Product
P
19
roduct, according to Kotler (2008), is anything that is offered to a market for
attention, acquisition, use or consumption and that might satisfy a need or
want. Products that are marketed include physical goods, services,
experiences, events, persons, places, properties, organization, information and
ideas.
William J. Stanton defines a product as a complex of tangible and intangible
attribute, including packaging, color, price, manufacturer’s prestige and retailers prestige
and manufacturer’s and retailer’s services which the buyer may accept as offering
satisfaction of wants and needs.
Three Levels of a Product
Core Product – considered as the essence of the product. This is that part of the
product that the consumer is actually buying.
Actual Product – considered as the product’s personality. This is the physical
property of a product. This includes the product’s name, label, brand name,
style, packaging, features, and quality level.
Augmented Product – the level where the seller provides additional services and
privileges to consumers of the product. It may be in the form of after-sales
service, warranty, free maintenance, discounts, and many more.
Classification of Products
Consumer products are those bought by household consumers for their personal
consumption. Consumer products are divided into four classes:

Convenience goods are those that are widely distributed and relatively
inexpensive goods which are purchased frequently and with minimum
effort (http://www.learnmarketing.net).
Examples are bread, coffee, photocopying services, etc.
Convenience goods may be staples, impulse, and emergency goods.
Examples of staples are rice and sugar. Chocolates and candies are
impulse goods while umbrellas and batteries are classified as emergency
goods.

Shopping goods are those that
the customer typically compares
for suitability, quality,
price, features, etc. before
selection and purchase
(http://en.mimi.hu/marketingweb
/shopping_goods.html). These
goods are usually of higher value
Blackberry Playbook
Tablet
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20
than convenience goods, bought
infrequently, and are durable.
Shopping goods may either be
homogenous or heterogeneous.
Homogeneous shopping goods are
those that are similar in quality but
different enough in other attributes
(such as price, brand image, or style) to
justify a search process. Examples:
Laptops of Acer and Asus brands, their
quality is same, but their price, brand
image and styles are different.
Heterogeneous shopping goods have product features that are often more
important to consumers than price; examples include clothes, high-tech
equipment, and furniture.

Specialty goods are those with unique characteristics or brand
identification for which a significant group of buyers is willing to make a
special purchase effort (http://www.mbanotesworld.in). The consumers
will conduct extensive research to make sure that their purchase
decision is right, because these goods are expensive and not
frequently purchased.
For example, one may insist on buying a North Face® backpack
for his outdoor activities. Or, a customer would insist on going to
David’s Salon for her regular hair treatment.

Unsought goods are consumer products that the consumer either does
not know about or knows about but does not normally think of buying.
These are goods that consumers did not even know they needed until
either (a) an emergency arose that needed an immediate purchasing
decision to help resolve said emergency; or (b) an aggressive sales
representative influence them into a purchase.
Memorial plans, life insurance, and security alarm systems are
examples of unsought goods.
Industrial products goods and services purchased by industrial buyers for use in
the production of their own goods and services or in the conduct of their business
(http://en.mimi.hu/marketingweb/industrial_goods.html).

Raw Materials are industrial goods that are processed to become part of
another product. Farm products such as pork, cotton, eggs, milk, and
poultry, and natural resources like coal, iron ore, and lumber make up
raw materials.

Component parts and materials are finished goods of one producer
that become part of the final products of another producer.
Texas Instruments (TI) manufactures a product known as Open
Multimedia Application Platform (OMAP) which is originally intended
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21
for use as application processors in
smart phones with processors hefty
enough to run significant operating
systems, support connectivity to
personal computers, and support
various audio and video
applications.
Now, the different
generations of TI OMAP are used
in products like Nokia N900,
Motorola Droid, Samsung I9003 Galaxy SL, and LG Optimus Black.

Installations include major capital investments for new factories and
heavy machinery and for telecommunications systems.

Accessory Equipment are capital items that typically cost less and last
for shorter periods than installations. They do not become part of the
finished product even if it has substantial value and is used in an
organization’s operations. Some examples are forklifts, copying
machines, power tools, and computers.

Supplies are also called MRO supplies (Kotler and Armstrong, 2008)
because they fall into three categories: (a) Maintenance items like
brooms, and lightbulbs; (b) Repair items like nuts and bolts used in
repairing equipment; and (c) Operating supplies like printer cartridges,
pens, and staplers.
The New Product Development Process
The three distinct categories of new products are:
a. Innovative Products
These are considered as unique products and that they satisfy needs that
have not been satisfied at the time they were introduced.
