CHAPTER 10

Product Concepts

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 What Is a Product?
Everything, both favorable and
unfavorable, that a person
receives in an exchange.
 Tangible Good
 Service
 Idea

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 What Is a Product?
Product

Price Promotion

Place (Distribution)

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 Types of Products

AA product
product used
used to to manufacture
manufacture
other
other goods
goods or or services,
services, to to
Business
Business facilitate
facilitate an
an organization’s
organization’s
Product
Product operations,
operations, or or to
to resell
resell to
to other
other
customers
customers

Consumer
Consumer AA product
product bought
bought to
to satisfy
satisfy an
an
Product
Product individual’s
individual’s personal
personal wants
wants

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 Types of Consumer Products
Products
Products

Consumer
Consumer Business
Business
Products
Products Products
Products

Convenience
Convenience Shopping
Shopping Specialty
Specialty Unsought
Unsought
Products
Products Products
Products Products
Products Products
Products

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 Types of
Consumer Products
Convenience A relatively inexpensive item that
Product merits little shopping effort

Shopping A product that requires comparison

shopping, because it is usually more
Product expensive and found in fewer stores

Specialty A particular item for which

Market search extensively and
consumers
Product are reluctant to accept substitutes
Development

Unsought A product unknown to the potential

buyer or a known product that the
Product buyer does not actively seek

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 Product Items,
Lines, and Mixes
AA specific
specific version
version of
of aa product
product
that
that can
can be
be designated
designated as as aa
Product Item
Product Item distinct
distinct offering
offering among
among an an
organization’s
organization’s products.
products.

AA group
group of
of closely-related
closely-related
Product
Product Line
Line product
product items.
items.

All
All products
products that
that an
an
Product
Product Mix
Mix organization
organization sells.
sells.

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Campbell’s Product Lines and Product Mix

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 Benefits of Product Lines

Advertising
Advertising Economies
Economies

Package
Package Uniformity
Uniformity

Standardized
Standardized
Components
Components

Efficient
Efficient Sales
Sales and
and
Distribution
Distribution

Equivalent
Equivalent Quality
Quality
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 Adjustments

Adjustments
Adjustmentsto to
Product
ProductItems,
Items,
Lines,
Lines,and
andMixes
Mixes

Product
Product Line
Line
Product
Product Product
Product Extension
Extension or
or
Modification
Modification Repositioning
Repositioning Contraction
Contraction

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 Types of Product Modifications

Functional
Functional
Modification
Modification

Quality
Quality
Style
Style Modification
Modification Modification
Modification

Planned Obsolescence: The practice of

modifying products so those that have
already been sold become obsolete before
they actually need replacement.
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 Repositioning

Why
Whyreposition
reposition
established
established
brands?
brands?

Changes
Changesinin
Changing
Changing Declining
DecliningSales
Sales Social
Social
Demographics
Demographics Environment
Environment

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 Product Line Extension
Adding additional products to an existing
product line in order to compete more
broadly in the industry.
Symptoms of Overextension
• Some products have low sales or
cannibalize sales of other items
• Resources are disproportionately allocated
to slow-moving products
• Items have become obsolete because of
new product entries
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 Branding

Brand That part of a brand that can be spoken,

Name including letters, words, and numbers

Brand The elements of a brand that

Mark cannot be spoken

Brand
The value of company and brand names
Equity
A brand where at least a third of the
Global
earnings come from outside its home
Brand country

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© 2015 by Cengage Learning Inc. All Rights Reserved. 14
 Benefits of Branding

Product
Product
Identification
Identification

Repeat
Repeat Sales
Sales

New
New Product
Product
Sales
Sales

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 Branding Strategies

Brand No Brand

Manufacturer’s
Private Brand
Brand

Individual Family Combi- Individual Family Combi-

Brand Brand nation Brand Brand nation

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 Branding Strategies

Manufacturers’ The brand name of a

Brand manufacturer.

A brand name owned by a

Private wholesaler or a retailer. Also
Brand known as a private label or store
brand.

A brand manufactured by a third

party for exclusive retailer,
Captive
without evidence of a that
retailer’s affiliation.

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 Advantages of
Manufacturers’ Brands

 Heavy consumer ads by manufacturers

 Attract new customers
 Enhance dealer’s prestige
 Rapid delivery, carry less inventory
 If dealer carries poor quality brand,
customer may simply switch brands and
remain loyal to dealer

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 Trader Joe’s—The Brand
• About 80 percent of the items offered at Trader
Joe’s are private label.
• Trader Joe’s offers several sub-brands within the
Trader Joe’s brand family, such as Trader Ming’s
for Chinese food and Trader Darwin’s for vitamins.
• Trader Joe’s purchases directly from the
manufacturer and ships directly to its distribution
centers, where many of the products are
portioned and packaged.
Source: Beth Kowitt, “Inside Trader Joe’s,” Fortune, September 6, 2010. 86-96

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 Advantages of
Private Brands
 Earn higher profits on own brand
 Less pressure to mark down price
 Manufacturer can become a direct
competitor or drop a brand/reseller
 Ties customer to wholesaler or
retailer
 Wholesalers and retailers have no
control over the intensity of
distribution of manufacturers’ brands
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 Advantages
of Captive Brands

• No evidence of store’s affiliation

• Manufactured by third party
• Sold exclusively at the chain
• Can ask price similar to
manufacturer’s brands

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 Individual Brands Versus
Family Brands

Using different brand

Individual
names for different
Brand products.

Marketing several different

Family
products under the same
Brand
brand name.

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 Co-branding

Ingredient
Ingredient
Branding
Branding

Types of Co- Cooperative

Cooperative
branding Branding
Branding

Complementary
Complementary
Branding
Branding

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 Trademarks
A Trademark is the exclusive right to use
a brand. A service mark performs the same
function for services.
 Many parts of a brand and associated
symbols qualify for trademark protection.
 Trademark right comes from use rather than
registration.
 The Digital Millennium Copyright Act
(DMCA) explicitly applies trademark law to
the digital world.
 Companies that fail to protect their trademarks
face the possibility that their product names
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will become generic.
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 Functions of Packaging

Contain and Protect

Promote

Facilitate Storage, Use,

and Convenience

Facilitate Recycling
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 Labeling
Persuasive Informational

 Focuses on  Helps make proper

promotional selections
theme
 Lowers cognitive
 Consumer dissonance
information is
secondary

Greenwashing
Attempting to give the impression of
environmental friendliness whether or not it is
environmentally friendly.
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 Universal Product Codes

A series of thick and thin vertical lines

(bar codes), readable by computerized
optical scanners, that represent
numbers used to track products.

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 Global Issues in Branding

One
One Brand
Brand Name
Name
Everywhere
Everywhere

Global Options Adaptations

Adaptations &&
for Branding Modifications
Modifications

Different
Different Brand
Brand
Names
Names inin Different
Different
Markets
Markets
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 Global Issues in Packaging

Labeling
Labeling

Global
Considerations Aesthetics
Aesthetics
for Packaging

Climate
Climate
Considerations
Considerations
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 Product Warranties

A confirmation of the quality or

Warranty
performance of a good or service.

Express
A written guarantee.
Warranty

An unwritten guarantee that the good

Implied
or service is fit for the purpose for
Warranty
which it was sold.

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 Chapter 10 Video
Zappos
Zappos discusses how the company builds its
product offerings and enters into new fields.
Zappos also has a limited line of private label
offerings that it creates to fill a perceived gap
in the market. Choosing the correct products is
the starting point for Zappos to offer its great
customer service and “deliver happiness.”
CLICK TO PLAY VIDEO

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