Chapter 11: Basic Concepts in Product Planning

Lindell’s Chapter 11 Notes BASIC PRODUCT 11-1 OVERVIEW A. Product planning is systematic decision making relating to all aspects of the development and management of a firm’s products including !randing and packaging.

B. "ach product consists of a !undle of attri!utes capa!le of e#change or use usually a mi# of tangi!le and intangi!le forms. C. A $ell%structured product plan ena!les a company to pinpoint opportunities develop appropriate marketing programs coordinate a mi# of products maintain successful products as long as possi!le reappraise faltering products and delete undesira!le products. &. A firm should define its products in three distinct $ays: tangi!le augmented and generic. 'ee (igure 11%1. 1. A tangi!le product is a !asic physical entity service or idea. ). An augmented product includes not only the tangi!le elements of a product !ut also the accompanying cluster of image and service features. *. A generic product focuses on $hat a product means to the customer not the seller. 'ee (igure 11%). 11%) A. 11%)a A. B. C. +,P"' -( P.-&/C+'

+he first product%planning decision involves the choice of the type0s1 of products to offer. (/N&A2"N+AL &3'+3NC+3-N' B"+4""N 5--&' AN& '".63C"' 5oods marketing entails the sale of physical products. 'ervice marketing encompasses the rental of goods servicing goods o$ned !y consumers and personal services. (our attri!utes distinguish services from goods: intangi!ility perisha!ility insepara!ility from the service provider and varia!ility in 7uality. Although services have different characteristics from goods their sales are fre7uently connected. C-N'/2". P.-&/C+' Consumer products are goods and services destined for the final consumer for personal family or household use.

11%)! A.

). ). C. C. A product mi# can !e descri!ed !y its $idth 0num!er of different product lines1 depth 0num!er of product items $ithin each product line1 and consistency 0ho$ closely related product lines are1. 3ndustrial services are of t$o general types. 3N&/'+. A product line is a group of closely related items. +he classification is an e#cellent means for segmenting consumers.-&/C+' 3ndustrial products are goods and services purchased for use in the production of other goods or services in the operation of a !usiness or for resale to other consumers. 'taples impulse goods and emergency goods are the kinds of convenience goods. 1. 3t re7uires investments and e#pertise in different areas. (igure 11%* sho$s product mi# alternatives in terms of $idth and depth. *.-&/C+ 239 C. 1. +he t$o kinds of shopping goods are attri!ute%!ased and price%!ased. *. 'ee +a!le 11%). A deep mi# satisfies the needs of several segments ma#imi8es shelf space discourages competitors covers a range of prices and sustains dealer support. (igure 11%: highlights Colgate%Palmolive’s product mi#. C. 3t may impose higher inventory and other costs as $ell as confuse consumers. 'pecialty products are those for $hich consumers are !rand loyal and $ill make a significant purchase effort to ac7uire the desired !rand.Chapter 11: Basic Concepts in Product Planning B. 11%) .3AL P. Convenience products are those !ought $ith a minimum of effort $here the !uyer has kno$ledge of product attri!utes prior to shopping. &. 3ndustrial goods are categori8ed !y the level of decision making in making a purchase costs consumption rapidity the role in production and the change in form. 11%* "L"2"N+' -( A P. A product item is a specific model !rand or si8e of a product that a company sells. A. A $ide mi# ena!les a firm to diversify appeal to different consumer needs and encourage one%stop shopping. 3t may leave the firm vulnera!le to environmental threats since it is not diversified. 11%)c A. 'hopping products are those for $hich consumers lack sufficient information a!out products prior to making a purchase decision and must therefore ac7uire further kno$ledge. A consistent mi# is easy to manage is efficient creates a strong image and generates solid distri!ution relations. B. Consumer products may !e classified in the follo$ing categories. A product mi# consists of all the different product lines a firm offers. B. 'ee +a!le 11%1.

