1. Chapter 11 Product, Branding, and Packaging Decisions

2. Learning Objectives (1 of 2)
Learning Objective 11.1 Describe the components of a product. Learning Objective 11.2 Identify the types of consumer products. Learning Objective 11.3 Explain the difference between a product mix’s breath and a product line’s depth. Learning Objective 11.4 Identify the advantages that brands provide firms and consumers.
LO1 Describe the components of a product.
LO2 Identify the types of consumer products.
LO3 Explain the difference between a product mix’s breadth and a product line’s depth.
LO4 Identify the advantages that brands provide firms and consumers.
These are the learning objectives for this chapter.

3. Learning Objectives (2 of 2)
Learning Objective 11.5 Explain the various components of brand equity. Learning Objective 11.6 Determine the various types of branding strategies used by firms. Learning Objective 11.7 Distinguish between brand extension and line extension. Learning Objective 11.8 Indicate the advantages of a product’s packaging and labeling strategy.
These are the learning objectives for this chapter.
LO5 Explain the various components of brand equity.
LO6 Determine the various types of branding strategies used by firms.
LO7 Distinguish between brand extension and line extension.
LO8 Indicate the advantages of a product’s packaging and labeling strategy.

4. Types of Products Specialty Shopping Convenience Unsought
Consumer products are products and services used by people for their personal use. Marketers further classify these products by the way they are used and purchased. Specialty products/services are those for which customers express such a strong preference that they will expend considerable effort to search for the best suppliers. Shopping products/services are products or services for which consumers will spend a fair amount of time comparing alternatives, such as furniture, apparel, fragrances, appliances, and travel. Convenience products/services are those products or services for which the consumer is not willing to expend any effort to evaluate prior to purchase. Unsought products/services are products or services that consumers either do not normally think of buying or do not know about. 

5. PROGRESS CHECK (1 of 5) Explain the three components of a product.
What are the four types of consumer products?
Core customer value, actual product, and associated services
Specialty, shopping, convenience, and unsought

6. Product Mix and Product Line Decisions (1 of 2)
Product Lines
Mercedes-Benz Cars
Mercedes-AMG cars 
Smart Cars 
Mercedes-Benz Vans
A-Class
C 63
Smart ForTwo 
Sprinter Worker
B-Class
CLS 63
Smart ForTwo Cabrio
Sprinter Cargo Van
C-Class
GLE 450
Smart ForFour
Sprinter Crew Van
CLA
SL Convertible
Smart ForTwo Electric Drive
Sprinter Passenger Van
CLS GT
Metro Passenger Van
G-Class
Metro Cargo Van
E-Class
Marco Polo Camper Van 
GLA
R-Class
S-Class
V-Class
The complete set of all products and services offered by a firm is called its product mix. This chapter uses Mercedes-Benz brands as examples. Many students may be familiar with the luxury cars Mercedes-Benz produces but not know they have so many other products.

7. Product Mix and Product Line Decisions (2 of 2)
Breadth
Number of product lines
Depth
Number of categories within a product line
The product mix reflects the breadth and depth of the company’s product lines. A firm’s product mix breadth represents a count of the number of product lines offered by the firm. Product line depth, in contrast, equals the number of products within a product line. 
Courtesy Pepsi Cola Company

8. PROGRESS CHECK (2 of 5)
What is the difference between product line breadth versus depth?
Why change product line breadth?
Why change product line depth?
Breadth (sometimes also referred to as variety) represents the number of product lines offered by the firm. Product line depth, in contrast, is the number of categories within a product line.
To capture new or evolving markets, increase sales, and compete in new venues; to address changing market conditions or meet internal strategic priorities.
To address changing consumer preferences or preempt competitors while boosting sales, to realign resources.

