chapter 14 setting the product and branding...

14-1Copyright © 2003 Prentice-Hall, Inc.

Chapter 14Chapter 14Setting the Product andSetting the Product andBranding StrategyBranding Strategybyby

PowerPoint byPowerPoint byMilton M. PressleyMilton M. Pressley

University of New OrleansUniversity of New Orleans


The best way to holdThe best way to holdcustomers is tocustomers is toconstantly figure outconstantly figure outhow to give themhow to give themmore for less.more for less.

Kotler onMarketing


Chapter Objectives§§ In this chapter, we focus on the followingIn this chapter, we focus on the following

questions:questions:§§ What are the characteristics of products?What are the characteristics of products?§§ How can a company build and manage itsHow can a company build and manage its

product mix and product lines?product mix and product lines?§§ How can a company make better brandHow can a company make better brand

decisions?decisions?§§ How can packaging and labeling be used asHow can packaging and labeling be used as

marketing tools?marketing tools?


The Product and theProduct Mix

§§ ProductProduct§§ Physical goodsPhysical goods§§ ServicesServices§§ ExperiencesExperiences§§ EventsEvents§§ PersonsPersons§§ PlacesPlaces§§ PropertiesProperties§§ OrganizationsOrganizations§§ InformationInformation§§ IdeasIdeas

Figure 14.1: Componentsof the Market Offering



§§ Product levelsProduct levels§§ Customer valueCustomer value

hierarchyhierarchy§§ Core benefitCore benefit§§ Basic productBasic product§§ Expected productExpected product§§ Augmented productAugmented product

Figure 14.2: FiveProduct Levels


BabyCenter is not just an onlineBabyCenter is not just an onlinemerchant, itmerchant, it’’s a metamediarys a metamediary

http://www.babycenter.com/



§§ Consumption systemConsumption system§§ Potential productPotential product

§§ Product hierarchyProduct hierarchy§§ Need familyNeed family§§ Product familyProduct family§§ Product classProduct class§§ Product lineProduct line§§ Product typeProduct type§§ ItemItem

General MillsGeneral Mills’’ Mycereal.comMycereal.comWeb siteWeb site

http://www.mycereal.com/



§§ Product systemProduct system§§ Product mixProduct mix

§§ Product classificationsProduct classifications§§ Durability and TangibilityDurability and Tangibility

Classification:Classification:§§ Nondurable goodsNondurable goods§§ Durable goodsDurable goods§§ ServicesServices



§§ ConsumerConsumer--Goods Classification:Goods Classification:§§ Convenience goodsConvenience goods

§§ StaplesStaples§§ Impulse goodsImpulse goods§§ Emergency goodsEmergency goods

§§ Shopping goodsShopping goods§§ HomogeneousHomogeneous

shopping goodsshopping goods§§ HeterogeneousHeterogeneous

shopping goodsshopping goods§§ Specialty goodsSpecialty goods§§ Unsought goodsUnsought goods



§§ IndustrialIndustrial--Goods ClassificationGoods Classification§§ Materials and partsMaterials and parts

§§ Farm productsFarm products§§ Natural productsNatural products§§ ManufacturedManufactured

materials and partsmaterials and parts§§ Component materialsComponent materials§§ Component partsComponent parts

§§ Capital itemsCapital items§§ InstallationsInstallations§§ EquipmentEquipment



§§ Supplies and business servicesSupplies and business services§§ Maintenance andMaintenance and

repair itemsrepair items§§ Operating suppliesOperating supplies§§ Maintenance andMaintenance and

repair servicesrepair services§§ Business advisoryBusiness advisory

servicesservices



§§ Product mix (ProductProduct mix (Productassortment)assortment)§§ Product mix has a certain:Product mix has a certain:§§ WidthWidth§§ LengthLength§§ DepthDepth§§ ConsistencyConsistency


Table 14.1: Product-Mix Width and Product-LineLength for Proctor& Gamble Products

CharminCharmin(1928)(1928)

PuffsPuffs(1960)(1960)

BannerBanner(1982)(1982)