This point-and-shoot camera is the first
to include a built-in projector, capable of
casting images that measure up to 40
inches diagonally. This newfangled
technology may bring back the oldfashioned family slide show.
Nikon Coolpix S1000PJ Camera
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22
b. Replacement Products
Replacement products are assigned when the current items become
temporarily or permanently unavailable. OECD defines a replacement
product as the product chosen to replace a sampled product either
because it has disappeared completely from the market or because its
market share has fallen either in a specific establishment or in the market
as a whole.
Memory sticks and Flash
Drives have largely
replaced floppy disks.
c. Imitative Products
These are new to the company but not entirely new to the market. These
products imitate competitive products with identical features.
iPod is a line of portable media
players designed and marketed
by Apple and launched in 2001.
Zune is an entertainment platform
and portable media player made
by Microsoft launched in 2006.
Microsoft Zune
Apple iPod
New Product Development Process
Idea Generation
The new-product development process starts with the search for ideas. Top
managers should define the product and market scope and the new product’s objectives.
They should state how much effort should be devoted to developing breakthrough
products, modifying existing products, and copying competitors’ products. This is
considered as the exploration stage of new product development.
New-product ideas can come from many sources: customers, scientists,
competitors, employees, channel members, and top management.
Idea Screening
This is the stage in which alternative ideas are sorted. The purpose of screening is
to drop poor ideas as early as possible. The rationale is that product-development costs
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23
rise substantially with each successive development stage. Most companies require newproduct ideas to be described on a standard form that can be reviewed by a committee.
The description includes the product idea, the target market, and the competition, and it
roughly estimates market size, product price, development time and costs, manufacturing
costs as well as the rate of return.
Idea Generation
Amount of Investment
Idea Screening
Concept Development and Testing
Marketing Strategy
Business Analysis
Product Development
Test Marketing
Commercialization
Figure 4.1 New Product Development Process
Concept Development and Testing
Diola and Tichepco (2009) define this as the development of screened ideas into
product concepts. A product idea is a possible product the company might offer to the
market. A product concept is an elaborated version of the idea expressed in meaningful
consumer terms. Concept testing involves testing the product concept with a group of
consumers to determine their reaction.
Marketing Strategy Development
This consists of three parts. The first part describes the target market, the
positioning of the product, the market share, and the target sales and profits for the first
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24
few years. The second part describes the pricing, distribution, and marketing budget for
the first year of production. The third part describes the long-term potential of the goods
of the company in terms of sales, profits, and marketing mix strategy (Diola and
Tichepco, 2009).
Business Analysis
This stage requires both qualitative and quantitative analysis. The quality of the
product and its likely success are evaluated. The new product idea is also evaluated
making use of quantitative facts and figures.
Product Development
In this stage, a prototype or a trial model of the product is developed.
Test Marketing
This is an experimental procedure in which the company tests a new product
under realistic market conditions so that the company will be able to measure its potential
sales once distributed in a bigger area. There are instances when the design of the
product and the planned production may be modified based on the results of the tests
conducted. This is also the part where management decides whether to continue or not
with the product.
Commercialization
Production and distribution will be full blast at this stage. This entails great risks
because it involves financial, physical, and human resources.
The Product Mix
This refers to the variety of product lines that a company produces, or that a
retailer stocks. With the right blend of products offered, a company can maximize sales
opportunities. Product mix is sometimes called product assortment
(http://www.bnet.com/topics/product+mix).
Product Line
A product line is a collection of products, offered by a firm, that satisfy similar
needs for different target audiences. Thus all products within a product line are related,
but may vary in terms of size, color, quality etc. The product line is part of the broader
product mix, which is the full suite of products offered by the company
(http://en.mimi.hu/marketingweb/product_line.html). For example, Nike produces
several lines of athletic shoes, and Motorola produces several lines of
telecommunications products.
Product Line Width
This refers to the number of product lines the firm offers. For example,
Procter & Gamble markets a fairly wide product mix consisting of many product
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25
lines, including paper, food, household cleaning, medicinal, cosmetics, and
personal care products.
Product Line Length
This refers to the number of different products a firm carries within its
product lines. Procter & Gamble typically carries many brands within each line.
For example, in the Philippines, it sells four laundry detergents, three shampoos,
and three bath soaps.
Product Line Depth
This refers to the number of versions (such as size of packaging,
different formulations, etc.) offered of each product in the line. For example,
Pantene of Procter and Gamble has Pantene Soft and Silky, Pantene Hair Fall
Control, Pantene Nourished Shine, and the latest Pantene Nature Care.
