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Chapter 11: Managing Products And Brands
Chapter 11: Managing Products And Brands
I. PRODUCT LIFE CYCLE
A way to trace the stages of a product's acceptance from its introduction to its demise. One of the most familiar concepts in marketing A prevalent marketing management tool Refers to the life of the product category The time a product category spends in a stage of the product life cycle may vary from a few weeks to decades. Does not predict how long a product category will remain in any one stage A tool to help marketers understand where their product is now what may happen which strategies are normally appropriate.
1/17/13 Chapter 11: Managing Products And Brands A. C.sdsu. 2/14 . Introduction Stage Sales grow slowly Profit is minimal or negative Create awareness Stimulate trial High production costs Limited product models Frequent product modification Penetration pricing Skimming pricing Little competition High failure rate.edu/~renglish/370/notes/chapt11/index. Many competitors enter the market. Growth Stage Characteristics Sales grow at an increasing rate. Maturity Stage Sales continue to increase but at a decreasing rate Annual models of many products Product lines are widened or extended www-rohan. High marketing costs Promotion strategy focuses on primary demand for the product category developing product awareness Informing about product benefits. Sales volume has created economies Development costs have been recovered of scale. Large companies may acquire small Profits are healthy pioneering firms. Gaining wider distribution is a key goal Toward the end of this stage prices normally fall profits reach their peak. Promotion emphasis heavy brand advertising Differences between brands. B. Intensive personal selling to retailers and wholesalers is required.htm The marketplace is approaching saturation An emphasis on product style rather than function marginal competitors begin dropping out of the market.
D. Some Dimensions of the Product Life Cycle 1. b.edu/~renglish/370/notes/chapt11/index. Shape of the Product Life Cycle There are several distinctive life-cycle curves Each type suggests different marketing strategies Significant education of the customer is required. Extended introductory period. market The rate of decline is governed by a. Length of the Product Life Cycle There is no exact time that a product takes consumer products usually have shorter life to move through its life cycle cycles than business products Rate of technological change shortens Mass communication shortens life cycles product life cycles. 2. www-rohan.htm 3/14 . is the most drastic strategy. Company retains the product but reduces marketing Harvesting support Promote more frequent use of the product by current customers Find new target markets for the product Find new uses for the product Price the product below the market To prevent slipping into decline Develop new distribution channels Add new ingredients Delete old ingredients Make a dramatic new guarantee E.sdsu. how rapidly consumer A few small specialty firms may still manufacture tastes change or the product. Heavy promotions to both the dealers and consumers are required. Decline Stage Signaled by a long-run drop in Falling demand forces many competitors out of the sales.1/17/13 Chapter 11: Managing Products And Brands out of the market. Strategies Dropping a product from the company’s product Deletion. line. how rapidly substitute products are adopted. Prices and profits begin to fall.
edu/~renglish/370/notes/chapt11/index.htm 4/14 .1/17/13 Chapter 11: Managing Products And Brands Sales begin immediately Little learning is required by the consumer Benefits of purchase are readily understood. Most often appear in women’s and men’s clothing styles. Length of the cycles may be years or decades.sdsu. Rapid sales on introduction Equally rapid decline. www-rohan.
Entire product category or industry Product class Such as video game consoles and software.edu/~renglish/370/notes/chapt11/index. www-rohan. Variations within the class Product form Such as the computing capability of game consoles.1/17/13 Chapter 11: Managing Products And Brands Often novelties and have a short life cycle.sdsu. or spreads. 4. The Product Level: Multiple life cycles (class and form) may exist. through the population.htm 5/14 . 3. a concept called the diffusion of innovation. The Life Cycle and Consumers A product diffuses.
