Lamb, Hair, McDaniel
2010-2011
CHAPTER 10
Product Concepts
1
Learning Outcomes
LO 1 Define the term product
LO 2 Classify consumer products
LO 3 Define the terms product item, product line,
and product mix
LO 4 Describe marketing uses of branding
2
Learning Outcomes
LO 5 Describe marketing uses of packaging and
labeling
LO 6 Discuss global issues in branding
and packaging
LO 7 Describe how and why product warranties
are important marketing tools
3
What Is a Product?
Define the term
product
LO1
4
What Is a Product?
Product
LO1
Everything, both favorable
and unfavorable, that a
person receives in an
exchange.

Tangible Good

Service

Idea
5
What Is a Product?
Product is the starting point of Marketing Mix
Product
Price
LO1
Promotion
Place (Distribution)
6
Types of Consumer Products
Classify consumer
products
LO2
7
Types of Products
Business
Product
A product used to manufacture other
goods or services, to facilitate an
organization’s operations, or to resell
to other consumers.
Consumer
Product
A product bought to satisfy an
individual’s personal needs or wants
LO2
8
Types of Consumer Products
Products
Consumer
Products
Convenience
Products
Shopping
Products
Business
Products
Specialty
Products
Unsought
Products
LO2
9
Types of
Consumer Products
Convenience
Product
Shopping
Product
Increase market share among
A relatively
existinginexpensive
customers item that
merits little shopping effort
Attract
new
customers
to
A product
that
requires
comparison
shopping,
because
it is usually more
existing
products
expensive and found in fewer stores
A particular
itemproducts
for whichfor
Create
new
Specialty
Market
consumers
extensively and
presentsearch
markets
Diversification
Product Development
are reluctant to accept substitutes
Unsought
Product
LO2
A product unknown to the potential
new
products
buyerIntroduce
or a known
product
that the
new
buyerinto
does
notmarkets
actively seek
10
Product Items,
Lines, and Mixes
Define the terms
product item,
product line,
and product mix
LO3
11
Product Items,
Lines, and Mixes
Product Item
A specific version of a product
that can be designated as a
distinct offering among an
organization’s products.
Product Line
A group of closely-related
product items.
Product Mix
All products that an
organization sells.
LO3
12
Campbell’s
Product Lines and Mix
{
LO3
}
13
Benefits of Product Lines
Advertising Economies
Package Uniformity
Standardized
Components
Efficient Sales and
Distribution
Equivalent Quality
LO3
14
Adjustments
Adjustments to
Product Items,
Lines, and Mixes
Product
Modification
LO3
Product
Repositioning
Product Line
Extension or
Contraction
15
Types of Product Modifications
Quality Modification
Functional Modification
Style Modification
Planned Obsolescence: The practice of
modifying products so those that have
already been sold become obsolete
LO3 before they actually need replacement.
16
Repositioning
Why reposition
established brands?
Changing
Demographics
LO3
Declining Sales
Changes in
Social
Environment
17
Product Line Extension
Adding additional products to an existing product
line in order to compete more broadly in the
industry.
Symptoms of Overextension
• Some products have low sales or
cannibalize sales of other items
• Resources are disproportionately allocated
to slow-moving products
• Items have become obsolete because of
new product entries
LO3
18
Branding
Describe marketing
uses of branding
LO4
19
Branding
Brand
Name
That part of a brand that can be spoken,
including letters, words, and numbers
Brand
Mark
The elements of a brand that
cannot be spoken
Brand
Equity
The value of company and brand names
Global
Brand
A brand where at least 20 percent of the
product is sold outside its home country
LO4
20
Benefits of Branding
Product
Identification
Repeat Sales
New Product
Sales
LO4
21
Top Ten Global Brands
1.
Coca-Cola
U.S.
2.
IBM
U.S.
3.
Microsoft
U.S.
4.
GE
U.S.
5.
Nokia
Finland
6.
McDonald’s
U.S.
7.
Google
U.S.
8.
Toyota
Japan
9.
Intel
U.S.
10.
Disney
U.S.
Source: Burt Helm, "Best Global Brands,"
BusinessWeek September 28, 2009
LO4
22
Branding Strategies
Brand
Manufacturer’s
Brand
Individual
Brand
LO4
Family
Brand
No Brand
Private Brand
Combination
Individual
Brand
Family
Brand
Combination
23
Branding Strategies
Manufacturers’
Brand
The brand name of a
manufacturer.
Private
Brand
A brand name owned by a
wholesaler or a retailer. Also
known as a private label or
store brand.
Captive
A brand manufactured by a third
party for exclusive retailer,
without evidence of a that
retailer’s affiliation
LO4
24
Advantages of
Manufacturers’ Brands
 Heavy consumer ads by manufacturers
 Attract new customers
 Enhance dealer’s prestige
 Rapid delivery, carry less inventory
 If dealer carries poor quality brand,
customer may simply switch brands and
remain loyal to dealer
LO4
25
Advantages of
Private Brands
 Earn higher profits on own brand
 Less pressure to mark down price
 Manufacturer can become a direct
competitor or drop a brand/reseller
 Ties customer to wholesaler or retailer
 Wholesalers and retailers have no control
over the intensity of distribution of
manufacturers’ brands
LO4
26
Advantages
of Captive Brands
• No evidence of store’s affiliation
• Sold exclusively at the chain
• Can ask price similar to
manufacturer’s brands
LO4
27
Individual Brands Versus
Family Brands
Individual
Brand
Family
Brand
LO4
Using different brand names
for different products.
Marketing several different
products under the same
brand name.
28
Cobranding
Ingredient
Branding
Types of
Cobranding
Cooperative
Branding
Complementary
Branding
LO4
http://www.bose.com
Online
29
Trademarks
A Trademark is the exclusive right to use a brand.
 Many parts of a brand and associated symbols
qualify for trademark protection.
 Trademark right comes from use rather than
registration.
 The mark has to be continuously protected.
 Rights continue for as long as the mark is used.
 Trademark law applies to the online world.
LO4
30
Marketing Uses of Branding
LO4
31
Packaging
Describe marketing
uses of packaging
and labeling
LO5
32
Functions of Packaging
Contain and Protect
Promote
Facilitate Storage, Use,
and Convenience
Facilitate Recycling
LO5
http://www.levesquedesign.com/
http://www.design4packaging.com
Online
33
Packaging Innovations
• Packages tend to have the same shapes
and sizes
– Easy consumer comparison
– Innovations for ease of use can be a
competitive advantage
• Collection of some great innovations in 2009:
– http://packaginguniversity.com/blog/2009/11/04/my-bestpackaging-picks-for-october/
LO5
• Great packaging does not make up for an
unsatisfactory product
34
Beyond the Book
100 Percent Recyclable
Coca-Cola is building the largest recycling plant in the
world. The plant will produce 100 million pounds of foodgrade recycled plastic for reuse each year. That’s enough
plastic to produce two billion 20-ounce Coke bottles.
Coca-Cola’s goal is to recycle or reuse 100 percent of the
company’s plastic bottles in the U.S. market. By meeting
that goal over the next ten years, the Coca-Cola recycling
plant will eliminate the production of one million metric tons
of CO2 emissions—the equivalent of removing 215,000
cars from American highways.
SOURCE: Press Release, The Coca-Cola Company, Atlanta, GA, September 5, 2007
LO5
35
Labeling
Persuasive