% .an% n&$!onm nta. 11%* . o# p!o%ucts- B. Onc consum ! p !c pt$ons a! #o!m %. +here are five !asic product%management organi8ational forms as sho$n in +a!le 11%*: +he correct organi8ation depends on the firm’s diversity the num!er of ne$ products introduced the level of innovativeness company resources management e#pertise and other factors.n (!an%s a! compa! % to on anot" !. p !c pt$ons consum !s Company p!o%uct pos$t$on$n' s"o. A com!ination of forms may !e !est. A #$!m+s 'oa. Consum ! % s$! s ! # ! to t" att!$(ut s consum !s .$n . 11-5 PRODUCT POSITIONING C.$& to $ts comp t$to!s. Comp t$t$& p!o%uct pos$t$on$n' ! # !s to t" "a& o# a #$!m ! . En&$!onm nta. s a #$!m to map $ts o## !$n's $n t !ms o# consum ! p !c pt$ons an% % s$! s. Consum ! p !c pt$ons a! t" $ma' s consum !s "a& (ot" a company+s an% comp t$to!s+. c"an' s may a. 1. Its o. P!o%uct pos$t$on$n' na(. D. 11%: P. consum !s p !c $& %$## ! nt (!an%s o# t" #$!m . c"an' s. B.t ! p !c pt$ons o# p!o%ucts. 'everal e#amples of different companies’ product mi#es are provided. C. $s to "a& consum !s p !c $& p!o%ucts+ att!$(ut s as $t $nt n%s.-&/C+ 2ANA5"2"N+ -. 0.5AN3.ot" ! company p!o%ucts.A+3-N' A.$* p!o%ucts to poss ss/t" $! $% a. A. E.comp t$t$on.s a #$!m "o.$t"$n t" sam p!o%uct .Chapter 11: Basic Concepts in Product Planning :. A company must nsu! t"at ac" o# $ts p!o%ucts $s p !c $& % as p!o&$%$n' a com($nat$on o# un$)u # atu! s an% t"at t" s # atu! s a! % s$! % (y t" ta!' t ma!* t.t" y may ( "a!% to c"an' .ou. po$nts.

o! t!a% c"a!act ! o! com($nat$on t" ! o# t"at $s '$& n . CORPORATE S.o! . 0$'u! 11-5 $.ac .o!%. 11-4a .an ma!* t$n' ##o!ts acco!%$n'. Branding philosophy. 9. p!ot ct$on.o 2amp. Corporate sym!ols. B $mp. po$nts...ys$s.o! %$st$nct$& co. ! o! '!oup o# s . A.. 2onetary" assoc$at % . ). :. /sing trademarks. *.% & . :. *.sym(o. a!n a '! at % a. tt !s 6num( !s7 t"at can ( spo* n.op$n'. T. 1. tt ! 6num( !7.$t" a sp c$#$c typ o# ca! an% % sc!$( % $n t" t 2t..S. B!an%$n' $s t" p!oc %u! a #$!m #o. A firm must make these four decisions related to !randing 0see (igure 11%<1: 1. 11-4 BRANDING 3. 4hile definitions of !rand e7uity may differ they have these factors in common: 1.<BO=S 11%: A. A (!an% nam $s a .Chapter 11: Basic Concepts in Product Planning I.(!an% ma!*.ust!at s p!o%uct pos$t$on$n' #o! t" U. A t!a% ma!* $s a (!an% nam .o! any ot" ! # atu! t"at $% nt$#$ s t" 'oo%s an% s !&$c s o# a s . tt !$n' t"at cannot ( spo* n. T" ! a! n$n $% a. m nt$n' $ts (!an%6s7. Perceived 7uality.o. auto ma!* tp.t !m. an% p. 3ntangi!ility. s a! p!o&$% %..y.% s$'n.. Brand e7uity is a ne$ !randing concept that recogni8es the financial value associated $ith a !rand apart from a product’s physical attri!utes.% s$'n.. A (!an% $s a nam .a company can .s $n ! s a!c"$n'.'!oup o# .o!%s. 8. Choosing a !rand name. B. A t!a% c"a!act ! $s a (!an% ma!* t"at $s p !son$#$ %. S 0$'u! s 11-4 an% 11-5. 'a.o!$n' o! . !s. A (!an% ma!* $s a sym(o. ). 3n general !rands ease identification provide 7uality assurance identify the maker reduce price comparisons aid advertising segment markets increase prestige reduce consumer risk improve reseller cooperation sell a $hole product line and ease entry into a ne$ product category. T"!ou'" p!o%uct-pos$t$on$n' ana.

