marketing individual assignment

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Please answer the following questions from Chapter 10:

  1. Supermarkets and mass merchants (e.g., Target) are creating hundreds of different “private label” brands that appeal to multiple price/quality segments (e.g., Up & Up, Archer Farms) to sell alongside their national brands. What are the advantages of private label brands for retailers?
  2. What are the roles of brand elements (name, logo, slogan, packaging, jingle, url)? Pick one brand and apply the use and benefits of brand elements (Example: Bounty – name; “the quicker picker upper” – slogan). How might you add new elements or modify current elements for your marketing plans?
  3. Go to: http://www.campbellsoup.com/ Why would a company like Campbell’s utilize multiple sub-brands (Chunky, Homestyle, etc.) within their soup line? Describe the target segments for each sub-brand. Why would Campbell’s create depth in their product lines?

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10 Product Concepts LEARNING OUTCOMES 10-1 Define the term product 10-5 Describe marketing uses of packaging and labeling 10-2 Classify consumer products 10-6 Discuss global issues in branding and packaging 10-3 Define the terms product item, product line, and 10-7 Describe how and why product warranties are important marketing tools product mix 10-4 Describe marketing uses of branding After finishing this chapter go to PAGE 10-1 188 for STUDY TOOLS WHAT IS A PRODUCT? The product offering, the heart of an organization’s marketing program, is usually the starting point in creating a marketing mix. A marketing manager cannot determine a price, design a promotion strategy, or create a distribution channel until the firm has a product to sell. Moreover, an excellent distribution channel, a persuasive promotion campaign, and a fair price have no value when the product offering is poor or inadequate. A product may be defined as everything, both favorable and unfavorable, that a person receives in an exchange. A product may be a tangible good like a pair of shoes, a service like a haircut, an idea like “don’t litter,” or any combination of these three. Packaging, style, color, options, and size are some typical product features. Just as important are intangibles such as service, the seller’s image, the manufacturer’s reputation, and the way consumers believe others will view the product. To most people, the product everything, both term product means a favorable and unfavorable, that a tangible good. However, person receives in an exchange services and ideas are 174 also products. (Chapter 12 focuses specifically on the unique aspects of marketing services.) The marketing process identified in Chapter 1 is the same whether the product marketed is a good, a service, an idea, or some combination of these. 10-2 TYPES OF CONSUMER PRODUCTS Products can be classified as either business (industrial) or consumer, depending on the buyer’s intentions. The key distinction between the two types PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 misuma/Shutterstock.com After studying this chapter, you will be able to… of products is their intended use. If the intended use is a business purpose, the product is classified as a business or industrial product. As explained in Chapter 7, a business product is used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other customers. A consumer product is bought to satisfy an individual’s personal wants or needs. Sometimes the same item can be classified as either a business or a consumer product, depending on its intended use. Examples include lightbulbs, pencils and paper, and computers. We need to know about product classifications because business and consumer products are marketed differently. They are marketed to different target markets and tend to use different distribution, promotion, and pricing strategies. Chapter 7 examined seven categories of business products: major equipment, accessory equipment, component parts, processed materials, raw materials, supplies, and services. This chapter examines an effective way of categorizing consumer products. Although there are several ways to classify them, the most popular approach includes these four types: convenience products, shopping products, specialty products, and unsought A marketing manager cannot determine a price, design a promotion strategy, or create a distribution channel until the firm has a product to sell. products. This approach classifies products according to how much effort is normally used to shop for them. 10-2a Convenience Products A convenience product is a relatively inexpensive item that merits little shopping effort—that is, a consumer is unwilling to shop extensively for such an item. Candy, soft drinks, aspirin, small hardconvenience product ware items, dry cleaning, and a relatively inexpensive item car washes fall into the conthat merits little shopping effort venience product category. CHAPTER 10: Product Concepts Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 175 10-2b Shopping Products A shopping product is usually more expensive than a convenience product and is found in fewer stores. Consumers usually buy a shopping product only after comparing several brands or stores on style, practicality, price, and lifestyle compatibility. They are willing to invest some effort into this process to get the desired benefits. There are two types of shopping products: homogeneous and heterogeneous. Consumers perceive homogeneous shopping products as basically similar—for example, washers, dryers, refrigerators, and televisions. With homogeneous shopping products, consumers typically look for the lowest-priced brand that has the desired features. For example, they might compare Kenmore, Whirlpool, and General Electric refrigerators. In contrast, consumers perceive heterogeneous shopping products as essentially different—for example, furniture, clothing, housing, and universities. Consumers often have trouble comparing heterogeneous shopping products because the prices, quality, and features vary so much. The benefit of comparing heterogeneous shopping products is “finding the best product or brand for me”; this decision is often highly individual. For example, it would be difficult to compare a small, private shopping product a product that requires comparison shopping college with a large, public because it is usually more expensive university, or IKEA with than a convenience product and is La-Z-Boy. found in fewer stores specialty product a particular item for which consumers search extensively and are very reluctant to accept substitutes unsought product a product unknown to the potential buyer or a known product that the buyer does not actively seek product item a specific version of a product that can be designated as a distinct offering among an organization’s products 176 karamysh/Shutterstock.com Consumers buy convenience products regularly, usually without much planning. Nevertheless, consumers do know the brand names of popular convenience products, such as Coca-Cola, Bayer aspirin, and Old Spice deodorant. Convenience products normally require wide distribution in order to sell sufficient quantities to meet profit goals. For example, the gum brand Extra is available everywhere, including Walmart, Walgreens, gas stations, newsstands, and vending machines. 