SummitSummit(1992)(1992)

PampersPampers(1961)(1961)

LuvsLuvs(1976)(1976)

IvoryIvory(1879)(1879)

KirkKirk’’ss(1885)(1885)

LavaLava(1893)(1893)

CamayCamay(1926)(1926)

Gleem (1952)Gleem (1952)

Crest (1955)Crest (1955)

Ivory SnowIvory Snow(1930)(1930)

DreftDreft(1933)(1933)

TideTide(1946)(1946)

CheerCheer(1950)(1950)

PaperPaperTissueTissueDiapersDiapers

DisposableDisposableBar SoapBar SoapToothpasteToothpasteDetergentsDetergents

ProductProduct--Mix WidthMix Width

PRODUCTPRODUCT--LINELINELENGTHLENGTH

See text for complete table



§§ ProductProduct--line decisionsline decisions§§ ProductProduct--line analysisline analysis§§ Sales and ProfitsSales and Profits

§§ Four types ofFour types ofproduct classes:product classes:§§ Core productCore product§§ StaplesStaples§§ SpecialtiesSpecialties§§ Convenience itemsConvenience items


Figure 14.3: Product-Item Contributions to aProduct Line’s Total Sales and Profits



§§ Market profileMarket profile

Figure 14.4:Product Mapfor aPaper-ProductLine



§§ ProductProduct--line lengthline length§§ Line StretchingLine Stretching§§ Downmarket StretchDownmarket Stretch

§§ The company may notice strong growth opportunities asThe company may notice strong growth opportunities asmass retailers attract a growing number of shoppersmass retailers attract a growing number of shoppers

§§ The company may wish to tie up lowerThe company may wish to tie up lower--end competitorsend competitorswho might otherwise try to move upmarketwho might otherwise try to move upmarket

§§ The company may find that the middle market isThe company may find that the middle market isstagnating or decliningstagnating or declining

§§ Upmarket StretchUpmarket Stretch§§ TwoTwo--Way StretchWay Stretch


Kmart has entered into branding andKmart has entered into branding anddistribution agreements with celebrities likedistribution agreements with celebrities likeKate Smith for womenKate Smith for women’’s apparel and Marthas apparel and MarthaStewart in house wares, gardening supplies,Stewart in house wares, gardening supplies,etc. Is this an upmarket stretch, aetc. Is this an upmarket stretch, adownmarket stretch or a twodownmarket stretch or a two--way stretchway stretchfor Kmart?for Kmart?



§§ Line FillingLine Filling§§ JustJust--noticeablenoticeable

differencedifference

§§ Line Modernization,Line Modernization,featuring, andfeaturing, andpruningpruning

§§ Brand decisionsBrand decisions§§ What is brand?What is brand?§§ AttributesAttributes§§ BenefitsBenefits§§ ValuesValues§§ CultureCulture§§ PersonalityPersonality§§ UserUser



§§ Commonly used research approachesCommonly used research approachesto determine brand meaning:to determine brand meaning:§§ Word associationsWord associations§§ Personifying thePersonifying the

brandbrand§§ Laddering up theLaddering up the

brand essencebrand essence§§ Brand essenceBrand essence§§ Laddering upLaddering up



§§ Building Brand IdentityBuilding Brand Identity§§ Brand bondingBrand bonding§§ Brands are not built by advertisingBrands are not built by advertising

but by the brand experiencebut by the brand experience§§ Everyone in the company lives the brandEveryone in the company lives the brand§§ Three ways to carry on internal brandingThree ways to carry on internal branding ––

Employees mustEmployees must§§ UnderstandUnderstand§§ Desire, andDesire, and§§ Deliver on the brand promiseDeliver on the brand promise


§§ Building Brands in the new economyBuilding Brands in the new economy§§ Heidi and Don Schultz urge companies to:Heidi and Don Schultz urge companies to:

