Companies in the middle market should never attempt to stretch their line in both directions

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Chapter7 Marketing Management

Chapter7 Marketing Management

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1. 1. Chapter 7
2. 2. • Summary • What Is A Product? • Product differentiation • Design • Luxury products • Environmental Issues • Product and Brand Relationships • Packaging, Labeling, Warranties, and Guarantees TABLE OF CONTENTS
3. 3. SUMMARY 3
4. 4. • Product is the first and most important element of the marketing mix. Product strategy calls for making coordinated decisions on product mixes, product lines, brands, and packaging and labeling. • In planning its market offering, the marketer needs to think through the five levels of the product: the core benefit, the basic product, the expected product, the augmented product, and the potential product, which encompasses all the augmentations and transformations the product might ultimately undergo. SUMMARY
5. 5. • Products can be nondurable goods, durable goods, or services. In the consumer-goods category are convenience goods (staples, impulse goods, emergency goods), shopping goods (homogeneous and heterogeneous), specialty goods, and unsought goods. • The industrial-goods category has three subcategories: materials and parts (raw materials and manufactured materials and parts), capital items (installations and equipment), and supplies and business services (operating supplies, maintenance and repair items, maintenance and repair services, and business advisory services). SUMMARY
6. 6. • Brands can be differentiated on the basis of product form, features, performance, conformance, durability, reliability, repairability, style, customization, and design, as well as such service dimensions as ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. • Design is the totality of features that affect how a product looks, feels, and functions. A well-designed product offers functional and aesthetic benefits to consumers and can be an important source of differentiation. • Luxury brands command price premiums and often have a strong lifestyle component. They can require some special considerations in how they are sold. SUMMARY
7. 7. • Products and their packaging must be designed to reduce adverse environmental impact as much as possible. • Most companies sell more than one product. A product mix can be classified according to width, length, depth, and consistency. • These four dimensions are the tools for developing the company’s marketing strategy and deciding which product lines to grow, maintain, harvest, and divest. To analyze a product line and decide how many resources to invest in it, product line managers need to look at sales and profits and market profile SUMMARY
8. 8. • A company can change the product component of its marketing mix by lengthening its product via line stretching (down-market, up-market, or both) or line filling, by modernizing its products, by featuring certain products, and by pruning its products to eliminate the least profitable. • Brands are often sold or marketed jointly with other brands. Ingredient brands and co-brands can add value, assuming they have equity and are perceived as fitting appropriately. • Physical products must be packaged and labeled. Well- designed packages can create convenience value for customers and promotional value for producers. Warranties and guarantees can offer further assurance to consumers. SUMMARY
9. 9. In this chapter we will address the following questions: • What are the characteristics of products and how do marketers classify products? • How can companies differentiate products? • Why is product design important and what factors affect a good design? • How can a company build and manage its product mix and product lines? • How can companies combine products to create strong co- brands or ingredient brands? • How can companies use packaging, labeling, warranties, and guarantees as marketing tools? Copyright©2012Pearson Education9-9 LEARNING OBJECTIVES
10. 10. WHAT IS A PRODUCT? Section 1
11. 11. WHAT IS A PRODUCT? • A product is anything that can be offered to a market to satisfy a want or needs such as: Physical Goods Services Experiences Events Persons Places Properties Organizations Information Ideas
12. 12. WHAT IS A PRODUCT? Five Product Levels • There are five product levels
13. 13. WHAT IS A PRODUCT? Product Levels: The Customer-value Hierarchy • The fundamental level is the core benefit: the service or benefit the customer is really buying. Marketers must see themselves as benefit providers Core Benefit Basic Product Expected Product Augmented Product Potential Product
14. 14. WHAT IS A PRODUCT? Product Levels: The Customer-value Hierarchy • At the second level, the marketer must turn the core benefit into a basic product Core Benefit Basic Product Expected Product Augmented Product Potential Product
15. 15. WHAT IS A PRODUCT? Product Levels: The Customer-value Hierarchy • At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product Core Benefit Basic Product Expected Product Augmented Product Potential Product
