Product and Brand
Product strategy is a critical element of marketing and business strategy, since it is through
the sale of products and services that companies survive and grow. This chapter discusses
four important areas of concern in developing product strategies. First, some basic issues are
discussed, including product definition, product classification, product quality and value,
product mix and product line, branding and brand equity, and packaging. Second, the product
life cycle and its implications for product strategy are explained. Third, the product audit is
reviewed, and finally, three ways to organize for product management are outlined. These
include the marketing manager system, brand manager system, and cross-functional teams.
BASIC ISSUES IN PRODUCT MANAGEMENT
Successful marketing depends on understanding the nature of products and basic decision
areas in product management. In this section, we discuss the definition and classification
of products, the importance of product quality and value, and the nature of a product mix
and product lines. Also considered is the role of branding and packaging.
The way in which the product variable is defined can have important implications for the
survival, profitability, and long-run growth of the firm. For example, the same product
can be viewed at least three different ways. First, it can be viewed in terms of the tangible product––the physical entity or service that is offered to the buyer. Second, it can be
viewed in terms of the extended product––the tangible product along with the whole cluster of services that accompany it. For example, a manufacturer of computer software may
offer a 24-hour hotline to answer questions users may have or to offer free or reduced-cost
software updates, free replacement of damaged software, and a subscription to a newsletter
that documents new applications of the software. Third, it can be viewed in terms of the
generic product—the essential benefits the buyer expects to receive from the product. For
example, many personal care products bring to the purchaser feelings of self-enhancement
and security in addition to the tangible benefits they offer.
From the standpoint of the marketing manager, to define the product solely in terms of the
tangible product is to fall into the error of “marketing myopia.” Executives who are guilty of
committing this error define their company’s product too narrowly, since they overemphasize
the physical object itself. The classic example of this mistake can be found in railroad passenger
The Marketing Mix
Elements of Product Strategy
1. An audit of the firm’s actual and potential resources
a. Financial strength
b. Access to raw materials
c. Plant and equipment
d. Operating personnel
f. Engineering and technical skills
g. Patents and licenses
2. Approaches to current markets
a. More of the same products
b. Variations of present products in terms of grades,
sizes, and packages
c. New products to replace or supplement current
d. Product deletions
3. Approaches to new or potential markets
a. Geographical expansion of domestic sales
b. New socioeconomic or ethnic groups
c. Overseas markets
d. New uses of present products
e. Complementary goods
f. Mergers and acquisitions
4. State of competition
a. New entries into the industry
b. Product imitation
c. Competitive mergers or acquisitions
service. Although no amount of product improvement could have staved off its decline, if the
industry had defined itself as being in the transportation business, rather than the railroad business, it might still be profitable today. On the positive side, toothpaste manufacturers have been
willing to exercise flexibility in defining their product. For years toothpaste was an oral hygiene
product in which emphasis was placed solely on fighting tooth decay and bad breath (e.g., Crest
with fluoride). More recently, many manufacturers have recognized the need to market toothpaste as a cosmetic item (to clean teeth of stains), as a defense against gum disease (to reduce
the buildup of tartar above the gumline), as an aid for denture wearers, and as a breath freshener. As a result, special-purpose brands have been designed to serve these particular needs,
such as Ultra Brite, Close-Up, Aqua-Fresh, Aim, Dental Care, and the wide variety of baking
soda, tartar-control formula, and gel toothpastes offered under existing brand names.
In line with the marketing concept philosophy, a reasonable definition of product is that
it is the sum of the physical, psychological, and sociological satisfactions the buyer derives
from purchase, ownership, and consumption. From this standpoint, products are customersatisfying objects that include such things as accessories, packaging, and service.
A product classification scheme can be useful to the marketing manager as an analytical
device to assist in planning marketing strategy and programs. A basic assumption underlying
such classifications is that products with common attributes can be marketed in a similar
fashion. In general, products are classed according to two basic criteria: (1) end use or
market and (2) degree of processing or physical transformation.
1. Agricultural products and raw materials. These are goods grown or extracted from
the land or sea, such as iron ore, wheat, and sand. In general, these products are fairly
homogeneous, sold in large volume, and have low value per unit or in bulk weight.
