1. Copyright ©2009 by Cengage Learning Inc. All rights reserved 1 Designed by Eric Brengle B-books, Ltd. CHAPTER 10 Product Concepts Prepared by Amit Shah Frostburg State University Marketing Lamb, Hair, McDaniel 10

2. Copyright ©2009 by Cengage Learning Inc. All rights reserved What Is a Product? 2 LO I Product Everything, both favorable and unfavorable, that a person receives in an exchange.  Tangible Good  Service  Idea

3. Copyright ©2009 by Cengage Learning Inc. All rights reserved What Is a Product? 3 LO I Promotion Place (Distribution) PriceProduct Product is the starting point of Marketing Mix

4. Copyright ©2009 by Cengage Learning Inc. All rights reserved Types of Products 4 LO 2 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

5. Copyright ©2009 by Cengage Learning Inc. All rights reserved Types of Consumer Products 5 LO 2 Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products

6. Copyright ©2009 by Cengage Learning Inc. All rights reserved Types of Consumer Products 6 LO 2 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

7. Copyright ©2009 by Cengage Learning Inc. All rights reserved Product Items, Lines, and Mixes 7 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.

8. Copyright ©2009 by Cengage Learning Inc. All rights reserved Campbell’s Product Lines and Mix 8 LO 3

9. Copyright ©2009 by Cengage Learning Inc. All rights reserved Benefits of Product Lines 9 LO 3 Equivalent Quality Efficient Sales and Distribution Standardized Components Standardized Components Package Uniformity Advertising Economies

10. Copyright ©2009 by Cengage Learning Inc. All rights reserved Product Mix Width 10 LO 3 Product Mix Width The number of product lines an organization offers.  Diversifies risk  Capitalizes on established reputations

11. Copyright ©2009 by Cengage Learning Inc. All rights reserved Product Line Depth 11 LO 3 Product Line Depth Product Line Depth 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

12. Copyright ©2009 by Cengage Learning Inc. All rights reserved Adjustments 12 LO 3 Product Modification Product Repositioning Product Line Extension or Contraction Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes

13. Copyright ©2009 by Cengage Learning Inc. All rights reserved Types of Product Modifications 13 LO 3 Quality Modification Functional Modification Style Modification

14. Copyright ©2009 by Cengage Learning Inc. All rights reserved Planned Obsolescence 14 LO 3 Planned Obsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.

15. Copyright ©2009 by Cengage Learning Inc. All rights reserved Repositioning 15 LO 3 Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands?

16. Copyright ©2009 by Cengage Learning Inc. All rights reserved Product Line Extension 16 LO 3 Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry.

17. Copyright ©2009 by Cengage Learning Inc. All rights reserved Product Line Contraction 17 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

18. Copyright ©2009 by Cengage Learning Inc. All rights reserved Brand 18 LO 4 Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products.

19. Copyright ©2009 by Cengage Learning Inc. All rights reserved Branding 19 LO 4 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 one-third of the product is sold outside its home country

20. Copyright ©2009 by Cengage Learning Inc. All rights reserved Benefits of Branding 20 LO 4 Product Identification Repeat Sales New Product Sales

21. Copyright ©2009 by Cengage Learning Inc. All rights reserved Generic Brand 21 LO 4 Generic Product Generic Product A no-frills, no-brand-name, low-cost product that is simply identified by its product category.

22. Copyright ©2009 by Cengage Learning Inc. All rights reserved Manufacturers’ Brands Versus Private Brands 22 LO 4 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.

23. Copyright ©2009 by Cengage Learning Inc. All rights reserved Advantages of Manufacturers’ Brands 23 LO 4  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

24. Copyright ©2009 by Cengage Learning Inc. All rights reserved Advantages of Private Brands 24 LO 4  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

25. Copyright ©2009 by Cengage Learning Inc. All rights reserved Cobranding 25 LO 4 Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding

26. Copyright ©2009 by Cengage Learning Inc. All rights reserved Trademarks 26 LO 4  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. A Trademark is the exclusive right to use a brand.

27. Copyright ©2009 by Cengage Learning Inc. All rights reserved Functions of Packaging 27 LO 5 Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling

28. Copyright ©2009 by Cengage Learning Inc. All rights reserved Labeling 28 LO 5 Persuasive  Focuses on promotional theme  Consumer information is secondary Informational  Helps make proper selections  Lowers cognitive dissonance  Includes use/care http ://www.fda.gov Online

29. Copyright ©2009 by Cengage Learning Inc. All rights reserved Universal Product Codes 29 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.