CHAPTER
Day 15
BUS 222
Agenda
• Questions?
• Assignment 3 Corrected
– 10 A’s, 4 B’s, 2 C’s, 1 D and 1 F
• Assignment 4 posted
–
–
Due March 19 (Monday)
Marketing Assignment 4.pdf
• Quiz 3 corrected
– 12 A’s, 2 B’s, 2 C’s and 2 D’s
• Quiz 4, March 22 Chaps 10, 11 & 12
• Finish Discussion on PRODUCT, BRANDING, AND PACKAGING
DECISIONS
• Begin Discussion on DEVELOPING NEW PRODUCTS
CHAPTER
PRODUCT,
BRANDING, AND
PACKAGING
DECISIONS
McGraw-Hill/Irwin
10
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Check Yourself
1.
Explain the three components of a
product.
2.
What are the four types of consumer
products?
Check Yourself
1.
What is the difference between
product line breadth versus depth?
2.
Why change product line breadth?
3.
Why change product line depth?
Branding
Courtesy Mercedes-Benz USA, LLC;
Merkley & Partners/New York
A brand can use: Name, logo symbols, characters,
slogans, jingles and even distinctive packages.
Oscar Meyer
Commercial
What Makes a Brand?
Logos and
symbols
Characters
URLs
Brand name
Slogans
Branding
Jingles/Sounds
Value of Branding for the
Customer and the Marketer
Facilitate Purchasing
Establish Loyalty
Protect from Competition
Reduce Marketing Costs
Are Assets
Impact Market Value
History in Advertising
Design repeats itself
Brand Equity: Brand Awareness
Brand equity 2011
Brands Awareness: Strength
Brand Equity: Perceived Value
• How do discount
retailers like Target,
T.J. Maxx, and H&M
create value for
customers?
• Wal-mart vs.
JC penny
Photo by Peter Kramer/Getty Images
Brand Equity: Brand Associations
©McGraw-Hill Companies Inc/Gary He, photographer
Brand Equity: Brand Loyalty
• Consumers are often
less sensitive to price
• Marketing costs are
much lower
• Firm insulated from
the competition
Copyright State Farm Mutual Automobile Insurance
Company 2005 Used by permission
Check Yourself
1.
How do brands create value for the
customer and the firm?
2.
What are the components of brand
equity?
Brand Ownership
Manufacturer brands or
national brands
Private-label brands or
Store Brands
• Premium
• Generic
• Copycat
• Exclusive co-branded
Brand Ownership
Private Label
http://www.mainesowntreats.com/
McGraw-Hill Companies
Brand Ownership
Exclusive Co-brands
Naming Brands and Product Lines
• Corporate or family
brand
– The Gap
• Corporate and
product line brands
– Kellogg’s Corn Flakes
• Individual lines
– Mr. Clean (Proctor &
Gamble)
Brand Extension
©M Hruby
State Farm
Website
Brand Dilution
Evaluate the fit between
the product class
of the core brand
and the extension.
Evaluate consumer
perceptions of the
attributes of the core brand
and seek out extensions
with similar attributes.
Refrain from
extending the brand
name to too many
products.
Is the brand
extension distanced
enough from the
core brand?
Co-branding
©M Hruby
LaCoste SA
LaCoste SA
Brand Licensing
Brand Repositioning
• How is this
repositioning?
Courtesy The Procter & Gamble Company
Check Yourself
1.
What are the differences among
manufacturer and private-label
brands?
2.
What is co-branding?
3.
What is the difference between brand
extension and line extension?
4.
What is brand repositioning?
Packaging
• What other packaging
do you as a consumer
find useful?
Product Labeling
C Sherburne/PhotoLink/Getty Images
©The McGraw-Hill Companies, Inc/Elite Images
CHAPTER
DEVELOPING NEW
PRODUCTS
McGraw-Hill/Irwin
11
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Developing New Products
LEARNING OBJECTIVES
LO1 Identify the reasons firms innovate.
LO2 Describe the different groups of adopters
articulated by the diffusion of innovation
theory.
LO3 Identify the factors that determine how fast
innovation diffuses.
LO4 Explain the various stages involved in
developing a new product or service.