Focuses on
promotional
theme
Consumer
information is
secondary
Informational

Helps make proper
selections

Lowers cognitive
dissonance

Includes use/care
http://www.fda.gov
LO5
Online
36
Universal Product Codes
Universal
Product Codes
(UPCs)
LO5
A series of thick and thin
vertical lines (bar codes),
readable by computerized
optical scanners, that
represent numbers used to
track products.
37
Global Issues in
Branding and Packaging
Discuss global
issues in branding
and packaging
LO6
38
Global Issues in Branding
One Brand Name
Everywhere
Global Options
for Branding
Adaptations &
Modifications
Different Brand
Names in Different
Markets
LO6
39
Global Issues in
Packaging
Labeling
Global
Considerations
for Packaging
Aesthetics
Climate
Considerations
LO6
40
Global Package designs
2009 European Design Awards
• Creative global packaging
– Some of the winners
• Blog highlighting interesting global
packaging
– http://packagingworld.blogspot.com/
LO6
41
Product Warranties
Describe how
and why product
warranties are
important
marketing tools
LO7
42
Product Warranties
Warranty
A confirmation of the quality or
performance of a good or service.
Express
Warranty
A written guarantee.
Implied
Warranty
An unwritten guarantee that the good or
service is fit for the purpose for which it
was sold. (UCC)
LO7
43