Brand importance

CHAPTER 12 Developing and Managing Brand and Product Categories

MANAGING BRANDS FORCOMPETITIVE ADVANTAGE• Brand Name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating them from the competition’s.

• Brands have a powerful influence on consumer behavior.


BRAND LOYALTY

• Measured in three stages:

• Brand recognition Consumer awareness and identification of a brand.

• Brand preference Consumer reliance on previous experiences with a product to choose that product again.

• Brand insistence Consumer refusal of alternatives and extensive search for desired merchandise.


BRAND LOYALTY

• Measured in three stages:

• Brand recognition Consumer awareness and identification of a brand.

• Brand preference Consumer reliance on previous experiences with a product to choose that product again.

• Brand insistence Consumer refusal of alternatives and extensive search for desired merchandise.

TYPES OF BRANDS

• Brands classified in a number of ways.

• Generic products Products characterized by plain labels, no advertising, and the absence of brand names.


Manufacturer’s Brands versus Private Brands

• Manufacturer’s brand Brand name owned by a manufacturer or other producer.

• Examples: Sony, Pepsi, Dell.

• Private brands—brands offered by wholesalers and retailers.

• Account for one of every five items sold in the United States.

Captive Brands

• National brands sold exclusively by a retail chain.

• Example: Target’s sale of products by Michael Graves.

Family and Individual Brands

• Family brand Single brand name that identifies several related products.

• Individual brand—uniquely identifies the item itself.


BRAND EQUITY

• Brand equity Added value that a respected, well-known brand name gives to a product in the marketplace.

• Strong brand equity

• Increases likelihood customers will recognize firm’s product or product line.

• Can contribute to buyers’ perceptions of product quality.

• Can reinforce customer loyalty and repeat purchases.

• Facilitates expansion into international markets.

• Built sequentially on four dimensions: differentiation, relevance, esteem, and knowledge.


THE ROLE OF CATEGORY AND BRAND MANAGEMENT

• Category management Product management system in which a category manager—with profit and loss responsibility—oversees a product line.

• Help retailer’s category buyer maximize sales for the whole category, not just particular manufacturer’s product.

• Also identify opportunities for growth, set performance targets, and create marketing strategy.


PRODUCT IDENTIFICATION• Products identified in the marketplace by brand names, symbols, and distinctive packaging.

• Choices about how to identify products are a major strategic decision.

BRAND NAMES AND BRAND MARKS

• Brand name Part of a brand consisting of words or letters that form a name that identifies and distinguishes a firm’s offerings from those of its competitors.

• Brand mark—symbol or pictorial design that distinguishes a product.

• Effective brand names are easy to pronounce, recognize, and remember.

• Should give buyers correct connotation of product’s image and qualify for legal protection.

• Brand name loses protection when class of products generally comes to be known by that name. Examples include nylon, kerosene, and zipper.


TRADEMARKS

• Trademark Brand for which the owner claims exclusive legal protection.

Protecting Trademarks

• Gives firm exclusive legal right to use brand name, brand mark, and any slogan name or product name appreciation.

• Example: Former Beatles and their representatives sued Apple Computer, claiming its iPod product violated the trademarks for Apple Corps, the Beatles record label.

• Firms can also seek protection for packaging elements and product features.

Trade Dress

• Visual cues in branding that create an overall look.

• Examples: McDonald’s golden arches, Merrill Lynch’s bull.


DEVELOPING GLOBAL BRAND NAMES AND TRADEMARKS

• An excellent name or symbol in one country may be a poor choice in another.

• Some sounds are common to most languages, such as o, k, and short a, so names such as Coca-Cola and Texaco tend to work well worldwide.

PACKAGING

• Can powerfully influence buyers’ decisions.

• Many companies conduct research to develop and evaluate packaging.

Protection Against Damage, Spoilage, and Pilferage

• Protection against damaging was original purpose of packaging.

• Packaging can help overcome consumer fears of tampering.


Assistance in Marketing the Product

• Many firms use biodegradable and recyclable materials to respond to consumer preferences.

• Packaging must help product capture the shopper’s attention.

• Can enhance convenience for buyers.

• Example: Squeezable bottles of honey and ketchup.

Cost-Effective Packaging

• Packaging cost must be reasonable.