10-2c Specialty Products When consumers search extensively for a particular item and are very reluctant to accept substitutes, that item is a specialty product. Omega watches, Rolls-Royce automobiles, Bose speakers, Ruth’s Chris Steak House, and highly Consumers perceive houses as heterogeneous because of variety and differences. specialized forms of medical care are generally considered specialty products. Marketers of specialty products often use selective, status-conscious advertising to maintain a product’s exclusive image. Distribution is often limited to one or a very few outlets in a geographic area. Brand names and quality of service are often very important. 10-2d Unsought Products A product unknown to the potential buyer or a known product that the buyer does not actively seek is referred to as an unsought product. New products fall into this category until advertising and distribution increase consumer awareness of them. Some goods are always marketed as unsought items, especially needed products we do not like to think about or care to spend money on. Insurance, burial plots, and similar items require aggressive personal selling and highly persuasive advertising. Salespeople actively seek leads to potential buyers. Because consumers usually do not seek out this type of product, the company must go directly to them through a salesperson, direct mail, or direct response advertising. 10-3 PRODUCT ITEMS, LINES, AND MIXES Rarely does a company sell a single product. More often, it sells a variety of things. A product item is a specific version of a product that can be designated as a distinct offering among an organization’s products. Campbell’s Cream of Chicken soup is an example of a product item (see Exhibit 10.1). PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 EXHIBIT 10.1 CAMPBELL’S PRODUCT LINES AND PRODUCT MIX DEPTH Depth of the Product Lines Width of the Product Mix Soups Sauces Frozen Entrées Cream of Chicken Cream of Mushroom Vegetable Beef Chicken Noodle Tomato Bean with Bacon Minestrone Clam Chowder French Onion and more Cheddar Cheese Alfredo Italian Tomato Hollandaise Macaroni and Cheese Tomato Juice Golden Chicken V-Fusion Juices Fricassee V8 Splash Traditional Lasagna A group of closely related product items is called a product line. For example, the column in Exhibit 10.1 titled “Soups” represents one of Campbell’s product lines. Different container sizes and shapes also distinguish items in a product line. Diet Coke, for example, is available in cans and various plastic containers. Each size and each container are separate product items. An organization’s product mix includes all the products it sells. All Campbell’s products—soups, sauces, frozen entrées, beverages, and biscuits—constitute its product mix. Each product item in the product mix may require a separate marketing strategy. In some cases, however, product lines and even entire product mixes share some marketing strategy components. For example, UPS promotes its various services by demonstrating its commitment to helping customers with the tagline “United Problem Solvers.” Organizations derive several benefits from organizing related items into product lines: ● ● ● Advertising economies: Product lines provide economies of scale in advertising. Several products can be advertised under the umbrella of the line. Campbell’s can talk about its soups being “M’m, M’m, Good!” and promote the entire line. Package uniformity: A product line can benefit from package uniformity. All packages in the line may have a common look and still keep their individual identities. Campbell’s soup, with its recognizable red and white labels, is again a good example. Standardized components: Product lines allow firms to standardize components, thus reducing Beverages Biscuits Arnott’s: Water Cracker Butternut Snap Chocolate Ripple Spicy Fruit Roll Chocolate Wheaten manufacturing and inventory costs. For example, General Motors uses the same parts on many automobile makes and models. ● ● Efficient sales and distribution: A product line enables sales personnel for companies like Procter & Gamble to provide a full range of choices to customers. Distributors and retailers are often more inclined to stock the company’s products if it offers a full line. Transportation and warehousing costs are likely to be lower for a product line than for a collection of individual items. Equivalent quality: Purchasers usually expect and believe that all products in a line are about equal in quality. Consumers expect that all Campbell’s soups and all Gillette razors will be of similar quality. Product mix width (or breadth) refers to the number of product lines an organization offers. In Exhibit 10.1, for example, the width of Campbell’s product mix is five product lines. Product line depth is the number of product items in a product line. As shown in Exhibit 10.1, the sauces product line consists of four product items; the frozen entrée product line includes three product items. product line a group of closely Firms increase the related product items width of their product mix to diversify risk. To generproduct mix all products that an organization sells ate sales and boost profits, firms spread risk across product mix width the number many product lines rather of product lines an organization offers than depend on only one or product line depth the number two. Firms also widen their of product items in a product line product mix to capitalize on CHAPTER 10: Product Concepts Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 177 Bloomberg/Getty Images CEO of Barnes & Noble Michael Huseby introduces the Android-powered Samsung Galaxy Tab 4 Nook at a Barnes & Noble store in New York City. Barnes & Noble began selling the new high-powered e-reader to compete with tablet and laptop makers such as Microsoft and Apple. established reputations. For example, leading fitness wear manufacturer Under Armour recently added a wearable activity tracker to its product mix. Called the HealthBox, this device analyzes sleep, daily activity, workout intensity, and weight. The company is working to widen its product mix across the industry of health and fitness.1 Firms increase the depth of their product lines to attract buyers with different preferences, to increase sales and profits by further segmenting the market, to capitalize on economies of scale in production and marketing, and to even out seasonal sales patterns. 