MAR 3023 Chapter 10

Product Concepts

product

everything, both favorable and unfavorable, that a person receives in an exchange (To most people, the term product means a tangible good. However, services and ideas are also products) - can be classified as either business (industrial) or consumer, depending on the buyer’s intentions

convenience product

is a relatively inexpensive item that merits little shopping effort—that is, a consumer is unwilling to shop extensively for such an item

shopping product

is usually more expensive than a convenience product and is found in fewer stores. Consumers usually buy a shopping product only after comparing several brands or stores on style, practicality, price, and lifestyle compatibility. They are willing to invest some effort into this process to get the desired benefits.

Two Types of Shopping Products

• homogeneous shopping products as basically similar—for example, washers, dryers, refrigerators, and televisions (consumers typically look for the lowest-priced brand that has the desired features)

• heterogeneous shopping products as essentially different—for example, furniture, clothing, housing, and universities (Consumers often have trouble comparing heterogeneous shopping products because the prices, quality, and features vary so much)

specialty product

a particular item for which consumers search extensively and are very reluctant to accept substitutes (Marketers of specialty products often use selective, status-conscious advertising to maintain a product’s exclusive image. Distribution is often limited to one or a very few outlets in a geographic area. Brand names and quality of service are often very important.)

unsought product

a product unknown to the potential buyer or a known product that the buyer does not actively seek (a product unknown to the potential buyer or a known product that the buyer does not actively seek)

product item

a specific version of a product that can be designated as a distinct offering among an organization’s products

product line

a group of closely related product items

product mix

all products that an organization sells

What are the benefits from organizing related items into product lines

• Advertising economies: Product lines provide economies of scale in advertising. Several products can be advertised under the umbrella of the line. Coca-Cola can use the slogan “Open Happiness” to promote the entire line.

• Package uniformity: A product line can benefit from package uniformity. All packages in the line may have a common look and still keep their individual identities. Coca-Cola’s soda packaging is again a good example. Coca-Cola Classic, Diet Coke, and Coke Zero all share certain colors and design elements, but each is recognizably unique.

• Standardized components: Product lines allow firms to standardize components, thus reducing manufacturing and inventory costs. For example, General Motors uses the same parts on many automobile makes and models.

• Efficient sales and distribution: A product line enables sales personnel for companies like Procter & Gamble to provide a full range of choices to customers. Distributors and retailers are often more inclined to stock the company’s products if it offers a full line. Transportation and warehousing costs are likely to be lower for a product line than for a collection of individual items.

• Equivalent quality: Purchasers usually expect and believe that all products in a line are about equal in quality. Consumers expect that all Campbell’s soups and all Gillette razors will be of similar quality.

Product mix width (or breadth)

refers to the number of product lines an organization offers (Firms increase the width of their product mix to diversify risk. To generate sales and boost profits, firms spread risk across many product lines rather than depending on only one or two.)

Product line depth

is the number of product items in a product line (Firms increase the depth of their product lines to attract buyers with different preferences, to increase sales and profits by further segmenting the market, to capitalize on economies of scale in production and marketing, and to even out seasonal sales patterns.)

Product modification

changing one or more of a product’s characteristics

Quality modification

a change in a product’s dependability or durability

Functional modification

change in a product’s versatility, effectiveness, convenience, or safety

Style modification

an aesthetic (how the product looks) product change rather than a quality or functional change

Planned obsolescence

the practice of modifying products so those that have already been sold become obsolete before they actually need replacement

product line extension

adding additional products to an existing product line in order to compete more broadly in the industry

Product lines can be overextended when

• Some products in the line do not contribute to profits because of low sales or they cannibalize sales of other items in the line.

• Manufacturing or marketing resources are disproportionately allocated to slow-moving products.

• Some items in the line are obsolete because of new-product entries in the line or new products offered by competitors.