16. 16. WHAT IS A PRODUCT? Product Levels: The Customer-value Hierarchy • At the fourth level, the marketer prepares an augmented product that exceeds customer expectations. In developed countries, brand positioning and competition take place at this level • Differentiation arises and competition increasingly occurs on the basis of product augmentation. • Each augmentation adds cost, however, and augmented benefits soon become expected benefits and necessary points-of- parity in the category Core Benefit Basic Product Expected Product Augmented Product Potential Product
17. 17. WHAT IS A PRODUCT? Product Levels: The Customer-value Hierarchy • At the fifth level stands the potential product, which encompasses all the possible augmentations and transformations the product or offering might undergo in the future Core Benefit Basic Product Expected Product Augmented Product Potential Product
18. 18. WHAT IS A PRODUCT? Product ClassificationSchemes • Marketers have traditionally classified products on the basis of characteristics: • durability, • tangibility, and • use (consumer or industrial). • Each product type has an appropriate marketing-mix strategy Durability Tangibility Use (consumer or industrial)
19. 19. WHAT IS A PRODUCT? Durability And Tangibility • Non-durable goods are tangible goods normally consumed in one or a few uses, like bread and soap. • Because these goods are consumed quickly and purchased frequently, the appropriate strategy is to make them available in many locations charge only a small markup, and advertise heavily to induce trial and build preference • Non durable goods • Durable goods • Services
20. 20. WHAT IS A PRODUCT? Durability And Tangibility • Durable goods are tangible goods that normally survive many uses: refrigerators, machine tools and clothing. • Durable products normally require more personal selling and service, command a higher margin and require more seller guarantees. • Non durable goods • Durable goods • Services
21. 21. WHAT IS A PRODUCT? DurabilityAndTangibility • Services are intangible, inseparable, variable, and perishable products. • As a result, they normally require more quality control, supplier credibility, and adaptability. • Examples include haircuts and repairs. • Non durable goods • Durable goods • Services
22. 22. WHAT IS A PRODUCT? Consumer Goods Classification • There are four types of consumer goods. Convenience Shopping Specialty Unsought
23. 23. WHAT IS A PRODUCT? Consumer Goods Classification • Goods are those the customer usually purchases frequently, immediately, and with a minimum of effort, • e.g. tobacco products, soaps, and newspaper Convenience Shopping Specialty Unsought
24. 24. WHAT IS A PRODUCT? Consumer Goods Classification • Goods that the customer, in the process of selection and purchase, characteristically compares on such bases as suitability, quality price, and style. • e.g. furniture and clothing. Convenience Shopping Specialty Unsought
25. 25. WHAT IS A PRODUCT? Consumer Goods Classification • Unique characteristics or brand identification for which a suf- ficient number of buyers are willing to make a special purchasing effort, e.g. cars, stereo components, photographic equipment Convenience Shopping Specialty Unsought
26. 26. WHAT IS A PRODUCT? Consumer Goods Classification • Goods are those the consumer does not know about or does not normally think buying, like smoke detectors. Convenience Shopping Specialty Unsought
27. 27. WHAT IS A PRODUCT? IndustrialGoods Classification • We can distinguish three groups of industrial goods: • materials and parts, • capital items, and • supplies and business services. • Materials and parts are goods that enter the manufacturer's product completely fall into two classes: raw materials and manufactured materials and parts Materials and parts Capital items Supplies/business services
28. 28. WHAT IS A PRODUCT? VideoTime–“Thethreewaysthatgooddesignmakesyou happy” “Design critic Don Norman turns his incisive eye toward beauty, fun, pleasure and emotion, as he looks at design that makes people happy. He names the three emotional cues that a well-designed product must hit to succeed”.  Donald Arthur Norman is the director of The Design Lab at University of California, San Diego. He is widely regarded for his expertise in the fields of design, usability engineering, and cognitive science.  https://www.youtube.com/watch ?v=RlQEoJaLQRA
29. 29. PRODUCT DIFFERENTIATION Section 2
30. 30. PRODUCT DIFFERENTIATION • Products must be differentiated • Differentiated products can create significant competitive advantages Differentiated products Competitive advantages
31. 31. PRODUCT DIFFERENTIATION • Means for product differentiation include • form, • features, • performance quality, • conformance quality, • durability, • reliability, • reparability, • style and • customization • Design has become an increasingly important differentiator Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
32. 32. PRODUCT DIFFERENTIATION • The size, shape, or physical structure of a product Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
