1. Part 4: Product Decisions
Product and Service Strategies
Category and Brand Management, Product Identification, and New-Product Development

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

3. 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.

4. 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

5. 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.

6. 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

7. 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

8. Brand equity: added value that a respected, well-known brand name gives to a product in the marketplace.
Brand equity increases the likelihood that consumers will recognize the firm’s product when they make purchase decisions
A strong brand equity can contribute to buyers’ perceptions of product quality
Branding can also reinforce customer loyalty and repeat purchases

9. Brand Equity
The Young & Rubicam Model:
Brand Asset Valuator

10. The Role of Category and Brand Managers
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.

11. 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)

12. 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 distinctive shape of Philips light bulbs and the McDonald’s arches provide an example of trade dress

13. Developing Global Brand Names and Trademarks
Potentially an acute problem for international marketers
An excellent brand name or symbol in one country may prove disastrous in another
Trademarks that are effective in their home countries may fare less well in other cultures

14. 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)

15. 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

16. New Product Planning
As a firm’s offerings enter the maturity and decline stages of the product life cycle, it must add new items to continue to prosper
Alternative Product Development Strategies

17. 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

18. 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

19. Consumer innovator: People who purchase new products almost as soon as the products reach the market
Diffusion process: Process by which new goods or services are accepted in the marketplace

20. Figure 12.8
Categories of Adopters Based on Relative Times of Adoption

21. Identifying Early Adopters
Substantial benefits may be obtained by locating the likely first buyers of new products (innovators and early adopters)
Suggestions for modifying the product may be obtained from these individuals
Acceptance or rejection of the innovation by innovators and early adopters can help forecast sales

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

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

24. New Product Development Process
New product development process: six stages through which new product ideas progress before being introduced to the overall market

25. Idea Generation New product ideas come from many sources including:
Sales force, Customers, Employees, R&D specialists, The competition, Suppliers, Retailers, Independent inventors
Screening Screening separates ideas with commercial potential from those that cannot meet company objectives
Checklists of development standards can be helpful at this stage

26. Business Analysis The 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
Concept testing
Development Converting an idea into a physical product
Requires interaction among many of the firm’s departments
Prototypes may go through many changes

27. Test Marketing 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
Some firms skip this stage, moving directly to full-scale commercialization
Commercialization In this stage, the firm establishes marketing strategies, and funds outlays for production and marketing
The sales force, marketing intermediaries and potential customers are acquainted with the new product

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