Product Line Contraction

Contracting product lines is a strategic way to deal with overextension, (First, resources become concentrated on the most important products. Second, managers no longer waste resources trying to improve the sales and profits of poorly performing products. Third, new-product items have a greater chance of being successful because more financial and human resources are available to manage them.)

brand 

a name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products

brand name

that part of a brand that can be spoken, including letters, words, and numbers

brand mark

the elements of a brand that cannot be spoken (Like a logo)

brand equity

the value of a company or brand name

global brand

a brand that obtains at least a one-third of its earnings from outside its home country, is recognizable outside its home base of customers, and has publicly available marketing and financial data

Brand loyalty

consistent preference for one brand over all others

manufacturer’s brand

the brand name of a manufacturer

private brand

a brand name owned by a wholesaler or a retailer

captive brands

a brand manufactured by a third party for an exclusive retailer, without evidence of that retailer’s affiliation

individual branding

using different brand names for different products

family branding

marketing several different products under the same brand name

Co-branding

placing two or more brand names on a product or its package - types of co-branding are ingredient branding, cooperative branding, and complementary branding

ingredient branding

identifies the brand of a part that makes up the product - For example, in 1975, Bonne Bell launched a Dr. Pepper-flavored Lip Smacker lip balm—a product that has been popular with teenage girls for decades.

Cooperative branding

occurs when two brands receiving equal treatment (in the context of an advertisement) borrow from each other’s brand equity. A promotional contest jointly sponsored by Ramada Inn, American Express, and United Airlines used cooperative branding. Guests at Ramada who paid with an American Express card were automatically entered in a contest and were eligible to win more than 100 getaways for two at any Ramada in the continental United States and round-trip airfare from United.

complementary branding

products are advertised or marketed together to suggest usage, such as a spirits brand (Seagram’s) and a compatible mixer (

trademark

the exclusive right to use a brand or part of a brand

service mark

a trademark for a service

generic product name

identifies a product by class or type and cannot be trademarked

The three most important functions of packaging

contain and protect products; promote products; and facilitate the storage, use, and convenience of products  - fourth - facilitate recycling and reduce environmental damage.

Persuasive labeling

a type of package labeling that focuses on a promotional theme or logo; and consumer information is secondary

Informational labeling

a type of package labeling designed to help consumers make proper product selections and lower their cognitive dissonance after the purchase

Greenwashing

is when a product or company attempts to give the impression of environmental friendliness whether or not it is environmentally friendly.

top packaging design trends include

Simplicity, Pastels, Outstanding Shapes and Materials, Doodles, Vintage Design

universal product codes (UPCs)

a series of thick and thin vertical lines (bar codes) readable by computerized optical scanners that represent numbers used to track products

When planning to enter a foreign market with an existing product, a firm has three options for handling the brand name.

• One brand name everywhere: This strategy is useful when the company markets mainly one product and the brand name does not have negative connotations in any local market. The Coca-Cola Company uses a one-brand-name strategy in more than 195 countries around the world. The advantages of a one-brand-name strategy are greater identification of the product from market to market and ease of coordinating promotion from market to market. For example, Coca-Cola has adopted a one-brand global strategy for its cola products. The company’s new packaging, developed to support this strategy, has a unified visual identity. Now, all of Coca-Cola’s trademarked package designs feature the company’s signature shade of red.

• Adaptations and modifications: A one-brand-name strategy is not possible when the name cannot be pronounced in the local language, when the brand name is owned by someone else, or when the brand name has a negative or vulgar connotation in the local language. The Iranian detergent Barf, for example, might encounter some problems in the U.S. market.

• Different brand names in different markets: Local brand names are often used when translation or pronunciation problems occur, when the marketer wants the brand to appear to be a local brand, or when regulations require localization. Unilever’s Axe line of male grooming products is called Lynx in England, Ireland, Australia, and New Zealand. PepsiCo changed the name of its eponymous cola to Pecsi in Argentina to reflect the way the word is pronounced with an Argentinian accent.

companies must consider global packaging needs

labeling concern is properly translating ingredient, promotional, and instructional information on labels. Care must also be employed in meeting all local labeling requirements

aesthetics may also require some attention. Even though simple visual elements of the brand, such as a symbol or logo, can be a standardizing element across products and countries; marketers must stay attuned to cultural traits in host countries

warranty

a confirmation of the quality or performance of a good or service

express warranty

a written guarantee

implied warranty

an unwritten guarantee that the good or service is fit for the purpose for which it was sold