10-3a PRODUCT MODIFICATION Marketing managers must decide if and when to modify existing products. Product modification is a change in one or more of a product’s characteristics: ● Adjustments to Product Items, Lines, and Mixes Over time, firms change product items, lines, and mixes to take advantage of new technical or product developments or to respond to product modification changes in the environchanging one or more of a product’s ment. They may adjust characteristics by modifying products, 178 repositioning products, or extending or contracting product lines. ● Quality modification: a change in a product’s dependability or durability. Reducing a product’s quality may let the manufacturer lower the price and appeal to target markets unable to afford the original product. Conversely, increasing quality can help the firm compete with rival firms. For example, Barnes & Noble offers a color version of its Nook that runs Android apps, allowing it to compete with tablet and laptop makers such as Microsoft and Apple. Increasing quality can also result in increased brand loyalty, greater ability to raise prices, or new opportunities for market segmentation. Functional modification: a change in a product’s versatility, effectiveness, convenience, or safety. PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 ● Brendan Howard/Shutterstock.com Oil-Dri Corporation of America, a leading manufacturer of quality cat litter, recently introduced Cat’s Pride Fresh & Light Ultimate Care litter. This product has a unique formula that is 50 percent lighter than other litters and features 10-day odor control, ultra-strong clumping, and dust-free scooping.2 Style modification: an aesthetic (how the product looks) product change rather than a quality or functional change. Clothing and auto manufacturers commonly use style modifications to motivate customers to replace products before they are worn out. Planned obsolescence is a term commonly used to describe the practice of modifying products so that those that have already been sold become obsolete before they actually need replacement. For example, products such as printers and cell phones become obsolete because technology changes so quickly. Some argue that planned obsolescence is wasteful; some claim it is unethical. Marketers respond that consumers favor style modifications because they like changes in the appearance of goods such as clothing and cars. Marketers also contend that consumers, not manufacturers and marketers, decide when styles are obsolete. REPOSITIONING Repositioning, as Chapter 8 explained, involves changing consumers’ perceptions of a brand. SeaWorld, one of America’s leading tourist attractions, received negative publicity from the documentary film Blackfish, which exposed how the company trained and treated orcas. As a result, the company decided to phase out orca breeding and end the stunt-based shows featuring these animals. SeaWorld repositioned its brand toward preserving and protecting sea creatures and made animal care and sensitivity to wildlife central to its mission. Now, orcas at SeaWorld are presented in naturalistic settings rather than in theatrical shows.3 Changing demographics, declining sales, and changes in the social environment often motivate a firm to reposition an established brand. Retailer Target, for example, plans to reposition its brand toward Hispanic shoppers. The company’s research showed that while only 38 percent of its shoppers said that the store was their favorite, 54 percent of Hispanic Millennials said that Target was their favorite store. Several departments, including the baby department, will be renovated to focus on marketing to Hispanic moms. Target also plans to be the first brand to launch a Spanish-language ad campaign on an English-language network.4 Krispy Kreme developed a line of beverages that it made available to sell in grocery, convenience, and mass merchandise stores. PRODUCT LINE EXTENSIONS A product line extension occurs when a company’s management decides to add products to an existing product line in order to compete more broadly in the industry. Donut maker Krispy Kreme recently launched a series of ready-to-drink iced coffees that consumers can purchase nationwide in grocery, convenience, and mass merchandise stores. The drinks are relatively inexpensive, convenient, and are offered in mocha, vanilla, and caramel flavors. The company hopes to attract more coffee drinkers, as well as retail customers, to its products.5 A company can add too many products, or demand can change for the type of products that were introduced over time. When this happens, a product line is overextended. Product lines can be overextended when: ● ● ● Some products in the line do not contribute to profits because of low sales or they cannibalize sales of other items in the line. Manufacturing or marketing resources are disproportionately allocated to slow-moving products. Some items in the line are obsolete because of new-product entries in the line or new products offered by competitors. planned obsolescence the practice of modifying products so those that have already been sold become obsolete before they actually need replacement product line extension adding additional products to an existing product line in order to compete more broadly in the industry CHAPTER 10: Product Concepts Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 179 Apple’s Brand Equity In 2015, research firm Milland Brown rated Apple as the company with the strongest brand equity. Apple’s iPhone 6 contributed heavily to the value of the Apple brand, as did Apple Pay and the Apple–IBM partnerships announced in 2014. In the same report, Google fell to second place, while Microsoft rose to third. Microsoft’s rise was attributed to a shift in focus toward the cloud, a more collaborative corporate philosophy, and a feeling of optimism following the installation of new CEO Satya Nadella. Amazon, Facebook, Alibaba, and IBM all made the top 15.6 PRODUCT LINE CONTRACTION Sometimes marketers can get carried away with product extensions. (Does the world really need 31 varieties of Head & Shoulders shampoo?) Contracting product lines is a strategic way to deal with overextension. In early 2016, Toyota axed Scion, which the company had positioned as a “youth” brand. Scion helped Toyota attract younger buyers (with an average age of 36), but the company failed to clearly differentiate Scion from its other small cars. Toyota did not provide enough marketing support to generate a critical sales mass, and what marketing there was focused on fuel economy and price—not enough to give Scion a competitive differentiation, particularly as gas prices plummeted. All is not lost for fans of the Scion brand, however, as Toyota plans to incorporate several Scion models into its remaining brand a name, term, symbol, brands.7 design, or combination thereof Indeed, three major that identifies a seller’s products benefits are likely when a and differentiates them from firm contracts an overexcompetitors’ products tended product line. First, brand name that part of a resources become conbrand that can be spoken, including centrated on the most imletters, words, and numbers portant