2. Organizational goods. Such products are purchased by business firms for the purpose of
producing other goods or for running the business. This category includes the following:
a. Raw materials and semifinished goods.
b. Major and minor equipment, such as basic machinery, tools, and other processing
88 Part C
The Marketing Mix
c. Parts or components, which become an integral element of some other finished good.
d. Supplies or items used to operate the business but that do not become part of the
3. Consumer goods. Consumer goods can be divided into three classes:
a. Convenience goods, such as food, which are purchased frequently with minimum
effort. Impulse goods would also fall into this category.
b. Shopping goods, such as appliances, which are purchased after some time and
energy are spent comparing the various offerings.
c. Specialty goods, which are unique in some way so the consumer will make a special
purchase effort to obtain them.
In general, the buying motive, buying habits, and character of the market are different for organizational goods vis-à-vis consumer goods. A primary purchasing motive for
organizational goods is, of course, profit. As mentioned in a previous chapter, organizational goods are usually purchased as means to an end and not as an end in themselves.
This is another way of saying that the demand for organizational goods is a derived
demand. Organizational goods are often purchased directly from the original source with
few middlemen, because many of these goods can be bought in large quantities; they have
high unit value; technical advice on installation and use is required; and the product is
ordered according to the user’s specifications. Many organizational goods are subject to
multiple-purchase influence, and a long period of negotiation is often required.
The market for organizational goods has certain attributes that distinguish it from the consumer goods market. Much of the market is concentrated geographically, as in the case of
steel, auto, or shoe manufacturing. Certain products have a limited number of buyers; this is
known as a vertical market, which means that (1) it is narrow, because customers are restricted
to a few industries; and (2) it is deep, in that a large percentage of the producers in the market use the product. Some products, such as desktop computers, have a horizontal market,
which means that the goods are purchased by all types of firms in many different industries.
In general, buyers of organizational goods are reasonably well informed. As noted previously,
heavy reliance is often placed on price, quality control, and reliability of supply source.
In terms of consumer products, many marketing scholars have found the convenience,
shopping, and specialty classification inadequate and have attempted either to refine it or to
derive an entirely new typology. None of these attempts appears to have met with complete
success. Perhaps there is no best way to deal with this problem. From the standpoint of the
marketing manager, product classification is useful to the extent that it assists in providing
guidelines for developing an appropriate marketing mix. For example, convenience goods
generally require broadcast promotion and long channels of distribution as opposed to
shopping goods, which generally require more targeted promotion and somewhat shorter
channels of distribution.
Product Quality and Value
Quality can be defined as the degree of excellence or superiority that an organization’s
product possesses. Quality can encompass both the tangible and intangible aspects of a
firm’s products or services. In a technical sense, quality can refer to physical traits such as
features, performance, reliability, durability, aesthetics, serviceability, and conformance to
specifications. Although quality can be evaluated from many perspectives, the customer is
the key perceiver of quality because his or her purchase decision determines the success of
the organization’s product or service and often the fate of the organization itself.
Many organizations have formalized their interest in providing quality products by
undertaking total-quality management (TQM) programs. TQM is an organizationwide
commitment to satisfying customers by continuously improving every business process
involved in delivering products or services. Instead of merely correcting defects when
Chapter Six Product and Brand Strategy
they occur, organizations that practice TQM train and commit employees to continually
look for ways to do things better so defects and problems don’t arise in the first place.
The result of this process is higher-quality products being produced at a lower cost.
Indeed, the emphasis on quality has risen to such a level that more than 70 countries
have adopted the ISO 9000 quality system of standards, a standardized approach for
evaluating a supplier’s quality system, which can be applied to virtually any business.1
The term quality is often confused with the concept of value. Value encompasses not
only quality but also price. Value can be defined as what the customer gets in exchange
for what the customer gives. In other words, a customer, in most cases, receives a product in exchange for having paid the supplier for the product. A customer’s perception of
the value associated with a product is generally based both on the degree to which the
product meets his or her specifications and the price that the customer will have to pay to
acquire the product. Some organizations are beginning to shift their primary focus from
one that solely emphasizes quality to one that also equally encompasses the customer’s
viewpoint of the price/quality trade-off. Organizations that are successful at this process
derive their competitive advantage from the provision of customer value. In other words,
they offer goods and services that meet or exceed customer needs at a fair price. Recall that
Chapter 1 described various strategies based on value.
