MARKETING
17e
Hult • Pride • Ferrell
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Part 4
Product
Decisions
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10: Product Decisions
11: Strategic Product
Management
12: Services Marketing
13: Strategic Management of
Branding and Packaging
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14-2
Objectives








To explain the value of branding
To understand brand loyalty
To analyze the major components of brand equity
To recognize the types of brands and their benefits
To understand how to select and protect brands
To examine three types of branding strategies
To understand co-branding and brand licensing
To describe the major packaging functions and
design considerations and how packaging is used
in marketing strategies
 To examine the functions of labeling and describe
some legal issues pertaining to labeling
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14-3
Branding
 A brand is a name, term, design, symbol or
other feature that identifies one seller’s product
as distinct from those of other sellers
 A brand name is the part of a brand that can
be spoken, including letters, words and
numbers
 A band mark is the part of a brand that is not
made up of words, such as a symbol or design
 A trademark is a legal designation of
exclusive use of a brand
 A trade name is the full legal name of an
organization
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14-4
Discussion Point
The apple is a
familiar brand
mark initiated,
owned and
protected by
Apple Inc.
? Can you name some other iconic brand marks?
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14-5
Value of Branding
Buyers benefit from branding in the following
ways:
 Brands identify specific products and without them
product selection would be random
 Brands can be a form of self-expression
 Helps buyers evaluate quality
 Brands reduce a buyer’s perceived risks
 There may be a psychological reward from owning
a brand that symbolizes status
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14-6
Value of Branding
The value of branding for sellers are:
 Brands identify products, making repeat
purchases easier
 Branding helps when introducing new products
because buyers are familiar with the name
 Facilitates promotional efforts because the
promotion of one branded product indirectly
promotes all similarly branded products
 Fosters brand loyalty and a certain level of
market share and price stability
 When marketers increase their brand’s value,
they also raise the total value of the organization
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14-7
Brand Loyalty
 Brand loyalty is a customer’s favorable attitude
toward a specific brand
 Three degrees of brand loyalty
 Brand recognition – the degree of brand loyalty
in which a customer is aware that a brand exists
and views the brand as an alternative purchase if
their preferred brand is unavailable
 Brand preference – the degree of brand loyalty
in which a customer prefers one brand over
competitive offerings
 Brand insistence – the degree of brand loyalty
in which a customer strongly prefers a specific
brand and will accept no substitute
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14-8
Brand Insistence
 Some consumers
are brand insistent
about their
deodorant
 When they find just
the right brand that
works with their
body chemistry,
they keep buying
the same brand
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14-9
Discussion Point
Identify two brands for which you are brand
insistent
? How did you begin using these brands?
? Why do you no longer user other brands?
? Will you travel out of your way to get the
‘correct’ brand?
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14-10
Brand Equity
 Brand equity is the marketing and financial
value associated with a brand’s strength in a
market
 Four major elements underlie brand equity:




Brand-name awareness
Brand loyalty
Perceived brand quality
Brand associations
 An organization may buy a brand from another
company at a premium price because it may
be less expensive and less risky
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14-11
Major Elements of Brand
Equity
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14-12
Discussion Point
Geico uses the gecko
as a trade character to
stimulate favorable
brand associations
? Can you think of other companies who use
an animal as a brand association?
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14-13
World’s Most Valuable Brands
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14-14
Types of Brands
 Manufacturer brands are initiated by
producers to ensure that producers are
identified with their products at the point of
purchase
 Private distributor brands are initiated and
owned by a reseller
 Also called private brands, store brands or
dealer brands
 Generic brands are brands indicating only the
product category
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14-15
Discussion Point
? Which of
these private
label products
do you
purchase?
? Do you
purchase
them
because of
price? Or for
other
reasons?
