12
CHAPTER
Developing and Managing
Brand and Product Categories
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 7 List the stages in the newdevelop strong identities
product development
for their products and
process.
brands.
8 Explain the relationship
between product safety
and product liability.
5
Identify and briefly
describe each of the newproduct development
strategies.
6
Describe the consumer
adoption process.
CHAPTER 12 Developing and Managing Brand & Product Categories
MANAGING BRANDS FOR
COMPETITIVE ADVANTAGE
• Brand Name, term, sign, symbol, design, or some
combination that identifies the products of one firm
while differentiating them from the competition’s.
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 refusal of alternatives and extensive search
for desired merchandise.
CHAPTER 12 Developing and Managing Brand & Product Categories
TYPES OF BRANDS
• Generic products Products characterized by plain labels, no advertising,
and the absence of brand names.
• Manufacturer’s brand Brand name owned by a manufacturer or other
producer.
• Private brands—brands offered by wholesalers and retailers.
• Captive brands—national brands sold exclusively by a retail chain.
• Family brand Single brand name that identifies several related products.
• Individual brand—uniquely identifies the item itself.
CHAPTER 12 Developing and Managing Brand & Product Categories
BRAND EQUITY
• Brand equity Added value that a respected, well-known
brand name gives to a product in the marketplace.
• Strong brand equity increases recognition, contributes to
quality perceptions, reinforces loyalty, and facilitates
expansion into foreign markets.
THE ROLE OF CATEGORY AND BRAND
MANAGEMENT
• Category management Product management system in which a category
manager—with profit and loss responsibility—oversees a product line.
• Helps category buyer identify opportunities for growth, set performance
targets, and create marketing strategy.
CHAPTER 12 Developing and Managing Brand & Product Categories
PRODUCT IDENTIFICATION
BRAND NAMES AND BRAND MARKS
• Brand name Part of a brand consisting of words or letters that form a
name that identifies and distinguishes a firm’s offerings from those of its
competitors.
• Brand mark—symbol or pictorial design that distinguishes a product.
TRADEMARKS
• Trademark Brand for which the owner claims exclusive legal protection.
• Gives firm exclusive legal right to use brand name, brand mark,
and any slogan name or product name appreciation.
• Trade dress—visual cues in branding that create an overall look.
CHAPTER 12 Developing and Managing Brand & Product Categories
DEVELOPING GLOBAL BRAND NAMES AND
TRADEMARKS
• An excellent name or symbol in one country may be a poor choice in
another.
• Some sounds are common to most languages, such as o, k, and short a, so
names such as Coca-Cola and Texaco tend to work well worldwide.
PACKAGING
• Can powerfully influence buyers’ decisions.
• Protects against damage, spoilage, and pilferage.
• Assists in marketing the product.
• Must be cost-effective.
• Includes labeling that carries an item’s brand name or symbol and other
marketing and legally required information.
CHAPTER 12 Developing and Managing Brand & Product Categories
BRAND EXTENSIONS
• Brand extension Strategy of attaching a popular brand name to a new
product in an unrelated product category.
BRAND LICENSING
• Authorizing other companies to use a firm’s brand name.
• Brand’s owner receives royalties, typically four to eight percent of
wholesale revenues.
• Can hurt a brand if the licensed product is poor quality or ethically
incompatible with the brand.
• Another risk is overextending the brand.
CHAPTER 12 Developing and Managing Brand & Product Categories
NEW-PRODUCT PLANNING
• Firms must add new products in order to continuing prospering as other
items reach the later stages of the product life cycle.
PRODUCT DEVELOPMENT STRATEGIES
Market Penetration
Product Development
Market Development
Product Diversification
CHAPTER 12 Developing and Managing Brand & Product Categories
• Product positioning—refers to consumers’ perceptions of a product’s
attributes, uses, quality, and advantages and disadvantages relative to
competing brands.
• Market development—concentrates on finding new markets for existing
products.
• Product development—introduction of new products into identifiable or
established markets.
• Product diversification—focuses on developing entirely new products for
new markets.
• Firms must avoid cannibalization—introducing a new product that
adversely affects sales of existing products.
CHAPTER 12 Developing and Managing Brand & Product Categories
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.
• Consumers go through five stages:
• Awareness—individuals first learn of the new product, but they
lack full information about it.
• Interest—potential buyers begin to seek information about it
• Evaluation—they consider the likely benefits of the product.
• Trial—they make trial purchases to determine its usefulness.
• Adoption/rejection—decide whether to use the product regularly.
CHAPTER 12 Developing and Managing Brand & Product Categories
ADOPTER CATEGORIES
• Consumer innovators People who purchase new products almost as soon
as the products reach the market.
• Diffusion process Process by which new goods or services are accepted in
the marketplace.
CHAPTER 12 Developing and Managing Brand & Product Categories
IDENTIFYING EARLY ADOPTERS
• Firms who reach early buyers can treat them as a test market.
• Tend to be younger, have higher social status, are better educated, and
enjoy higher incomes than other consumers.
Rate of Adoption Determinants
• Relative advantage—increases the product’s adoption rate.
• Compatibility—innovation consistent with the values and experiences of
potential adopters.
• Complexity—difficulty understanding the innovation can slow the speed of
acceptance.
• Possibility of trial use—can accelerate the rate of adoption.
• Observability—observing an innovation’s superiority increase the adoption
rate.
CHAPTER 12 Developing and Managing Brand & Product Categories
ORGANIZING FOR NEW PRODUCT DEVELOPMENT
• Firms must be organized so personnel can stimulate and coordinate newproduct development.
• New-product committees primarily review and evaluate others’ new
product plans rather than develop their own.
• Tend to move slowly and conservatively in large companies.
• New-product departments encourage innovation as a full-time activity.
• Product managers support the marketing strategies of an individual product
or product line.
• Venture teams—a group of specialists gathered from different areas of an
organization to work together in developing new products.
CHAPTER 12 Developing and Managing Brand & Product Categories
THE NEW-PRODUCT DEVELOPMENT PROCESS
• Firms must usually generate dozens of ideas to produce one successful
product.
Idea Generation
Screening
Business Analysis
Development
Test Marketing
Commercialization
CHAPTER 12 Developing and Managing Brand & Product Categories
PRODUCT SAFETY AND LIABILITY
• Manufacturers must design their products to protect users from harm.
• Product liability—responsibility of manufacturers and marketers for
injuries and damages caused by their products.
• Consumer Product Safety Commission has jurisdiction over most
consumer product categories.
• Food and Drug Administration approves food, medications, and healthrelated devices.
• Liability lawsuits are increasing domestically and internationally.
• To counter increased litigation and legislation, some companies sponsor
voluntary improvements in safety standards.
• Safety planning and testing can be an effective marketing tool.