products. Second, brand mark the elements of a managers no longer waste brand that cannot be spoken resources trying to imbrand equity the value of a prove the sales and profits company or brand name of poorly performing prodglobal brand a brand that ucts. Third, new-product obtains at least a one-third of its items have a greater earnings from outside its home chance of being successful country, is recognizable outside its home base of customers, and has because more financial and publicly available marketing and human resources are availfinancial data able to manage them. 180 10-4 BRANDING The success of any business or consumer product depends in part on the target market’s ability to distinguish one product from another. Branding is the main tool marketers use to distinguish their products from those of the competition. A brand is a name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. A brand name is that part of a brand that can be spoken, including letters (GM, YMCA), words (Chevrolet), and numbers (WD-40, 7-Eleven). The elements of a brand that cannot be spoken are called the brand mark—for example, the well-known Mercedes-Benz and Delta Air Lines symbols. 10-4a Benefits of Branding Branding has three main purposes: product identification, repeat sales, and new-product sales. The most important purpose is product identification. Branding allows marketers to distinguish their products from all others. Many brand names are familiar to consumers and indicate quality. The term brand equity refers to the value of a company or brand name. A brand that has high awareness, perceived quality, and brand loyalty among customers has high brand equity—a valuable asset indeed. See Exhibit 10.2 for some classic examples of companies that leverage their brand equity to the fullest. The term global brand refers to a brand that obtains at least one-third of its earnings from outside its home country, is recognizable outside its home base PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Tupungato/Shutterstock.com EXHIBIT 10.2 THE POWER OF BRAND EQUITY YUM! believes that it must adapt its restaurants to local tastes and different cultural and political climates. of customers, and has publicly available marketing and financial data. Yum! Brands, which owns Pizza Hut, KFC, and Taco Bell, is a good example of a company that has developed strong global brands. Yum! management believes that it must adapt its restaurants to local tastes and different cultural and political climates. In Japan, for instance, KFC sells tempura crispy strips. In northern England, KFC focuses on gravy and potatoes, and in Thailand, it offers rice with soy or sweet chili sauce. The best generator of repeat sales is satisfied customers. Branding helps consumers identify products they wish to buy again and avoid those they do not. Brand loyalty, a consistent preference for one brand over all others, is quite high in some product categories. More than half the consumers in product categories such as cigarettes, mayonnaise, toothpaste, coffee, headache remedies, bath soap, and ketchup are loyal to Product Category Dominant Brand Name Children’s Entertainment Disney Laundry Detergent Tide Tablet Computer Apple Toothpaste Crest Microprocessor Intel Soup Campbell’s Bologna Oscar Meyer Ketchup Heinz Bleach Clorox Greeting Cards Hallmark Overnight Mail FedEx Copiers Xerox Gelatin Jell-O Hamburgers McDonald’s Baby Lotion Johnson & Johnson Tissues Kleenex Acetaminophen Tylenol Coffee Starbucks Information Search Google Source: Data from Chris Moorman. one brand. Many students go to college and purchase the same brands they used at home rather than choosing by price. Brand identity is essential to developing brand loyalty. The third main purpose of branding is to facilitate new-product sales. Having a well-known and respected company and brand name is extremely useful when introducing new products. 10-4b Branding Strategies Firms face complex branding decisions. Firms may choose to follow a policy of using manufacturers’ brands, private (distributor) brands, or both. In either case, they must then decide among a policy of individual branding (different brands for different products), family branding (common names for different brand loyalty consistent products), or a combinapreference for one brand over all tion of individual branding others and family branding. CHAPTER 10: Product Concepts Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 181 EXHIBIT 10.3 COMPARISON OF MANUFACTURER’S AND PRIVATE BRANDS FROM THE RESELLERS PERSPECTIVE Key Advantages of Carrying Manufacturers’ Brands Key Advantages of Carrying Private Brands • Heavy advertising to the consumer by manufacturers such as Procter & Gamble helps develop strong consumer loyalties. • A wholesaler or retailer can usually earn higher profits on its own brand. In addition, because the private brand is exclusive, there is less pressure to mark down the price to meet competition. • Well-known manufacturers’ brands, such as Kodak and Fisher-Price, can attract new customers and enhance the dealer’s (wholesaler’s or retailer’s) prestige. • A manufacturer can decide to drop a brand or a reseller at any time or even become a direct competitor to its dealers. • Many manufacturers offer rapid delivery, enabling the dealer to carry less inventory. • A private brand ties the customer to the wholesaler or retailer. A person who wants a DieHard battery must go to Sears. • If a dealer happens to sell a manufacturer’s brand of poor quality, the customer may simply switch brands and remain loyal to the dealer. • Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brands. Walmart store managers don’t have to worry about competing with other sellers of Sam’s American Choice products or Ol‘ Roy dog food. They know that these brands are sold only in Walmart and Sam’s Club stores. MANUFACTURERS’ BRANDS VERSUS PRIVATE BRANDS The brand name of a manufacturer—such as Kodak, La-Z-Boy, and Fruit of the Loom—is called a manufacturer’s brand. Sometimes “national brand” is used as a synonym for “manufacturer’s brand.” This term is not always accurate, however, because many manufacturers serve only regional markets. Using “manufacturer’s brand” precisely defines the brand’s owner. A private brand, also known as a private label or store brand, is a brand name owned by a wholesaler or a retailer. Target’s Archer Farms brand is a popular private label, for example. Private labels are increasing in popularity and price as customers develop loyalties to store brands such as Archer Farms. Private brands have seen strong growth since the start of the Great Recession in 2008, more than doubling in sales and capturing about 25 percent of all grocery store volume. Much of this growth has occurred in the dry groceries and non-foods categories because of changing shopper behavior and heavy competition.8 Sensing these trends, Amazon recently launched private label brands in men’s, manufacturer’s brand the women’s, and children’s brand name of a