The degree to which a product is perceived to be Relative advantage superior to existing substitutes. Product Characteristics and the Rate of Adoption The degree of difficulty involved in understanding and Complexity using a new product. Do not rely on the norms of the group.5% Early Adopters 13. Independent because they are tradition-bound Have the lowest socioeconomic status Are suspicious of new products Alienated from an advancing society Early Majority 34% Late Majority 34% Laggards 16% Common reasons for resisting a product in the introduction stage are usage barriers product is incompatible with existing habits value barriers product provides no incentive to change risk barriers physical. For them. Speeds diffusion is the degree to which a product can be tried on a www-rohan. neighbors.edu/~renglish/370/notes/chapt11/index. Rely on friends.sdsu. or social psychological barriers cultural differences or image. and opinion leaders for information and norms. and current needs. adoption is the result of pressure to conform. Speeds diffusion The degree to which the benefits and other results of using a new product can be observed by others and Observability communicated to target customers. The degree to which the new product is consistent with existing values and product knowledge. economic. Are older than the others Tend to be below average in income and education.5% Eager to try new ideas and products Have higher incomes Better educated than noninnovators Much more reliant on group norms Oriented to the local community Tend to be opinion leaders. Adopt because most of their friends have already done so.1/17/13 Chapter 11: Managing Products And Brands Innovators 2. past Compatibility experiences.htm 6/14 . Slows diffusion. Collect more information Evaluate more brands than early adopters. Incompatibility slows diffusion.
Increasing use among existing users. 7/14 Reacting to a Competitor’s Position. Reposition the Product Changing the place a product occupies in a consumer’s mind relative to competitive products.htm . Three ways to manage: modify the product modify the market reposition the product. Modify the Market Market modification strategies involve: Product repositioning Finding new users. B. MANAGING THE PRODUCT LIFE CYCLE A. Reposition a product by changing one of four marketing mix elements.1/17/13 Chapter 11: Managing Products And Brands Trialability limited basis. Product (or brand) manager manages the marketing efforts for a close-knit family of products or brands. Role of a Product Manager Product manager is responsible for marketing products through the successive stages of their life cycles.edu/~renglish/370/notes/chapt11/index. Reaching a New www-rohan. Creating new use situations. Modify the Product Altering a product’s characteristic to try to increase and extend the product’s sales. D. Speeds diffusion Marketing Implications of the Adoption Process Word-of-mouth communication Marketing to consumers Two types of communication aid the diffusion process The effectiveness of different messages and appeals depends on the type of adopter targeted. Four factors that trigger a repositioning action are: Competitor’s position is adversely affecting sales and market share. II. quality performance appearance. C.sdsu. Repositioning a product allows it to reach a new market.
For example. www-rohan. Trademarks Legal term indicating the owner's exclusive right to use the brand or part of the brand. Changing the Value Offered. Symbols.. Abbreviations. All of the products below were The MARK has to be used continuously to trademarked. or combination thereof that identifies a Brand seller's products and differentiates them from competitors' products. down Reducing the content of packages without changing package size and maintaining the package price.htm 8/14 . Brand markThe element of the brand that cannot be spoken. term. Brand nameThat part of the brand that can be spoken. such as symbols Trade name commercial.sdsu. be protected Some still are! Rights to a trademark continue for as long aspirin as it is used. Phrases. for trademark protection. design. adding value to the product (or line) Trading Additional features up Higher quality materials. III.1/17/13 Chapter 11: Managing Products And Brands Market. legal name under which a company does business. Sets severe penalties for trademark trampoline infringement. dry ice Lanham Act of 1946 protects Trademarks magic marker® 1.edu/~renglish/370/notes/chapt11/index. consumer interest in “functional foods” that offer health and dietary benefits beyond nutrition inspired repositioning of oatmeal. Shapes Failure to protect trademarks may and Color combinations may also qualify make product names generic. dumpster® 2. kerosene A service mark performs the same styrofoam® functions for service businesses. The injured party can sue for nylon triple damages and recovery of any vaseline® profit. BRANDING AND BRAND MANAGEMENT Branding Decisions A name. symbol. formica® sheetrock® Others are prohibited from using the band-aid® brand without permission. Catching a Rising Trend. Reducing the number of features Lower quality Trading Lower price. Changing consumer trends can also lead to repositioning a product.
