Slide 10-2

1. CHAPTERS PRODUCTS, & BRANDS 10 & 11 Slide 10-2

2. THE VARIATION OF PRODUCTSPRODUCT, PRODUCT LINE, AND PRODUCT MIX • Product line – a group of products that are closely related because they satisfy a class of need, are used together, are sold to the same customer group, are distributed through the same type of outlets, or fall within a given price range. • Product mix (or product assortment) – the number of product lines offered by a company. • Product– a good, service, idea or experience consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value. 10-2

3. THE VARIATION OF PRODUCTSPRODUCT, PRODUCT LINE, AND PRODUCT MIX • Product line – a group of products that are closely related because they satisfy a class of need, are used together, are sold to the same customer group, are distributed through the same type of outlets, or fall within a given price range. • Product mix (or product assortment) – the number of product lines offered by a company. • Product– a good, service, idea or experience consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value. 10-3

4. Learning Objective • Know the various classifications of consumer and industrial goods. For consumer goods know how they vary based on the 4Ps and how they are purchased by consumers. Be able to recognize examples.

5. THE VARIATIONS OF PRODUCTS Classifying Products Degree of Tangibility • Durable Goods – an item consumed in one or a few uses • Non-Durable Goods – an item that usually lasts over an extended number of uses • “Soft” Goods – between durable and non-durable goods • Services – activities, benefits, or satisfactions offered for sale • Type of User • Consumer Goods – products purchased by the ultimate consumer • Industrial Goods – products that assist directly or in directly in • providing products for resale

6. Learning Objective • Know what services are and their importance in the U.S. economy.

7. Importance of Services in the U.S. Services account for more than 41% of the gross domestic product ( GDP) in the U.S. Services (as a percentage of total GDP) grew more than 80% between 1990 and 2006, and are expected to employ 129 million people by 2012 (compared to 23.3 million employed in goods producing firms).

8. CLASSIFYING CONSUMER GOODS Convenience Goods– items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort. Shopping goods– items for which the consumer compares several alternatives on criteria such as price, quality, or style. Specialty goods– items that a consumer makes a special effort to search out and buy. Unsought goods– items that the consumer either does not know about or knows about but does not initially want. Goods differ in terms of (1) the effort the consumer spends on the purchase decision, (2) the attributes used in purchase, and (3) frequency of purchase. 10-8

9. Classification of consumer goods Slide 10-10

10. Industrial (Business) Goods Production goods (used in the manufacturing process that become part of the final product) include: -- raw materials, and -- component parts Support goods (items used to assist in producing other goods and services) include: -- installations -- accessory equipment -- supplies -- services

11. The Strategic Marketing Process Slide 2-32

12. Learning Objective • Know the different stages in the product life cycle including the characteristics of each stage in terms of profit, sales, and competition. Also know the main marketing objective for each stage and strategies for each element of the marketing mix (the 4Ps) that are appropriate for each stage. Be able to recognize examples.

13. How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions The product life cycle describes the stages a new product goes through in the marketplace from its beginning to its end from the point of view of the entire industry. 11-13

14. THE PRODUCT LIFE CYCLEINTRODUCTION STAGE - PRICE • Skimming Strategy – a high initial price charged to help the company recover the cost of product development and capitalize on the price insensitivity of early buyers. • Penetration Pricing - A low initial price charged to help build unit volume and market share. 11-14

15. THE PRODUCT LIFE CYCLEINTRODUCTION STAGE - PROMOTION • Primary Demand – creating a desire for the product class rather than for a specific brand (a promotional goal during the introduction stage). • Selective Demand – the preference for a specific brand (a promotional goal during the growth stage). The main marketing objective in the introduction stage is to promote awareness and stimulate trial. Thus, the promotional strategy at this stage is to educate consumers and create awareness of the product 11-15

16. THE PRODUCT LIFE CYCLEGROWTH STAGE • Rapid Sales Increases • Repeat Purchasers • New Features • Broader Distribution 11-16

17. Product life cycle for the stand-alone fax machine for business use: 1970-2010 11-17

18. How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-18

19. Pioneer Advantage • The Pioneer is the first company to introduce a new product in a product category. Advantages of being the pioneer brand include: • Becoming the prototype for the product category (the brand against which subsequent brands are compared) • Developing brand loyalty

20. How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-20

21. THE PRODUCT LIFE CYCLEMATURITY STAGE • Industry/Product Sales Slow • Product Differentiation • Fewer Competitors • Intense Price Competition 11-21

22. How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-22

23. Learning Objective • Know the different ways marketing managers try to extend the life of their products (i.e., modifying the product, modifying the market, or repositioning the product) and be bale to recognize examples of each.

24. Product Management Strategies • Product Modification - altering a product’s characteristic, such as its quality, performance, or appearance, to try to increase and extend the product’s Sales. • Market modification strategies are utilized When a company tries to: 1. Increase a product’s use among existing customers, 2. Create new use situations, or 3. Find new customers. • Product repositioning - changing the place a product occupies in a consumer’s mind relative to competitive products. The need to reposition a product can be triggered by: • Reacting to a competitor’s position. • Trying to reach a new market. • Catching a rising trend. • Changing the value offered.