Product Mix Strategies
Establishing and managing the product mix have become increasingly important
marketing activities. Improving the depth, length, and width to the product mix requires
careful thinking and planning. Marketers have to look at the effectiveness of its depth,
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length, and width. Otherwise, a company may end up with too many products including
some that do not sell well.
Product Positioning
A product’s position is what the customer believes about your product's
value, features, and benefits; it is a comparison to the other available alternatives
offered by the competition. These beliefs tend to based on customer experiences
and evidence, rather than awareness created by advertising or promotion.
There are various strategies that can be utilized by marketing executives
in order to create the most useful meaning in the minds of consumers.
1. Positioning in relation to a competitor
More often than not, the best position is directly against the
competitor especially if there are only few of them.
Examples:
Globe versus Smart
Jollibee versus McDonalds
2. Positioning in relation to a product class
A company may produce several brands within the same product
class in order to appeal to different segments of the market.
Example:
Universal Robina Corporation offers different
beverages that can be positioned to compete
with the products of its rivals.
URC offers Nature's Harvest FAB which is
positioned against Del Monte’s Fit n’ Right.
URC also offers Xplode, an energy drink, which
is positioned against PepsiCo’s Sting and Asia
Brewery’s Cobra.
3. Positioning in relation to a target market
Example:
The Generics Pharmacy has positioned itself to
offer generic medicines to people who are not so
particular with the brands of the medicines they
buy and are in search for lower priced
medicines.
4. Positioning by price and quality
Example:
Eastwood and Rockwell are known in the
Philippines as prominent malls with high prices.
On the other hand, SM and Robinsons are
known for relatively lower prices.
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Product Mix Expansion
Another strategy a company may adopt is increasing the depth within a
product line and/or the number of lines a firm offers to its market.
1. Product Line Extension is the use of an established product’s brand
name for a new item in the same product category. For example,
Coca-Cola, in addition to its Regular Coke, offered Diet Coke, Coke
Light, Coke Vanilla, and Cherry Coke to the Philippine market.
2. Product Mix Extension occurs when a firm adds new product line
to its present assortment of products. Globe Telecommunications
offered Broadband services in 2007 in addition to its original
assortment of services.
Trading Up and Trading Down
The product strategies of trading up and trading down involve an
expansion of product line and a change in product positioning. Trading up means
increasing the number of features (and their associated benefits) of a product,
improving its quality, or backing it with a superior level of service to justify a
higher price (http://www.businessdictionary.com). The purpose is to boost the
image or prestige of the product and increase the sale of the existing low-priced
products.
With the iPad 2 going on sale in a week, Apple
appears to be working to unload its remaining
inventory of the tablet computer's first generation.
It takes some poking around, but on Apple's website,
the entry-level 16 GB iPads (Wi-Fi only) were on sale
Thursday for $399 -- $100 less than before -- with
refurbished models going for $349.
A 32GB Wi-Fi model now sells for $499, and the
64GB version is $599. Prices range up to $729 for
the 64GB version with Wi-Fi and 3G connectivity.
iPad 2 by Apple
iPad prices drop as iPad 2 approaches
March 03, 2011| By Doug Gross, CNN
Trading down means adding a low-priced item to its line of prestigious
products. The purpose of this is to encourage people who cannot afford the
original product to buy the new product because it carries some of the status or
prestige of the higher-priced product.
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The All-New NOOK, The Simple Touch Reader runs Android
2.1 and features a 6-inch touchscreen, the most-advanced EInk Pearl display yet with up to 80 percent less flashing, and a
battery life of a whopping 2 months (with Wi-Fi off). It has 2GB
of storage for up to 1,000 digital books, and sports a microSD
card slot for even more storage. It's lighter and slimmer too.
The All-New NOOK weighs in at only 7.48 ounces – that's 35
percent lighter and 15 percent thinner than the first model.
(http://www.beststuff.com)
This is available at www.nook.com and at Barnes & Noble
stores for just $139 – cheaper than the NookColor which is
sold for $249.
Product Alteration
Product alteration means improving an already existing product. This can
be more profitable, less risky and less costly than developing a completely new
product. Many companies frequently redesign or reformulate their products to
give them a new appeal.
For material goods, especially, redesigning is often the key to products,
and renaissance packaging has been a very popular area for product alteration,
particularly in consumer products (http://www.mbanetbook.co.in).
Product Mix Contraction
Product mix contraction means eliminating an entire product line or
simplifying the assortment within a line. This is intended to weed out a low-profit
and unprofitable products. The expected result is higher profits from fewer
products.
The Product Life Cycle
All products have a particular life span, which is called the product life cycle.
