Chapter 11: Product, Branding, and Packaging Decisions

3 Components of a Product

Actual product: Brand Name, Quality Level, Packaging, Features/Design

Center: Core customer value

Associated services: Financing, Product Warranty, Product Support

core customer value

The basic problem-solving benefits that consumers are seeking.

actual product

The physical attributes of a product including the brand name, features/design, quality level, and packaging.

associated services (augmented product)

The nonphysical attributes of the product including product warranties, financing, product support, and after-sale service.

consumer products

Products and services used by people for their personal use.

4 Types of Consumer Products/Services

Specialty, Shopping, Convenience, Unsought

specialty products/services

Products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers.

shopping products/services

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

convenience products/services

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

unsought products/services

Products or services consumers either do not normally think of buying or do not know about.

product mix

The complete set of all products and services offered by a firm

product lines

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

breadth (variety)

Number of product lines offered by a firm

depth

The number of products within a product line

cannibalize

When products are too similar and sales of one brand take away sales from the other brand with no increases in net sales, profit, or market share.

4 Changes to a Product Mix

Increase Depth

Decrease Depth

Decrease Breadth

Increase Breadth

6 Elements of Branding

1. Brand name

2. URLs

3. Logos and symbols

4. Slogans

5. Jingles/sounds

brand name element

Spoken component of branding

URLs element

Locations of pages on the internet substituting for the firm’s name

logos and symbols element

Visual branding elements that stand for corporate names or trademarks

characters element

Brand symbols that could be human, animal, or animated

slogans element

Short phrases used to describe the brand or persuade consumers about some of the brand’s characteristics

jingles/sounds element

Audio messages about the brand composed of words or distinctive music

Top 5 Global Brands (AMAGS)

1. Apple

2. Microsoft

3. Amazon

4. Google

5. Samsung

Ways that brands add value for customers and the firm

• Facilitate purchases

• Establish loyalty

• Protect from competition and price competition

• Are assets

• Affect market value

Brands facilitate purchases

Brands are often easily recognized by consumers, signify a certain quality level with familiar attributes, and help them make quick decisions

Brands establish loyalty

Consumers learn to trust certain brands

Brands protect from competition and price competition

Strong brands are more established in the market and have a more loyal customer base, making competitive pressures less threatening

Brands are assets

Brands can be legally protected through trademarks and copyrights as a unique form of ownership

Brands affect market value

Having well-known brands can have a direct impact on the company’s bottom line

brand equity

The set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.

4 Components of Brand Equity

1. Brand awareness

2. Perceived value

3. Brand associations

4. Brand loyalty

brand awareness

Measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about it

perceived value

The relationship between a product or service’s benefits and its cost

brand associations

The mental links that consumers make between a brand and its key product attributes, such as a logo and its color, a slogan, or famous personality

brand loyalty

Occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buying from multiple suppliers within the same category

Types of Branding Strategies

Brand Ownership

Naming Brands and Product Lines

Co-branding

Brand Licensing

Brand Repositioning

Brand Ownership

Manufacturer brands or Retailer brands

manufacturer/national brands

Brands owned and managed by the manufacturer

retailer/store brands

Private-label brands developed and marketed by a retailer and available only from the retailer

Naming brands and Product lines

Family/corporate brands or Individual brands

family brand

A firm’s own corporate name used to brand its product lines and products

individual brand

The use of individual brand names for each of a firm’s products

brand extension (increase breadth)

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

line extension (increase depth)

The use of the same brand name within the same product line

Advantages to using the same brand name for new products

1. Brand name is already well established so the firm can spend less on developing brand awareness for the new product

2. If either the original brand or the brand extension has strong consumer acceptance, that perception will carry over to the other product

3. Brand extensions used for complementary products create synergy 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

What firms should consider to prevent negative consequences of brand extensions

• Evaluate fit between product class of core brand and extension

• Evaluate consumer perceptions of attributes of core brand, seek out extensions with similar attributes

• Refrain from extending brand name to too many products

co-branding

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

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.

brand repositioning (rebranding)

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

primary package

The packaging the consumer uses, such as the toothpaste tube, from which he or she typically seeks convenience in terms of storage, use, and consumption

secondary package

The wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners

sustainable packaging

Product packaging that has less of a negative impact on the environment

Key Roles of Packaging

• Attracts consumers’ attention

• Enables products to stand out from their competitors

• Offers a promotional tool

• Appeals to different markets