Transcript Managing Products and Brands

CHAPTER TWELVE
MANAGING PRODUCTS
AND BRANDS
Irwin/McGraw-Hill
MARKETING, 6/e
BERKOWITZ
KERIN
HARTLEY
RUDELIUS
Irwin/McGraw-Hill
© The McGraw-Hill Companies, Inc., 2000
AFTER READING THIS CHAPTER YOU SHOULD
BE ABLE TO:
• Explain the product life cycle (PLC) concept
and relate a marketing strategy to each stage.
• Recognize the differences in PLCs for various
products and their implications for marketing
decisions.
• Understand alternative approaches to
managing a product’s PLC.
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AFTER READING THIS CHAPTER YOU SHOULD
BE ABLE TO
• Describe elements of brand personality and
brand equity and the criteria for the good
brand name.
• Explain the rationale for alternative branding
strategies employed by companies.
• Understand the benefits of packaging and
warranties in the marketing of a product.
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PP12-AA Gatorade: The Active Thirst-Quencher
• The Gatorade brand commands more than 80% of the $1.5
billion U.S. sports drink market.
• Today Gatorade is the official sports drink of Major League
Baseball, the National Football League, the National
Basketball Association and the National Hockey League.
• Gatorade sales have been built via more flavors, multiple
package sizes and forms, including glass and plastic bottles
and aluminum cans.
• Distribution has been expanded to include convenience stores
and supermarkets followed by vending machines and
fountain service.
• Consistent advertising has effectively conveyed the product’s
benefits and links with athletic competition.
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PP12-BB The Product Life Cycle Concept
• Products, like people, have been viewed
as having a life cycle.
• The concept of the product life cycle
describes the stages a new product goes
through in the marketplace:
introduction, growth, maturity, and
decline.
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PP12-1 How stages of the product life cycle relate to a firm’s
marketing objectives and marketing mix actions
Sales revenue
or profit
Stage of the product life cycle
Introduction
Growth
Maturity
Decline
Total industry
sales revenue
+
0
–
Total industry profit
Marketing
objective
Gain
Awareness
Stress
differentiation
Maintain
brand loyalty
Harvesting,
deletion
Competition
None
Growing
Many
Reduced
Product
One
More versions
Best sellers
Price
Skimming or
penetration
Gain share, deal
Full
product line
Defend share,
profit
Promotion
Inform, educate
Stress
competitive
differences
Reminder
oriented
Minimal
promotion
Place
(distribution)
Limited
More outlets
Maximum
outlets
Fewer outlets
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Stay profitable
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PP12-2 Product Life Cycle for the stand alone FAX machine for
business use: 1970-1999
$7.0
Sales ($billion)
6.0
5.0
4.0
3.0
2.0
1.0
1970 1975 1980 1982 1984 1986 1988 1990 1992 1994 1996 1997 1998 1999
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PP12-CC Will the Internet bury the Familiar Fax?
• Technical substitution often causes
the decline stage in the PLC.
• Will the Internet and E-mail replace
FAX machines?
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PP12-DD Some Dimensions of the PLC--Length
1.
Consumer products have shorter
PLCs than industrial products.
2.
Mass communication informs
consumers faster and shortens PLCs.
3.
Products affected by technological
change tend to have shorter PLCs.
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PP12-EE Some Dimensions of the PLC--Shape
1.
High learning product
2.
Low learning product
3.
Fashion product
4.
Fad product
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PP12-3 Alternative Product Life Cycles
A. High learning product
B. Low learning product
Time
Time
C. Fashion product
D. Fad product
Time
Time
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PP12-B Product life cycle for wine coolers
Millions
of Dollars
$1500
$1000
$500
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Source: Figure drawn from Wine and Liqour Handbook statistics.
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Albums
Compact
disks
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
Cassettes
1975
650
600
550
500
450
400
350
300
250
200
150
100
50
0
1973
Millions of units sold
PP12-C Recording industry product form life cycles
Source: Figure drawn from Recording Industry Association of America statistics.
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PP12-FF Some Dimensions of the PLC--Product Level
1.
Product brand -- the specific version of a
product offered by a particular company
2.
Product class -- refers to the entire product
category or industry such as video games
3.
Product form -- pertains to variations
within the product class
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PP12-4a Video game life cycles by product class, product form,
and brand
Worldwide sales (millions of units)
40
A. Video game life cycle by product class and product form (worldwide)
Product class
Total
30
Product form
8-bit machines
16-bit machines
32-/64-bit machines
20
10
0
1987
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1989
BERKOWITZ
1991
KERIN
1993
HARTLEY
1995
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1997
1999 (est.)
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PP12-4b Video game life cycles by product class, product form,
and brand
B. Advanced video game life cycle by brand (United States)
U.S. sales, including hardware and
software ($ billion)
$4
3
Nintendo
Sony
Sega
2
1
0
1994
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1995
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1996
HARTLEY
1997
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1998
1999 (est.)
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PP12-GG Factors Affecting the Diffusion of an Innovation
1.
Usage barriers -- the product is not compatible
with existing habits.
2.
Value barriers -- the product provides no
incentive to change…not that much better.
3.
Risk barriers -- risk can be physical, social or
economic/financial.
4.
Psychological barriers -- which can be the result
of cultural differences or image.