25. THE PRODUCT LIFE CYCLEDECLINE STAGE • Industry/Product Sales Drop • Often caused by environmental changes • Appropriate Marketing Strategies include: • Deletion – dropping the product from the company’s product line • Harvesting – retaining the product but reducing marketing cost 11-25

26. How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-26

27. Learning Objective • Know various factors that influence the length and shape of the product life cycle (i.e., technological advancement, amount of learning required from consumer, type of product, etc.) and be able to recognize examples.

28. Factors affecting the length of the product lifecycle • Consumer products generally have shorter lifecycles and industrial products • Technology products generally move more quickly than other products through the product lifecycle • Products promoted through mass communications generally move more quickly than other products through the product lifecycle

29. Video game console and software life cycles by product class and product form Slide 11-15

30. A. High learning product B. Low learning product Sales Sales Time Time C. Fashion product D. Fad product Sales Sales Time Time Alternative Product Life Cycles

31. Learning Objective • Understand the concept of diffusion of innovations and the product adoption curve. Know characteristics of each category of product adopters, including the factors that most influence category membership (i.e., socioeconomic status, social contacts, education).

32. The Diffusion of Innovations Process Five categories and profiles of product adopters Early adopters 13.5% Laggards 16% Innovators 2.5% Early majority 34% Late majority 34% Time • Innovators: • Venturesome, higher educated, use multiple information sources • Early majority: • Deliberate, many informal social contacts • Laggards: • Fear of debt, neighbors and friends are information sources • Early adopters: • Leaders in social setting, slightly above average education • Late majority: • Skeptical, below average social status

33. Learning Objective • Know the product factors that influence the rate of product adoption (i.e., relative advantage, complexity, divisibility, etc.). Be able to recognize examples – notes and PowerPoint.

34. Product Characteristics Influencing Adoption Rate • Relative advantage – the degree to which an innovation is perceived as superior to existing alternatives. • Complexity – the degree to which the innovation is perceived as difficult to learn or use • Divisibility – the degree to which the innovation may be trialed on a limited basis prior to purchase • Communicability – the degree to which the benefits of the innovation can be observed or described to others

35. Learning Objectives • Understand the role of branding in marketing a product and know the basic branding strategies employed by marketers (i.e., multi-product branding, licensing, multi-branding, etc.). Be able to recognize examples. • Know what brand equity is and why its important.

36. Trademarks, Brand Names, and Trade Names • Brand Name: • Honda Accord Automobile • Levi’s 501 Jeans • Oakley M-Frame Sunglasses • Apple iPod Media Player • Macintosh PC Trademark • Trade name/ • legal name/ • of organization: • Campbell Soup Co. • Apple Corp. • Ford Motor Co. • Kellogg Co. • Ralston Purina Co. • Brand name - Any word or "device" or combination that distinguishes a seller's offerings from those of competitors • Trade name - A commercial, legal name under which a company does business. • Trademark - The brand name which is the exclusive right of the company and is registered with the U.S. Patent Office.

37. Brand Equity The added value a brand name gives to a product beyond the functional benefits it provides. • Provides a Competitive Advantage Due to Consumer • Loyalty to the Brand • Allows a Price Premium to be Charged

38. Alternative branding strategies Branding strategy Manufacturer branding strategy • Multi-product branding strategy • Sunbeam makes: • Sunbeam irons • Sunbeam toasters • Sunbeam crockware • Toro makes: • Toro snowblowers • Toro lawn mowers • Toro garden hoses • Multibranding strategy • Anheuser-Busch makes: • Budweiser • Busch • Michelob • Procter & Gamble makes: • Tide • Cheer • Ivory Snow • Bold • Private branding strategy • Wal-Mart has: • Equate brands • Sears has: • Kenmore appliances • Craftsman tools • Diehard • batteries • Mixed branding strategy • Michelin makes: • Michelin tires • Sears tires • Epson makes printers as: • Epson • IBM Generic branding strategy Dog food Peanut butter Green beans Paper towels Aspirin Cola

39. Alternative branding strategies Branding strategy Manufacturer branding strategy • Multi-product branding strategy • Sunbeam makes: • Sunbeam irons • Sunbeam toasters • Sunbeam crockware • Toro makes: • Toro snowblowers • Toro lawn mowers • Toro garden hoses • Multibranding strategy • Anheuser-Busch makes: • Budweiser • Busch • Michelob • Procter & Gamble makes: • Tide • Cheer • Ivory Snow • Bold • Private branding strategy • Wal-Mart has: • Equate brands • Sears has: • Kenmore appliances • Craftsman tools • Diehard • batteries • Mixed branding strategy • Michelin makes: • Michelin tires • Sears tires • Epson makes printers as: • Epson • IBM Generic branding strategy Dog food Peanut butter Green beans Paper towels Aspirin Cola

40. Other Branding Strategies • Private Branding is when a manufacturer’s product is sold under the brand name of a wholesaler or retailer. • Mixed Branding is a compromise between private and manufacturer branding. It is where a firm markets products under its own name and that of a reseller because the segment attracted to the reseller is different than their own market. • Generic Branding is when there is no branding, no identification other than the contents of the product.

41. Learning Objective • Know the functions and benefits of packaging.

42. Benefits of Packaging • communication benefits -- the information on the package that is communicated to the consumer, such as directions on how to use, composition of the product, warnings and other information necessary to satisfy legal requirements of product disclosure. • functional benefits -- such as convenience, protection, or storage. • perceptual benefits -- which can connote status, economy, and/or product quality.