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
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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.
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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).
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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
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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.
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●
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
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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
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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.
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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
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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
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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
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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
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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.
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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.
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