Chapter 12 Category and Brand Management, Product Identification, and New-Product Development

Chapter Objectives Explain the benefits of category and brand management. Identify the different types of brands. Explain the strategic value of brand equity. Discuss how companies develop strong identities for their products and brands. Identify and briefly describe each of the four strategies for new-product development. Describe the consumer adoption process. List the stages in the process for developing new products. Explain the relationship between product safety and product liability.

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: name, term, sign, symbol, design, or some combination that identifies the products of a firm while differentiating them from the competition’s

Brand Loyalty Brand recognition: Consumer awareness and identification of a brand. Brand preference: Consumer reliance on previous experiences with a product to choose that product again. Brand insistence: Consumer refusals of alternatives and extensive search for desired merchandise.

Types of Brands Generic product: item characterized by plain label, with no advertising and no brand name Manufacturers’ brand or National Brand: brand name owned by a manufacturer or other producer Private brands: brand name placed on products marketed by wholesalers and retailers Captive brands: national brands that are sold exclusively by a retail chain

Family brand: brand name that identifies several related products 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

Brand equity: added value that a respected, well-known brand name gives to a product in the marketplace. Young & Rubicam Model: Brand Asset Valuator (see text)

Brand manager: Marketing professional charged with planning and implementing marketing strategies and tactics for a brand Category management: Product management system in which a category manager—with profit and loss responsibility—oversees a product line.

Product Identification 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: symbol or pictorial design that identifies a product Generic name: branded name that has become a generically descriptive term for a class of products (e.g., nylon, aspirin, kerosene, and zipper)

Trademark: legal protection which confers the exclusive right to user brand name, trade mark, and any slogan or product name abbreviation

Trade Dress: visual cues used in branding to create an overall look The McDonald’s arches provide an example of trade dress Developing Global Brand Names and Trademarks An excellent brand name or symbol in one country may prove disastrous in another

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)

Brand extension: application of a popular brand name to a new product in an unrelated product category Line extensions refers to new sizes, styles, or related products

Brand licensing: practice allowing other companies to use a brand name in exchange for a payment Nabisco Licenses Its Oreo Brand to Post Cereal

New Product Planning 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

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

Consumer innovator: People who purchase new products almost as soon as the products reach the market Identifying Early Adopters Substantial benefits may be obtained by locating the likely first buyers of new products (innovators and early adopters) Diffusion process: Process by which new goods or services are accepted in the marketplace

Rate of Adoption Determinants Characteristics of a product innovation that influence its adoption rate include: Relative advantage Compatibility Complexity Possibility of trial use Observability

Organizing for New Product Development New-Product Committees New-Product Departments Product Managers Venture Teams Task forces

New Product Development Process Idea Generation Sales force, Customers, Employees, R&D specialists, The competition, Suppliers, Retailers, Independent inventors Screening Separates ideas with commercial potential from those that cannot meet company objectives 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

Development Converting an idea into a physical product 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 Commercialization The firm establishes marketing strategies, and funds outlays for production and marketing

Product Safety and Liability Product Liability: responsibility of manufacturers and marketers for injuries and damages caused by their products