Chapter 11 Outline by gdDK26

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                                             Marketing 301

                                           Chapter 11 Outline

                                     Managing Products and Brands

The Product Lifecycle

Products, like people, have been viewed as having a lifecycle

The Product Lifecycle describes the stages a new product goes through in the marketplace

    -   Introduction
    -   Growth
    -   Maturity
    -   Decline

Figure 11-1 (pg. 237)

Introduction Stage of PLC

    -   Marketing Objective                    Gain Awareness
    -   Competition                            Few
    -   Product                                One
    -   Price                                  Skimming or Penetration
    -   Promotion                              Inform, Educate
    -   Place (distribution)                   Limited

Growth Stage of PLC

    -   Marketing Objective                    Stress Differentiation
    -   Competition                            More
    -   Product                                More versions
    -   Price                                  Gain market share, deal
    -   Promotion                              Stress Points of Difference
    -   Place (distribution)                   More Outlets

Maturity Stage of PLC

    -   Marketing Objective                    Maintain Brand Loyalty
    -   Competition                            Many
    -   Product                                Full Product Line
    -   Price                                  Defend market share, profit
    -   Promotion                              Reminder Oriented
    -   Place (distribution)                   Maximum Outlets
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    -

Decline Stage of PLC

    -     Marketing Objective                   Harvesting, Deletion
    -     Competition                           Reduced
    -     Product                               Best Sellers
    -     Price                                 Stay Profitable
    -     Promotion                             Minimal promotion
    -     Place (distribution)                  Fewer outlets

Types of Demand

Primary Demand – desire for the product class, rather than for a specific brand, when there are no
competitors with the same product. (Introduction stage)

Selective Demand – demand for a specific brand

Dimensions of the PLC

Length:

    1) Consumer products have shorter PLCs than industrial products
    2) Mass communication informs consumers faster & shortens PLC
    3) Products affected by technological change tend to have shorter PLC’s

Shape (figure 11-3, pg. 241)

    -     High Learning Product – slow growth at first followed by a small hump
              o Significant education of the customer is required and there is an extended introductory
                 period. Ex. Convection ovens
    -     Low Learning Product – fast growth that rounds off
              o Sales begin immediately, but product can be easily imitated by competitors, so the
                 marketing strategy is to broaden distribution quickly. Ex. Gillette’s Mach3
    -     Fashion Product – growth goes up and down as time goes on with trends
              o Introduced, Declines, then seems to return ex. Hemline lengths on skirts
    -     Fad Product – high growth at first that drops off drastically
              o Experiences rapid sales on introduction than equally rapid decline

Dimensions of the PLC at the Product Level

    1) Product Brand – specific version of a product offered by a company
    2) Product Class - refers to entire product category or industry such as video games
    3) Product Form – pertains to variations within the product class
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Factors affecting Diffusion of an Innovation

    1)   Usage Barriers – the product is not compatible with existing habits
    2)   Value barriers – the product provides no incentive to change…not that much better
    3)   Risk barriers – risk can be physical, social or economic/financial
    4)   Psychological barriers – which can be the result of cultural differences or image

Figure 11-4 – 5 Categories and Profiles of Product Adopters

Innovators:

    -    Venturesome
    -    Higher Educated
    -    Use multiple information sources

Early Adopters:

    -    Leaders in social setting
    -    Slightly above average education

Early Majority:

    -    Deliberate
    -    Many informal social contacts

Late Majority:

    -    Skeptical
    -    Below average social status

Laggards:

    -    Fear of debt
    -    Neighbors and Friends are information sources

The Product (Brand Manager) – manage the marketing efforts for a close-knit family of products or
brands

Responsibilities:

    -    Developing & Executing a marketing program for the product line described in an annual
         marketing plan
    -    Approving Ad Copy, media selection, and package design
    -    A role in planning, implementing, & controlling marketing strategy
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Product Modification – altering a products characteristics: quality, performance, appearance, to try to
increase and extend the products sales.

    -    Changing the products characteristics to give the sense of a revised product can be
         accomplished by new features, new package, new scents etc.

Market Modification is utilized when companies try to:

    1) Increase the products use among existing customers
    2) Create new use situations
    3) Find new customers

Repositioning the Product – changing the place a product occupies in a consumer’s mind relative to
competitive products.