§§ Clarify the corporationClarify the corporation’’s basic values and build the corporate brand.s basic values and build the corporate brand.§§ Use brand managers to carry out the tactical work.Use brand managers to carry out the tactical work.§§ Develop a more comprehensive brandDevelop a more comprehensive brand--building plan.building plan.§§ Define the brandDefine the brand’’s basic essence to be delivered wherever it is sold.s basic essence to be delivered wherever it is sold.§§ Use the brandUse the brand--value proposition as the key driver of the companyvalue proposition as the key driver of the company’’ss

strategy, operations, services, and product development.strategy, operations, services, and product development.§§ Measure their brandMeasure their brand--building effectiveness, not by the old measuresbuilding effectiveness, not by the old measures

of awareness, recognition, and recall, but by a more comprehensiof awareness, recognition, and recall, but by a more comprehensiveveset of measures including customerset of measures including customer--perceived value, customerperceived value, customersatisfaction, customer share of wallet, customer retention, andsatisfaction, customer share of wallet, customer retention, andcustomer advocacy.customer advocacy.




§§ Brand EquityBrand Equity§§ Brand awarenessBrand awareness§§ Brand acceptabilityBrand acceptability§§ Brand preferenceBrand preference§§ AakerAaker’’s five levels of customer attitude:s five levels of customer attitude:

§§ The customer will change brands, especially forThe customer will change brands, especially forprice reasons. No brand loyalty.price reasons. No brand loyalty.

§§ Customer is satisfied. No reason to change brands.Customer is satisfied. No reason to change brands.§§ Customer is satisfied and would incur cost byCustomer is satisfied and would incur cost by

changing brand.changing brand.§§ Customer values the brand and sees it as a friend.Customer values the brand and sees it as a friend.§§ Customer is devoted to the brand.Customer is devoted to the brand.



§§ Value of Brand EquityValue of Brand Equity§§ Brand valuationBrand valuation§§ Competitive advantages of high brand equity:Competitive advantages of high brand equity:

§§ The company will have more leverage in bargaining withThe company will have more leverage in bargaining withdistributors and retailers because customers expect themdistributors and retailers because customers expect themto carry the brand.to carry the brand.

§§ The company can charge a higher price than itsThe company can charge a higher price than itscompetitors because the brand has higher perceivedcompetitors because the brand has higher perceivedquality.quality.

§§ The company can more easily launch extensions becauseThe company can more easily launch extensions becausethe brand name carries high credibility.the brand name carries high credibility.

§§ The brand offers some defense against price competition.The brand offers some defense against price competition.


§§ Managing Brand EquityManaging Brand Equity§§ Branding ChallengesBranding Challenges§§ Branding Decision: To Brand or Not to Brand?Branding Decision: To Brand or Not to Brand?

Figure 14.5: An Overview of Branding Decisions

The Product and the Product Mix


When is a brand more than just a brand?When is a brand more than just a brand?Have you ever based a purchasing decisionHave you ever based a purchasing decisionprimarily on the brand? Was it because ofprimarily on the brand? Was it because ofsome perceived quality difference, or was itsome perceived quality difference, or was itbased on the expectation of how othersbased on the expectation of how otherswould see or treat you? Have you ever seenwould see or treat you? Have you ever seensomeone buying a givensomeone buying a givenbrand of an item in anbrand of an item in anattempt to be seen asattempt to be seen as ““coolcool””??



§§ Branding gives the seller several advantages:Branding gives the seller several advantages:§§ Brand name makes it easier for the seller toBrand name makes it easier for the seller to

process orders and track down problemsprocess orders and track down problems§§ SellerSeller’’s brand name and trademark provide legals brand name and trademark provide legal

protection of unique product featuresprotection of unique product features§§ Branding gives the seller the opportunity toBranding gives the seller the opportunity to

attract a loyal and profitable set of customers.attract a loyal and profitable set of customers.§§ Branding helps the seller segment markets.Branding helps the seller segment markets.§§ Strong brands help build corporate image,Strong brands help build corporate image,

making it easier to launch new brands and gainmaking it easier to launch new brands and gainacceptance by distributors and consumers.acceptance by distributors and consumers.



