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Chapter 13 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in DEVELOPING AND MANAGING BRAND AND PRODUCT CATEGORIES 1
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Transcript of Chapter 13 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,...
Chapter 13
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DEVELOPING AND MANAGING BRAND AND PRODUCT CATEGORIES
1
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Objectives
1. Determine how to define a brand.2. Identify the different types of brands.3. Explain the strategic value of brand
equity.4. Explain the benefits of category and
brand management.5. Discuss how companies develop a strong
identity for their product or brand.
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Objectives
6. Identify and briefly describe each of the new-product development strategies.
7. Describe the consumer adoption process.8. List the stages in the new-product
development process.9. Explain the relationship between product
safety and product liability.
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Managing Brands for Competitive Advantage▮ Brands have a powerful influence on
consumer behavior▮ Brand - Name, term, sign, symbol, design, or
some combination that identifies the products of one firm while differentiating them from competitors’ offerings
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Table 13.1 – Selected Brands, Brand Names, and Brand Marks
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Brand Loyalty
▮ Measured in three stages• Brand recognition - Consumer awareness and
identification of a brand• Brand preference - Consumer choice of a
product on the basis of a previous experience• Brand insistence - Consumer refusal of
alternatives and extensive search for desired merchandise
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Types of Brands
▮ Generic products - Products characterized by plain labels, no advertising, and the absence of brand names
▮ Manufacturer’s brand - Brand name owned by a manufacturer or other producer
▮ Private brands - Brands offered by wholesalers and retailers
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Types of Brands
▮ Captive brands - National brands sold exclusively by a retail chain• Example: Target’s sale of products by Michael
Graves
▮ Family brand - Single brand name that identifies several related products
▮ Individual brand - Single brand that uniquely identifies a product
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Brand Equity
▮ Added value that a respected, well-known brand name gives to a product in the marketplace
▮ Built sequentially on four dimensions• Differentiation• Relevance• Esteem• Knowledge
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
The Role of Category and Brand Management▮ Brand manager - Marketer responsible for
a single brand▮ Category management - Product
management system in which a category manager—with profit and loss responsibility—oversees a product line
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Product Identification
▮ Products identified in the marketplace by brand names, symbols, and distinctive packaging
▮ Choosing how to identify a firm’s output represents a major strategic decision for marketers
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Brand Names and Brand Marks
▮ Brand name - Part of a brand that can be spoken
▮ Brand mark - Symbol or pictorial design that distinguishes a product
▮ Effective brand names are easy to pronounce, recognize, and remember
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Brand Names and Brand Marks
▮ Brand name• Should give buyers the correct connotation of
the product’s image • Must qualify for legal protection
▮ A brand name loses protection when a class of products generally comes to be known by that name
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Trademarks
▮ Brand for which the owner claims exclusive legal protection
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Protecting Trademarks
▮ Gives firms the exclusive legal right to use a brand name, brand mark, and any slogan or product name abbreviation
▮ Firms can also seek protection for packaging elements and product features
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Trade Dress
▮ Visual components that contribute to the overall look of a brand
▮ Visual components may be related to color selections, sizes, package, label shapes, and similar factors
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Developing Global Brand Names and Trademarks▮ An excellent name or symbol in one country
may be a poor choice in another▮ A firm marketing a product in multiple
countries has two choices• Use a single brand name for universal
promotions • Tailor names to individual countries
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Packaging
▮ Serves three major objectives• Protection against damage, spoilage, and
pilferage• Assistance in marketing the product• Cost effectiveness
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
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
▮ Universal product code (UPC) - Numerical bar code system used to record product and price information
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Labeling
▮ RFID tags may replace some of the functions of UPC codes• Reduce labor costs and improve inventory
control
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Brand Extensions
▮ Attaching a popular brand name to a new product in an unrelated product category
▮ Line extension - Development of individual offerings that appeal to different market segments while remaining closely related to the existing product line
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Brand Licensing
▮ Practice that expands a firm’s exposure in the marketplace
▮ Brand name’s owner receives royalties, typically 8 to 12 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
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Figure 13.1 – Alternative Product Development Strategies
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Product Development Strategies
▮ Market penetration - Increase sales of existing products in existing markets
▮ Product positioning - 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
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Product Development Strategies
▮ Product development - Introduction of new products into identifiable or established markets
▮ Product diversification - Focuses on developing entirely new products for new markets
▮ Cannibalization - Introducing a new product that adversely affects sales of existing products
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Consumer Adoption Process
▮ Adoption process – Stages consumers go through in learning about a new product, trying it, and deciding whether to purchase it again• Awareness
• Interest
• Evaluation
• Trial
• Adoption/rejection
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
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
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Figure 13.2 - Categories of Adopters Based on Relative Times of Adoption
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Identifying Early Adopters
▮ Firms who reach early purchasers can treat them as a test market• Evaluating the product and discovering
suggestions for modifications
▮ Early purchasers can act as opinion leaders from whom others seek advice• Attitudes toward new products quickly spreads
to others
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Rate of Adoption Determinants
▮ Relative advantage - Innovation that appears far superior to previous ideas
▮ Compatibility - Innovation consistent with the values and experiences of potential adopters
▮ Complexity - Relative difficulty of understanding the innovation influences the speed of acceptance
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Rate of Adoption Determinants
▮ Possibility of trial use - Initial free or discounted trial of a good or service reduces adopters financial risk
▮ Observability - Observing an innovation’s superiority increases the adoption rate
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Organizing for New Product Development▮ New-product committees• Most common arrangement• Brings together functional experts• Tends to reach decisions slowly• Maintains conservative views• Members may compromise so they can return
to their regular responsibilities
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Organizing for New Product Development▮ New-product departments• Separate and formally organized• Aims at generating and refining new product
ideas• Encourages innovation as a permanent full-time
activity• Responsible for all phases of a development
project within the firm
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
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
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Venture Teams
▮ Specialists from different areas of an organization who work together in developing new products
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Venture Teams
▮ The venture team must meet criteria for:• Return on investment
• Uniqueness of product• Serving a well-defined need• Compatibility of the product with existing
technology• Strength of patent protection
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Figure 13.3 – Steps in the New-Product Development Process
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
The New-Product Development Process▮ Idea generation - New-product development
begins with ideas from many sources▮ Screening - Separates ideas with
commercial potential from those that cannot meet company objectives
▮ Business analysis - Assessing the new product’s potential market, growth rate, and likely competitive strengths
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
The New-Product Development Process• Concept testing - Method for subjecting a
product idea to additional study before actual development by involving consumers through focus groups, surveys, in-store polling, and similar strategies
• Screening and business analysis stages generate important information because they:• Define the proposed product’s target market and
customers’ needs and wants • Determine the product’s financial and technical
requirements
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
The New-Product Development Process▮ Development - Financial outlays increase
substantially as a firm converts an idea into a visible product
▮ Test marketing - To verify that the product will perform well in a real-life environment
▮ Commercialization - A product is ready for full-scale marketing
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
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
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Product Safety and Liability
▮ The Consumer Product Safety Commission has jurisdiction over most consumer product categories
▮ The Food and Drug Administration approves food, medications, and health-related devices
▮ Liability lawsuits are increasing domestically and internationally
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Product Safety and Liability
▮ To counter increased litigation and legislation• Companies sponsor voluntary improvements in
safety standards
▮ Safety planning and testing can be an effective marketing tool
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 13 Developing and Managing Brand and Product Categories
Zappos Video
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