:. . 11%= B. ).o'os. BRANDING PHILOSOPHY A branding philosophy o !lin"s !h" s" o# $an #a%! r"r& pri'a!"& and(or g"n"ri% brands& as )"ll as #a$ily and(or indi'id al branding. ).esellers secure e#clusive rights are responsi!le for distri!ution control the marketing effort and charge lo$ prices. G n !$c (!an%s emphasi8e the names of the products themselves and not manufacturer or reseller names. +hese !rands appeal to the most price%conscious consumers $ho $ill accept lo$er 7uality. +hey are 7uite similar to manufacturer !rands $ith less emphasis on packaging and variety. B. G n !$c B!an%s A. 11-6b A. =. :. 1. +hey have the most sales. Co!po!at sym(o. P!$&at 6% a. +hese !rands appeal to consumers $ho desire lo$ risk good 7uality routine !ehavior status and convenience shopping.Chapter 11: Basic Concepts in Product Planning A. :. C. +hey are identifia!le and present distinctive images to shoppers. 2erges $ith another company.educes or e#pands product lines. !7 (!an%s contain the name of the $holesaler or retailer. Attracting and retaining customer loyalty are important. (irst !egins !usiness. . .. +hey are $ell kno$n and trusted !ecause 7uality control is strictly maintained. 1. 'ym!ols are evaluated $hen a company does the follo$ing: 1. +hey have su!stantial sales. 1. *. +he ma>or goal is to attract and retain consumers $ho are loyal to the reseller and for the distri!utor?retailer to e#ert control over the marketing of these !rands. . +hey have the least sales. +hese !rands appeal to price%conscious consumers. =. (inds its name to !e un$ieldy nondistinctive or t!a% c"a!act !s.s a! a #$!m+s nam . 'eeks ne$ geographic markets. 'ee (igure 11%@. ). *. <anu#actu! !. ).P!$&at . *. <anu#actu! ! (!an%s contain the name of the manufacturer.

1. 0h"y %an ha'" a ni#or$ i$ag" and !h" abili!y !o pro$o!" !h" sa$" na$" %on!in ally& )hi%h +""ps pro$o!ion %os!s do)n. +hey are seldom advertised and receive poor shelf space. 1.separate !rands are used for different items or product lines. +a!le 11%: compares the three types of !rands. -any %o$pani"s s"lling ind s!rial prod %!s or %ons $"r s"r'i%"s s" so$" #or$ o# #a$ily branding. 3t is useful in product positioning attracts various market segments increases sales and marketing control offers !oth premium and lo$%priced !rands and allo$s a manufacturer to secure greater shelf space in retail stores. +he ma>or goal is to offer lo$%priced lo$er%7uality items to consumers interested in price savings. 0am$. 7 (!an%$n'. (or e#ample Procter A 5am!le’s $ide and deep product mi# includes eight !rands of laundry detergent. C.y an% <u. :.t$p. Prices are less than the other !rands due to 7uality packaging assortment distri!ution and promotion economies. . +here are seven situations in $hich this strategy is most effective: 4ith $n%$&$%ua.Chapter 11: Basic Concepts in Product Planning *. B!an%$n' A. &. 1.. 0h" $a2or disad'an!ag"s o# #a$ily branding ar" !ha! di##"r"n!ia!"d $ar+"!ing "##or!s ar" $ini$i/"d& on" na$" #or di'"rs" prod %!s %an da$ag" a %o$pany3s i$ag"& and inno'a!i'"n"ss is no! pro2"%!"d !o %ons $"rs. 3n the !attle of the !rands each type of !rand attempts to gain a greater share of the consumer’s dollar control over marketing strategy consumer loyalty product distinctiveness ma#imum shelf space and locations and a large share of profits. (. An effective use of family !randing is !rand e#tension a strategy !y $hich an esta!lished !rand name is applied to ne$ products. In #a$ily *blan+"!. =. I! )or+s b"s! #or sp"%iali/"d #ir$s or !hos" )i!h narro) prod %! lin"s. +oday many companies employ a mi#ed%!rand strategy $here!y they sell a com!ination of manufacturer and private !rands 0and sometimes generics1. 6mu. ". +his ena!les them to increase control reach more market segments encourage loyalty coordinate shelf space and locations improve channel cooperation increase assortments sta!ili8e production utili8e e#cess capacity ma#imi8e sales and utili8e e#cess capacity. 11%B B. branding& on" na$" is s"d #or !)o or $or" indi'id al prod %!s.t$p. .