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PP12-5 Five categories and profiles of product adopters
Early adopters
13.5%
Innovators
2.5%
Laggards
16%
Early majority
34%
Late majority
34%
Time
Innovators:
Venturesome, higher
educated, use multiple
information sources
Fear of debt, neighbors
and friends are
information sources
Deliberate, many
informal social contacts
Early adopters:
Leaders in social setting,
slightly above average
education
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Laggards:
Early majority:
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Late majority:
Skeptical, below average
social status
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PP12-HH Concept Check
1.
2.
3.
Advertising plays a major role in the _____
stage of the PLC, and _____ plays a major
role in maturity.
How do high learning and low learning
products differ?
What does the life cycle for a fashion
product look like?
?
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PP12-II The Product (Brand) Manager
• Product Managers: manage the marketing efforts for
a close-knit family of products or brands.
• Responsibilities of the Product/Brand Manager:
• developing and executing a marketing program
for the product line described in an annual
marketing plan;
• approving ad copy, media selection, and
package design; and
• a role in planning, implementing, and
controlling marketing strategy.
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PP12-JJ Product Modification
• Product Modification involves altering a product’s
characteristic, such as its quality, performance, or
appearance, to try to increase and extend the
product’s sales.
• Changing a product’s characteristics to give the
sense of a revised product can be accomplished by:
• new features
• new package
• new scents, etc.
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PP12-KK Market Modification
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.
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PP12-LL Repositioning the Product
• Product repositioning is changing the place a
product occupies in a consumer’s mind relative to
competitive products.
• A firm can reposition a product by changing one or
more of the four marketing mix elements (product,
place/distribution, price, promotion).
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PP12-MM Four Factors that trigger product repositioning
Product Repositioning can be triggered by:
• reacting to a competitor’s position
• reaching a new market
• catching a rising trend
• changing the value offered
– trading up
– trading down…..can be via downsizing
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PP12-NN Concept Check
1.
How does a product manager help manage
a product’s life cycle?
2.
What does “creating new use situations”
mean in managing a product’s life cycle?
3.
Explain the difference between trading up
and trading down in repositioning.
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PP12-OOa Branding
• Branding involves an organization using a
name, phrase, design, symbols,or combination
of these to identify its products and distinguish
them from those of competitors.
• A brand name is any word, “device” (design,
sound, shape, or color), or combination of these
used to distinguish a seller’s goods or services.
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PP12-OOb Branding - continued
• A trade name is a commercial, legal name
under which a company does business. For
example, the Campbell Soup Company is the
trade name of that firm.
• A trademark identifies that a firm has legally
registered its brand name or trade name so the
firm has its exclusive use, thereby preventing
others from using it.
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PP12-6 Examples of well-known trademarks, brand names, and
trade names
Brand name that
can be spoken
Big Mac hamburger
Levi’s jeans
Teflon plastic
Betty Crocker cake
mix
Macintosh computer
Brand name that
cannot be spoken
Trade name/
legal name/
of organization
Campbell Soup Co.
Compaq Corp.
Ford Motor Co.
Kellogg Co.
Ralston Purina Co.
Trademark, brand name, or trade name
registered with the U.S. Patent and Trademark Office
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PP12-E Definition of Brand Equity
Brand Equity is . . . .
The added value a given brand
provides a product beyond the
functional benefits provided.
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PP12-F Four criteria for picking a good brand name
Describe product benefits
Be memorable, distinctive, and
positive
A good
brand name
should . . . .
Fit the company or product image
Have no legal restrictions
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PP12-7 Alternative branding strategies
Branding strategy
Manufacturer branding strategy
Multiproduct
branding
strategy
Multibranding Private
strategy
branding
strategy
Mixed
branding
strategy
Generic
branding
strategy
Sunbeam makes:
Sunbeam irons
Sunbeam
toasters
Sunbeam
crockware
Anheuser-Busch
makes:
Budweiser
Busch
Michelob
Wurtburger
Hofbrau
A&P has:
Ann Page
canned goods
Ann Parker
bakery goods
Eight O’Clock
coffee
Michelin
makes:
Michelin tires
Sears tires
Dog food
Peanut butter
Green beans
Paper towels
Aspirin
Cola
Toro makes:
Toro
snowblowers
Toro lawn
mowers
Toro garden
hoses
Procter &
Gamble makes:
Tide
Cheer
Ivory Snow
Oxydol
Sears has:
Kenmore
appliances
Craftsman
tools
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Epson makes
printers as:
Epson
IBM
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PP12-G Line and Brand Extension
Line extension . . . .
The use of a current brand to enter a new
market segment in its product class
Brand extension . . . .
The use of a current brand name to enter a
completely different product class
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PP12-PP 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.
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PP12-QQ Packaging
• Packaging is the component of a product that refers
to any container in which it is offered for sale and on
which information is communicated.
• To a great extent, the customer’s first exposure to a
product is the package.
• Packaging is expensive and an important part of
marketing strategy.
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PP12-RR Benefits of Packaging
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.
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PP12-H Warranty forms
Limited-coverage warranty
Extent of
coverage
Full warranty
Express warranty
Extent of
formality
Implied warranty
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PP12-SS Concept Check
1.
2.
3.
How does a generic brand differ from a
private brand?
Explain the role of packaging in terms of
perception.
What is the difference between
an expressed and an implied
warranty?
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