33. 33. PRODUCT DIFFERENTIATION • A company can identify and select appropriate new features by surveying recent buyers and then calculating customer value versus company cost for each potential feature and should avoid feature fatigue Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
34. 34. PRODUCT DIFFERENTIATION • Performance level is the level at which the product’s primary characteristics operate: low, average, high, or superior Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
35. 35. PRODUCT DIFFERENTIATION • The degree to which all produced units are identical and meet promised specifications Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
36. 36. PRODUCT DIFFERENTIATION • A measure of the product’s expected operating life under natural or stressful conditions, is a valued attribute for vehicles, kitchen appliances, and other durable goods Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
37. 37. PRODUCT DIFFERENTIATION • A measure of the probability that a product will not malfunction or fail within a specified time period, and high reliability can garner a price premium. Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
38. 38. PRODUCT DIFFERENTIATION • Ease of fixing a product when it malfunctions or fails Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
39. 39. PRODUCT DIFFERENTIATION • The product’s look and feel to the buyer and creates distinctiveness that is hard to copy Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
40. 40. PRODUCT DIFFERENTIATION • Customized products and marketing allow firms to be highly relevant and differentiating by finding out exactly what a person wants— and doesn’t want—and delivering on that Form Features Performance Quality Conformance Quality Durability Reliability Reparability Style Customization
41. 41. SERVICE DIFFERENTIATION • Means for service differentiation include • Ordering ease • Delivery • Installation • Customer training • Customer Consulting • Maintenance and repair • Returns Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
42. 42. SERVICE DIFFERENTIATION • Describes how easy it is for the customer to place an order with the company Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
43. 43. SERVICE DIFFERENTIATION • Refers to how well the product or service is brought to the customer, including speed, accuracy, and care throughout the process. Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
44. 44. SERVICE DIFFERENTIATION • Refers to the work done to make a product operational in its planned location. Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
45. 45. SERVICE DIFFERENTIATION • Helps the customer’s employees use the vendor’s equipment properly and efficiently Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
46. 46. SERVICE DIFFERENTIATION • Includes data, information systems, and advice services the seller offers to buyers Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
47. 47. SERVICE DIFFERENTIATION • Programs help customers keep purchased products in good working order; critical in business-to-business settings Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
48. 48. SERVICE DIFFERENTIATION • Inconvenient, embarrassing; bad for providers when returned merchandise, not in re-sellable condition, lacks proper proof of purchase, or is returned to the wrong store Ordering ease Delivery Installation Customer training Customer Consulting Maintenance and repair Returns
49. 49. 1. What were some of the key steps that made Caterpillar the industry leader in earth-moving machinery? Explain how Caterpillar’s products differ from competitors’. 2. Discuss Caterpillar’s future. What should it do next with its product line? Where is the future growth for this company? PRODUCT DIFFERENTIATION Caterpillar - Questions
50. 50. • What were some of the key steps that made Caterpillar the industry leader in earth-moving machinery? Explain how Caterpillar’s products differ from competitors’ • In terms of the concept of “product,” Caterpillar has re-invented its product—from the physical product, to its services provided, to its research and development, to its “local” emphasis with its equipment, CAT today has a different line up of products than the CAT of old. Examples include: 56% of its business is in capital equipment and the remaining percentage in services. CAT is focused on high-tech machinery i.e.,: hybrid, and has divided its product strategy into three segments to meet the needs of its customers. • Discuss Caterpillar’s future. What should it do next with its product line? Where is the future growth for this company? • Student’s answers will vary but good students will cite material from this chapter regarding the customer-value hierarchy—core benefit, basic product, expected product, augmented product, and potential product to defend their positions on where Caterpillar’s future lies. PRODUCT DIFFERENTIATION Caterpillar - Answers
51. 51. DESIGN Section 3
52. 52. DESIGN What Is Design? • The totality of features that affect the way the product looks, feels, and functions, offers a potent way to differentiate and position a company’s products and services.
