsSpecialtyProducts
ShoppingProducts
ShoppingProducts
ConvenienceProducts
ConvenienceProducts
ConsumerProducts
ConsumerProducts
BusinessProductsBusinessProducts
ProductsProducts
© 2015 by Cengage Learning Inc. All Rights Reserved. 6
Types of Types of Consumer ProductsConsumer Products
MarketDevelopment
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
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Characteristics of Consumer Products
Type/
Criteria
Convenience Shopping Specialty
Distribution Intensive Selective Exclusive
Retail margin low medium High
Consumer Shopping time
low medium High
Purchase frequency
high medium low
Inventory turnover
high medium low
Support services
low medium high
© 2015 by Cengage Learning Inc. All Rights Reserved. 8
Product Items, Product Items, Lines, and MixesLines, and Mixes
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.
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Exhibit 10.1Exhibit 10.1Campbell’s Product Lines and Product MixCampbell’s Product Lines and Product Mix
Source: Campbell's Web site: http://www.campbellsoup.com.
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Optimum Product Mix Decisions
Optimum product mix decision of a company is the width (number of product lines) and depth (items in each line) that a company can carry considering the following factors.
– Level of market/economic development– Sales/Profit– Competition– Market characteristics– Product characteristics– Legal considerations
It is an issue of “trade-off.” More lines or items can provide increased sales but there is a cost of managing the line/item.
© 2015 by Cengage Learning Inc. All Rights Reserved. 11
AdjustmentsAdjustments
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
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© 2015 by Cengage Learning Inc. All Rights Reserved. 12
Types of Product ModificationsTypes of Product Modifications
Quality Modification
Quality Modification
Functional ModificationFunctional
Modification
Style ModificationStyle Modification
Planned Obsolescence: The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.
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© 2015 by Cengage Learning Inc. All Rights Reserved. 13
RepositioningRepositioning
Changing Demographics
Changing Demographics Declining SalesDeclining Sales
Changes in Social
Environment
Changes in Social
Environment
Why reposition Why reposition established established
brands?brands?
Why reposition Why reposition established established
brands?brands?
3
© 2015 by Cengage Learning Inc. All Rights Reserved. 14
Product Line ExtensionProduct Line Extension
Adding additional products to an existing
product line in order to compete more
broadly in the industry.
• 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 Overextension
3
© 2015 by Cengage Learning Inc. All Rights Reserved. 15
BrandingBranding
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 a third of theearnings come from outside its home
country
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 16
Branding StrategiesBranding Strategies
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.
Captive
A brand manufactured by a third party for exclusive retailer, without evidence of a that retailer’s affiliation.
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 17
Advantages of Advantages of Manufacturers’ BrandsManufacturers’ 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
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 18
Advantages of Advantages of Private BrandsPrivate 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
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 19
AdvantagesAdvantagesof Captive Brandsof Captive Brands
• No evidence of store’s affiliation• Manufactured by third party• Sold exclusively at the chain• Can ask price similar to
manufacturer’s brands
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 20
Individual Brands Versus Individual Brands Versus Family BrandsFamily Brands
Individual Brand
Family Brand
Using different brand names for different products.
Marketing several different products under the same brand name.
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 21
Co-brandingCo-branding
IngredientBranding
IngredientBranding
Cooperative Branding
Cooperative Branding
Complementary Branding
Complementary Branding
Types of Co-branding
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 22
TrademarksTrademarks
A Trademark is the exclusive right to use a brand. A service mark performs the same function for services.
Many parts of a brand and associated symbols qualify for trademark protection.
Trademark right comes from use rather than registration.
The Digital Millennium Copyright Act (DMCA) explicitly applies trademark law to the digital world.
Companies that fail to protect their trademarks face the possibility that their product names will become generic.4
© 2015 by Cengage Learning Inc. All Rights Reserved. 23
Functions of PackagingFunctions of Packaging
Contain and Protect
Promote
Facilitate Storage, Use, and Convenience
Facilitate Recycling
5
© 2015 by Cengage Learning Inc. All Rights Reserved. 24
LabelingLabeling
Persuasive
Focuses on promotional theme
Consumer information is secondary
Informational
Helps make proper selections
Lowers cognitive dissonance
GreenwashingAttempting to give the impression of environmental friendliness whether or not it is environmentally friendly.5
© 2015 by Cengage Learning Inc. All Rights Reserved. 25
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
© 2015 by Cengage Learning Inc. All Rights Reserved. 26
Global Issues in BrandingGlobal Issues in Branding
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
6
© 2015 by Cengage Learning Inc. All Rights Reserved. 27
Global Issues in PackagingGlobal Issues in Packaging
AestheticsAesthetics
Global Global Considerations Considerations for Packagingfor Packaging
Climate Considerations
Climate Considerations
LabelingLabeling
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Product Warranties
Warranty
ExpressWarranty
ImpliedWarranty
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.
© 2015 by Cengage Learning Inc. All Rights Reserved. 28
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Ch 10 Discussion Questions
1. What is a product? Explain Core and Augmented Product.
2. Define the four types of consumer products. How can we classify them using various criteria? Explain.
3. Explain the concept of product item, product line, and product mix.
4. What is an optimum product mix decision? Explain the factors affecting optimum product mix of a company.
5. What is a brand? Explain the rationale for branding from manufacturer’s and distributor’s perspective.
6. What is packaging and labeling? Explain their benefits.