1. PRODUCT, BRANDING, AND PACKAGING DECISIONS11
PRODUCT, BRANDING, AND PACKAGING DECISIONS
Chapter 11 – Product, Branding, and Packaging Decisions
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. Product, Branding, and Packaging Decisions
Describe the components of a product.
Identify the types of consumer products.
Explain the difference between a product mix’s breath and a product line’s depth,
Identify the advantages that brands provide firms and consumers.
Explain the various components of brand equity.
Determine the various types of branding strategies used by firms.
Distinguish between brand extension and line extension.
Indicate the advantages of a product’s packaging and labeling strategy.
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LO2
LO3
LO4
LO5
These are the learning objectives for this chapter.
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3. Red Bull
Ask students: How many use energy drinks? Do you buy Red Bull branded products? How did you feel about the product?
Pushing the envelope is just what Red Bull wants its brand to be known for doing. By sponsoring events such as the space jump or even its annual Flugtag competition, Red Bull brands itself as fun, a little crazy, and ready for anything.
Jay Nemeth/ZUMA Press/Newscom

4. Complexity of Products
Marketers involved with the development, design, and sale of products think of them in an interrelated fashion. At the center is the core customer value, next is the actual product, followed by associated services.
Michael Blann/Digital Vision/Getty Images

5. 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.

6. CHECK YOURSELF 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.

7. Product Mix and Product Line Decisions
Abbreviated List of BMW Product Mix
Product Lines
BMW
MINI
Rolls-Royce
Motorrad
2 Series
3 Series
4 Series
5 Series
6 Series
7 Series
X Series
Z4 Series
M Series
BMW i
Hybrid
Clubman
Convertible
Countryman
Coupe
Hardtop
John Cooper Works
Paceman
Roadster
Ghost
Phantom
Wraith
C Series
F Series
G Series
K Series
R Series
S Series
This chapter uses Kellogg’s brands as examples. Many students may be familiar with the name Kellogg’s with breakfast cereal, but not know they have so many other products.
Source: Kellogg’s 2010 annual report,

8. Product Mix and Product Line Decisions
Breadth
Number of product lines
Depth
Number of categories within a product line
Students should understand that each item is called a stock keeping unit (SKU) and the category depth is the number of SKUs within a category.
Courtesy Pepsi Cola Company

9. Change Product Mix Depth
Increase Depth
Band-Aid now has over 40 products to heal cuts.
Decrease Depth
McCormick spices eliminates dozens of products each year.
Ask students: What are the pros and cons of offering competing products in the same category?
The primary advantage is to increase overall sales and profits. But at the same time, adding competing products can cannibalize sales of current brands. Firms must determine the net effect on sales and the overall impact on competitive products.
©M Hruby

10. Change Product Mix Breadth
Increase Breadth
True Religion Brand Jeans now are a lifestyle brand with apparel, belts, swimwear and fragrances
Decrease Breadth
Due to competitive changes, TCBY is now focusing on Yogurt.
Ask students: Why would a company want to increase its product mix breadth? Why would it want to decrease it? Students should comment that they would increase to capture new or evolving markets and increase sales. Decreasing might be due to changing market conditions or internal strategic priorities.
©Procter & Gamble

11. Product Line Decisions
How is this changing the product mix?
Does it increase breadth or depth?
Is this research or advertising?
CLOROX® is a registered trademark of The Clorox Company Used with permission
It increases depth by adding one more scent. This is type of ad depicts both research and advertising.

12. CHECK YOURSELF
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. address changing market conditions or meet internal strategic priorities.
To address changing consumer preferences or preempt competitors while boosting sales, to realign resources.

13. Branding
A brand can use: Name, logo symbols, characters, slogans, jingles and even distinctive packages.
Brand identification takes many forms. Ask students: How many of you can sing the Oscar Meyer jingle? Student will get a kick out of the YouTube ad (always check before class). It is the one of the original 1965 Oscar Meyer ads.
YouTube link:

14. McGraw-Hill Companies, Inc.
What Makes a Brand?
McGraw-Hill Companies, Inc.
Logos and symbols
Characters
URLs
Slogans
©M. Hruby.
Branding
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 Coca-Cola – Real Taste and Zero Calories
Sound: Law & Order “Doink Doink“
Brand name
Jingles/Sounds
“Law & Order”

15. Value of Branding for the Customer
Facilitate Purchasing
Establish Loyalty
Protect from Competition
Are Assets
Impact Market Value
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:
Apple wins in the
Apple vs Samsung patent lawsuit

16. Brand History in Advertising
Note: Please make sure that the video file is located in the same folder as the PowerPoint slides.