    -    A firm can reposition a product by changing 1 or more of the 4 marketing mix elemends

Four Factors That Trigger Product Repositioning

    1)   Reacting to a Competitor’s Position
    2)   Reaching a New Market
    3)   Catching a Rising Trend
    4)   Changing the Value Offered
             a. Trading Up – adding value through additional features or higher quality materials
             b. Trading Down – reducing the number of features, quality, or price, can be via
                downsizing- reducing the content of packages without changing the package size and
                maintaining or increasing the package price

Branding

Branding involves an organization using a name, phrase, design, symbols, or a combo of these to identify
its products and distinguish them from competitors

A Brand Name is any word “device” (design, sound, shape, color) or combination of these used to
distinguish a sellers goods or services

A Trade Name is a commercial, legal name under which a company does business. Ex. Campbell soup co.

A Trademark identifies that a firm has legally registered its brand name or trade name so the firm has
exclusive use, thereby preventing others from using it.

Brand Equity – the added value a given brand name gives to a product beyond the functional benefits
provided.

This value has 2 distinct advantages:
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    1) Provides a competitive advantage, ex. Sunkist label implies quality fruit
    2) Consumers are often willing to pay a higher price for a product with brand equity

Considered an Intangible asset, however it has economic value to the manufacturer

    -    Can increase in value when managed correctly
    -    Can lose value when managed ineffectively

    4 Criteria for picking a good brand name; a good brand name should…

    1)   Describe product benefits
    2)   Be memorable, distinctive, and positive
    3)   Fit the company or product image
    4)   Have no legal restrictions

Figure 11-6 (Pg. 249) – Alternative Branding Strategies

    -    Multiproduct Branding – a company uses one name for all its products in a product class.
         Sometimes called family branding or corporate branding
             o Toro Snowblowers
             o Toro Lawnmowers
             o Toro Garden Hoses
             o Toro Sprinkler Systems
    -    Takes advantage of brand equity and allows for line extensions, or the practice of using a current
         brand name to enter a new market segment in its product class
    -    Some companies employ subbranding which combines a corporate or family brand with a new
         brand
    -    Strong brand equity also allows for brand extension, the practice of using a current brand name
         to enter a completely different product class
    -    Multibranding Strategy – involves giving each product a distinct name.
             o Useful when each brand is intended for a different market segment
             o A-B makes; Budweiser, Bush, Michelob, Wurtburgr, Hofbrau
    -    Fighting Brands - Multibrand companies introduce new product brands as defensive moves to
         counteract competition.
             o Chief purpose is to confront competitor brands
    -    Private Branding – often called private labeling or reseller branding – used when a company
         manufactures products but sells them under the brand name of a wholesaler or retailer.
             o Radio Shack, Sears, Kmart, Kroger all have their own brand names
    -    Mixed Branding –a firm markets products under its own name and that of a reseller because the
         segment attracted to the reseller is different from their own market.
             o Michelin makes – Sears Tires, Michelin Tires
    -    Generic Branding Strategy – No branding, no identification other than the contents of the
         product
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             o   Dog food, peanut butter, green beans, paper towels, aspirin, cola

Packaging

Packaging – component of a product that refers to any container in which it is offered for sale and on
which information is conveyed

    -    To a great extent, the customer’s first exposure to a product is the package
    -    Expensive and important part of marketing strategy

Benefits of Packaging:

    -    Communication Benefits – information on it conveyed to the customer
             o Directions on how to use product
             o Composition of the product
             o Warnings & other info necessary to satisfy legal requirements of product disclosure
    -    Functional Benefits
             o Storage – coke fridge packs
             o Convenience – squeeze bottles, microwave popcorn
             o Protection – tamper-resistant containers
             o Product Quality – Pringles – uniform chips, minimal breakage, better value
    -    Perceptual Benefits – Can connotation status, economy, and/or product quality

9 Methods for New Product Success:

    1)   Take something out of your product – Fat
    2)   Put something into your product – vitamin C in milk
    3)   Answer Consumer Gripes – easier, faster
    4)   Visible Difference – Doritos new package
    5)   Make the task easier – Remote Car Start
    6)   Use Products in a new way – Snickers are also good to snack on
    7)   Product Substitutability – OJ Anytime
    8)   Just Be Creative
    9)   Look at International Products
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