As firms e#pand glo!ally !randing takes on special significance.& P"r! Pl s.. . (or e#ample one% third of Cein8’s products have the Cein8 nameD the others have names like 'tarkist and -re%3da. =. ). 4ithin the Conda line are the Conda Accord Conda Civic and Conda Prelude. 1.g. *.& D""r" !ra%!ors. 7. I! %an b" l"gally pro!"%!"d *". Brands’ meanings must not have negative connotations or violate cultural ta!oos.g.g. &. 3n choosing a !rand name the firm should plan for the consumer’s !rand decision process as sho$n in (igure 11%11. I! %on'"ys a di##"r"n!ial ad'an!ag" *". ). Co%!randing $here!y t$o or more names are used $ith the same product to gain from the !rand images of each. . 'ee (igure 11%1E. 1. A firm could have a flagship !rand and other secondary !rands.. . Licensing agreement $here!y the company pays a fee to use a name or logo $hose trademark rights are held !y another firm.Chapter 11: Basic Concepts in Product Planning ). C1OOSING A BRAND NA<E 11-4c A. I! is "asy !o sp"ll and r"$"$b"r& and prono n%"abl" in on" )ay *". A good brand na$" has !h" #ollo)ing a!!rib !"s4 1. I! %an b" appli"d !o a )hol" lin" o# prod %!s *".g.& P"rri"r. (or e#ample Conda has t$o ma>or auto lines Conda and Acura.. :. 6.g. 2any companies com!ine family and individual !rands. 11%F &.esellers.. A family !rand could !e used $ith individual !rands. I! has a pl"asan! or a! l"as! n" !ral $"aning in!"rna!ionally *". C. Ne$ name. "#amples are provided for each of these in the te#t. 'peciali8ed firms such as Namestormers devise names for clients that are accepta!le around the $orld. (or a ne$ !rand nonrecognition is the first stage. I! s gg"s!s !h" prod %!3s s" *". 6..g.. +here are several sources from $hich a firm can choose a !rand name: 1.& 5l"an)ip"s. 1.& Bi%.& On'ia. 2ultiple !rands re7uire large promotional costs may cause a loss of continuity lessen mass production economies and do not aid in ne$ product introductions. "#isting company !rands 0!rand e#tension1. B..

A physical container may !e a card!oard metal plastic or $ooden !o#D a cellophane $a#paper or cloth $rapperD a glass aluminum or plastic >ar or canD a paper !agD styrofoamD some other materialD or a com!ination of these. +his occurred for cellophane aspirin shredded $heat cola linoleum and light !eer. Last there is insistence 0or aversion1 for the !rand. A package is a product’s physical container la!el and?or inserts.G' +he company determines $hether to apply for trademark protection under the Lanham Act 0updated !y the +rademark La$ . A!out 1E percent of a typical product’s final selling price goes for its packaging. :. +rademarks are voluntary.oller!lade (ormica and +eflon. B. A preference 0or dislike1 for the !rand is developed. A trademark must have a distinct meaning !e used in interstate commerce not !e confusingly similar to other trademarks and not imply attri!utes a product does not have. C. 11%< C. . 11%Bd A. 3nserts are instructions and safety information or coupons pri8es or recipe !ooklets. A la!el indicates the !rand name company logo ingredients promotional messages inventory codes and?or instructions for use. A. +he amount is higher for such products as cosmetics 0up to :E percent1. 4hen !rands !ecome too popular or descriptive of a product category they run the risk of !ecoming pu!lic property.A&"2A. +C" /'" -( +. ). +hey re7uire a registration procedure that can !e time consuming and e#pensive. 1. :. =. ). Packaging is the procedure follo$ed in researching designing and producing package0s1.Chapter 11: Basic Concepts in Product Planning ). &uring recognition the !rand and its attri!utes are kno$n. 1. A glo!al firm must register trademarks in every nation in $hich it operates. 11%F PACGA53N5 B. *. Brands currently fighting to remain e#clusive trademarks include L’eggs . +hey are used as appropriate. 4ith !rand e#tension the ne$ product starts at recognition preference or insistence. *. ". *. +rademark protection grants the e#clusive use of a $ord name sym!ol com!ination of letters or num!ers or other devicesHsuch as distinctive packaging Hto identify the goods and services of that firm and distinguish them from others for as long as they are marketed.evision Act1.

