Chapter 12
Category and Brand
Management,
Product
Identification, and
New-Product
Development
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Chapter Objectives
1. Explain the benefits of category and brand
management.
2. Identify the different types of brands.
3. Explain the strategic value of brand equity.
4. Discuss how companies develop strong identities
for their products and brands.
5. Identify and briefly describe each of the four
strategies for new-product development.
6. Describe the consumer adoption process.
7. List the stages in the process for developing new
products.
8. Explain the relationship between product safety
and product liability.
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Managing Brands for Competitive
Advantage
 Branding is the process of creating that
identity.
 Buyers respond to branding by making
repeat purchases because they identify the
item with the name of its producer.
 Brand: name, term, sign, symbol, design, or
some combination that identifies the
products of a firm while differentiating them
from the competition’s
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 Brand Loyalty
Brand recognition: Consumer
awareness and identification of a brand.
Brand preference: Consumer reliance
on previous experiences with a product to
choose that product again.
Brand insistence: Consumer refusals of
alternatives and extensive search for
desired merchandise.
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Types of Brands
 Generic product: item characterized by
plain label, with no advertising and no brand
name
 Manufacturers’ brand or National Brand:
brand name owned by a manufacturer or
other producer
 Private brands: brand name placed on
products marketed by wholesalers and
retailers
 Captive brands: national brands that are
sold exclusively by a retail chain
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 Family brand: brand name that identifies
several related products
 Individual brand: unique brand name that
identifies a specific offering within a firm’s
product line and that is not grouped under a
family brand
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 Brand equity: added value that a
respected, well-known brand name
gives to a product in the marketplace.
 Young & Rubicam Model:
Brand Asset Valuator (see text)
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 Brand manager: Marketing
professional charged with planning and
implementing marketing strategies and
tactics for a brand
 Category management: Product
management system in which a
category manager—with profit and loss
responsibility—oversees a product line.
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Product Identification
 Brand name: part of a brand consisting of
words or letters that form a name that
identifies and distinguishes a firm’s offering
from those of its competitors
 Brand mark: symbol or pictorial design that
identifies a product
 Generic name: branded name that has
become a generically descriptive term for a
class of products (e.g., nylon, aspirin,
kerosene, and zipper)
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 Trademark: legal protection
which confers the exclusive right
to user brand name, trade mark,
and any slogan or product name
abbreviation
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 Trade Dress: visual cues used in branding
to create an overall look
The McDonald’s arches provide an
example of trade dress
 Developing Global Brand Names and
Trademarks
An excellent brand name or symbol in
one country may prove disastrous in
another
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 Packaging: A package serves three
major objectives:
Protection against damage, spoilage,
and pilferage
Assistance in marketing the product
Cost effectiveness
 Labeling
Label
Universal Product Code (UPC)
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 Brand extension: application of a
popular brand name to a new product in
an unrelated product category
 Line extensions refers to new sizes,
styles, or related products
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 Brand licensing: practice allowing other
companies to use a brand name in
exchange for a payment
Nabisco Licenses Its Oreo Brand to
Post Cereal
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12-14
New Product Planning
 Product Development Strategies
Product positioning: consumers’
perceptions of a product’s attributes,
uses, quality, and advantages and
disadvantages in relation to those of
competing brands
Cannibalization: a loss of sales of the
current product due to competition from
a new product in the same line
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12-15
The Consumer Adoption Process
 Adoption process: Stages that
consumers go through in learning about
a new product, trying it, and deciding
whether to purchase it again.
Awareness
Interest
Evaluation
Trial
Adoption or rejection
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12-16
 Consumer innovator: People who
purchase new products almost as soon
as the products reach the market
 Identifying Early Adopters
Substantial benefits may be obtained
by locating the likely first buyers of
new products (innovators and early
adopters)
 Diffusion process: Process by which
new goods or services are accepted in
the marketplace
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 Rate of Adoption Determinants
Characteristics of a product innovation
that influence its adoption rate include:
Relative advantage
Compatibility
Complexity
Possibility of trial use
Observability
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 Organizing for New Product
Development
New-Product Committees
New-Product Departments
Product Managers
Venture Teams
Task forces
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New Product Development Process
 Idea Generation
Sales force, Customers, Employees, R&D
specialists, The competition, Suppliers,
Retailers, Independent inventors
 Screening
Separates ideas with commercial potential
from those that cannot meet company
objectives
 Business Analysis
Consists of assessing the new product’s
market potential, growth rate, likely
competitive strengths, and compatibility of
the proposed product with organizational
resources
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 Development
Converting an idea into a physical product
 Test Marketing
Introduction of a trial version of a new
product supported by a complete
marketing campaign to a selected city of
television coverage area
 Commercialization
The firm establishes marketing strategies,
and funds outlays for production and
marketing
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Product Safety and Liability
 Product Liability: responsibility of
manufacturers and marketers for injuries
and damages caused by their products
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