The length of time a product is on the market is largely contingent upon its competition,
technology and even the savvy of a company's marketing department. One of the best
ways of extending a product's life cycle is to continuously garner feedback from
consumers, finding out what they need and want from a particular product
(http://smallbusiness.chron.com).
CDs have been around for several years already but the demand and use for
such are declining due to the increase in the demand and use for digital files including
music, movies, and others that can be stored in other saving devices. Telephones have
been used for many years; cellular phones of different models are very young products by
comparison.
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Product Life Cycle Stages
Management should be able to determine the stage which its product is already in
to determine the competitive environment and marketing strategies to be used.
1. Introduction. At this stage, the product is launched full-scale into the
market. During this stage, a firm works hard to stimulate demand for the new
product. It focuses not only on finding first-time buyers of the product and
using promotion to make them aware of the product, but also on creating
channels of distribution by attracting retailers and other intermediaries to
handle the product. At this stage, expenses are high and profits are low.
2. Growth. If the product earns market acceptance, it should at some point
enter a period of comparatively rapid growth. It usually begins when a firm
starts to realize substantial profits from its investment. As sales rise,
competitors enter the market, resulting in a decline of profits toward the end
of the growth stage.
3. Maturity. As the product approaches the end of its growth period, sales
begin to decline. Sales eventually reach a plateau as the backlog of potential
customers dwindles. Profits level off and then fall in the maturity stage.
Later in this stage, for reasons like diminished popularity of the product,
obsolescence, or market saturation, the product begins to lose market
acceptance and some producers are forced to drop out of the market because
of lack of sufficient customers and/or profits. The competitive environment
becomes increasingly
4. Decline. The decline stage is characterized by falling sales and falling
profits. Most competitors have withdrawn from the market. Survivor firms
compete within an even smaller market, driving profit margins lower still.
Figure 4.2 The Product Life Cycle
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Extending the Product Life Cycle
Marketers usually try to extend each stage of the lifecycles for their products as
long as possible. Product lifecycles can stretch indefinitely as a result of decisions
designed to increase the frequency of use by current customers, increase the number of
users for the product, find new uses, or change package size, labels, or product quality.
1. Increasing Frequency of Use
During the maturity stage, the sales curve for a product category reaches
a maximum point if the competitors exhaust the supply of potential
customers who previously had not made purchases. However, if current
customers buy more frequently than they formerly did, total sales will rise
even though no new buyers enter the market.
For instance, consumers buy some products during certain seasons of the
year. Marketers can boost purchase frequency by persuading these people to
try the product year around. For decades, most people use sunscreen during
warm and sunny seasons of the year. With greater warnings about the risks of
sun damage and skin cancer, however, companies now advertise the benefits
of using sunscreen year around. Even consumers of some skin products are
encouraged by marketers to use said products “as often as possible”. As a
result, frequency of use as well as frequency of purchase will be higher.
2. Increasing the Number of Users
A second strategy for extending the product life cycle seeks to increase
the overall market size by attracting new customers who previously have not
used the product. Marketers may find their products in different stages of the
lifecycle in different countries. This difference can help firms extend product
growth. Items that have reached the maturity stage in United States may still
be in the introductory stage somewhere else.
NBC Universal, in 2008, announced that it will start a 24-hour local
news channel along the lines of cable’s New York One. It will de-emphasize
the identity of the NBC network’s flagship station, WNBC, Channel 4 in
New York, rechristening it a “content center,” and making it one part of a
larger local media effort. NBC Universal plans to de-emphasize the identity
of the NBC network’s flagship station, WNBC, Channel 4 in New York.
NBC’s plan calls for rebuilding Channel 4’s newsroom and melding its
content closely with the coming news channel, the existing local Web site,
and out-of-home video displayed in locations like gas pumps and back seats
of taxicabs. NBC will even take WNBC’s name off its local news Web site,
simply calling it NBC New York. (http://mediadecoder.blogs.nytimes)
3. Finding New Uses
Finding new users for a product is an excellent strategy for extending a
product’s lifecycle. New applications for mature products include oatmeal as
a cholesterol reducer, antacids as a calcium supplement, and aspirin for
promoting heart health.
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Marketers sometimes conduct contests or surveys to identify new uses
for their products. They may post the results or their own new ideas on their
Web sites.
Arm & Hammer
cites a variety of
alternative uses
throughout the house for
its baking soda.
Consumers can use
baking soda to clean
crayon off walls, as an
antacid to settle an upset
stomach, as an agent to
balance the pH in
swimming pool water, as
laundry detergent, underarm deodorant, and cat litter deodorizer. In their
website, solutions to everyday household problems are made available.
