Chapter 4: Product - Branding, Packaging, and New Product Development

Classification and Types of Consumer Products

• Definition of Consumer Products: According to the material provided, consumer products are categorized based on consumer behavior, price points, and purchase frequency. These are typically the goods individuals buy for personal consumption.

• Categories of Consumer Products:

  • Convenience Products: These are relatively inexpensive items that merit little shopping effort.
    • Price: Typically low price, occurring under $\$100$.
    • Purchase Frequency: Bought every day or a few times a week.
    • Examples: Food and drinks, newspapers, household chemicals, flowers, and Over-the-Counter (OTC) medication like headache tablets and vitamins.
    • Key Behavior: Consumers buy these frequently and immediately at many purchase locations.
    • Sub-types of Convenience Products:
      • Staple: Products that people usually buy regularly (e.g., Bread, milk, rice).
      • Impulse: Products consumers buy spontaneously without prior planning.
      • Emergency: Products purchased urgently due to an unexpected need (e.g., an umbrella during a storm or medicine during illness).
  • Shopping Products: A product that requires comparison shopping because it is usually more expensive and found in fewer stores than convenience goods.
    • Price: Medium price, ranging from $\$100$ to $\$10,000$.
    • Purchase Frequency: A few times a month.
    • Examples: Computers, smartphones, clothing, household appliances, hotel and airline bookings, doctor visits, and getting a pet.
    • Key Behavior: Consumers buy these less frequently and gather extensive product information before purchasing at fewer locations.
    • Homogeneous vs. Heterogeneous Shopping Products:
      • Homogeneous: Products perceived as having the same quality or no major differences (e.g., washing machines, televisions).
      • Heterogeneous: Products perceived as unique or distinct from other brands (e.g., laptops, clothing, furniture).
  • Specialty Products: Particular items for which consumers search extensively and are reluctant to accept substitutes.
    • Price: High price, typically over $\$1,000$.
    • Purchase Frequency: A few times a year.
    • Examples: Expensive cars, prestigious houses, special jewelry, wedding dresses, and specialist sporting equipment.
    • Key Behavior: Requires special purchase effort, focuses on unique characteristics and brand identification, and is found in very few purchase locations.
  • Unsought Products: Products unknown to the potential buyer or known products that the buyer does not actively seek.
    • Price: Varies depending on the product.
    • Purchase Frequency: Purchased in case of unforeseen circumstances.
    • Examples: Life and funeral insurance, raffle tickets, buying new technology, charity donations, unpredictable treatments, computer software, and fundraising events.
    • Key Behavior: Often involves new innovations or products consumers don't want to think about; these require more advertising and personal selling.

Branding: Identification and Value

• Overview: Branding is the primary tool marketers use to distinguish their products from competitors.
• Key Branding Definitions:
  • Brand: A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors.
  • Brand Name: The part of a brand that can be spoken. This includes letters (e.g., GM, YMCA), words (e.g., Chevrolet), and numbers (e.g., WD-40, 7-Eleven).
  • Brand Mark: The elements of a brand that cannot be spoken, such as the well-known Mercedes-Benz and Delta Air Lines symbols. Specific examples include the Nike Check, Apple icon, and Starbucks Siren.
• The Three Main Purposes of Branding:
  1. Product Identification: This is the most important purpose. It allows marketers to distinguish their products from all others.
  2. Repeat Sales: Satisfied customers are the best generator of repeat sales. Branding helps consumers identify products they want to buy again and avoid those they do not.
  3. New Product Sales: A strong brand facilitates the introduction and sale of new products. The Internet provides a platform for generating brand awareness, promoting images, and building equity.

Brand Equity and Brand Loyalty

• Brand Equity: This refers to the value of company and brand names. High brand equity is driven by:
  • High brand awareness.
  • Perceived quality.
  • Strong brand loyalty.
  • Examples of High Brand Equity: Starbucks, Volvo, and Dell.
• Brand Identity Components: The core components of brand equity include Brand Identity, Awareness, Quality, Image, and Loyalty.
• Brand Loyalty: A consistent preference for one brand over all others. Loyalty is exceptionally high in specific categories, where over half of users are loyal to a single brand. Categories include:
  • Mayonnaise, toothpaste, coffee, headache remedies, photographic film, bath soap, and ketchup.
• YouGov Global Best Brand Rankings 2022 (Malaysia):
  1. Shopee (Score: $63.4$)
  2. Milo (Score: $54.9$)
  3. WhatsApp (Score: $52.1$)
  4. YouTube (Score: $50.6$)
  5. Google (Score: $50.0$)
  6. Nescafé (Score: $45.4$)
  7. Kit Kat (Score: $45.4$)
  8. Maggi (Score: $45.1$)
  9. Dettol (Score: $44.5$)
  10. McDonald's (Score: $43.1$)
  • (Data averaged from September 28, 2021, to September 27, 2022).

Branding Strategies and Protection

• Major Branding Strategies:
  1. Manufacturers' Brands: The brand name of a manufacturer (e.g., Kodak, Philips, Sony, Samsung).
  2. Private Brands: Also known as private label or store brands, owned by a wholesaler or retailer (e.g., Lotus brand).
• Trademarks:
  • Definition: The exclusive right to use a brand or part of a brand. Trademark rights come from use rather than just registration, and the mark must be continuously protected. Rights continue for as long as the mark is used.
  • Protected Elements:
    • Shapes: Jeep front grille, Coca-Cola bottle.
    • Ornamental Color/Design: The black-and-copper color combination of Duracell batteries.
    • Catchy Phrases: Nike's "Just Do It."
    • Abbreviations: Bud, Coke, The Met.
    • Sounds: General Electric Broadcasting Company’s ship’s bell clock sound; the MGM lion’s roar.
  • Symbols:
    • $\circledR$: Registered trademark.
    • $\text{TM}$: Unregistered trademark.
    • $\text{SM}$: Unregistered service trademark.