manufacturer apparel. The company private brand a brand name now owns seven privateowned by a wholesaler or a retailer label fashion brands, and in 2015, sponsored New captive brand a brand manufactured by a third party for an York Men’s Fashion Week exclusive retailer, without evidence for the first time.9 of that retailer’s affiliation Retailers love consumindividual branding using ers’ greater acceptance of different brand names for different private brands. Because products overhead is low and there 182 are no marketing costs, private label products bring 10 percent higher profit margins, on average, than manufacturers’ brands. More than that, a trusted store brand can differentiate a chain from its competitors. Exhibit 10.3 illustrates key issues that wholesalers and retailers should consider in deciding whether to sell manufacturers’ brands or private brands. Many firms offer a combination of both. Instead of marketing private brands as cheaper and inferior to manufacturers’ brands, many retailers are creating and promoting their own captive brands. These brands carry no evidence of the store’s affiliation, are manufactured by a third party, and are sold exclusively at the chains. This strategy allows the retailer to ask a price similar or equal to manufacturers’ brands, and the captive brands are typically displayed alongside mainstream products. A recent study showed that many consumers believe that store brands are equivalent to name brands in flavor, packaging, and assortment, and 37 percent of consumers prefer to buy store brands over manufacturers’ brands. Interestingly, Millennial shoppers were found to be more likely than other demographic groups to buy store brand foods in general.10 For example, Simple Truth and Simple Truth Organic are Kroger’s lines of natural and organic products designed to meet consumer desire for upscale brands. In 2014, these private brands accounted for $1.2 billion in sales for Kroger.11 INDIVIDUAL BRANDS VERSUS FAMILY BRANDS Many companies use different brand names for different products, a practice referred to as individual branding. Companies use individual brands when their products vary greatly in use or performance. For instance, it would not make sense to use the same brand name for a pair of PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Niloo/Shutterstock.com Florida. “Pairing Bruegger’s Bagels with [Jamba Juice parent company] Great Service Restaurants is a fantastic match,” said Paul Carolan, chief development officer for Le Duff America, which owns Bruegger’s Bagels. “Great Service Restaurants shares our passion for community, quality, and providing exceptional guest experiences.”13 Finally, with complementary branding, products are advertised or marketed together to suggest usage, such as a spirits brand (Seagram’s) and a compatible mixer (7Up). Co-branding is a useful strategy when a combination of brand names enhances the prestige or perMost grocery stores sell all different types of brands sideceived value of a product or when by-side. it benefits brand owners and users. Co-branding may also be used to increase a company’s presence in markets where it has dress socks and a baseball bat. Procter & Gamble targets little room to differentiate itself or has limited market different segments of the laundry detergent market with share. For example, Doc Popcorn and Dippin’ Dots Bold, Cheer, Dash, Dreft, Era, Gain, and Tide. plan to join together to open their first co-branded By contrast, a company that markets several differstore. The companies will sell sweet and savory flaent products under the same brand name is practicing vors of popcorn as well as ice cream products under family branding. Jack Daniel’s family brand includes the same roof. This move will allow both brands to whiskey, coffee, barbeque sauce, heat-and-serve meat continue to grow domestically and internationally over products like brisket and pulled pork, mustard, playing the coming years. 14 cards, and clothing lines. CO-BRANDING Co-branding entails placing two or more brand names on a product or its package. Three common types of co-branding are ingredient branding, cooperative branding, and complementary branding. Ingredient branding identifies the brand of a part that makes up the product. For example, Church & Dwight co-branded an entire line of Arm & Hammer laundry detergents with OxiClean, a popular household cleaner and stain remover. OxiClean is also co-branded with Kaboom shower cleaner and Xtra detergent.12 Cooperative branding occurs when two brands receiving equal treatment (in the context of an advertisement) borrow from each other’s brand equity. A promotional contest jointly sponsored by Ramada Inn, American Express, and United Airlines used cooperative branding. Guests at Ramada who paid with an American Express card were automatically entered in a contest and were eligible to win more than 100 getaways for two at any Ramada in the continental United States and round-trip airfare from United. In 2014, Bruegger’s Bagels and Jamba Juice announced that five co-branded and co-operated locations would be opened across 10-4c Trademarks A trademark is the exclusive right to use a brand or part of a brand. Others are prohibited from using the brand without permission. A service mark performs the same function for services, such as H&R Block and Weight Watchers. Parts of a brand or other product identification may qualify for trademark protection. Some examples are: ● ● ● Sounds, such as the MGM lion’s roar. Shapes, such as the Jeep front grille and the Coca-Cola bottle. Ornamental colors or designs, such as the decoration on Nike tennis shoes, the blackand-copper color combination of a Duracell battery, Levi’s small tag on the left side of the family branding marketing several different products under the same brand name co-branding placing two or more brand names on a product or its package trademark the exclusive right to use a brand or part of a brand service mark a trademark for a service CHAPTER 10: Product Concepts Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 183 Helga Esteb/Shutterstock.com under some criticism for its more restrictive provisions. For example, some are concerned that this law has been abused by governments to silence political criticism on the Internet.16 Companies that fail to protect their trademarks face the possibility that their product names will become generic. A generic product name identifies a product by class or type and cannot be trademarked. Former brand names that were not sufficiently protected by their owners and were subsequently declared to be generic product names by U.S. courts include aspirin, cellophane, linoleum, thermos, kerosene, monopoly, cola, and shredEmpire stars Bryshere Gray, Terrence Howard, and Trai ded wheat. Byers (from left) arrive at a premiere event for the hit show. Companies such as Rolls-Royce, In 2016, Fox won a trademark case brought against the Cross, Xerox, Levi Strauss, Frigidaire, and McDonald’s aggressively enforce