53. 53. DESIGN Design Insights • The emotional power of design and the importance to consumers of look and feel as well as function, so design is exerting a stronger influence in categories where it once played a small role Design Leaders Power of Design Approaches to Design
54. 54. DESIGN Design Insights • In a visually oriented culture, transmitting brand meaning and positioning through design is critical Design Leaders Power of Design Approaches to Design
55. 55. DESIGN Design Insights • A well-designed product is easy to manufacture and distribute. To the customer, it is pleasant to look at and easy to open, install, use, repair, and dispose of. The designer must take all these goals into account Design Leaders Power of Design Approaches to Design
56. 56. DESIGN VideoTime–“Thefirstsecretofgreatdesign” “As human beings, we get used to "the way things are" really fast. But for designers, the way things are is an opportunity” • Tony Fadell is an American engineer, inventor, designer, entrepreneur, and angel investor. He served as the Senior Vice President of the iPod division at Apple Inc., from March 2006 to November 2008 and is known as "one of the fathers of the iPod“ for his work on the first generations of Apple's music player. • https://www.youtube.com/watch ?v=9uOMectkCCs
57. 57. LUXURY PRODUCTS Section 4
58. 58. • Design is often an important aspect of luxury products, though these products also face some unique issues because the brand and its image are often key competitive advantages that create enormous value and wealth. LUXURY PRODUCTS
59. 59. LUXURY PRODUCTS Characterizing LuxuryBrands • Higher priced; often about social status and who a customer was or perhaps wanted to be • Become more about style and substance, combining personal pleasure and self-expression
60. 60. LUXURY PRODUCTS Characterizing LuxuryBrands • Common denominators of luxury brands are quality and uniqueness • Winning formula for many is craftsmanship, heritage, authenticity, and sometimes extravagant price
61. 61. LUXURY PRODUCTS Characterizing LuxuryBrands • Luxury brands that successfully extended their brands vertically across a range of price points are usually the most immune to economic downturns. • Ralph Lauren, successfully marketed an aspirational luxury brand across a wide range of products. Besides clothing and fragrances, Lauren boutiques sell linens, candles, beds, couches, dishware, photo albums, and jewelry.
62. 62. LUXURY PRODUCTS Growing Luxury Brands • Luxury brands that successfully extended their brands vertically across a range of price points are usually the most immune to economic downturns. • Ralph Lauren, successfully marketed an aspirational luxury brand across a wide range of products. • Besides clothing and fragrances, Lauren boutiques sell linens, candles, beds, couches, dishware, photo albums, and jewelry.
63. 63. Clear differentiation must exists between these brands, minimizing the potential for consumer confusion and brand cannibalization Each also must live up to the core promise of the parent brand, reducing chances of hurting the parent’s image Horizontal extensions into new categories can also be tricky for luxury brands. Much of the growth in luxury brands in recent years has been geographical. LUXURY PRODUCTS Growing Luxury Brands
64. 64. LUXURY PRODUCTS Growing Luxury Brands • Globalization, new technologies, financial crises, shifting consumer cultures, and other forces require luxury brand marketers to be skillful and adept at their brand stewardship to succeed. Factors Affecting Luxury Brand Marketers Globalization New Technologies Financial Crises Shifting Consumer Cultures Other Forces
65. 65. LUXURY PRODUCTS Marketing Luxury Brands • Luxury brand marketers have been issued the following guidelines:- Maintain a premium image for luxury brands; control the image Create many intangible brand associations and an aspirational image Align all marketing program to ensure high-quality products and services and pleasurable and consumption experiences
66. 66. LUXURY PRODUCTS Marketing Luxury Brands • Luxury brand marketers have been issued the following guidelines:- Logos, symbols, packaging, signage - can be important drivers of brand equity for luxury products Secondary associations from linked personalities, events, countries, and other entities can boost luxury-brand equity as well Luxury brands must carefully control distribution via a selective channel strategy.
