MANAGING BRANDS FORCOMPETITIVE ADVANTAGE • Brand Name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating them from the competition’s. • Brands have a powerful influence on consumer behavior.
BRAND LOYALTY • Measured in three stages: • 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.
BRAND LOYALTY • Measured in three stages: • 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. TYPES OF BRANDS • Brands classified in a number of ways. • Generic products Products characterized by plain labels, no advertising, and the absence of brand names.
Manufacturer’s Brands versus Private Brands • Manufacturer’s brand Brand name owned by a manufacturer or other producer. • Examples: Sony, Pepsi, Dell. • Private brands—brands offered by wholesalers and retailers. • Account for one of every five items sold in the United States. Captive Brands • National brands sold exclusively by a retail chain. • Example: Target’s sale of products by Michael Graves. Family and Individual Brands • Family brand Single brand name that identifies several related products. • Individual brand—uniquely identifies the item itself.
BRAND EQUITY • Brand equity Added value that a respected, well-known brand name gives to a product in the marketplace. • Strong brand equity • Increases likelihood customers will recognize firm’s product or product line. • Can contribute to buyers’ perceptions of product quality. • Can reinforce customer loyalty and repeat purchases. • Facilitates expansion into international markets. • Built sequentially on four dimensions: differentiation, relevance, esteem, and knowledge.
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. • Help retailer’s category buyer maximize sales for the whole category, not just particular manufacturer’s product. • Also identify opportunities for growth, set performance targets, and create marketing strategy.
PRODUCT IDENTIFICATION • Products identified in the marketplace by brand names, symbols, and distinctive packaging. • Choices about how to identify products are a major strategic decision. 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. • Effective brand names are easy to pronounce, recognize, and remember. • Should give buyers correct connotation of product’s image and qualify for legal protection. • Brand name loses protection when class of products generally comes to be known by that name. Examples include nylon, kerosene, and zipper.
TRADEMARKS • Trademark Brand for which the owner claims exclusive legal protection. Protecting Trademarks • Gives firm exclusive legal right to use brand name, brand mark, and any slogan name or product name appreciation. • Example: Former Beatles and their representatives sued Apple Computer, claiming its iPod product violated the trademarks for Apple Corps, the Beatles record label. • Firms can also seek protection for packaging elements and product features. Trade Dress • Visual cues in branding that create an overall look. • Examples: McDonald’s golden arches, Merrill Lynch’s bull.
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. • Many companies conduct research to develop and evaluate packaging. Protection Against Damage, Spoilage, and Pilferage • Protection against damaging was original purpose of packaging. • Packaging can help overcome consumer fears of tampering.
Assistance in Marketing the Product • Many firms use biodegradable and recyclable materials to respond to consumer preferences. • Packaging must help product capture the shopper’s attention. • Can enhance convenience for buyers. • Example: Squeezable bottles of honey and ketchup. Cost-Effective Packaging • Packaging cost must be reasonable.
Labeling • Label carries an item’s brand name or symbol, the name and address of the manufacturer or distributor, information about the product’s composition and size, and recommended uses. • Labels are both promotional and informational. • Subject to legal restrictions. • Universal Product Code (UPC)—numerical bar codes printed on packages. • Reduce labor costs and improve inventory control. • Radio-frequency identification (RFID) tags—electronic chips that carry encoded product identification. • May one day replace some functions of UPC codes.
BRAND EXTENSIONS • Brand extension Strategy of attaching a popular brand name to a new product in an unrelated product category. • Development by Mattel of Barbie-branded high-end clothing and accessories for women from their teens through their 30s. 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.
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
• 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.
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. • Example: Schick gave away samples of its Quattro razor to move buyers through the evaluation and trial stages.
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.
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.
ORGANIZING FOR NEW PRODUCT DEVELOPMENT • Firms must be organized so personnel can stimulate and coordinate new-product development. New-Product Committees • Most common arrangement for new-product development. • 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. • Department head typically has substantial authority.
Product Managers • Another term for a brand manager; supports the marketing strategies of an individual product or product line. • Set prices, develop advertising and sales promotion programs, and work with sales representatives in the field. • Most consumer-goods companies have adopted a category management structure, as discussed earlier in the chapter. Venture Teams • Gathers a group of specialists from different areas of an organization to work together in developing new products. • Has a flexible lifespan.
THE NEW-PRODUCT DEVELOPMENT PROCESS • Firms must usually generate dozens of ideas to produce one successful product. • New products have an 80 percent failure rate.
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. • Example: Poison Prevention Packaging Act, which requires drug manufacturers to put product in child-resistant packaging. • Consumer Product Safety Commission has jurisdiction over most consumer product categories. • Food and Drug Administration approves food, medications, and health-related 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.