Trademark Infringement and Cases

• Invalidation and Free-Riding: Legal actions occur when brands "free-ride" on well-known trademarks.
  • KUMA vs. PUMA: Invalidation due to free-riding on the well-known PUMA trademark.
  • DoggiS vs. DoestS: Case example of free-riding in other countries.
  • ROLEX vs. POLEX: Invalidation of the POLEX trademark.
  • früh vs. früh: Case where an agent filed for a client's trademark.
  • IWATCH vs. SWATCH: Opposition decision upheld due to a lack of intention to use.

The Psychology of Color in Branding

• Red: Bold, courageous, energetic, passionate, active. Creates urgency and stimulates the pituitary gland, increasing heart rate (e.g., Coca-Cola, Target, Virgin).
• Orange: Joy, friendly, confident, warmth, extrovert, determination. Associated with impulsivity (e.g., Amazon, Harley-Davidson, Fanta).
• Yellow: Intellect, positivity, optimism, joy, energetic (e.g., McDonald's, Nikon, National Geographic).
• Black: Power, prestige, timelessness, formality, elegance, value (e.g., Chanel, Lexus, Adidas).
• Green: Balance, harmony, health, growth, fertility, ambition (e.g., Holiday Inn, Whole Foods, BP).
• Blue: Stability, trustworthy, wisdom, confidence, security, knowledge, loyalty (e.g., PayPal, Samsung, Intel, Dell).
• Purple: Creative, royalty, calm, luxury, nostalgia, wealth, ambition (e.g., Taco Bell, Cadbury, Syfy, Yahoo!).
• White: Purity, simplicity, goodness, spaciousness, sophistication, freshness (e.g., Sony, Toshiba, FedEx).

Packaging and Labeling Functions

• Package Functions:
  1. Contain and Protect: Handles liquid, granular, or divisible products and protects from breakage, evaporation, spillage, spoilage, light, heat, cold, and infestation.
  2. Promote Products: Uses designs, colors, and shapes to influence perception and buying behavior. Differentiates products from competitors.
  3. Facilitate Storage, Use, and Convenience: Wholesalers/retailers prefer easy shipping/stocking. Consumers want easy handling (e.g., zipper tear strips, screw-on tops, pour spouts).
  4. Facilitate Recycling and Environmental Protection: Essential for modern compatibility. Examples include Tetra-Pak as a glass alternative and McDonald’s use of paper.
• Case Study: Black Melon Pan: A Japanese cake package designed to look like "Afro hair" while the consumer "munches" chocolate cream. Price: $115\,\text{yen}$.
• Labeling Functions:
  • Persuasive Labeling: Focuses on the promotional theme. Consumer information is secondary.
  • Informational Labeling: Focuses on helping consumers make proper selections and lowering cognitive dissonance. Includes use and care instructions.
  • Smart Labels: Example noted: Coca-Cola Smart Label using QR-style interaction.

New Product Development (NPD)

• Importance of New Products: Results in increased sales/margins, product loyalty, resale opportunities, market responsiveness, and sustained leadership.
• Historical Milestone: The first handheld mobile phone was demonstrated by Martin Cooper of Motorola on 3 April 1973, weighing $2\,kg$. Nippon Telegraph and Telephone (NTT) launched the first cellular network in 1979 in Japan.
• The Seven Stages of NPD:
  1. New-Product Strategy: Links development to marketing department and corporate objectives.
     • Example: A strategy for an affordable 5G phone for students focusing on price, battery life, camera quality, and social media marketing.
  2. Idea Generation: Sources include customers, employees, distributors, vendors, competitors, R&D, and consultants.
  3. Idea Screening: The first filter, eliminating ideas inconsistent with strategy. Concept tests evaluate ideas before prototypes exist.
  4. Business Analysis: Calculating preliminary figures for demand, cost, sales, and profitability.
     • Questions to ask: Likely demand? Impact on ROI/Market share? Effect on existing products? Benefit to customers?
  5. Development: R&D/engineering create prototypes. Includes simultaneous product development where all functional areas (including suppliers) work together to shorten time and reduce costs.
  6. Test Marketing: Limited introduction to determine customer reactions.
     • Example: McDonald’s spent $12\,years$ testing salads before launch.
  7. Commercialization: The final decision to market. Involved tasks: ordering materials, starting production, building inventory, shipping, training sales staff, and advertising.

Product Life Cycle (PLC) and Evolution

• Definition: A biological metaphor tracing a product's acceptance from introduction ("birth") to decline ("death").

• Four Stages:

  1. Introduction: Low sales, high cost per customer, financial losses, innovative customers, few competitors.
  2. Growth: Increasing sales, cost per customer falls, profits rise, more competitors.
  3. Maturity: Peak sales, cost per customer at its lowest, profits high, mass market reach, stable number of competitors.
  4. Decline: Falling sales, cost per customer remains low, profits fall, customer base contracts, number of competitors falls.

• Evolution of Music Example:

  • Vinyl Records: Peter Carl Goldmark, $1887$.
  • Cassette Tapes: Philips Company, $1962$.
  • Audio CD: James Russell, $1982$.
  • MP3 Player: Kane Kramer, $1998$.
  • Cell Phones (Music capabilities): Samsung Uproar, $2001$.