67. 67. LUXURY PRODUCTS Marketing Luxury Brands • Luxury brand marketers have been issued the following guidelines:- Luxury brands must employ a premium pricing strategy, with strong quality cues and few discounts and markdowns Brand architecture for luxury brands must be managed carefully Competition for luxury brands must be defined broadly because it often comes from other categories
68. 68. • Trend for luxury brands is to wrap personal experiences around the products • Some luxury marketers have struggled to find the appropriate online selling and communication strategies for their brand • Success depends on getting the right balance of classic and contemporary imagery and continuity and change in marketing programs and activities LUXURY PRODUCTS Marketing Luxury Brands
69. 69. LUXURY PRODUCT VideoTime–“GlobalTrendsInLuxuryHospitality” “Jerry shares from his vast collection of stories from a stellar career. His takeaways? Service is nobility, service leads to success, and service deserves recognition”. • Gerard Jerry Inzerillo has been Chief Executive Officer of EMTG LLC since May 12, 2014. Mr. Inzerillo has been Chief Executive and President of IMG Artists LLC since April 2012 • https://www.youtube.com/watch ?v=hDIaq6B0ITY
70. 70. ENVIRONMENTAL ISSUES Section 5
71. 71. • Many firms are considering ways to reduce the negative environmental consequences of conducting business, and some are changing the manufacture of their products or the ingredients that go into them. ENVIRONMENTAL ISSUES
72. 72. PRODUCT AND BRAND RELATIONSHIPS Section 6
73. 73. Item Product type Product line Product class Product family Need family PRODUCT AND BRAND RELATIONSHIPS The Product Hierarchy Each product can be related to other products to ensure that a firm is offering and marketing the optimal set of products
74. 74. PRODUCT AND BRAND RELATIONSHIPS The Product Hierarchy • Also called stock-keeping unit or product variant. • A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. Item Product type Product line Product class Product family Need family
75. 75. PRODUCT AND BRAND RELATIONSHIPS The Product Hierarchy • A group of items within a product line that share one of several possible forms of the product Item Product type Product line Product class Product family Need family
76. 76. PRODUCT AND BRAND RELATIONSHIPS The Product Hierarchy • A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges. • A product line may consist of different brands, a single family brand, or an individual brand that has been line extended Item Product type Product line Product class Product family Need family
77. 77. PRODUCT AND BRAND RELATIONSHIPS The Product Hierarchy • A group of products within the product family recognized as having a certain functional coherence, also known as a product category. Item Product type Product line Product class Product family Need family
78. 78. PRODUCT AND BRAND RELATIONSHIPS The Product Hierarchy • All the product classes that can satisfy a core need with reasonable effectiveness Item Product type Product line Product class Product family Need family
79. 79. PRODUCT AND BRAND RELATIONSHIPS The Product Hierarchy • The core need that underlies the existence of a product family. Item Product type Product line Product class Product family Need family
80. 80. • Product system is a group of diverse but related items that function in a compatible manner. For example, the extensive iPod product system includes headphones and headsets, cables and docks, armbands, cases, power and car accessories, and speakers. PRODUCT AND BRAND RELATIONSHIPS ProductSystemsAndMixes
81. 81. PRODUCT AND BRAND RELATIONSHIPS ProductSystemsAndMixes • Product mix (aka product assortment) is the set of all products and items a particular seller offers for sale
82. 82. PRODUCT AND BRAND RELATIONSHIPS ProductSystemsAndMixes These four product mix expand its business in four ways. • It can add new product lines, thus widening its product mix. • It can lengthen each product line. • It can add more product variants to each product and deepen its product mix. • It can pursue more product line consistency.