1). A complete package redesign of a ma>or product may cost millions of dollars. (AC+-. (amily packaging. +he /niversal Product Code 0/PC1 is a system for coding information onto merchandise. 4.-p!o%uct p.sto! %an% "an%. Conta$nm nt an% p!ot ct$on/A p!o%uct can ( s"$pp %. Commun$cat$on/P!o%uct $n#o!mat$on an% company $ma' a! con& y %. 5.y us % an% ! sto! %.' C-N'3&". F. coop !at$on/C"ann .y.o!-ma% #o! a sp c$#$c ma!* t '!oup. ". :. Preprinted price and inventory control coding. 8. 'i8e0s1 color0s1 and shape0s1. @. B. 3nterrelation $ith other marketing varia!les. C"ann . Placement content si8e and prominence of the la!el. a. 3ndividual $rapping. Packaging decisions must serve !oth resellers and consumers. % sa# . :. Usa' /T" p!o%uct can ( as$. 11%F! A. <. *. N . An e#ample is provided. 9. 2ultiple packaging. 1. 3mage. T" ! a! s$2 (as$c pac*a'$n' #unct$ons. 3t re7uires pre%marking $ith a series of vertical lines $hich cannot !e read !y humans. 3nventory data are instantly transmitted to the main computer of the retailer or manufacturer. 11. m m( !s+ n %s a! m t. 3n the /PC system human% reada!le prices must still !e marked on the merchandise. 'tandardi8ation 0see (igure 11%1)1. (. 2aterials and level of innovation 0see (igure 11%1*1. 11-5a BASIC PAC>AGING 0UNCTIONS A. ).Chapter 11: Basic Concepts in Product Planning &. Package features. Packaging redesign fre7uently occurs $hen a firm’s current packaging receives a poor response from channel mem!ers and customers or !ecomes too e#pensive. 1E. S 'm ntat$on/A pac*a' can ( ta$. =. pac*a' can ( an $nno&at$on.y an% ##$c$ nt. +hey involve significant coordination $ith production logistics and legal personnel.ann$n'/A n . Costs. 11%@ ."& 3N PACGA53N5 &"C3'3-N' +hese are the t$elve key factors to consider in packaging: 1.

1. 11%1E . C. ).Chapter 11: Basic Concepts in Product Planning 11%Fc A. 3n planning their packaging programs firms need to $eigh the short%term and long%term !enefits and costs of providing environmentally safer less confusing and more tamper% resistant packages. 'hoplifting adds to packaging costs !ecause firms must add security tags and other$ise alter packages.3+3C3'2' -( PACGA53N5 Packaging has !een critici8ed and regulated in recent years !ecause of environmental and resource pro!lems costs 7uestions a!out honesty and the confusion caused !y inconsistent designations of package si8es and lack of safety.-&/C+ PLANN3N5 B. C. 11%< +C" 5L-BAL &32"N'3-N' -( P. +hro$a$ay !ottles $hich are preferred !y consumers use almost three times the energy of returna!le !ottles. Consumers must !ear part of the responsi!ility for the negative aspects of packaging.

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