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14-16
Consumers’ Perceptions
Consumers’ Perceptions of Store and
Manufacturers’ Brands for Selected Product
Groups
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14-17
Private Brands
Sears has initiated
and developed
several private
brands, using
Kenmore as a
private brand for
appliances,
Craftsman for tools
and DieHard for
automotive batteries
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14-18
Selecting a Brand Name
 Marketers consider several factors when
selecting a brand name
 The name should be easy for customers to say,
spell and recall
 The name should indicate the product’s major
benefits and suggest a product’s uses and
special characteristics
 The brand should be distinctive
 If the brand name will be used for a product
line, it must be compatible with other products
in the line
 Should be designed to be used and
recognized in all types of media
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14-19
Selecting a Brand Name
 Words, numbers and letters are used to create
some brand names
 To avoid negative connotations, marketers
sometimes use fabricated words
 Brand names can be created internally either
by department, by committee or suggested by
individuals
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14-20
Selecting a Brand Name
Branding a service has some additional
dimensions
 The service brand and company name are
usually the same
 Perceived by customers as having one brand
name even if they offer several products
 Frequently a service marketer uses a symbol
along with a name to make the brand
distinctive
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14-21
Protecting a Brand
 A marketer should design a brand that can be
easily protected through registration
 A series of court decisions has created a broad
hierarchy of protection based on brand type
 From most protectable to least protectable:





Fanciful – Exxon
Arbitrary – Dr. Pepper
Suggestive – Spray ‘n Wash
Descriptive – Minute Rice
Generic, not protectable– aluminum foil
 Surnames and descriptive, geographic or
functional names are difficult to protect
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14-22
Protecting a Brand
 A company must ensure a brand is not likely to
infringe upon any brand already registered
with the U.S. Patent and Trademark Office
 Infringement is determined by the courts
 A marketer must guard against allowing a
brand name to become a generic term
 Examples: aspirin, escalator and shredded
wheat
 Congress enacted the Trademark Law
Revision Act in 1988, strengthening trademark
protection
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14-23
Protecting a Brand
 A U.S. company trying to protect a brand in a
foreign country frequently encounters
problems
 In many countries, the first firm to use a brand
automatically has the rights to it
 Some companies have had to buy their own
brands from those in a foreign country who first
used it
 Marketers trying to protect their brands must
also contend with brand counterfeiting
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14-24
Protecting a Brand
 Companies try to
protect their
brands by using
certain phrases
and symbols in
their
advertisements
 Note the term
“brand” after
Kool-Aid, and the
use of the ®
symbol
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14-25
Discussion Point
 The brand name Xerox is sometimes used
generically to refer to photocopiers
 Kleenex is used to refer to facial tissues
? How can manufacturers protect their brand
names?
? Why would they want to do so?
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14-26
Branding Strategies
 An organization can use one or more of the
following branding strategies:
 Individual branding is a branding strategy in
which each product is given a different name
 Family branding is branding all of a firm’s
products with the same name or part of a name
 A brand extension is when an organization
uses one of its existing brands to brand a new
product in a different product category
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14-27
Co-Branding
Co-branding is using two or more brands on one
product
 Effective co-branding capitalizes on the trust
and confidence customers have in the brands
involved
 Co-branding can help a company differentiate
its products from those of competitors
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14-28
Co-Branding
Sandwich Combos
is a co-branded
product consisting
of Oscar Mayer
and Kraft products
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14-29
Discussion Point
 For each of the following product categories,
choose an existing brand
 Then, for each selected brand, suggest a
co-brand, and explain why the co-brand would
be effective




Cookies
Pizza
Chips
Sports drink
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14-30
Discussion Point
Gatorade Goes for “G” Branding
 Gatorade single-handedly pioneered the sports
drink category nearly 50 years ago
 Now, Gatorade’s marketers are fighting for
higher sales with new branding initiatives for
specific target markets and redesigned
packaging to grab customers’ attention
? What are the marketing advantages and
disadvantages of emphasizing “G” as the primary
element in the Gatorade brand?
? For competitive reasons, do you think Gatorade
should consider co-branding to build on the equity of
another major brand name as it seeks higher sales?
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14-31
Brand Licensing
 Brand licensing is an agreement whereby a
company permits another organization to use
its brand on other products for a licensing fee
 Royalties range from 2% of wholesale
revenues to 10% or higher
 The licensee is responsible for all
manufacturing, selling and advertising
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14-32
Packaging
 Packaging involves the development of a
container and a graphic design for a product
 Like a brand, a package can influence a
customers’ attitudes toward a product and
affect their purchase decisions
 A package can be a vital part of a product,
making it:
 More versatile
 Safer
 Easier to use
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14-33
Packaging Functions
Four functions of packaging:
 Protects and preserves the product, prevents
damage or may even prevent tampering or
shoplifting
 Offers convenience to the customer with such
things as individual servings or packaging sized
and shaped for easier storage
 The packaging can promote the product by
showing its features, uses, benefits or image
 Packaging can be used to evoke an emotional
response
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14-34
Packaging Considerations
In developing packages, marketers must take
many factors into account
 Cost – packaging costs vary greatly
 Regulations – the Food and Drug Administration’s
packaging regulations may require a tamperresistant package
 Consistency – how much consistency is desirable
among an organization’s package designs
 Family packaging is using similar packaging for all
of a firm’s products or packaging that has one
common design elements
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14-35
Packaging Considerations
Factors affecting packaging decisions
 Promotional role – packaging can create desirable
images and associations by choice of color,
design, shape and texture
 Packaging must meet the needs of resellers –
wholesalers and retailers consider packaging for
transportation, storage and handling
 Environmentally responsible packaging –
marketers must carefully balance society’s desire
to preserve the environment against customers’
desire for convenience
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14-36
Packaging and Marketing
Strategies
 Packaging can be a major component of a
marketing strategy
 Good packaging of a new product helps it gain
market recognition quickly
 When considering the strategic uses of
packaging, marketers must analyze the cost of
packaging and package changes
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14-37
Packaging Spending
Companies That Spend the Most on
Packaging
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14-38
Packaging Strategies
Marketers sometimes alter a package because
 The existing design is no longer in style compared
to competitive products
 New product features need to be highlighted
 New packaging materials have become available
 A marketer may want to reposition a product
 New packaging may make a product safer or more
convenient to use
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14-39
Packaging Strategies
Secondary-Use Packaging
 Customers see added value in a package that can
be reused
Category-Consistent Packaging
 A product is packaged in line with the packaging
practices for that product category, such as peanut
butter
Innovative Packaging
 Unusual or unique packaging makes the product
stand out from competitors
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14-40
Discussion Point
The individual sized
package shown here is
squeezable and also
designed for dipping
? Is this packaging an improvement over the plastic
pouches used previously?