9. What Makes a Brand? Branding Logos and symbols Characters URLs Slogans
Slogans
Group activity: Identify a brand that you recognize primarily by each of these elements.
Brand Name: Most brands
URLs:
Logos & Symbols: TAG Heuer
Characters: Toucan Sam
Slogans: State Farm—Like a Good Neighbor
Sound: Law & Order “Doink “
Brand name
Jingles/ Sounds
Branding

10. Value of Branding for the Customer
Facilitate Purchasing
Establish Loyalty
Protect from Competition
Group activity: Have students pick a well-established brand. Have them provide examples of how the brand provides value.
For example, consider eBay. The brand facilitates instant recognition, consumers are avidly loyal, which reduces competition from other online auctions and reduces expensive marketing ads. The brand is a valuable asset that they protect through copyrights and directly affects their profits.
Video link:
Are Assets
Impact Market Value

11. Brand Equity for the Owner
2015 Rank
2013 Rank
Brand
Country
Sector
Brand Value  (in $ Billions) 1
Apple
United States
Technology
$170.3 2
Google
$120.3 3
Coca-Cola
Beverages
$78.4 4 5
Microsoft
$67.7
IBM
Business Services
$65.1 6 10
Toyota
Japan
Automotive
$49.0 7 8
Samsung
South Korea
$45.3 GE
Diversified 
$42.3 9
McDonald's
Restaurants
$39.8
n.a.
Amazon
Retail
$37.9
Brand equity cuts both ways; customers dislike some brands because of the firm’s actions or their negative perceptions. Nike has been the target of many labor activists, which causes some consumers to refuse to purchase or wear Nike products.
Remind students what they have learned about consumer behavior. When consumers recognize a need, they begin with an internal search, during which they consider any brand they already know. If consumers are not aware of the brand, they simply will not purchase it.
Source: From Interbrand.com,

12. Brand Equity: Brand Awareness
The more aware of or familiar with an offering, the easier the consumer’s decision-making process is, which improves the chances of purchase.
Familiarity matters most for products that are bought without much thought, such as soap or chewing gum, but brand awareness is also critical for infrequently purchased items or those the consumer has never purchased before.
© McGraw-Hill Education

13. Brand Equity: Perceived Value
How do discount retailers like Target, T.J. Maxx, and H&M create value for customers?
These retailers offer designer products at reduced prices. In some cases, they use well-known designers for their lines of clothing.

14. Brand Equity: Brand Associations
Brand associations often result from a firm’s advertising and promotional efforts.
Prius
Economical
Good value
Stylish
Good for the environment
Target teamed up with high-fashion designer Jason Wu to create reasonably priced, yet very fashionable apparel.
Ask students what brands have personalities – they might mention McDonald’s and Pepsi (young).
Consumers develop links between brands and their own identity. Some brands are just “not for them.”
Ask students: How many of you proudly wear Abercrombie & Fitch clothing? How many choose never to wear this brand? How do you perceive this brand’s message?

15. Brand Equity: Brand Loyalty
Consumers are often less sensitive to price. Marketing costs are much lower. Firm are insulated from the competition.
Brand loyalty provides the firm with high value. State Farm has built their brand equity by having loyal customers.
Ask students: Once you have chosen an insurance company or a bank, how likely is it that you will switch? How likely is it that you will switch due to an increase in price? Is it important for the firm to spend a lot of money marketing to you, a loyal customer? Do you pay much attention to ads or direct mail pieces from competition?
To further illustrate brand loyalty, ask students: Would you leave a store if your particular brand were not in stock? When you order a Sprite in a restaurant and the server asks, “Is 7-Up okay?” do you say no?

16. PROGRESS CHECK (3 of 5)
How do brands create value for the customer and the firm?
What are the components of brand equity?
Brands facilitate the consumer search process, are valuable in a legal sense, can lead to lower marketing costs because the brand and its associations help sell the product, and brands have real market value as a company asset.
Brand awareness, perceived value, brand associations, and brand loyalty

17. Brand Ownership Private-label brands or Store Brands
Manufacturer brands or national brands
Private-label brands or Store Brands
Premium
Generic
Copycat
Exclusive co-branded
Unlike Europe, where store brands such as Tesco (U.K. grocery chain) were extremely popular, in the United States, few store brands had achieved such status and were often considered inferior to manufacturer or national brands. Today, many store brands are well established, such as Kirkland, Charter Club, and Trader Joe’s store brand.

18. Naming Brands and Product Lines
Corporate or family brand
The Gap
Corporate and product line brands
Kellogg’s Corn Flakes
Individual lines
Mr. Clean (Proctor & Gamble)
Ask students: Name a firm that uses a corporate or family brand. A corporate and product line brand? Individual lines?
Family brands include Heinz and Del Monte. Detergents are good examples of firms using individual brands: Tide, Bold, Gain and Surf.
All photos: ©M. Hruby.

