Chapter 11 and chapter 12

Notes on product, branding, and package decisions

Chapter 11: Product, Branding, and Package Decisions

Course Outline

  • Module 1: Assessing the Marketplace

    • Essentials of Marketing (Ch 1&2)

    • Analyzing Marketing Environment (Ch 5)

    • Marketing Research (Ch 10)

  • Module 2: Understanding and Identifying Customers

    • Consumer Behavior and STP Analysis (Ch 6 & Ch 9)

  • Module 3: 4Ps

    • Product: (Ch 11 & 12)

    • Global Marketing: (Ch 8)

    • Price: (Ch 14)

    • Promotion: (Ch 3, 17, 18)

    • Social Media: (Ch 3)

Learning Objectives

  • Describe the components of a product.

  • Identify types of consumer products.

  • Explain differences between product mix breadth and product line depth.

  • Identify advantages that brands provide to firms and consumers.

Complexity of Products

  • Products are thought of in an interrelated fashion by marketers:

    • Core Customer Value: Basic problem-solving benefits sought by customers.

    • Actual Product: Features, design, brand name, packaging.

    • Associated Services: After-sales service, warranty, financing, etc.

Types of Products

  • Specialty Products:

    • Unique characteristics; significant consumer effort in purchase.

    • Examples: Furniture, designer clothes.

  • Shopping Products:

    • Alternatives are compared based on price, quality, style.

    • Examples: Laundry detergents, fast food.

  • Convenience Products:

    • Purchased frequently with minimal effort.

    • Examples: Sugar, soft drinks.

  • Unsought Products:

    • Not actively sought until needed or consumer awareness increases.

    • Examples: Insurance.

Product Line and Product Mix

  • Product Line: Group of closely related products.

  • Product Mix (Product Assortment): Complete set of all products offered by a firm.

  • Note: Product mix is distinct from marketing mix!

What is Branding?

  • Definition: Process of creating a positive perception of a company or its products in customers' minds through logos, design, mission statement, and theme.

  • Purpose: Differentiate from competitors and build loyalty.

Value of Branding for the Customer

  • Facilitates Purchases: Reduces time spent on decision making.

  • Establishes Loyalty: Consumers become loyal to a brand.

  • Protects from Competition: Brands can shield consumers.

  • Valuable Assets: Brands have intrinsic value.

  • Affects Market Value: Strong branding can enhance market performance.

Brand Equity

  • Brand Awareness: The degree to which consumers recognize a brand; greater awareness leads to easier decision-making.

  • Perceived Value: The worth consumers attach to a brand based on the perceived benefits.

  • Brand Associations: Developed through advertising; attributes connected with a brand (e.g., Prius being economical).

  • Brand Loyalty: Strong emotional connection leading to reduced price sensitivity and lower marketing costs.

What Makes a Brand?

  • Elements:

    • Brand Name

    • Logos and Symbols

    • URLs (e.g., www.eBay.com)

    • Characters

    • Slogans

    • Jingles/Sounds

Brand Dilution

  • Assessment: Evaluate the fit and consumer perception of the core brand vs. extensions.

  • Guidelines: Avoid overextending brand names and ensure extensions are sufficiently distinct.

Co-Branding

  • Definition: Combining two or more brands to enhance quality perceptions.

  • Example: Yum! Brands uses co-branding across its restaurant chains (e.g., KFC, Taco Bell).

Chapter 12: Developing New Products
Learning Objectives

  • Identify reasons firms create new products.

  • Describe adoption groups in diffusion of innovation theory.

  • Explain stages in new product development.

  • Explain the product life cycle.

Innovation and Value

  • Reasons for New Products:

    • Changing customer needs

    • Enhancing business relationships

    • Market saturation

    • Fashion cycles

    • Managing risk through product diversity.

Diffusion of Innovation: Consumer Adoptions

  • Stages of Adoption:

    • 2.5%: Innovators

    • 13.5%: Early Adopters

    • 68%: Middle Majority

    • 16%: Laggards.

How Firms Develop New Products

  • Stages:

    1. Idea Generation: Development of new product ideas.

    2. Concept Testing: Testing ideas among potential customers.

    3. Product Development: Creating prototypes.

    4. Market Testing: Testing in selected markets.

    5. Product Launch: Full scale commercialization.

    6. Evaluation of Results: Analyzing product performance and making modifications.

Product Life Cycle

  • Phases:

    • Introduction: Sales are low, investment costs high.

    • Growth: Rapid acceptance, increasing profits.

    • Maturity: Sales plateau, profits stabilize or decline.

    • Decline: Sales fall off, profits drop rapidly.

Product Life-Cycle Strategies

  • Focus on understanding the trajectory from zero sales to peak maturity and decline stages, to manage product performance efficiently.