83. 83. • In offering a product line, companies normally develop a basic platform and modules that can be added to meet different customer requirements and lower production costs, • e.g. Car manufacturers build cars around a basic platform. Homebuilders show a model home to which buyers can add additional features. PRODUCT AND BRAND RELATIONSHIPS ProductLineAnalysis
84. 84. PRODUCT AND BRAND RELATIONSHIPS ProductLineAnalysis • Product line managers • need to know the sales and profits of each item in their line to determine which items to build, maintain, harvest, or divest and • need to understand each product line’s market profile and image. Sales and Profit Market Profile and Image
85. 85. PRODUCT AND BRAND RELATIONSHIPS ProductLineAnalysis • Every company’s product portfolio contains products with different margins. Companies should recognize that different items will allow for different margins and respond differently to changes in level of advertising. Sales and Profit Market Profile and Image
86. 86. PRODUCT AND BRAND RELATIONSHIPS ProductLineAnalysis The product line manager must review how the line is positioned against competitors’ lines. • A product map shows which competitors’ items are competing against company X’s items. • The map also reveals possible locations for new items. • Another benefit of product mapping is that it identifies market segments. Sales and Profit Market Profile and Image
87. 87. One objective is to create a product line to induce up-selling A different objective is to create a product line that facilitates cross- selling Companies seeking high market share and market growth will generally carry longer product lines PRODUCT AND BRAND RELATIONSHIPS ProductLineLength
88. 88. Those emphasizing high profitability will carry shorter lines consisting of carefully chosen items. Product lines tend to lengthen over time. A company lengthens its product line in two ways: line stretching and line filling PRODUCT AND BRAND RELATIONSHIPS ProductLineLength
89. 89. PRODUCT AND BRAND RELATIONSHIPS LineStretching Line Stretching occurs when a company lengthens its product line beyond its current range, whether down-market, up-market, or both ways. Down-Market Stretch: A company positioned in the middle market may want to introduce a lower-priced line for any of three reasons: • The company may notice strong growth opportunities. • The company may wish to tie up lower-end competitors who might otherwise try to move up-market. • The company may find the middle market stagnating or declining Down-Market Stretch Up-Market Stretch Two-Way Stretch Line Filling
90. 90. PRODUCT AND BRAND RELATIONSHIPS LineStretching Up-Market Stretch: enter the high end of the market to achieve more growth, realize higher margins, or simply position themselves as full- line manufacturers. • Some companies use their own names • Some companies create new names • Some brands have used modifiers to signal a quality improvement Down-Market Stretch Up-Market Stretch Two-Way Stretch Line Filling
91. 91. PRODUCT AND BRAND RELATIONSHIPS LineStretching Two-Way Stretch: companies serving the middle market might stretch their line in both directions. Down-Market Stretch Up-Market Stretch Two-Way Stretch Line Filling
92. 92. PRODUCT AND BRAND RELATIONSHIPS LineStretching • Line Filling: lengthening the product line by adding more items within the present range; overdone if it results in cannibalization and confusion Down-Market Stretch Up-Market Stretch Two-Way Stretch Line Filling
93. 93. PRODUCT AND BRAND RELATIONSHIPS ProductMixPricing • The firm searches for a set of prices that maximizes profits on the total mix. Product Line Pricing Optional-Feature Pricing Captive-Product Pricing Two-Part Pricing (fixed fee plus a variable usage fee) By-Product Pricing Product-Bundling Pricing
94. 94. PRODUCT AND BRAND RELATIONSHIPS Co-brandingAndIngredientBranding • Co-Branding: also called dual branding or brand bundling - two or more well-known brands are combined into a joint product or marketed together in some fashion. Same- company co-branding Joint- venture co- branding
95. 95. Product can be convincingly positioned by virtue of the multiple brands. Co-branding can generate greater sales from the existing market and open opportunities for new consumers and channels. It can also reduce the cost of product introduction because it combines two well- known images and speeds adoption Co-branding may be a valuable means to learn about consumers and how other companies approach them PRODUCT AND BRAND RELATIONSHIPS Co-brandingAdvantages