Establish a brand’s meaning in the minds of consumers. product counterfeiting has been a growing problem. Facilitates New Product Introduction A. Brand Personality and Brand Equity 1. 2. or customer benefit is mentioned. www-rohan. Creating Brand Equity Brand equity is created by marketing programs Forge strong. 2. 3. the added value a given brand name gives to a product beyond the functional benefits provided. 1. Brand Equity has two distinct advantages: Brand equity provides a competitive advantage. Leads to repeat Brand Loyalty purchases. Brand Equity Often represented by the premium a consumer will pay for one brand over another when the functional benefits provided are identical Consistent preference for one brand over all others. Counterfeit products can steal sales from the original manufacturer or hurt the company’s reputation. Elicit the proper consumer responses to a brand’s identity and meaning.sdsu. active loyalty relationship between consumers and the brand. 5. 2. Attention to how consumers think and feel about a brand.1/17/13 Chapter 11: Managing Products And Brands Generic product name identifies a product by class or type and cannot be trademarked escalator ping-pong® yo-yo Identification Encourages repeat sales Benefits of Branding The brand allows the product to be differentiated from others and serves as an indicator of quality to consumers Because a familiar brand is more quickly accepted by consumers. use situation. Some Branding Concepts The value of company and brand names. product attribute. and unique consumer associations and experiences with a brand Sequential four-step building process: Develop positive brand awareness and an association in consumer’s minds with a product class or need to give a brand an identity. 4. Brand Identityimportant to developing brand loyalty A brand so dominant in consumers' minds that they think of it Master Brand immediately when a product category. Valuing Brand Equity 9/14 1.edu/~renglish/370/notes/chapt11/index. Create a consumer-brand resonance evident in an intense. favorable.htm . Consumers are often willing to pay a higher price for a product with brand equity.
C. A good brand name should D. Manufacturer Branding. Picking a Good Brand Name Describe product benefits.htm 10/14 . distinctive.1/17/13 Chapter 11: Managing Products And Brands Brand equity is a financial advantage for the brand owner. Be simple and emotional. B. Use one name for all its products. Licensing also assists companies in entering global markets with minimal risk. or other property for a royalty or a fee.sdsu. Have no legal or regulatory restrictions. patent. and positive. Licensing Licensing is a contractual agreement whereby a company allows another firm to use its brand name. Branding Strategies 1. Be carefully checked for prior impressions or undesirable images in different languages and cultures. Be memorable.. Fit the company or product image.edu/~renglish/370/notes/chapt11/index. Allows for brand extension Using a current brand name to enter a completely different product class. Too many uses for one brand name can dilute the meaning. Makes possible line extensions Subbranding combines a family brand with a new brand. Established brands are considered intangible assets. www-rohan.. Multiproduct branding Called blanket branding strategy Called family branding strategy.. trade secret. Can appreciate in value when effectively managed Can lose value when not managed properly.
no frills www-rohan. Private Brands Advantages of Advantages of Manufacturer's Brands Private Brands to retailers or wholesalers to retailers or wholesalers Higher gross margin Can enhance retailer's image Manufacturer can not discontinue can carry lower inventory ties consumer to dealer manufacture gets the blame for ties salespeople to dealer problems dealer controls marketing mix Disadvantages (risks) of Disadvantages (risks) of Manufacturer Brands Private brands to retailers or wholesalers retailers or wholesalers Higher marketing costs Must buy in large quantities Lower margins Dealer gets the blame for problems risk of lower perceived quality 3. Makes Pan-European advertising and promotion programs possible. 4. 2. Manufacturer's Brands vs. Euro-branding.sdsu. Adds value to products that are generally perceived to be homogeneous shopping goods. a no-brand product that competes on price. Promotional costs are higher with multibranding. Use when each brand is intended for a different market segment. multibranding giving each product a distinct name. Low cost.edu/~renglish/370/notes/chapt11/index.1/17/13 Chapter 11: Managing Products And Brands Co-branding The use of a combination of brand names to enhance the perceived value of a product May be used to identify product ingredients or components. Generic Branding.htm 11/14 . Private Branding. A compromise between manufacturer and private branding A firm markets products under its own name and that of a reseller The segment attracted to the reseller is different from the manufacturer’s own market. Has become more complex in the global marketplace. Mixed Branding. May be used when two organizations wish to collaborate to offer a product. Use the same brand name for the same product across all countries in the European Union. Often called private labeling or reseller branding Use the brand name of a wholesaler or retailer.