19. Brand and Line Extensions
Ask students: What are the advantages of a brand extension?
They should reply that the firm can spend less on brand awareness. The positive consumer acceptance will spread to the new product and a synergy exists between the two products. In the picture above of Tostitos and Lay’s products, one might use the Tostitos chips and cheese dip together.
Jump to Appendix 1 long image description
©M. Hruby.

20. Brand Dilution
Evaluate the fit between the product class of the core brand and the extension. Evaluate consumer perceptions of the attributes of the core brand and seek out extensions with similar attributes. Refrain from extending the brand name to too many products. Is the brand extension distanced enough from the core brand?
A brand is only as good as its last extension. Many firms try to take their brands just one more step, only to find the extension hurts rather than helps the parent brand. For example, McDonald’s agreed to license a McKids line of clothing, but the line was not as successful as it had hoped it would be.
Ask students: What do you think McDonald’s did wrong? They should comment that this was not a great fit. Consumers’ perceptions might not have been of the highest quality.
GfK Custom Research

21. Co-Branding
Can enhance perceptions of quality through links between brands
Yum! Brands
Combines two or more of its restaurant chains (A&W, KFC, Long John Silver’s, Pizza Hunt, and Taco Bell) into one store space
Co-branding benefits the participating brands by attracting the consumers of one brand to the others. Remind students of the Yum! Brands example. This co-branding strategy is designed to appeal to diverse market segments and extend the hours during which each restaurant attracts customers.

22. Brand Licensing
Brand licensing is common for toys, apparel, accessories, and entertainment products such as video games. The NBA licenses products like these New Orleans Pelicans hats to a manufacturer in exchange for a negotiated fee.
© Stacy Revere/Getty Images

23. Brand Repositioning
Can improve the brand’s fit with its target segment Can boost vitality of old brands Not without costs and risks
Brand repositioning, or rebranding, refers to a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences.

24. PROGRESS CHECK (4 of 5)
What are the differences among manufacturer and private-label brands?
What is co-branding?
What is the difference between brand extension and line extension?
What is brand repositioning?
Manufacturer brands are owned and managed by the manufacturer. The manufacturer develops the merchandise, produces it to ensure consistent quality, and invests in a marketing program to establish an appealing brand image. Private-label brands are products developed by retailers.
Co-branding is the practice of marketing two or more brands together, on the same package or promotion.
Whereas a brand extension uses the same brand name for a new product that gets introduced into new or the same markets, a line extension is simply an increase of an existing product line by the brand.
Brand repositioning refers to a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences.

25. What other packaging do you as a consumer find useful?
Although often overlooked as a marketing tool, packaging helps determine the success of a product. In some instances, such as Coca-Cola or Aunt Jemima Maple Syrup, the package has become synonymous with the brand.
Ask students: What packages are so distinct that it helps make the brand successful? Possible answers are: Perrier, Altoids, and Tiffany’s turquoise box. See if you can bring in examples of other bottled water in unusual bottles such as Fuji and Fred.

26. Product Labeling
Label information is determined by regulations, and labeling rules vary from country to country. Certain terms convey specific meanings, such as “natural,” “organic,” “made in the USA,” and products must meet specific tests before placing such terms on their label.
Group activity: Look at the label of a snack or drink you may have brought to class. What information does it provide? How does it support the marketing of this item?
Photo 1: ©The McGraw-Hill Companies, Inc/Elite Images, Photo 2: C Sherburne/PhotoLink/Getty Images

27. PROGRESS CHECK (5 of 5) Why do firms change packaging?
What objectives do product labels fulfill?
Firms occasionally change or update their packaging as a subtle way of repositioning the product. A change can be used to attract a new target market and/or appear more up to date to its current market.
Labels on products and packages provide information the consumer needs for his or her purchase decision and consumption of the product. Because they identify the product and brand, labels are also an important element of branding and can be used for promotion. A product label is much more than just a sticker on the package; it is a communication tool. Many of the elements on the label are required by laws and regulations (i.e., ingredients, fat content, sodium content, serving size, calories), but other elements remain within the control of the manufacturer.  In addition, the way manufacturers use labels to communicate the benefits of their products to consumers varies with the product.

28. Marketing Chapter 11
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