96. 96. Risks and lack of control in becoming aligned with another brand in consumers’ minds Consumer expectations of co-brands are likely to be high, so unsatisfactory performance could have negative repercussions for both brands If the other brand enters a number of co-branding arrangements, overexposure may dilute the transfer of any association. It may also result in a lack of focus on existing brands. Consumers may feel less sure of what they know about the brand PRODUCT AND BRAND RELATIONSHIPS Co-branding Disadvantages
97. 97. • For host products whose brands are not that strong, ingredient brands can provide differentiation and important signals of quality • An interesting take on ingredient branding is self-branded ingredients that companies advertise and even trademark • Ingredient brands try to create enough awareness and preference for their product so consumers will not buy a host product that doesn’t contain it. Many manufacturers make components or materials that enter final branded products but lose their individual identity PRODUCT AND BRAND RELATIONSHIPS IngredientBranding
98. 98. Consumers must believe the ingredient matters to the performance and success of the end product. Ideally, this intrinsic value is easily seen or experienced Consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior A distinctive symbol or logo must signal that the host product contains the ingredient. Symbol or logo “seal” and is simple and versatile, credibly communicating quality and confidence “Pull” and “push” program must help consumers understand the advantages of the branded ingredient. Channel members must offer support such as consumer advertising and promotions. What Are The Requirements For Successful Ingredient Branding?
99. 99. PRODUCT AND BRAND RELATIONSHIPS VideoTime–“Theartofinnovation” "Rethink. Redefine. Recreate." His talk is titled "The Art of Innovation.“  Guy Takeo Kawasaki is an American marketing specialist, author, and Silicon Valley venture capitalist. He was one of the Apple employees originally responsible for marketing their Macintosh computer line in 1984. He popularized the word evangelist in marketing the Macintosh and the concepts of evangelism marketing and technology evangelism.  https://www.youtube.com/watch?v= Mtjatz9r-Vc
100. 100. PACKAGING, LABELING, WARRANTIES, AND GUARANTEES Section 7
101. 101. PACKAGING WhatIsTheFifthP? • Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product. • Packaging is important because it is the buyer’s first encounter with the product Draws the consumer in and encourages product choice Acts as a “five-second commercial” for the product Affects consumers’ later product experiences when they open it and use what’s inside Packaging may be an important part of a brand’s equity
102. 102. Self-service (more choices; less explanation) Consumer affluence (increases willingness to pay for the convenience, appearance, dependability, and prestige of better packages). Company and brand image (recognition of the company or brand) Innovation opportunity (make products more convenient and easier to use) PACKAGING FactorsContributingToTheEmphasisOnPackaging
103. 103. • Identify the brand • Convey descriptive and persuasive information • Facilitate product transportation and protection • Assist at-home storage • Aid product consumption PACKAGING PackagingObjectives
104. 104. It identifies the product or brand The label might describe the product: who made it, where and when, what it contains, how it is to be used, and how to use it safely The label might promote the product through attractive graphics In 1914, the Federal Trade Commission Act held that false, misleading, or deceptive labels or packages constitute unfair competition PACKAGING FunctionsOfLabels
105. 105. PACKAGING WarrantiesAndGuarantees • Warranties are formal statements of expected product performance by the manufacturer. Products under warranty can be returned to the manufacturer or designated repair center for repair, replacement, or refund. Whether expressed or implied, warranties are legally enforceable Extended warranties and service contracts can be extremely lucrative for manufacturers and retailers
106. 106. PACKAGING WarrantiesAndGuarantees • Many sellers offer either general or specific guarantees Guarantees reduce the buyer’s perceived risk They suggest that the product is of high quality and the company and its service performance are dependable They can be especially helpful when the company or product is not well known or when the product’s quality is superior to that of competitors.

What occurs when any company lengthens its product line beyond its current range?

Is anything that can be offered to a market to satisfy a want or need including physical goods?

When the physical product Cannot be easily differentiated the key to competitive success may lie in adding valued services and improving their quality?

What types of goods are purchased frequently immediately and with minimum effort by consumers?