? Why do you think they changed the packaging?
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14-41
Packaging Strategies
Multiple Packaging
 Offering products in twin packs, tri-packs, sixpacks or other forms is useful for some products
as it may increase consumption but does not work
for all products
Handling-Improved Packaging
 Making a package easier to handle in the
distribution channel
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14-42
Discussion Point
 Like other marketers of consumer products,
Pillsbury has set up a website to inform and
entertain consumers
 Catering to the appeal of its most popular
product spokesperson, Pillsbury has given its
Dough Boy his own site
? What branding strategy does Pillsbury seem to be
using with regard to the products it presents on this
site?
? How does the Pillsbury site promote brand loyalty?
? What degree of consistency exists in Pillsbury’s
packaging of its products displayed on the website?
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14-43
Criticisms of Packaging
While there have been improvements in
packaging, there are still some problems
 Some packages suffer from functional problems
and simply do not work well
 Flour and sugar bags leak and tear
 Critics focus on packages safety issues
 Sharp edges and breakable glass
 Packaging may be viewed as deceptive
 Inconsistent size designations confuse customers
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14-44
Discussion Point
Packaging provides
 Product protection
 Customer convenience
 Promotion of image
 Key features and benefits
 Identify a product and evaluate the effectiveness of
the package for one of these functions
 Identify a package you believe is inferior
 Explain why you think the package is inferior
 Discuss your recommendations for improving the
packaging
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14-45
Labeling
Labeling is providing identifying, promotional or
other information on package labels
 Very closely interrelated with packaging;
information on the label may include:
Brand name
Trademark symbol
Package size and content Product features
Nutritional information
Presence of allergens
Type and style of product Number of servings
Care instructions
Safety precautions
Directions for use
Manufacturer name/address
Expiration dates
Seal of approval
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14-46
Discussion Point
“Made in…” Labels
The country of
origin affects
customers’
perceptions of the
product
? If given a choice of two identical products, would
you choose the one with the ‘Made in the USA’ label
over the other?
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Perceived Quality
Perceived Quality and Value of Products Based on
Country of Origin
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Labeling
 Many labels contain a Universal Product
Code (UPC) – a series of electronically
readable lines identifying a product and
containing inventory and pricing information
 Federal laws and regulations specify
information that must be included on labels of
certain products
 The Nutrition Labeling Act of 1990 requires the
FDA to review food labeling and packaging
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with
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Questionable Labeling Practices
Despite legislation, questionable labeling
practices persist
 Truth in labeling such as “strawberry frozen yogurt
bars” that contain strawberry flavoring but no real
strawberries
 “green labeling” or “greenwashing” where
misleading claims play on customers’ concern for
the environment
 What constitutes when a product is really “made in
the U.S.A.”?
 Label guidelines continue to evolve from the
Federal Trade Commission
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with
content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a
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Discussion Point
100 Years of Product Innovation at Chevrolet
 General Motors’ Chevrolet brand celebrated its
100th anniversary in 2011
 Over the years, it has transitioned from an
American icon into a worldwide brand known for
its quality and durability
 Despite numerous ups and downs, including the
recent bankruptcy and bailout, Chevrolet is still
going strong
? How has GM managed product innovation to sustain
the Chevrolet brand for over 100 years?
? What are some future challenges for the Chevrolet
brand?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with
content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a
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Discussion Point
New Belgium Brews Up Strong Brand Loyalty
 The overall craft-brewing industry has done well
in recent years, but New Belgium Brewing has
done even better
 New Belgium’s mission is: “To operate a
profitable brewery which makes our love and
talent manifest”
? What has New Belgium Brewing done to increase
brand recognition and brand preference?
? How is New Belgium Brewing using packaging to
support its brand image?
? Assess New Belgium’s brand equity in terms of
awareness, quality, associations and loyalty
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with
content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a
publicly accessible website, in whole or in part.
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