Chapter 9: Product, Branding, and Packaging Decisions

core customer value

the basic problem-solving benefits that consumers are seeking

marketers convert core customer value into an actual product

Associated services (or augmented product)

The non-physical attributes of the product, including product warranties, financing, product support, and after-sale service

Types of products

consumer products, speciality goods/services, shopping goods/services, convenience goods/services, unsought products/services

Consumer products

Products and services used by people for their personal use

Specialty goods/services

products or services toward which customers show a strong preference and for which they will expend considerable effort to search for the best supplier

shopping goods/services

products or services - such as apparel, fragrances, and appliances - for which consumers will spend time comparing alternatives

convenience goods/services

products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase

unsought products/services

products/services consumers do not search out or do not know about

product mix

the complete set of all products offered by a firm

product lines

groups of associated items, such as those that consumers use together or think of as part of a group of similar products

product category

an assortment of items that the customer sees as reasonable substitutes for one another

brands

the names, terms, designs, symbols, or any other features that identify one seller's good or service as distinct from those of other sellers

product mix breadth

the number of product lines, or variety, offered by the firm

product line depth

the number of products within a product line

Stock keeping units (SKUs)

individual items within each product category; the smallest unit available for inventory control

Change product mix breadth and depth

Increase breadth → adding new product lines to capture new or evolving markets, increase sales, and compete in new venues

Decrease breadth → sometimes necessary to delete entire product lines to address changing market conditions or meet internal strategic priorities

Increase depth → firms may add new products within a line to address changing consumer preferences or pre-empt competitors while boosting sales

Decrease depth → from time to time, it is necessary to delete product categories to realign resources. The decision to delete products is never taken lightly yet firms often make pruning decisions regularly to eliminate unprofitable items and refocus their marketing efforts on the most profitable items

Branding strategies

- brand ownership

- naming brands and product lines

- brand extension

- cobranding

- brand licensing

Brand ownership

Manufacturer brands: brands owned and managed by the manufacturer

Private-label/store brands: brands developed and marketed by a retailer and available only from that retailer

Generic brands: a product sold without a brand name, typically in commodities markets

Naming Brands and Product Lines

- although there is no simple way to decide how to name a brand or product line, the more the products vary in their usage or performance, the more likely it is that the firm should use individual brands

- Family brands: the use of a combination of the company brand name and individual brand name to distinguish a firm's products

- Individual brands: the use of individual brand names for each of a firm's products

What are the desirable qualities companies should consider when choosing a brand/product line name?

- The brand name should be descriptive and suggestive of benefits and qualities associated with the product

- The brand name should be easy to pronounce, recognize, and remember

- The company should be able to register the brand name as a trademark and legally protect it

- For companies looking to global markets, the brand name should be easy to translate into other languages

Brand extension

the use of the same brand name for new products being introduced to the same or new markets

Several advantages to using the same brand name for new products

First, because the brand name is ready well established, the firm can spend less in developing consumer brand awareness and brand associations for the new product

Second, if the brand is known for its high quality, that perception will carry over to the new product

Third, when brand extensions are used for complementary products, a synergy exists between the two products that can increase overall sales

Brand dilution

occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold

To prevent the potentially negative consequences of brand extensions, firms must consider the following caveats:

- Marketers should carefully evaluate the fit between the product class of the core brand and that of the extension → if the fit between the product categories is high, consumers will consider the extension credible, and the brand association will be stronger for the extension

- Firms should carefully evaluate consumer perceptions of the attributes of the core brand and seek out similar attributes for the extension, because brand-specific associations are very important for extensions

- Firms should refrain from extending the brand name to too many products and product categories to avoid diluting the brand and damaging brand equity

- Firms should consider whether the brand extension will be distanced from the core brand, especially if the firm wants to use some but not all of the existing brand associations

Cobranding

the practice of marketing two or more brands together, on the same package or promotion

- Cobranding enhances consumers' perceptions of product quality by signalling otherwise universal product quality through links between the firm's brand and a well-known quality brand

- Risks to co-branding, especially when customers for each of the brands are vastly different --> May also fail when there are financial disputes or conflicts of interest

Brand licensing

A contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characters in exchange for a negotiated fee

- Licensing is an effective form of attracting visibility for the brand and thereby building brand equity while also generating additional revenue

- Some risks → for the licensor, the major risk is the dilution of its brand equity through overexposure of the brand, especially if the brand name and characters are used inappropriately

Packaging

Important brand element with more tangible or physical benefits than the other brand elements because packages come in different types and offer a variety of benefits to consumers, manufacturers, and retailers

sustainable packaging is more important than ever

What does packaging provide?

- Attracts the consumer's attention, enables products to stand out from their competitors, and offers a promotional tool

- Also serves to protect products

- Provides the UPC label used by retail scanners

- Provides contents, directions, and other additional product information

- May affect consumers' emotions and drive impulse buying

- Can also be used to help suppliers save cost → when the costs of producing a product rise significantly, manufacturers are faced with either raising prices (something customers don't usually like) or reducing the amount of product sold in a package

Labelling

Labels provide information that consumers need for their purchase decisions and consumption of the products.

Labels are also an important part of branding that can be used for promotion. --> more than just a sticker, it is a communication tool

Many of the elements on the label are required by laws and regulations (e.g., ingredients, fat content, sodium content, serving size, calories)

Info about labelling requirements

The information on labels must comply with general and industry-specific laws and regulations, including the constituents or ingredients contained in the product, where the product was made, directions for use, and/or safety precautions

- Many labelling requirements stem from various laws, including the Competition Act, the Consumer Packaging and Labelling Act and Regulations, the Food and Drugs Act, and the Hazardous Materials Act

- Several federal agencies, industry groups, and consumer watchdogs carefully monitor product labels

- The Food and Drugs Act regulated the information on food, drugs, and cosmetics package labels

- The Consumer Packaging and Labelling Act covers food products and ensures that the claims made by the manufacturer are true and that labels accurately reflect ingredients and quantities