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Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Part 4: Product Decisions 11. Product and Service Strategies.

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Presentation on theme: "Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Part 4: Product Decisions 11. Product and Service Strategies."— Presentation transcript:

1 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Part 4: Product Decisions 11. Product and Service Strategies 12. Category and Brand Management, Product Identification, and New- Product Development

2 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter 12 Category and Brand Management, Product Identification, and New-Product Development

3 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Chapter Objectives 1.Explain the benefits of category and brand management. 2.Identify the different types of brands. 3.Explain the strategic value of brand equity. 4.Discuss how companies develop strong identities for their products and brands. 5.Identify and briefly describe each of the four strategies for new-product development. 6.Describe the consumer adoption process. 7.List the stages in the process for developing new products. 8.Explain the relationship between product safety and product liability.

4 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Managing Brands for Competitive Advantage Branding is the process of creating that identity. Buyers respond to branding by making repeat purchases because they identify the item with the name of its producer. Brand: Brand: name, term, sign, symbol, design, or some combination that identifies the products of a firm while differentiating them from the competition’s

5 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Brand Loyalty Brand Loyalty Brand recognition Brand recognition: Consumer awareness and identification of a brand. Brand preference Brand preference: Consumer reliance on previous experiences with a product to choose that product again. Brand insistence Brand insistence: Consumer refusals of alternatives and extensive search for desired merchandise.

6 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Types of Brands Generic product Generic product: item characterized by plain label, with no advertising and no brand name Manufacturers’ brand or National Brand Manufacturers’ brand or National Brand: brand name owned by a manufacturer or other producer Private brands Private brands: brand name placed on products marketed by wholesalers and retailers

7 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Captive brands Captive brands: national brands that are sold exclusively by a retail chain Family brand Family brand: brand name that identifies several related products Individual brand Individual brand: unique brand name that identifies a specific offering within a firm’s product line and that is not grouped under a family brand

8 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Brand equity Brand equity: added value that a respected, well-known brand name gives to a product in the marketplace. Brand equity increases the likelihood that consumers will recognize the firm’s product when they make purchase decisions A strong brand equity can contribute to buyers’ perceptions of product quality Branding can also reinforce customer loyalty and repeat purchases

9 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Brand Equity Brand Equity The Young & Rubicam Model: Brand Asset Valuator

10 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved The Role of Category and Brand Managers The Role of Category and Brand Managers Brand manager Brand manager: Marketing professional charged with planning and implementing marketing strategies and tactics for a brand Category management Category management: Product management system in which a category manager—with profit and loss responsibility—oversees a product line.

11 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Product Identification Brand name Brand name: part of a brand consisting of words or letters that form a name that identifies and distinguishes a firm’s offering from those of its competitors Brand mark Brand mark: symbol or pictorial design that identifies a product Generic name Generic name: branded name that has become a generically descriptive term for a class of products (e.g., nylon, aspirin, kerosene, and zipper)

12 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Trademark Trademark: legal protection which confers the exclusive right to user brand name, trade mark, and any slogan or product name abbreviation Trade Dress Trade Dress: visual cues used in branding to create an overall look The distinctive shape of Philips light bulbs and the McDonald’s arches provide an example of trade dress

13 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Developing Global Brand Names and Trademarks Developing Global Brand Names and Trademarks Potentially an acute problem for international marketers An excellent brand name or symbol in one country may prove disastrous in another Trademarks that are effective in their home countries may fare less well in other cultures

14 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Packaging A package serves three major objectives: Protection against damage, spoilage, and pilferage Assistance in marketing the product Cost effectiveness Labeling Label Universal Product Code (UPC)

15 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Brand extension Brand extension: application of a popular brand name to a new product in an unrelated product category Line extensions Line extensions refers to new sizes, styles, or related products Brand licensing Brand licensing: practice allowing other companies to use a brand name in exchange for a payment

16 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved New Product Planning As a firm’s offerings enter the maturity and decline stages of the product life cycle, it must add new items to continue to prosper Alternative Product Development Strategies

17 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Product Development Strategies Product Development Strategies Product positioning: consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages in relation to those of competing brands Cannibalization: a loss of sales of the current product due to competition from a new product in the same line

18 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved The 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. Awareness Interest Evaluation Trial Adoption or rejection

19 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Consumer innovator Consumer innovator: People who purchase new products almost as soon as the products reach the market Diffusion process Diffusion process: Process by which new goods or services are accepted in the marketplace

20 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Figure 12.8 Figure 12.8 Categories of Adopters Based on Relative Times of Adoption

21 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Identifying Early Adopters Identifying Early Adopters Substantial benefits may be obtained by locating the likely first buyers of new products (innovators and early adopters) Suggestions for modifying the product may be obtained from these individuals Acceptance or rejection of the innovation by innovators and early adopters can help forecast sales

22 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Rate of Adoption Determinants Rate of Adoption Determinants Characteristics of a product innovation that influence its adoption rate include:  Relative advantage  Compatibility  Complexity  Possibility of trial use  Observability

23 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Organizing for New Product Development Organizing for New Product Development New-Product Committees New-Product Departments Product Managers Venture Teams  Task forces

24 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved New Product Development Process New product development process: six stages through which new product ideas progress before being introduced to the overall market

25 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Idea Generation Idea Generation New product ideas come from many sources including: Sales force, Customers, Employees, R&D specialists, The competition, Suppliers, Retailers, Independent inventors Screening Screening Screening separates ideas with commercial potential from those that cannot meet company objectives Checklists of development standards can be helpful at this stage

26 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Business Analysis Business Analysis The business analysis consists of assessing the new product’s market potential, growth rate, likely competitive strengths, and compatibility of the proposed product with organizational resources Concept testing Development Development Converting an idea into a physical product Requires interaction among many of the firm’s departments Prototypes may go through many changes

27 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Test Marketing Test Marketing Test marketing: Introduction of a trial version of a new product supported by a complete marketing campaign to a selected city of television coverage area Some firms skip this stage, moving directly to full-scale commercialization Commercialization Commercialization In this stage, the firm establishes marketing strategies, and funds outlays for production and marketing The sales force, marketing intermediaries and potential customers are acquainted with the new product

28 Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved Product Safety and Liability Product Liability Product Liability: responsibility of manufacturers and marketers for injuries and damages caused by their products


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