§§ BrandBrand--Sponsor DecisionsSponsor Decisions§§ Manufacturer brandManufacturer brand§§ Distributor brandDistributor brand§§ Licensed brand nameLicensed brand name§§ Slotting feeSlotting fee§§ Brand ladderBrand ladder§§ Brand parityBrand parity



§§ BrandBrand--Name DecisionName Decision§§ Four available strategies:Four available strategies:§§ Individual namesIndividual names§§ Blanket family namesBlanket family names§§ Separate family names for all productsSeparate family names for all products§§ Corporate name combined withCorporate name combined with

individual product namesindividual product names



§§ Desirable qualities for a brand nameDesirable qualities for a brand name§§ It should suggest something about the productIt should suggest something about the product’’ss

benefitsbenefits§§ It should suggest the product or service categoryIt should suggest the product or service category§§ It should suggest concrete,It should suggest concrete, ““high imageryhigh imagery””

qualitiesqualities§§ It should be easy to spell, pronounce, recognize,It should be easy to spell, pronounce, recognize,

and rememberand remember§§ It should be distinctiveIt should be distinctive§§ It should not carry poor meanings in otherIt should not carry poor meanings in other

countries and languagescountries and languages



§§ Brand building toolsBrand building tools§§ Public relations andPublic relations and

press releasespress releases§§ SponsorshipsSponsorships§§ Clubs and consumerClubs and consumer

communitiescommunities§§ Factory visitsFactory visits§§ Trade showsTrade shows§§ Event marketingEvent marketing

§§ Public facilitiesPublic facilities§§ Social causeSocial cause

marketingmarketing§§ High value forHigh value for

the moneythe money§§ FounderFounder’’s or as or a

celebrity personalitycelebrity personality§§ Mobile phoneMobile phone

marketingmarketing


NikeNike’’s arrangement with Michael Jordans arrangement with Michael Jordanhas provided an excellent example of ahas provided an excellent example of acelebrity endorsement. Can you think ofcelebrity endorsement. Can you think ofan endorsement campaign that backfired?an endorsement campaign that backfired?What did it cost the companyWhat did it cost the companyin the short term? What,in the short term? What,if any, have been theif any, have been thelasting effects?lasting effects?



§§ Brand Strategy DecisionBrand Strategy Decision§§ Functional brandFunctional brand§§ Image brandImage brand§§ ExperimentalExperimental

brandsbrands

§§ Line ExtensionsLine Extensions§§ Branded variantsBranded variants

§§ Brand extensionsBrand extensions§§ Brand dilutionBrand dilution



§§ MultibrandsMultibrands, New Brands, and, New Brands, andCoCo--BrandsBrands§§ MultibrandMultibrand

§§ Flanker BandsFlanker Bands§§ CoCo--branding (Dual branding)branding (Dual branding)

§§ Ingredient coIngredient co--brandingbranding§§ SameSame--company cocompany co--brandingbranding§§ Joint venture coJoint venture co--brandingbranding§§ Multisponsor coMultisponsor co--brandingbranding



§§ Brand Asset ManagementBrand Asset Management§§ Brand Auditing and RepositioningBrand Auditing and Repositioning§§ Brand report cardBrand report card



§§ Packaging and LabelingPackaging and Labeling§§ PackagingPackaging§§ PackagePackage

§§ Primary PackagePrimary Package§§ Secondary PackageSecondary Package§§ Shipping PackageShipping Package

§§ Factors which have contributed to the growing useFactors which have contributed to the growing useof packaging as a marketing toolof packaging as a marketing tool§§ SelfSelf--ServiceService§§ Consumer affluenceConsumer affluence§§ Company and brand imageCompany and brand image§§ Innovation opportunityInnovation opportunity



§§ LabelingLabeling§§ FunctionsFunctions

§§ IdentificationIdentification§§ GradingGrading§§ DescriptionDescription

§§ Consumerists have lobbied for:Consumerists have lobbied for:§§ Open datingOpen dating§§ Unit pricingUnit pricing§§ Grade labelingGrade labeling§§ Percentage labelingPercentage labeling

chapter 14 setting the product and branding...

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