1. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG Lamb, Hair, McDaniel 2007-2008 9 CHAPTER Product Concepts

2. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 Learning Outcomes Define the term product Classify consumer products Define the terms product item, product line, and product mix Describe marketing uses of branding LO 1 LO 2 LO 3 LO 4

3. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 Learning Outcomes Describe marketing uses of packaging and labeling Discuss global issues in branding and packaging Describe how and why product warranties are important marketing tools LO 5 LO 6 LO 7

4. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 Define the term product What Is a Product? LO 1

5. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 LO 1 What Is a Product? Everything, both favorable and unfavorable, that a person receives in an exchange.  Tangible Good  Service  Idea Product

6. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 LO 1 What Is a Product? Product is the starting point of Marketing Mix Promotion Place (Distribution) PriceProduct

7. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 REVIEW LEARNING OUTCOME LO 1 Define the term product Product Good Service Idea Good Service Idea

8. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 Classify consumer products Types of Consumer Products LO 2

9. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 LO 2 Types of Products Business Product Business Product Consumer Product Consumer Product A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. A product bought to satisfy an individual’s personal needs or wants A product bought to satisfy an individual’s personal needs or wants

10. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 LO 2 Types of Consumer Products Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products

11. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 LO 2 Types of Consumer Products Market Development Diversification Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets Convenience Product Shopping Product Specialty Product Unsought Product A relatively inexpensive item that merits little shopping effort A product that requires comparison shopping, because it is usually more expensive and found in fewer stores A particular item for which consumers search extensively and are reluctant to accept substitutes A product unknown to the potential buyer or a known product that the buyer does not actively seek

12. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 REVIEW LEARNING OUTCOME LO 2 Consumer Products

13. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 Define the terms product item, product line, and product mix Product Items, Lines, and Mixes Product Items, Lines, and Mixes LO 3

14. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 Product Items, Lines, and Mixes LO 3 Product Item Product Line Product Mix A specific version of a product that can be designated as a distinct offering among an organization’s products. A group of closely-related product items. All products that an organization sells.

15. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 Campbell’s Product Lines and Mix LO 3 {}

16. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 Benefits of Product Lines LO 3 Equivalent Quality Efficient Sales and Distribution Standardized Components Standardized Components Package Uniformity Advertising Economies

17. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 Product Mix Width LO 3 The number of product lines an organization offers.  Diversifies risk  Capitalizes on established reputations The number of product lines an organization offers.  Diversifies risk  Capitalizes on established reputations Product Mix Width

18. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 Product Line Depth LO 3 The number of product Items in a product line.  Attracts buyers with different preferences  Increases sales/profits by further market segmentation  Capitalizes on economies of scale  Evens out seasonal sales patterns The number of product Items in a product line.  Attracts buyers with different preferences  Increases sales/profits by further market segmentation  Capitalizes on economies of scale  Evens out seasonal sales patterns Product Line Depth Product Line Depth

19. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 Adjustments LO 3 Product Modification Product Repositioning Product Line Extension or Contraction Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes

20. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 Types of Product Modifications LO 3 Quality Modification Functional Modification Style Modification

21. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21 Planned Obsolescence LO 3 Planned Obsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.

22. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22 Repositioning LO 3 Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands?

23. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23 Product Line Extension LO 3 Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry.

24. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24 Product Line Contraction LO 3  Some products have low sales or cannibalize sales of other items  Resources are disproportionately allocated to slow-moving products  Items have become obsolete because of new product entries Symptoms of Product Line Overextension

25. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25 REVIEW LEARNING OUTCOME LO 3 Product item, product line, and product mix

26. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26 Describe marketing uses of branding Branding LO 4

27. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27 LO 4 Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. Brand

28. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28 LO 4 Branding Brand Name Brand Mark Brand Equity That part of a brand that can be spoken, including letters, words, and numbers The elements of a brand that cannot be spoken The value of company and brand names Global Brand A brand where at least 20 percent of the product is sold outside its home country

29. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29 LO 4 Benefits of Branding Product Identification Repeat Sales New Product Sales

30. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30 Biz Flix LO 4 Josie and the Pussycats

31. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31 LO 4 Top Five Global and North American Brands Global 1. Apple 2. Google 3. IKEA 4. Starbucks 5. Al Jazeera North American 1. Apple 2. Google 3. Target 4. Starbucks 5. Pixar SOURCE: Deborah L. Vence, “Not Taking Care of Business,” Marketing News, March 15, 2005, p. 19.

32. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32 LO 4 Branding Strategies BrandNo Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Individual Brand Family Brand Combi- nation

33. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 33 LO 4 Generic Brand A no-frills, no-brand-name, low-cost product that is simply identified by its product category. Generic Product Generic Product

34. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34 LO 4 Manufacturers’ Brands Versus Private Brands Manufacturers’ Brand Private Brand The brand name of a manufacturer. A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand.

35. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 35 LO 4 Advantages of Manufacturers’ Brands  Heavy consumer ads by manufacturers  Attract new customers  Enhance dealer’s prestige  Rapid delivery, carry less inventory  If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer

36. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36 LO 4 Advantages of Private Brands  Earn higher profits on own brand  Less pressure to mark down price  Manufacturer can become a direct competitor or drop a brand/reseller  Ties customer to wholesaler or retailer  Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brands

37. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 37 LO 4 Individual Brands Versus Family Brands Individual Brand Family Brand Using different brand names for different products. Marketing several different products under the same brand name.

38. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 38 LO 4 Cobranding Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding http://www.bose.com Online

39. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 39 LO 4 Trademarks A Trademark is the exclusive right to use a brand.  Many parts of a brand and associated symbols qualify for trademark protection.  Trademark right comes from use rather than registration.  The mark has to be continuously protected.  Rights continue for as long as the mark is used.  Trademark law applies to the online world.

40. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 40 REVIEW LEARNING OUTCOME LO 4 Marketing Uses of Branding

41. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 41 Describe marketing uses of packaging and labeling Packaging LO 5

42. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 42 Functions of Packaging LO 5 Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling http://www.levesquedesign.com/ http://www.design4packaging.com Online

43. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 43 Labeling LO 5 Online http://www.fda.gov Persuasive  Focuses on promotional theme  Consumer information is secondary Informational  Helps make proper selections  Lowers cognitive dissonance  Includes use/care

44. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 44 Universal Product Codes LO 5 Universal Product Codes (UPCs) A series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products.

45. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 45 REVIEW LEARNING OUTCOME LO 5 Packaging and Labeling

46. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 46 Discuss global issues in branding and packaging Global Issues in Branding and Packaging LO 6

47. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 47 Global Issues in Branding LO 6 Adaptations & Modifications Global Options for Branding One Brand Name Everywhere Different Brand Names in Different Markets

48. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 48 Global Issues in Packaging LO 6 Aesthetics Global Considerations for Packaging Climate Considerations Labeling

49. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 49 REVIEW LEARNING OUTCOME LO 6 Global Issues in Branding and Packaging Branding Choices: 1 name Modify or adapt 1 name Different names in different markets Packaging Considerations: Labeling Aesthetics Climate

50. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 50 Describe how and why product warranties are important marketing tools Product Warranties LO 7

51. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 51 Product Warranties LO 7 Warranty Express Warranty Implied Warranty A confirmation of the quality or performance of a good or service. A written guarantee. An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC)

52. Chapter 9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 52 REVIEW LEARNING OUTCOME LO 7 Product Warranties Express warranty=written guarantee Implied warranty=unwritten guarantee