4. Changing Package Sizes, Labels , or Product Quality
Many firms try to extend their product lifecycles by introducing physical
changes in their offerings. Alternatively, new packaging and labels with
updated images and slogans can help revitalize a product. Procter &
Gamble rejuvenated its Herbal Essences Shampoo line by aiming at a
younger generation of consumers with new packaging and language.
Different hair style products were given updated names such as “Totally
Twisted”, “Break’s Over”, “Long Term Relationship” and “Drama Clean.”
The shampoo and conditioner bottles are curved so that they fit together on
the store shelf or bathroom counter.
Brands and Trademark
A brand is a name, term, symbol, special design, or a combination of these
elements that is intended to differentiate the goods or services of a company from those
of its competitors. A brand name is the verbal part of the brand. It consists of words,
letters, and/or numbers that can be uttered or vocalized. Toyota, Jollibee, and Kleenex are
brand names. One method of classifying brand is on the basis of who owns them –
producers or retailers. Sony, Lexus, and Colgate are the producer’s brand. Body Shop,
Bench, Blue Magic and Silver Works are brands that are owned by retailers. Baygon
Insect - family brand. Bonus of SM is an example of a private brand.
For many years, national brands have been used to describe brands owned by
producers, while private brands or private labels for brands owned by retailers.
A brand mark is a part of the brand that appears in the form of a symbol,
design, distinctive coloring, or lettering. A well known brand mark is Colonel Sanders for
Kentucky Fried Chicken. A brand name can be almost anything a marketer wants it to
be, but it does not have legal status.
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A trademark is defined as a brand that is given legal protection because, under
the law, it has been appropriated to one seller. Hence, trademark is essentially a legal
term. All trademarks are brands, thus, include the words, letters, numbers, and symbols or
pictorial images. Coke for instance is a trademark of Coca-Cola Company. Nike’s
Swoosh and Microsoft’s Windows are famous trademarks.
Characteristics of Good Brand Names
These days, with the dearth of good names, selecting a brand name has become
quite challenging. The creation of a new brand name often involves research to determine
whether consumers will react positively to it.
A brand name should possess as many of the following characteristics as
possible.
1. Suggestive of the product’s characteristics – its benefits, use, or action.
Some names that suggest desirable benefits are Mr. Clean, Softee,
Manila Pure, BeautyRest and Carefree.
2. Easy to pronounce, spell, and remember.
Some simple, one-syllable names include Tide, Joy, and Axe.
3. Distinctive.
Some companies begin their brand names with adjectives, like Allied
Bank and United Airlines.
Distinctive brand names include Swatch, Kodak, Nokia, Sony, and
Porsche.
4. Adaptable to new products that may be added to the product line.
Colgate and Rubbermaid are examples of this.
5. Capable of being registered and legally protected.
Generic names would not meet this criterion. For example, the word “ice
cream” used as a brand name cannot by itself be registered and legally
protected. The same goes for names registered and used by other firms.
Brand Equity
Brand equity is the value a brand adds to a product. For many consumers, brand
names such as Volvo, Nike, or Rolex on a product add value to it. A brand adds value to
the product through its name awareness and its connotations of favorable attributes. A
survey of computer buyers revealed that these buyers would pay more for IBM and
Compaq brands equity is a process of creating loyal followers who provide word-ofmouth support and eventually, add value to the product.
Brands with high equity confer financial advantages on a firm because they often
command comparatively large markets shares and consumers may pay little attention to
differences in prices. Studies have also linked brand equity to high profits and stock
returns. Services companies are also aware of the value of brand equity.
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According to Y & R, a firm builds brand equity sequentially on four dimensions
of brand personality. These four dimensions are differentiation, relevance, esteem, and
knowledge:
 Differentiation refers to a brand’s ability to stand apart from competitors. Brands
such as Porsche and Victoria’s Secret stand out in consumers’ minds as symbols
of unique product characteristics.
 Relevance refers to the real and perceived appropriateness of the brand to a big
consumer segment. A large number of consumers must feel a need for the
benefits offered by the brand. Brands with high relevance include Microsoft and
Hallmark.
 Esteem is a combination of perceived quality and consumer perceptions about a
brand’s growing or declining popularity. A rise in perceived quality or in public
opinion about a brand enhances a brand’s esteem. But negative impressions
reduce esteem. Brands with high esteem include General Mills and Honda.
 Knowledge refers to the extent of customers’ awareness of the brand and
understanding of what a good or service stands for. Knowledge implies that
customers feel an intimate relationship with a brand. Examples include Jell-O
and Band-Aid.