want Protect the product packages that Prevent spoilage or breakage Extend shelf life. tampering Contain and Promotes children Protect Products 3.1/17/13 Chapter 11: Managing Products And Brands Popular in late 1970's 30%-40% cheaper than national brands 20%-25% cheaper than store brands good market share in some categories IV. Functional Benefits. www-rohan. Consumers want Easy to handle packages Easy to open that are Easy To reuse Packaging is often used to segment markets. spoilage Packaging 2.edu/~renglish/370/notes/chapt11/index.htm 12/14 . Integral part of the package Typically identifies the product or brand Who made it Where and when it was made How it is to be used Package contents and ingredients. PACKAGING AND LABELING Packaging component any container in which it is offered for sale and on which label information is conveyed. Label A. Theft Facilitate Recycling Convenience and utility of the package can differentiate a product from the Reduce Environmental Damage competition Facilitate Storage Last opportunity to influence shoppers before they buy. 1. Communication Benefits. Label information Packaging can also have brand equity benefits. Creating Customer Value through Packaging and Labeling Packaging Functions 1. Products 4. 2. particularly by offering different sizes for different segments.sdsu. Facilitate Use Brand Image is often closely linked to packaging Are easy to Wholesalers ship & store Retailers stock on shelves. as in the case of L’eggs.
Firms are using life-cycle analysis (LCA) to examine the environmental effects of their packaging at every stage from raw material sources and production through distribution and disposal. and European consumers believe that companies should make sure products and packages are safe.htm 13/14 . New packaging technology to extend shelf life (the time a product can be stored) and prevent spoilage is being developed with special applications for less-developed countries. www-rohan. regardless of the cost. C. composition. B. U. Helps consumers in making proper product selections Informational labeling Helps lower cognitive dissonance May include care and use information may explain construction figures Universal Product Codes Introduced in 1974 (UPC) Many Retailers will not stock products without Nutrition Labeling and Education Act of 1990 Requires detailed nutritional information on most food packages Establishes standards for health claims on food packaging. firms marketing in the EU have responded to these guidelines and ultimately benefited consumers outside the EU as well. Health and Safety Concerns A majority of U. Can connote status economy product quality. 2. Create perception in the consumer’s mind.1/17/13 Chapter 11: Managing Products And Brands Convenience Product protection Storage. Environmental Sensitivity The amount. and disposal of packaging material continue to receive much attention.sdsu.edu/~renglish/370/notes/chapt11/index.S. Labeling Persuasive labeling Focuses on a promotional theme or logo Information for the consumer is secondary. European countries have been trendsetters in packaging guidelines and environmental sensitivity.S. Global Trends in Packaging 1. Perceptual Benefits. Consumer protection 3.
All sales have an implied warranty under the Uniform Implied Warranty Commercial Code. PRODUCT WARRANTY A warranty is a statement indicating the liability of the manufacturer for product deficiencies. Express Warranty made in writing full warranty has no limits of noncoverage.sdsu. Federal Trade A limited warranty must be conspicuously promoted by the Commission manufacturer Improvement Act Otherwise a full warranty is assumed. limited-coverage specifically states the bounds of coverage warranty areas of noncoverage.1/17/13 Chapter 11: Managing Products And Brands V. Warranties are important in light of increasing product liability claims. Warranties Guarantees the quality or performance of a good or Warranty service. This issue is hotly contested between companies and consumer advocates.edu/~renglish/370/notes/chapt11/index. www-rohan.htm 14/14 . Warranty Strategy Product A protection and information device for consumers. There are various types of product warranties with different implications for manufacturers and customers. Unwritten guarantee that a good or service is fit for the purpose for which it was sold. Magnuson-Moss Manufacturer that promises a full warranty must meet Warranty certain minimum standards. Often assign responsibility for product deficiencies to the manufacturer.