television network by similarly named music company their trademarks. Rolls-Royce, CocaEmpire. Cola, and Xerox even run newspaper and magazine ads stating that their rear pocket of its jeans, or the cutoff black cone on names are trademarks and should not be used as descripthe top of Cross pens. tive or generic terms. Television network Fox recently ● Catchy phrases, such as Prudential’s “Own a Piece of won a trademark victory for the name of hit show Emthe Rock,” Mountain Dew’s “Do the Dew,” and Nike’s pire against San Francisco-based hip-hop music com“Just Do It!” pany Empire. The music company offered to recall the claim—that its brand was being tarnished by the show’s ● Abbreviations, such as Bud, Coke, or the Met. portrayal of a music label run by a drug dealer who liked It is important to understand that trademark to murder his friends—for $8 million, or for guest spots rights come from use rather than registration. An for their artists and $5 million. The judge who decided intent-to-use application is filed with the U.S. Patent the case wrote that “‘Empire’ has genuine relevance to and Trademark Office, and a company must have a the Empire Series and it was not arbitrarily chosen to genuine intention to use the mark when it files and exploit Empire Distribution’s fame.”17 must actually use it within three years of the granting To try to stem the number of trademark infringeof the application. Trademark protection typically lasts ments, violations carry steep penalties. But despite for ten years.15 To renew the trademark, the company the risk of incurring a penalty, infringement lawsuits must prove it is using the mark. Rights to a trademark are still common. Serious conflict can occur when last as long as the mark is used. Normally, if the firm brand names resemble one another too closely. Fashdoes not use it for two years, the trademark is considion brand Gucci has accused Guess of trademark viered abandoned, and a new user can claim exclusive olations for years. In 2015, a French court ruled in ownership of the mark. Guess’s favor, finding that no trademark infringement, The Digital Millennium Copyright Act (DMCA) excounterfeiting, or unfair competition between the two plicitly applies trademark law to the digital world. This brands occurred. The court found that Guess had dilaw includes financial penalties for those who violate luted Gucci’s logos, not copied them. An American trademarks or register an court ruled, however, that Guess was guilty of copying generic product otherwise trademarked four of Gucci’s five trademarked logos. This example name identifies a product by class term as a domain name. also illustrates that there is no such thing as a global or type and cannot be trademarked The DMCA has come trademark. 18 184 PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Companies must also contend with fake or unauthorized brands. Knockoffs of trademarked clothing lines are easy to find in cheap shops all over the world, and loose imitations are found in some reputable department stores as well. Today, whole stores are faked in China. Stores selling real iPhones and iPads in stores with sparse décor and bright lighting may seem like authentic Apple stores but are frequently imitating the real deal. Numerous fast-food restaurants have become victims of knockoff stores throughout China: Pizza Huh (Pizza Hut), Mak Dak (McDonald’s), and Taco Bell Grande (Taco Bell) mimic the American chains’ layouts and products. FBC, KFG, KLG, MFC, and OFC all lift Kentucky Fried Chicken’s iconic logo, color scheme, and menu.19 In Europe, you can sue counterfeiters only if your brand, logo, or trademark is formally registered. Formal registration used to be required in each country in which a company sought protection. However, today a company can register its trademark in all European Union member countries with one application. 10-5 PACKAGING Packages have always served a practical function— that is, they hold contents together and protect goods as they move through the distribution channel. Today, however, packaging is also a container for promoting the product and making it easier and safer to use. 10-5a Packaging Functions The three most important functions of packaging are to contain and protect products; promote products; and facilitate the storage, use, and convenience of products. A fourth function of packaging that is becoming increasingly important is to facilitate recycling and reduce environmental damage. CONTAINING AND PROTECTING PRODUCTS The most obvious function of packaging is to contain products that are liquid, granular, or otherwise divisible. Packaging also enables manufacturers, wholesalers, and retailers to market products in specific quantities, such as ounces. Physical protection is another obvious function of packaging. Most products are handled several times between the time they are manufactured, harvested, or otherwise produced and the time they are consumed or used. Many products are also shipped, stored, and inspected several times between production and consumption. Some, like milk, need to be refrigerated. Others, like beer, are sensitive to light. Still others, like medicines and bandages, need to be kept sterile. Packages protect products from breakage, evaporation, spillage, spoilage, light, heat, cold, infestation, and many other conditions. PROMOTING PRODUCTS Packaging does more than identify the brand, list the ingredients, specify features, and give directions. A package differentiates a product from competing products and may associate a new product with a family of other products from the same manufacturer. However, some products’ packaging lacks useful information. The Food and Drug Administration (FDA) is looking to remedy inconsistent and incomplete food packaging information by adding more facts to nutrition labels. These changes include listing the number of servings in each container and printing the calorie count for each serving in larger, bolder type. The FDA hopes that these changes will catch consumers’ eyes and help them better manage their health.20 Packages use designs, colors, shapes, and materials to try to influence consumers’ perceptions and buying behavior. For example, marketing research shows that health-conscious consumers are likely to think that any food is probably good for them as long as it comes in green packaging. Packaging can influence other consumer perceptions of a brand as well. In 2016, Coca-Cola introduced the Diet Coke It’s Mine program, which featured millions of unique package designs for the brand. The company partnered with HP Inc. to use the innovative HP Indigo digital printing technology to design the labels. The brand first created 36 base designs inspired by the bubbles, fizz, taste, and spirit of Diet Coke. Then, using these base designs, the HP software automatically generated millions of entirely new graphics. Coca-Cola also partnered with celebrity stylist Brad Goreski to host an It’s Mine pop-up fashion house experience in New York