MKTG

1. MKTG Lamb, Hair, McDaniel 2007-2008 9 CHAPTER Product Concepts Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University

2. Learning Outcomes Define the term product Classify consumer products Define the terms product item, product line, and product mix Describe marketing uses of branding LO1 LO2 LO3 LO4

3. Learning Outcomes Describe marketing uses of packaging and labeling Discuss global issues in branding and packaging Describe how and why product warranties are important marketing tools LO5 LO6 LO7

4. What Is a Product? LO1 Define the term product

5. Everything, both favorable and unfavorable, that a person receives in an exchange. • Tangible Good • Service • Idea What Is a Product? Product LO1

6. A set of tangible and intangible attributes that may include packaging, color, price, quality, and brand, plus the services and reputation of the seller. Products go from being tangible objects to pure services Most products fall somewhere in the middle. May include goods, services, places, persons, or ideas Provide want-satisfaction in the form of benefits What is a Product?

7. Layers of Product Concept

8. Consists of all the benefits the product will provide for consumers or business customers A customer purchases a 1/2” drill bit. What does s/he want? A 1/2” hole! Marketing is about supplying benefits, not products. The Core Product

9. Consists of the physical good or delivered service that supplies the desired benefit Example: A washing machine’s core product is the ability to get clothes clean, but the actual product is a large, square, metal apparatus Actual product also includes appearance, styling, packaging, and the brand The Actual Product

10. Consists of the actual product plus other supporting features such as warranty, credit, delivery, installation, and repair service after the sale The Augmented Product

11. NetFlix Example • Core Product: access to movies • Actual Product: rental of DVDs • Augmented Product: rentals unlimited, 3 movies out at a time, monthly subscription fee, no late fees, no shipping fees, movie recommendation service

12. Product Price Promotion Place (Distribution) What Is a Product? Product is the starting point of Marketing Mix LO1

13. Product Good Service Idea REVIEW LEARNING OUTCOME LO1 Define the term product

14. Types of Consumer Products LO2 Classify consumer products

15. Business Product A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. Consumer Product A product bought to satisfy an individual’s personal needs or wants Types of Products LO2

16. Products Consumer Products Business Products Convenience Products Shopping Products Specialty Products Unsought Products Types of Consumer Products LO2

17. Increase market share among existing customers Convenience Product A relatively inexpensive item that merits little shopping effort Shopping Product A product that requires comparison shopping, because it is usually more expensive and found in fewer stores Attract new customers to existing products Specialty Product A particular item for which consumers search extensively and are reluctant to accept substitutes Create new products for present markets Market Development Diversification A product unknown to the potential buyer or a known product that the buyer does not actively seek Unsought Product Introduce new products into new markets Types of Consumer Products LO2

18. Convenience Product

19. Shopping Product

20. Specialty Products

21. Unsought Products

22. REVIEW LEARNING OUTCOME LO2 Consumer Products

23. Product Items, Lines, and Mixes LO3 Define the terms product item, product line, and product mix

24. Product Item A specific version of a product that can be designated as a distinct offering among an organization’s products. Product Line A group of closely-related product items. Product Mix All products that an organization sells. LO3 Product Items, Lines, and Mixes

25. LO3 Campbell’s Product Lines and Mix { }

26. Advertising Economies Package Uniformity Standardized Components Efficient Sales andDistribution Equivalent Quality LO3 Benefits of Product Lines

27. LO3 Product Mix Width Product MixWidth • The number of product lines an organization offers. • Diversifies risk • Capitalizes on established reputations

28. LO3 Product Line Depth Product Line Depth • The number of product • Items in a product line. • Attracts buyers with different preferences • Increases sales/profits by further market segmentation • Capitalizes on economies of scale • Evens out seasonal sales patterns

29. Adjustments to Product Items,Lines, and Mixes Product Modification ProductRepositioning Product Line Extension or Contraction LO3 Adjustments

30. LO3 Types of Product Modifications Quality Modification Functional Modification Style Modification

31. PlannedObsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement. LO3 Planned Obsolescence

32. Why reposition established brands? Changing Demographics Declining Sales Changes in Social Environment LO3 Repositioning

33. Product-Mix Strategies • Product mix expansion—increasing the number of product lines and/or depth within a line. • Line extension—adding a similar item to an existing product line • Brand extension—adding a new product line to the present assortment • Contraction of product mix—elimination of product lines or simplifying the selection within a product line.

34. Brand Strategy • Product mix expansion—increasing the number of product lines and/or depth within a line. • Line Extension - Existing brand names extended to new forms, sizes, and flavors of an existing product category. • Brand Extension - Existing brand names extended to new product categories. • New Brands - New brand names in new product categories.

35. Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry. LO3 Product Line Extension

36. Product Line Extension

37. Product Mix Extensions

38. New Brands

39. Symptoms of Product Line Overextension • Some products have low sales or cannibalize sales of other items • Resources are disproportionately allocated to slow-moving products • Items have become obsolete because of new product entries LO3 Product Line Contraction

40. REVIEW LEARNING OUTCOME LO3 Product item, product line, and product mix

41. Branding LO4 Describe marketing uses of branding

42. Brand Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. LO4

43. Brand Name That part of a brand that can be spoken, including letters, words, and numbers Brand Mark The elements of a brand that cannot be spoken Brand Equity The value of company and brand names GlobalBrand A brand where at least 20 percent of theproduct is sold outside its home country Branding LO4

44. Brand name—consists of words, letters, and/or numbers that can be vocalized. Michigan Business School Brand mark—the part of the brand that appears in the form of a symbol, design, or distinctive coloring or lettering. Brand Name

45. Product Identification Repeat Sales New Product Sales Benefits of Branding LO4

46. Biz Flix Josie and the Pussycats LO4

47. Global North American 1. Apple 1. Apple 2. Google 2. Google 3. IKEA 3. Target 4. Starbucks 4. Starbucks 5. Al Jazeera 5. Pixar Top Five Global and North American Brands LO4 SOURCE: Deborah L. Vence, “Not Taking Care of Business,” Marketing News, March 15, 2005, p. 19.

48. Brand No Brand Manufacturer’s Brand Private Brand IndividualBrand Family Brand Combi-nation IndividualBrand Family Brand Combi-nation Branding Strategies LO4

49. Generic Brand Generic Product A no-frills, no-brand-name, low-cost product that is simply identified by its product category. LO4

50. Generic Brands