Product Mix and Product Line
A firm’s product mix is the full set of products offered for sale by the organization; A
product mix may consist of several product lines, or groups of products that share common characteristics, distribution channels, customers, or uses. A firm’s product mix is
described by its width and depth. Width of the product mix refers to the number of product lines handled by the organization. For example, one division of General Mills has a
widespread mix consisting of five different product lines: ready-to-eat cereals, convenience foods, snack foods, baking products, and dairy products. Depth refers to the average
number of products in each line. In its ready-to-eat cereals line, General Mills has eight
different products. It has five different products in its line of convenience foods. Thus, the
organization has a wide product mix and deep product lines.
An integral component of product line planning revolves around the question of how
many product variants should be included in the line.2 Manufacturing costs are usually
minimized through large-volume production runs, and distribution costs tend to be lower
if only one product is sold, stocked, and serviced. At a given level of sales, profits will
usually be highest if those sales have been achieved with a single product. However, many
firms offer many product variants.
Organizations offer varying products within a given product line for three reasons. First,
potential customers rarely agree on a single set of specifications regarding their “ideal
product,” differing greatly in the importance and value they place on specific attributes.
For example, in the laundry detergent market, there is a marked split between preferences
for powder versus liquid detergent. Second, customers prefer variety. For example, a person may like Italian food but does not want to only eat spaghetti. Therefore, an Italian
restaurant will offer the customer a wide variety of Italian dishes to choose from. Third,
the dynamics of competition lead to multiproduct lines. As competitors seek to increase
market share, they find it advantageous to introduce new products that subsegment an
existing market segment by offering benefits more precisely tailored to the specific needs
of a portion of that segment. For example, Proctor & Gamble offers Jif peanut butter in a
low-salt version to target a specific subsegment of the peanut butter market.
All too often, organizations pursue product line additions with little regard for consequences. However, in reaching a decision on product line additions, organizations need
to evaluate whether (1) total profits will decrease or (2) the quality/value associated with
current products will suffer. If the answer to either of these is yes, then the organization
A. CLASSES OF CONSUMER GOODS—SOME CHARACTERISTICS AND MARKETING CONSIDERATIONS
Type of Product
Time and effort devoted by
consumer to shopping
Time spent planning
How soon want is satisfied
after it arises
Are price and quality
Frequency of purchase
Length of channel
Importance of retailer
Number of outlets
Responsibility for advertising
Brand or store name
Importance of packaging
Cannot generalize; consumer may go
to nearby store and buy with minimum
effort or may have to go to distant store
and spend much time and effort
Relatively long time
Any single store
As many as
Short to very short
Few; often only one in a market
Source: From Michael Etzel, Bruce Walker and William Stanton, Marketing 13E, 2004, p. 211, 214. Reprinted with permission of
should not proceed with the addition. Closely related to product line additions are issues
associated with branding. These are covered next.
Branding and Brand Equity
A critical focus in marketing strategy is on building the company’s brand and brand equity.
Marketing Insight 6–3 presents some of the most valuable worldwide brands. If you examine Marketing Insight 6–3 you will see that you are most likely familiar with each one of
them. Why is this so? More than likely it is because of some or all of the following reasons:
Whatever they do, they do it very well (e.g., Microsoft, Mercedes-Benz).
They tell their story often and very well (e.g., Gillette, GE).
Customers see the brand wherever they shop (e.g., McDonald’s, Coca-Cola).
The brand has a distinct personality, in other words, they stand for something
(e.g., Disney, Louis Vuitton).
B. CLASSES OF ORGANIZATIONAL PRODUCTS—SOME CHARACTERISTICS
AND MARKETING CONSIDERATIONS
Type of Product
Length of life
slowly or not
The brand name is perhaps the single most important element on the package, serving as a unique identifier. Specifically, a brand is a name, term, design, symbol, or any
other feature that identifies one seller’s good or service as distinct from those of other
sellers. The legal term for brand is trademark.3 A good brand name can evoke feelings of
trust, confidence, security, and strength. To illustrate, consider the case of Bayer aspirin.
Bayer can be sold at up to two times the price of generic aspirin due to the strength of its
MARKETING INSIGHT How Much Is a Brand Worth: Best Global
Brands 2012 Report
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