Protecting a Brand Name
Sometimes, brands become so well-accepted that the brand name is substituted
for the generic name of the product. Some brand names that have legally become generic
are cellophane, linoleum, and nylon. The patent on these products has expired but the
public continues to use the brand names as generic names. Some brand names that are
usually used as generic names are Xerox, Band-Aid, Scotch Tape, and Shellane.
To prevent the loss of the distinctive character of the brand name and avoid its
falling into a generic name, three strategies could be used. One is by ensuring that the
words “trademark” or the letters “TM” appear adjacent
to the brand name. A second strategy is to use two
names; the company’s name together with the brand
name or the brand names together with the generic
name. Examples are Johnson’s Baby Powder, San
Miguel Beer, and Lucky Me Pancit Canton. The third
strategy is incorporating into the brand name a
distinctive signature or logo such as that of the SUBWAY® Restaurants.
Brand Loyalty
Brands achieve widely varying consumer familiarity and acceptance. A mountain
climber might insist on a complete getup from The North Face, but the same consumer
might show little loyalty to particular brands in another product category such as
shampoo. Marketers measure brand loyalty in three stages: brand recognition, brand
preference, and brand insistence.
Brand recognition is a company’s first objective for newly introduced products.
Marketers begin the promotion of new items by trying to make them familiar to
the public. Advertising offers one effective way for increasing consumer
awareness of a brand. Nike is a very famous brand and people easily recognize
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its goods even only either through the swoosh or its Jumpman (better known as
the Air Jordan) logo.
At the second level of brand loyalty, brand preference, buyers rely on previous
experiences with the product when choosing it, if available, over competitor’s
products. You may prefer Kenneth Cole shoes or Ralph Lauren clothes to other
brands and buy their new lines as a soon as they offered. If so, those products
have established brand preference.
Brand insistence, the ultimate stage in brand loyalty, leads consumers to refuse
alternatives and to search extensively for the desirable merchandise. Although
many firms try to establish brand insistence with all consumers, few achieve this
ambitious goal. Companies that offer specialty or luxury goods and services,
such as Tiffany & Co. jewelries or Rolex watches, are more likely to achieve this
status than those offering mass-marketed goods and services.
Types of Brands
Generic Products
There are characterized by plain
On the difference between generic and
labels, little or no advertising, and no brand
branded medicines:
names. Common categories of generic
products include food and household staples.
“In terms of quality analysis, they both
These no-name products were first sold in
undergo the same process at the Food and
Europe at prices as much as 30 percent below
Drug Administration. Quality, safety and
efficacy are scrutinized. Meaning, when it
those of branded products. The market shares
passes through FDA, whether it’s generic
for generic products increase during economic
or branded, it has the same quality.” - (Dr.
downturns but subside when the economy
Melissa Guerrero, Head of the Department
improves. However, many consumers do
of Health’s National Center for
request generic substitutions for certain brandPharmaceutical Access and Management
name prescriptions at the pharmacy when they
(DOH-NCPAM))
are available. Generic medicines are very
http://www.abs-cbnnews.com/currentmuch in demand now in the Philippine market
affairs-programs/03/16/11/salamat-dokbecause they are cheaper. And since many
generic-vs-branded-medicines
people are already informed about the
similarities and differences of generic versus branded medicines, consumers are
more aware about the purchases they make.
Manufacturers’ Brands versus Private Brands
Manufacturers’ brands, also called national brands, define the image most people
from when they think of a brand. A manufacturer’s brand is one that is created by
producers and bears their chosen brand name. Well-known manufacturer’s brands
include Tabasco, Sony, Coca-Cola, and Dell. In contrast, many large wholesalers and
retailers place their own brands on the merchandise they market. The brands offered by
wholesalers and retailers usually are called private brands (or private labels). Although
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some manufacturers refuse to produce private-label goods, most regard such production
as a way to reach additional markets segments. Wal-Mart’s private-labels include Sam’s
Choice Cola, Faded Glory, No Boundaries, and White Stag. In the Philippines, bottled
water labeled as SM is supplied by the Philippine Spring Water Resources, Inc., the
company that owns Nature’s Spring.
Captive Brands
Major discounters – such as Wal-Mart, Target, and Kmart – have come up with a
spinoff of the private-label idea. So-called captive brands are national brands sole
exclusively by a retail chain. Captive brands typically provide better profit margins than
private labels. Target’s captive brands include housewares and apparel by Michael
Graves and Mossimo Giannulli; paper collections, including party supplies such as
napkins, tablecloths, and paper plates by Belgian designer Isabelle de Borchgrave; and
furniture collections by Sean Conway. Wal-Mart’s captive brands include linens and
home furnishings by Martha Stewart.
Family and Individual Brands
A family brand is a single brand name that identifies several related products.