17. Brand Equity: Brand Awareness
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: Interbrand’s Best Global Brands 2013 report is a look at financial performance of the brand, role of brand in the purchase decision process, and the brand strength. Go to for more information. Reprinted with permission.

18. 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.
Photo by Peter Kramer/Getty Images

19. Brand Equity: Brand Associations
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?
Vince Talotta/Toronto Star/Getty Images

20. Brand Equity: Brand Loyalty
Consumers are often less sensitive to price
Marketing costs are much lower
Firm 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?
Copyright State Farm Mutual Automobile Insurance
Company 2005 Used by permission

21. CHECK YOURSELF
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.

22. Manufacturer brands or national brands
Brand Ownership
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 Kenmore, Charter Club, and Presidents’ Choice.

23. Brand Ownership Private Label
Private-label brands , also called store brands, house brands , or own brands , are products developed by retailers. Some manufacturers prefer to make only private-label merchandise because the costs of developing and marketing a manufacturer’s brand are prohibitive.
McGraw-Hill Companies

24. Manufacturer/National Brand
Brand Ownership
Who Owns the Brand?
Manufacturer/National Brand
Retailer/Store Brand
Common Name
or Not?
Family Brands
Kellogg’s family line
Kroger’s line
Individual Brands
Kellogg’s individual brand
Kroger’s individual brand
There are two basic brand ownership strategies: manufacturer brands and retailer/store brands. The brands can be marketed using a common/family name or as individual brands.
All photos: ©M. Hruby.

25. 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.
©M. Hruby.

26. Brand Extension
Ask students: What are the advantages of a brand extension?
They should reply that the firm can spend less on brand awareness. That the positive consumer acceptance will spread to the new product and a synergy exists between the two products. In the picture above one might use the crest toothpaste and floss together.
This web link is to the State Farm Website. You can see from the Website that State Farm has extended their brand past insurance to include mutual funds and banking products.
©M Hruby
State Farm

27. 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: In terms of this slide, what do you think McDonald’s did wrong? They should comment that this was not a great fit. That the perceptions might not have been of the highest quality.

28. Zite Personalized Magazine
Co-branding
Co-branding benefits the participating brands by attracting the consumers of one brand to the others. Remind students of the FedEx/Kinko’s example. The synergy between these two brands helped ensure a successful co-branding effort.
WSJ:
©M Hruby
Zite Personalized Magazine

29. Brand Licensing
The NBA licenses products like these bobblehead figures of Dallas Mavericks and San Antonio Spurs players to a manufacturer in exchange for a negotiated fee.
Photo by D. larke Evans/NBAE via Getty Images.

30. Brand Repositioning How is this repositioning?
The product is now positioned as a detergent and an air freshener.
Courtesy The Procter & Gamble Company

31. CHECK YOURSELF
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.

32. Packaging 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. The chapter covers many new packaging innovations including FlexCan, Daily Gloss, smart lids, Labatt blue, aseptic drink bottles, and snack and seal as seen in the ad above. 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.
©M. Hruby.

33. 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?
C Sherburne/PhotoLink/Getty Images
©The McGraw-Hill Companies, Inc/Elite Images

34. Glossary
A brand association reflects the mental links that consumers make between a brand and its key product attributes, such as a logo, slogan, or famous personality.
A brand association reflects the mental links that consumers make between a brand and its key product attributes, such as a logo, slogan, or famous personality.

35. Glossary
Brand dilution occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.
Brand dilution occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

36. Glossary
Brand equity is the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.
Brand equity is the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.

37. Glossary
A brand extension refers to the use of the same brand name for new products being introduced to the same or new markets.
A brand extension refers to the use of the same brand name for new products being introduced to the same or new markets.

38. Glossary
Brand licensing is a contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee.
Brand licensing is a contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee.

39. Glossary
Brand loyalty occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category.
Brand loyalty occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category.

40. Glossary
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.
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.

41. Glossary
Co-branding is the practice of marketing two or more brands together, on the same package or promotion.
Co-branding is the practice of marketing two or more brands together, on the same package or promotion.

42. Glossary
Perceived value of a brand is the relationship between a product or service’s benefits and its cost.
Perceived value of a brand is the relationship between a product or service’s benefits and its cost.

43. Glossary
Product assortment or product mix is the complete set of all products offered by a firm.
Product assortment or product mix is the complete set of all products offered by a firm.

44. Glossary
Product lines are groups of associated items, such as items that consumers use together or think of as part of a group of similar products.
Product lines are groups of associated items, such as items that consumers use together or think of as part of a group of similar products.

45. Glossary
Product mix or product assortment is the complete set of all products offered by a firm.
Product mix or product assortment is the complete set of all products offered by a firm.