Labeling

• Label carries an item’s brand name or symbol, the name and address of the manufacturer or distributor, information about the product’s composition and size, and recommended uses.

• Labels are both promotional and informational.

• Subject to legal restrictions.

• Universal Product Code (UPC)—numerical bar codes printed on packages.

• Reduce labor costs and improve inventory control.

• Radio-frequency identification (RFID) tags—electronic chips that carry encoded product identification.

• May one day replace some functions of UPC codes.


BRAND EXTENSIONS

• Brand extension Strategy of attaching a popular brand name to a new product in an unrelated product category.

• Development by Mattel of Barbie-branded high-end clothing and accessories for women from their teens through their 30s.

BRAND LICENSING

• Authorizing other companies to use a firm’s brand name.

• Brand’s owner receives royalties, typically four to eight percent of wholesale revenues.

• Can hurt a brand if the licensed product is poor quality or ethically incompatible with the brand.

• Another risk is overextending the brand.


NEW-PRODUCT PLANNING• Firms must add new products in order to continuing prospering as other items reach the later stages of the product life cycle.

PRODUCT DEVELOPMENT STRATEGIES


• Product positioning—refers to consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages relative to competing brands.

• Market development—concentrates on finding new markets for existing products.

• Product development—introduction of new products into identifiable or established markets.

• Product diversification—focuses on developing entirely new products for new markets.

• Firms must avoid cannibalization—introducing a new product that adversely affects sales of existing products.


CONSUMER ADOPTION PROCESS

• Adoption process Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again.

• Consumers go through five stages:

• Awareness—individuals first learn of the new product, but they lack full information about it.

• Interest—potential buyers begin to seek information about it

• Evaluation—they consider the likely benefits of the product.

• Trial—they make trial purchases to determine its usefulness.

• Adoption/rejection—decide whether to use the product regularly.

• Example: Schick gave away samples of its Quattro razor to move buyers through the evaluation and trial stages.


ADOPTER CATEGORIES

• Consumer innovators People who purchase new products almost as soon as the products reach the market.

• Diffusion process Process by which new goods or services are accepted in the marketplace.


IDENTIFYING EARLY ADOPTERS

• Firms who reach early buyers can treat them as a test market.

• Tend to be younger, have higher social status, are better educated, and enjoy higher incomes than other consumers.

Rate of Adoption Determinants

• Relative advantage—increases the product’s adoption rate.

• Compatibility—innovation consistent with the values and experiences of potential adopters.

• Complexity—difficulty understanding the innovation can slow the speed of acceptance.

• Possibility of trial use—can accelerate the rate of adoption.

• Observability—observing an innovation’s superiority increase the adoption rate.


ORGANIZING FOR NEW PRODUCT DEVELOPMENT

• Firms must be organized so personnel can stimulate and coordinate new-product development.

New-Product Committees

• Most common arrangement for new-product development.

• Primarily review and evaluate others’ new product plans rather than develop their own.

• Tend to move slowly and conservatively in large companies.

New-Product Departments

• Encourage innovation as a full-time activity.

• Department head typically has substantial authority.


Product Managers

• Another term for a brand manager; supports the marketing strategies of an individual product or product line.

• Set prices, develop advertising and sales promotion programs, and work with sales representatives in the field.

• Most consumer-goods companies have adopted a category management structure, as discussed earlier in the chapter.

Venture Teams

• Gathers a group of specialists from different areas of an organization to work together in developing new products.

• Has a flexible lifespan.


THE NEW-PRODUCT DEVELOPMENT PROCESS

• Firms must usually generate dozens of ideas to produce one successful product.

• New products have an 80 percent failure rate.


PRODUCT SAFETY AND LIABILITY• Manufacturers must design their products to protect users from harm.

• Product liability—responsibility of manufacturers and marketers for injuries and damages caused by their products.

• Example: Poison Prevention Packaging Act, which requires drug manufacturers to put product in child-resistant packaging.

• Consumer Product Safety Commission has jurisdiction over most consumer product categories.

• Food and Drug Administration approves food, medications, and health-related devices.

• Liability lawsuits are increasing domestically and internationally.

• To counter increased litigation and legislation, some companies sponsor voluntary improvements in safety standards.

• Safety planning and testing can be an effective marketing tool.

Brand importance

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