Product Concepts and Branding and Packaging

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Product Concepts and Branding and Packaging

• Dr. John T. Drea
• Professor of Marketing
• Western Illinois University

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Key terms and concepts

• Product
• It is everything (both favorable and unfavorable)
  that a buyer receives in a transaction.
• It is not just the thing - its the need
  satisfying offering of a firm
• Quality
• the ability of a product to satisfy a customer
• relative to competitors
• a moving target - changing expectations

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Product Differentiation

• Defined the degree to which competing products
  are perceived to be different.
• Some products are difficult to differentiate.
• Product differentiation is a key to profitability
  Motorola had it have they lost it?
• Consider the entry of a new product/service to
  the market.

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Classifications of Consumer Products
Products
Consumer Products
Business Products
Convenience Products
Shopping Products
Specialty Products
Unsought Products
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Classification of Consumer Products

• Convenience products
• Inexpensive, little shopping effort expended
• Location is paramount
• Shopping products
• More expensive and found in fewer stores than
  convenience products. There are two types
• Homogenous shopping products difference is on
  price
• Heterogeneous shopping products difference is on
  style/features
• What are the implications of marketing each of
  these two types?

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Classification of Consumer Products

• Specialty products
• Products the consumer is willing to spend
  considerable effort to locate
• Need to maintain image, limit outlets to those
  that will provide specific attention to the
  product.
• Unsought products
• Products the consumer does not actively seek.
• Key is identification of buyers and targeted
  promotions, including personal selling

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The Product Life Cycle (typical)
Intro.
Growth
Maturity
Decline
Total Industry Sales
Total Industry Profit
0
Time
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Introduction Stage

• Product category has recently been introduced
  into the market - consumers are unaware of the
  product.
• Proper capitalization is important.
• Industry sales are low, but growing.
• Industry profits are negative.
• Advertising frequently includes an orientation
  toward primary demand.
• Creating awareness and trial are common marketing
  objectives.
• Sales promotion used to trigger product trial.

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Growth Stage

• Sales are rising rapidly.
• Profits appear, peak, and begin to decline just
  before the end of the period.
• Profit possibilities attract competitors, but
  many competitors will be shaken out during this
  phase as well. Why?
• Promotion shifts from primary to selective
  demand.
• Building market share is a common marketing
  objective.

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Growth Stage (continued)

• Keys in the growth stage
• Maintain strong distribution networks (must be
  able to get products to consumers)
• Control costs
• Product differentiation (better at meeting
  customer needs)
• Incremental improvements in product
  features/benefits and product quality are
  critical (competitors are refining/improving
  marketing mixes)

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Maturity Stage

• Sales rise to their peak, then level off.
• Industry profits are in a slow decline.
• Competition increases.
• Promotional costs increase (selective demand),
  and sales promotion to trigger switching is more
  common

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Maturity Stage (continued)

• Products become more homogenous, triggering price
  competition. Need to differentiate brand.
• Diversify brand and models.
• Can be difficult to enter the market in this
  phase (capturing vs. retaining share)
• Efficiency is a key.

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Decline Stage

• Sales decrease.
• Profits decrease and eventually disappear.
• Declining numbers of competitors.
• Spend enough on promotion to retain hard core
  brand loyal customers.
• Eliminate unprofitable outlets.
• Marketing objective reduce costs and milk the
  brand, or drop it.

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How to use the PLC (or, how not to get used by
the PLC)

• The PLC applies to product categories/ideas, not
  individual brands.
• The PLC is market-specific.
• The PLC is not deterministic.
• Increase frequency of use by current customers
• Add new users to the product.
• Add new uses for the product.
• Packaging/quality improvements (industry-wide)
  which add significant consumer benefits.

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New Product Development Process

• Idea Generation
• Screening
• Strengths/weaknesses, compatible, ROI estimate
• Idea Evaluation
• Concept testing, cost/sales estimates
• Development
• Develop prototype, test marketing mix, revise ROI
  estimate
• Commercialization
• Finalize all plans, start production, final ROI
  estimate

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Why New Products Sometimes Fail

• Inadequate marketing research
• Product deficiencies
• Cost overruns
• Unanticipated competitor reactions
• Poor timing

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Brands

• Brand A name,sign, symbol intended to
  identify/differentiate a product from others.
• A brand can imply many things to a consumer,
  including quality and the image of the
  buyer/user.
• Key branding decisions
• Name
• Brand sponsor
• Brand strategy

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Major Branding Decisions

• Decision 1 Choosing a brand name
• Should suggest product benefits/qualities
• Sunkist, Spic and Span, DieHard, Easy-Off
• Easy to pronounce, recognize, remember
• Tide, Aim, Puffs, but I Cant Believe Its Not
  Butter works too!
• Distinctive
• Taurus, Kodak, Exxon
• Translates easily into foreign languages
• Capable of registration and legal protection

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Major Branding Decisions

• Decision 2 Brand Sponsor
• Manufacturers brand or private brand?
• Retailers like private brands
• Builds loyalty to the retailer
• Frequently better profit margins
• But they can be expensive to develop
• Family brand or individual brand?
• Do existing associations work for the new product?

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Major Branding Decisions
Decision 3 Brand Strategy
Product Category
Existing
New
Line Extension
Brand Extension
Existing
Brand Name
New Brands
Multibrands
New
Source Kotler and Armstrong (1999). Principles
of Marketing, 8th edition. Upper Saddle River,
NJ Prentice Hall
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International Branding Strategies
One brand name everywhere (greater identification
of the product worldwide, but are all consumer
needs the same?)
Different brand names in different markets (new
marketing mixes for each market will this make
you more effective?)
Adaptions and modifications (modifying elements
to fit each market will this help you
achieve economies of scale?)
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Brand Equity

• A brand has value, called brand equity. Brand
  equity is based on brand loyalty, name awareness,
  perceived quality, strong associations, patents,
  etc.
• What are the top brands worldwide for brand
  equity?
• Brand equity makes brand and line extensions
  easier.

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Managing Brand Equity

• Brand equity is an asset, and needs to be
  managed.
• maintain/improve top-of-mind awareness
• improve perceptions of quality
• create positive brand associations
• To manage brand equity, you should
• continuous R D investment
• skillful advertising
• avoid short-term actions which undermine the
  brand in the long-term

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Five levels of brand familiarity

• Brand rejection wont buy unless a relevant
  factor changes
• Brand non-recognition consumers dont pay
  attention to brands (commoditization)
• Brand recognition consumers are aware of the
  brand and recognize it with/without prompting
• Brand preference consumers usually choose a
  specific brand
• Brand insistenceconsumers are willing to prolong
  search to find the desired brand

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Packaging

• Four primary functions
• Containing and protecting products
• Promoting products
• Persuasive labeling (critical for many products)
• Informational labeling (helps make wsie purchase,
  lowers cognitive dissonance)
• Facilitating storage, use and convenience
• Facilitating recycling and reducing environmental
  damage