For example, Johnson & Johnson offers a line of baby powder, lotions, plastic pants, and
baby shampoo under its name. All Heinz products, including ketchup, mustard, barbecue
sauce, and salad dressing, carry the Heinz brand. Frito-Lay markets both chips and salsa
under its Tostitos family brand.
Alternatively, a manufacturer may choose to market a product as an individual
brand, which uniquely identifies the item itself, rather than promoting it under the name
of the company or under an umbrella name covering similar items. Procter and Gamble,
for example, markets Ariel, Tide, Mr. Clean, Joy, Downy, and Perla for fabric and home
care; Pantene, Head and Shoulders, and Rejoice for hair care; and Olay, Safeguard, and
Zest bath soaps. PepsiCo’s Frito-Lay division makes Lays, Ruffles and Doritos chips and
Smartfood popcorn, while the Pepsi-Cola brands include Sting Energy Drink, Lipton Ice
Tea, Premier Distilled Water, and Gatorade. Individual brands cost more than family new
product. Distinctive brands are extremely effective aids in implementing market
segmentation strategies, however.
On the other hand, a promotional outlay for a family brand can benefit all items
in the line. Family brands also help marketers introduce new products to both customers
and retailers. Because supermarkets stock thousands of items, they hesitate to add new
products unless they are confident they will be in demand.
Family brands should identify products of similar quality, or the firm risks
harming its overall product image. If Bentley marketers were to place the Bentley name
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on a low-end car or a line of discounted clothing, they would severely tarnish the image
of the luxury car line.
Individual brand names should, however, distinguish dissimilar products. For
instance, PepsiCo’s Propel – water and energy drink - is different from Aquafina and
Gatorade.
Packaging
This is defined by Entrepreneur.com as the wrapping material around a consumer
item that serves to contain, identify, describe, protect, display, promote and otherwise
make the product marketable and keep it clean.
Young and Pagoso (2008) defined packaging as the process of product planning
wherein the company researches, designs, and produces its packages. It is the activity of
designing and producing the container or wrapper for a product.
Primary packaging. First-level product packaging such as the bottle, can, jar,
tube, etc., that contains the item sold. It is the last packaging thrown by the consumer
(http://www.businessdictionary.com).
Secondary packaging. This is a packaging material outside the primary
packaging. It is commonly used to group primary packaging (i.e. boxes, cartons, shrinkwrap, etc.) and used to protect products from excessive moisture, light, heat, reactive
gases, etc.
Tertiary packaging. This is used for bulk handling, warehouse storage and
transport shipping. The most common form is a palletized unit load that packs tightly
into containers.
Purposes of Packaging
o
o
o
o
Protection - for the product: transportation without spoiling and/or breaking
for
the consumer: reduces worry and increases safety
Convenience - ease of use and decision making, simplifies life
Image - shelf-appeal, brand awareness, and product/company/consumer values
Sustainability - reduction of environmental impact, consumers can make a
difference
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2011 Trends in Packaging
Bells and whistles: Modern consumers are shopping experts who spend mere seconds making
purchase decisions. Especially in supermarkets, packaging must work hard to tempt shoppers into
trying new products. Revolutionary technologies such as thin film and printed batteries can have a
phenomenal impact at the first moment of truth, adding light, sound, and movement to packaging.
Sound chips can deliver promotional messages from store shelves; paper-thin video screens can
demonstrate product use. The first brands to adopt these cutting-edge strategies are sure to make a
splash in the crowded marketplace.
Reusable: After noticing the product (first moment of truth) and reading the product label (second),
there is now a third moment of truth for consumers: reusing packaging. More brands will make this
possible, banking on the cool factor to extend brand message beyond the life of the product. Burt’s
Bees, whose natural body care line already appeals to environmentally conscious customers, now
provides reusable carrying cases for its lip balm.
Sustainable: More companies will pledge to lessen their impact on the environment and look for
innovative ways to do so. Paper Mate recently introduced biodegradable pens with compostable outer
shells that break down into organic matter within a year. Following a more traditional route, Kraft
Foods plans to reduce its carbon footprint in 2011 by decreasing waste from its plants, eliminating 150
million pounds of packaging material, and cutting CO2 emissions by 25 percent.
Purposeful: To remain relevant in 2011, brands must stand for something and align their brand
promise with the good they do—and convey both through their packaging. The Tide Loads of Hope
program and its corresponding limited-edition detergent give back to the community in an on-brand
way: by providing laundry facilities in areas affected by disaster. In New Orleans following Hurricane
Katrina, the Procter & Gamble-sponsored initiative washed almost 14,000 loads of laundry for 11,000
families.