City at the start of Fashion Week. Diet Coke consumers who participate in the experience can choose label designs that they believe reflect both their individual personalities and their looks.21 FACILITATING STORAGE, USE, AND CONVENIENCE Wholesalers and retailers prefer packages that are easy to ship, store, and stock on shelves. They also like packages that protect products, prevent spoilage or breakage, and extend the product’s shelf life. Consumers’ requirements for storage, use, and convenience cover many dimensions. Consumers are constantly seeking items that are easy to handle, open, and reclose, although some consumers want packages that are tamperproof or childproof. Research CHAPTER 10: Product Concepts Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 185 10-5b persuasive labeling a type of package labeling that focuses on a promotional theme or logo, and consumer information is secondary informational labeling a type of package labeling designed to help consumers make proper product selections and lower their cognitive dissonance after the purchase 186 Labeling An integral part of any package is its label. Labeling generally takes one of two forms: persuasive or informational. Persuasive labeling focuses on a promotional theme or logo, and consumer information is secondary. Note that otography Some firms use innovative packaging to target environmentally concerned market segments. Package designer Aaron Mickelson’s the Disappearing Package project showcased several inventive ways to make packaging more sustainable. Mickelson’s designs include bar soap packaging that dissolves under shower water, trash bag packaging that doubles as a container and can be used as a trash bag itself, perforated tea bag booklets (eliminating the need for a box), and a rolled up tear-away detergent pod package with product information printed across the outside of the conjoined pods.24 ap el House Ph FACILITATING RECYCLING AND REDUCING ENVIRONMENTAL DAMAGE One of the most important packaging issues today is eco-consciousness, a trend that has recently been in and out of consumer and media attention. Studies conflict as to whether consumers will pay more for eco-friendly packaging, though consumers repeatedly iterate the desire to purchase such products. A recent study showed that 63 percent of U.S. consumers believe that reusable and repurposable packaging is important when choosing products. Companies have responded by looking for alternative packaging materials that are more ecologically friendly.23 The Disappearing Package Court esy of Ch indicates that hard-to-open packages are among consumers’ top complaints—especially when it comes to clamshell electronics packaging. Indeed, Quora users voted clamshell packaging “the worst piece of design ever done.” There is even a Wikipedia page devoted to “wrap rage,” the anger associated with trying to open clamshells and other poorly designed packages.22 As oil prices force the cost of plastics used in packaging skyward, companies such as Amazon, Target, and Walmart are pushing suppliers to do away with excessive and infuriating packaging. Such packaging innovations as zipper tear strips, hinged lids, tab slots, screw-on tops, simple cardboard boxes, and pour spouts were introduced to solve these and other problems. Easy openings are especially important for kids and aging baby boomers. Some firms use packaging to segment markets. For example, a C&H sugar carton with an easy-to-pour, reclosable top is targeted to consumers who do not do a lot of baking and are willing to pay at least 20 cents more for the package. Different-sized packages appeal to heavy, moderate, and light users. Campbell’s soup is packaged in single-serving cans aimed at the elderly and singles market segments. Packaging convenience can increase a product’s utility and, therefore, its market share and profits. the standard promotional claims—such as “new,” “improved,” and “super”—are no longer very persuasive. Consumers have been saturated with “newness” and thus discount these claims. Informational labeling, by contrast, is designed to help consumers make proper product selections and lower their cognitive dissonance after the purchase. Most major furniture manufacturers affix labels to their wares that explain the products’ construction features, such as type of frame, number of coils, and fabric characteristics. The Nutritional Labeling and Education Act of 1990 mandated detailed nutritional information on most food packages and standards for health claims on food packaging. An important outcome of this legislation has been guidelines from the PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Food and Drug Administration for using terms such as low fat, light, reduced cholesterol, low sodium, low calorie, low carb, and fresh. Getting the right information is very important to consumers, so some corporations are working on new technologies to help consumers shop smart. For example, micro-sensor technology can monitor a beverage’s temperature and freshness, providing more information than a simple “best by” date. Sensors can also promote food safety by detecting whether packages have been tampered with. Seafood Analytics created technology to detect and flag warning signs that could lead to seafood contamination, such as improper dates for when a fish was caught, harvested, and put on ice.25 GREENWASHING There are numerous products in every product category that use greenwashing to try and sell products. Greenwashing is when a product or company attempts to give the impression of environmental friendliness whether or not it is environmentally friendly. As consumer demand for green products appeared to escalate, green certifications proliferated. Companies could create their own certifications and logos, resulting in more than 300 possible certification labels, ranging in price from free to thousands of dollars. Consumer distrust and confusion caused the Federal Trade Commission to issue new rules. Starting in late 2011, new regulations apply to labeling products with green-certification logos. If the same company that produced the product performed the certification, that relationship must be clearly marked. This benefits organizations such as Green Seal, which uses unbiased, third-party scientists and experts to verify claims about emissions or biodegradability, and hopes to increase consumer confidence in green products.26 10-5c Universal Product Codes The universal product codes (UPCs) that appear on most items in supermarkets and other high-volume outlets were first introduced in 1974. Because the numerical codes appear as a series of thick and thin vertical lines, they are often called bar codes. The lines are read by computerized optical scanners that match codes with brand names, package sizes, and prices. They also print information on cash register tapes and help retailers rapidly and accurately prepare records of customer purchases, control inventories, and track sales. The UPC system and scanners are also used in scanner-based research (see Chapter 9). 