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Transcript of 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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Product Mix
2
The product mix includes items and product lines that a firm tries to market.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Product Mix: Width and Depth
• 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
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Product Mix: Width and Depth
• The personal care category Width is described by various brands:
Irish SpringPalmolive Soft soap
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Width and Depth• Within the Irish spring
line depth is described by scent:
• Irish spring original• Irish spring Aloe• Irish spring Sport
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
Chapter 8: Product Strategy
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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
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Shopping Goods
12
More time is spent on the decision; people shop around and compare items.
Apple iPodBlackberryMaytag AppliancesGuess JeansSeiko Watch
Key Marketing Considerations
Quality Price Style Suitability Dependability Service
Buying behaviour is more rational.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Key Marketing Considerations
Superior Quality Image Reputation Location
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
Chapter 8: Product Strategy
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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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
.
Chapter 8: Product Strategy
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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
Chapter 8: Product Strategy
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Family Brand
including the company name or major product family name in the brand name
Heinz, Campbell’s
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
Chapter 8: Product Strategy
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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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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).
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Components of a Package
29
Primary package
Secondary package
Label
Shipping Carton
Chapter 8: Product Strategy
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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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Brand Design of Durables
31
The design of the product is the package.
Brand design….everything starts and ends with the brand.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.”
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
Brand Loyalty
34
“The degree of attachment a customer has to a particular brand.”
BrandRecognition
Brand Preference
BrandInsistence
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.
Chapter 8: Product Strategy
Copyright © 2010 Pearson Education Canada
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.”