Part Five Product Decisions 13 Branding and Packaging

Copyright © Houghton Mifflin Company. All rights reserved.13 | 2 Objectives 1.To explain the value of branding 2.To understand brand loyalty 3.To analyze the major components of brand equity 4.To recognize the types of brands and their benefits 5.To understand how to select and protect brands 6.To examine three types of branding policies

Copyright © Houghton Mifflin Company. All rights reserved.13 | 3 Objectives (cont’d) 7.To understand co-branding and brand licensing 8.To describe the major packaging functions and design considerations and how packaging is used in marketing strategies 9.To examine the functions of labeling and describe some legal issues pertaining to labeling

Copyright © Houghton Mifflin Company. All rights reserved.13 | 4 Chapter Outline Branding Packaging Labeling

Copyright © Houghton Mifflin Company. All rights reserved.13 | 5 Branding: Key Terms Brand –An identifying name, term, design, or symbol –One item, family of items, or all items of a seller Corvette, Chevrolet, General Motors Brand Name –The part of a brand that can be spoken –Words, letters, numbers Union 76, NBA, 49’ers Brand Mark –The part of a brand not made up of words –Symbols or designs Nike swoosh, Mercedes star, McDonald’s arches

Copyright © Houghton Mifflin Company. All rights reserved.13 | 6 Branding: Key Terms (cont’d) Trademark –A legal designation of exclusive use of a brand Coca-Cola®, Hewlett-Packard® Trade Name –Full legal name of an organization American Telephone and Telegraph Corporation (AT&T)

Copyright © Houghton Mifflin Company. All rights reserved.13 | 7 Value of Branding For Consumers –Helps speed consumer purchases by identifying specific preferred products –Provides a form of self-expression and status –Evaluates product quality to reduce the risk of purchase

Copyright © Houghton Mifflin Company. All rights reserved.13 | 8 Value of Branding (cont’d) For Marketers –Identifies and differentiates a firm’s products from competing products –Helps in the introduction of new products –Facilitates the promotion of all same-brand products –Fosters the development of brand loyalty –Can create valuable intangible assets

Copyright © Houghton Mifflin Company. All rights reserved.13 | 9 Brand Loyalty: Key Terms Brand Loyalty –A customer’s favorable attitude toward a specific brand Brand Recognition –A customer’s awareness that a brand exists and is an alternative purchase

Copyright © Houghton Mifflin Company. All rights reserved.13 | 10 Brand Loyalty: Key Terms (cont’d) Brand Preference –The degree of brand loyalty in which a customer prefers one brand over competitive offerings Brand Insistence –The degree of brand loyalty in which a customer strongly prefers a specific brand and will accept no substitute

Copyright © Houghton Mifflin Company. All rights reserved.13 | 11 Major Elements of Brand Equity FIGURE 13.1 Source: Adapted with the permission of The Free Press, a division of Simon & Schuster Adult Publishing Group, from Managing Brand Equity: Capitalizing on the Value of a Brand Name by David A. Aaker. Copyright © 1991 by David A. Aaker.

Copyright © Houghton Mifflin Company. All rights reserved.13 | 12

Copyright © Houghton Mifflin Company. All rights reserved.13 | 13

Copyright © Houghton Mifflin Company. All rights reserved.13 | 14 Types of Brands Manufacturer Brands –Brands initiated by producers Private Distributor Brands –Brands initiated and owned by resellers Dealer brands, private brands, store brands Generic Brands –Brands indicating only the product category

Copyright © Houghton Mifflin Company. All rights reserved.13 | 15 Consumers’ Perceptions of Store and Manufacturers’ Brands for Selected Product Groups FIGURE 13.2 Source: “Store Brands at the Turning Point,” Consumer Research Network, 3624 Market Street, Philadelphia, PA.

Copyright © Houghton Mifflin Company. All rights reserved.13 | 16 Selecting a Brand Name The name should –be easy to say, spell, and recall. –indicate the product’s major benefits. –suggest the product’s major uses and special characteristics. –be distinctive, setting it apart from competing brands. –be compatible with all products in line. –be designed for use and recognition in all types of media.