10-6 GLOBAL ISSUES IN BRANDING AND PACKAGING When planning to enter a foreign market with an existing product, a firm has three options for handling the brand name: ● ● ● One brand name everywhere: This strategy is useful when the company markets mainly one product and the brand name does not have negative connotations in any local market. The Coca-Cola Company uses a one-brand-name strategy in more than 195 countries around the world. The advantages of a one-brand-name strategy are greater identification of the product from market to market and ease of coordinating promotion from market to market. Adaptations and modifications: A one-brandname strategy is not possible when the name cannot be pronounced in the local language, when the brand name is owned by someone else, or when the brand name has a negative or vulgar connotation in the local language. The Iranian detergent Barf, for example, might encounter some problems in the U.S. market. Different brand names in different markets: Local brand names are often used when translation or pronunciation problems occur, when the marketer wants the brand to appear to be a local brand, or when regulations require localization. Unilever’s Axe line of male grooming products is called Lynx in England, Ireland, Australia, and New Zealand. PepsiCo changed the name of its eponymous cola to Pecsi in Argentina to reflect the way the word is pronounced with an Argentinian accent. In addition to global branding decisions, companies must consider global packaging needs. Three aspects of packaging that are especially important in international marketing are labeling, aesthetics, and climate considerations. The major labeling concern is properly translating ingredient, promotional, and instructional information on labels. Care must also be employed in meeting all local labeling requirements. Several years ago, an Italian judge ordered that all bottles of Coca-Cola be removed from retail shelves because the ingredients were not universal product codes properly labeled. Labeling (UPCs) a series of thick and thin is also harder in countries vertical lines (bar codes) readable by computerized optical scanners that like Belgium and Finland, represent numbers used to track which require packaging to products be bilingual. CHAPTER 10: Product Concepts Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 187 Package aesthetics may also require some attention. Even though simple visual elements of the brand, such as a symbol or logo, can be a standardizing element across products and countries, marketers must stay attuned to cultural traits in host countries. For example, colors may have different connotations. Red is associated with witchcraft in some countries, green may be a sign of danger, and white may be symbolic of death. Such cultural differences could necessitate a packaging change if colors are chosen for another country’s interpretation. In the United States, green typically symbolizes an eco-friendly product, but that packaging could keep customers away in a country where green indicates danger. Aesthetics also influence package size. Soft drinks are not sold in six-packs in countries that lack refrigeration. In some countries, products such as detergent may be bought only in small quantities because of a lack of storage space. Other products, such as cigarettes, may be bought in small quantities, and even single units, because of the low purchasing power of buyers. Extreme climates and long-distance shipping necessitate sturdier and warranty a confirmation of the more durable packages quality or performance of a good or for goods sold overseas. service Spillage, spoilage, and express warranty a written breakage are all more imguarantee portant concerns when implied warranty an products are shipped long unwritten guarantee that the good distances or frequently or service is fit for the purpose for handled during shipping which it was sold and storage. Packages 10 10-7 PRODUCT WARRANTIES Just as a package is designed to protect the product, a warranty protects the buyer and gives essential information about the product. A warranty confirms the quality or performance of a good or service. An express warranty is a written guarantee. Express warranties range from simple statements—such as “100-percent cotton” (a guarantee of quality) and “complete satisfaction guaranteed” (a statement of performance)—to extensive documents written in technical language. In contrast, an implied warranty is an unwritten guarantee that the good or service is fit for the purpose for which it was sold. All sales have an implied warranty under the Uniform Commercial Code. Congress passed the Magnuson-Moss Warranty– Federal Trade Commission Improvement Act in 1975 to help consumers understand warranties and get action from manufacturers and dealers. A manufacturer that promises a full warranty must meet certain minimum standards, including repair “within a reasonable time and without charge” of any defects and replacement of the merchandise or a full refund if the product does not work “after a reasonable number of attempts” at repair. Any warranty that does not live up to this tough prescription must be “conspicuously” promoted as a limited warranty. STUDY TOOLS LOCATED AT WWW.CENGAGEBRAIN.COM LOCATED AT BACK OF THE TEXTBOOK in marketing ◻ Complete practice and graded quizzes to prepare for tests ◻ Complete interactive content within the MKTG Online experience ◻ View the chapter highlight boxes within the MKTG Online experience ◻ Rip out Chapter Review Card 188 may also need to ensure a longer product life if the time between production and consumption lengthens significantly. ◻ Review Key Terms Flashcards and create your own ◻ Track your knowledge and understanding of key concepts PART THREE: Product Decisions Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 PREPARE FOR TESTS ON THE STUDYBOARD! CORRECT INCORRECT INCORRECT INCORRECT Personalize Quizzes from Your StudyBits Take Practice Quizzes by Chapter CHAPTER QUIZZES Chapter 1 Chapter 2 Chapter 3 Chapter 4 Access MKTG ONLINE at www.cengagebrain.com Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
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Retailers such as “Target” derive numerous advantages from having private label products
alongside the national brands. One of the primary advantages is high margin profits. Reason being,
the resale value of private labels t is higher compared to that of selling distributed good by other
manufacturers. If a company is in a position to produce high quality products or services, it is more
likely to attract customers and sell more of the private label than the national brand. Therefore,
companies look at it from a point of raising their profit margins. Secondly, retailers gain
exclusivity. In a competitive market, every competitor requires a unique brand for selfidentification. Businesses use private label...


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