Source: http://www.brandpackaging.com
Labeling
This refers to activities associated with the design and content of the wording on
a product or package which identifies it and provides instructions for its handling and
use. A label is the part of a package that carries information about the product it
contains; a label may be a permanent part of the primary package or a tag, sticker, band,
etc. (http://marketinginformationcentre.ca). Whether the label is a separate part of the
package or is the package itself, it performs several functions. It carries the brand name
and identifies the product. It carries information about the product, such as cooking
instructions, the safe and proper use of the product, its manufacturer, where and when it
was manufactures, its contents, nutritional information, legal restrictions, and sometimes,
even a plea that littering be avoided. And, it helps promote the product through its
attractive designs and colors. (Diola and Tichepco, 2009)
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Other Image-Building Features
1.
2.
3.
4.
5.
Product design
Color
Product quality
Warranties
After-sales service
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LEARNING ACTIVITY #4
Name: ____________________________________________
Date: __________________________
39
Score: _____________
Part 1
TRUE OR FALSE. Write TRUE if the statement is true or correct. Otherwise, write
FALSE. Use the space provided before each number.
True
False
False
True
False
True
False
False
True
True
False
True
True
False
False
True
False
True
1. Products that are marketed include physical goods, services, experiences,
events, persons, places, properties, organization, information and ideas.
2. Actual product refers to that part of the product that the consumer is actually
buying.
3. Shopping goods are widely-available, purchased frequently and with minimal
effort.
4. Homogeneous products are identical products sold in the same market by
different producers.
5. Consumers of convenience goods will conduct extensive research to make
sure that their purchase decision is right, because these goods are expensive
and not frequently purchased.
6. Raw materials are industrial goods that are processed to become part of
another product.
7. Component parts and materials include major capital investments for new
factories and heavy machinery and for telecommunications systems.
8. Innovative products are new to the company but not entirely new to the
market. These products imitate competitive products with identical features.
9. Concept testing involves testing the product concept with a group of
consumers to determine their reaction.
10. The variety of product lines that a company produces, or that a retailer stocks
is referred to as the product mix.
11. The number of different products a firm carries within its product lines is
referred to as the product line width.
12. The number of versions offered of each product in the line is referred to as
the product line depth.
13. Product line extension is the use of an established product’s brand name for a
new item in the same product category.
14. The purpose of trading down is to boost the image or prestige of the product
and increase the sale of the existing low-priced products.
15. Product alteration means eliminating an entire product line or simplifying the
assortment within a line.
16. A trademark is defined as a brand that is given legal protection because,
under the law, it has been appropriated to one seller.
17. Brands with high equity confer financial disadvantages on a firm because
they often command comparatively large markets shares and consumers may
pay little attention to differences in prices.
18. The ultimate stage in brand loyalty that leads consumers to refuse alternatives
and to search extensively for the desirable merchandise is known as brand
insistence.
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40
True
19. Generic products are characterized by plain labels, little or no
True
20. Labeling refers to activities associated with the design and content of the
wording on a product or package which identifies it and provides instructions
for its handling and use.
advertising, and no brand names.
Part 2
IDENTIFICATION
Augmented Product
Unsought Goods
Raw Materials
Commercialization
Product Mix Extension
Trading Down
Decline Stage
Relevance
Esteem
Family Brand
Brand Preference
Primary Packaging
Manufacturer’s Brand
1. The level where the seller provides additional services
and privileges to consumers of the product.
2. These are products that the consumer either does not
know about or knows about but does not normally think
of buying.
3. Industrial goods that are processed to become part of
another product.
4. A stage in the new product development process wherein
production and distribution will be full blast.
5. When a firm adds new product line to its present
assortment of products, the strategy is called ___.
6. The purpose of this is to encourage people who cannot
afford the original product to buy the new product
because it carries some of the status or prestige of the
higher-priced product.
7. In this stage of the product life cycle, survivor firms
compete within an even smaller market, driving profit
margins lower still.
8. A dimension of brand personality that refers to the real
and perceived appropriateness of the brand to a big
consumer segment.
9. A dimension of brand personality which is a combination
of perceived quality and consumer perceptions about a
brand’s growing or declining popularity.
10. This is a single brand name that identifies several
related products.
11. A level of brand loyalty wherein buyers rely on
previous experiences with the product when choosing it,
if available, over competitor’s products.
12. It is the last packaging thrown by the consumer.
13. _____ is one that is created by producers and bears
their chosen brand name.
Label
Warranty
14. This is the part of a package that carries information
about the product it contains.
15. The purpose of this is to assure buyers that they would
be compensated in case the product does not perform
according to expectations.
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