Copyright © Houghton Mifflin Company. All rights reserved.13 | 17 Protecting a Brand Degree of brand protection through registration –Fanciful –Arbitrary –Suggestive –Descriptive –Generic Surnames and descriptive, geographic, or functional names are also difficult to protect. Registration with the U.S. Patent and Trademark Office protects a brand for ten years with indefinite renewals.MostLeast

Copyright © Houghton Mifflin Company. All rights reserved.13 | 18 Branding Policies Individual Branding –A policy of naming each product differently –Avoids stigmatizing all products due to a failed product Family Branding –Branding all of a firm’s products with the same name –Promotion of one item also promotes all other products

Copyright © Houghton Mifflin Company. All rights reserved.13 | 19 Branding Policies (cont’d) Brand-Extension Branding –Using an existing brand name for an improved or new product –Provides support for new products through established brand name and image

Copyright © Houghton Mifflin Company. All rights reserved.13 | 20 Co-Branding Using two or more brands on one product to capitalize on the brand equity (customer confidence and trust) of multiple brands Brands involved must represent a complementary fit in the minds of consumers. Helps differentiate a firm’s product from those of its competitors Helps take advantage of distribution capabilities of co-branding partners

Copyright © Houghton Mifflin Company. All rights reserved.13 | 21 Brand Licensing An agreement whereby a company permits another organization to use its brand on other products for a licensing fee Advantages –Low-cost and/or free publicity –Revenues from royalty fees Disadvantages –Lack of manufacturing control –Creating too many unrelated products –Licensing arrangements can fail

Copyright © Houghton Mifflin Company. All rights reserved.13 | 22 Packaging Involves the development of a container and a graphic design for a product Packaging Functions –Protect the product from damage –Offer convenience to consumers –Prevent waste and make storage easier –Promote the product by communicating its features, uses, benefits, and image

Copyright © Houghton Mifflin Company. All rights reserved.13 | 23 Major Packaging Considerations Cost of Packaging –Limited consumer willingness to pay for better packaging Tamper-Resistant Packaging –FDA regulations and consumer safety concerns Family Packaging –Similar packaging for all of a firm’s products or packaging that has one common design element A A

Copyright © Houghton Mifflin Company. All rights reserved.13 | 24 Major Packaging Considerations (cont’d) Promotional Role (Informing the Consumer) –Verbal and nonverbal symbols –Size, shape, texture, color, and graphics Reseller Needs –Transportation, storage, and handling Environmentally Responsible –Biodegradable and recyclable

Copyright © Houghton Mifflin Company. All rights reserved.13 | 25 Packaging and Marketing Strategy Altering the Package –To update style and to meet increased competition –To highlight new features –To take advantage of new packaging materials –To make the product safer or easier to use –To reduce packaging costs Secondary-Use Packaging –Reusable packaging adds customer value Category-Consistent Packaging –Packaging reflects customer expectations for the expected appearance of products in a category

Copyright © Houghton Mifflin Company. All rights reserved.13 | 26 Packaging and Marketing Strategy (cont’d) Innovative Packaging –Unique features or ways of packaging that make a product more distinct from its competitors Multiple Packaging –Bundling multiple units of a product together to encourage usage and to increase demand Handling-Improved Packaging –Packaging that has been changed to facilitate product handling in the distribution channel

Copyright © Houghton Mifflin Company. All rights reserved.13 | 27

Copyright © Houghton Mifflin Company. All rights reserved.13 | 28 Criticisms of Packaging Lack of functionality –Leak, difficult to open/close/seal, hard-to- use designs Safety –Sharp edges, broken glass, health hazards Deceptive –Shape, size, colors mask true nature of product Cost of packaging –What customers prefer is costly

Copyright © Houghton Mifflin Company. All rights reserved.13 | 29 Labeling –Providing identifying, promotional, legal, or other information on package labels Universal Product Code (UPC) –A series of electronically readable lines identifying a product and containing inventory and pricing information

Copyright © Houghton Mifflin Company. All rights reserved.13 | 30 Labeling (cont’d) Purposes of Labels –Help identify the product Display brand name and unique graphics –Support promotional efforts for the product Coupons, discounts, product features –Provide legally required labeling information Fair Packaging and Labeling Act of 1966 Nutrition Labeling Act of 1990

Copyright © Houghton Mifflin Company. All rights reserved.13 | 31 Labeling (cont’d) Purposes of Labels (cont’d) –“Green Labeling” issues Labeling packaging as made of recyclable materials –Provide information on product origin “Made in the USA” 1st

Copyright © Houghton Mifflin Company. All rights reserved.13 | 32 After reviewing this chapter you should: Be able to explain the value of branding Understand brand loyalty Be able to analyze the major components of brand equity Recognize the types of brands and their benefits Understand how to select and protect brands Know about three types of branding policies

Copyright © Houghton Mifflin Company. All rights reserved.13 | 33 After reviewing this chapter you should: Understand co-branding and brand licensing Be able to describe the major packaging functions and design considerations and how packaging is used in marketing strategies Understand the functions of labeling and its legal issues