LO5 Describe the various product life cycle
concepts.
Microsoft
Innovation and Value
Changing
Customer
Needs
Fashion
Cycles
WHY DO
FIRMS
CREATE NEW
PRODUCTS?
Managing
Risk
through
Diversity
Market
Saturation
Check Yourself
1.
What are the reasons why firms
develop new products?
Pioneers radically
change
competition and
consumer
preferences.
©Derrick Donnelly, Blackbag Technologies
New Product Introductions
Diffusion of Innovation
Recycled Organic Clothes
Using the Diffusion of
Innovation Theory
Compatibility
Relative
Advantage
Observability
Factors
Affecting
Product
Diffusion
Complexity and
Trialability
Check Yourself
1.
What are the five groups depicted in
the diffusion of innovation curve?
2.
What factors enhance the diffusion of a
good or service?
How Firms Develop New Products
Idea Generation
Internal R&D
• High product
development costs
• Often the source of
technological
products
• Often the source of
breakthrough
products
Courtesy Black & Decker Corporation
Crystal Pepsi Commercial
R&D Consortia
• Lower costs and risks;
firms join together
• Form research
consortiums
• Benefits spread to all
firms
• Example,
pharmaceutical
industry research
John A Rizzo/Getty Images
Licensing
• Firms purchase the rights to technology or ideas
from other research-intensive firms
• University research centers also often provide
such licenses
Chris Ratcliffe/Bloomberg via Getty Images
Brainstorming
Ryan McVay/Getty Images
• Groups work together to generate ideas
• No idea can be immediately dismissed
Outsourcing
IDEO Website
Eric Audras/Photoalto/PictureQuest
Competitors’ Products
Reverse engineering
“Me Too” or copycat
products
©Royalty-Free/Corbis
Customer Input
• As much as 85% of
new business to
business products
come from customers
• Lead users modify
existing products
according to their own
specific needs
Photo by Dave Hogan/Getty Images
Concept Testing
• Concept is a brief
written description of
the product
• Customers reactions
determine whether or
not it goes forward
• Triggers the marketing
research process
Stockbyte/Getty Images
Product Development
Prototype
Alpha testing
Beta testing
©Lars A Niki
Market Testing
Premarket
tests
Test
marketing
Customers
exposed
Mini product
launch
Customers
surveyed
More expensive
than premarket
tests
Firm makes
decision
Market demand
is estimated
Digital Vision/Getty Images
Dodge Commercial
Market Testing
How do firms know what market tests need to be
performed to ensure a successful product?
Getty Images/PHotodisc
Product Launch
Courtesy The Coca-Cola Company
©2006 Kellogg North
America Company
Kellogg’s
Drink’n
Crunch
Portable
Cereals
©The Arbor Strategy Group, Inc
• An inner cup contains the
cereal and the outer cup
contains the milk
Minute Maid
Premium
Heart Wise
Orange
Juice
• Each 8 oz. serving of the juice
contains 1 gram of plan
sterols that can reduce
cholesterol levels
Aquafresh
Floss ‘N’ Cap
Fluoride
Toothpaste
• The cap of the toothpaste
contains floss
New Product Marketing Mix
Promotion
Price
Place
Launching a New Product
Royalty-Free/CORBIS
How do firms launch a new product innovation?
http://www.mondialautomobile.com/
Evaluation of Results
Satisfaction of technical requirements
Customer acceptance
Satisfaction of the firm’s financial
requirements
Check Yourself
1.
What are the steps in the new product
development process?
2.
Identify different sources of new
product ideas.
Product Life Cycle
Stages in the Product Life Cycle
Introduction
The introduction stage of the PLC
Growth
The growth stage of the PLC
Maturity
The maturity stage of the PLC
CLOROX® is a registered trademark of The Clorox Company Used with permission
Decline
A behavior in the decline stage?
©Software & Information Industry Association
Strategies Based on the Product
Life Cycle: Some Caveats
Theoretically they are bell
shaped but in reality they
can take many shapes
Managers do not know
exactly what the shape each
product’s life cycle will take
so there is no way to know
precisely what stage they
are in.
Check Yourself
1.
What are the stages in the product life
cycle?
2.
How do sales and profits change during
the various stages?
