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Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Part 4: Product DecisionsPart 4: Product Decisions
11.11. Product and Service Product and Service StrategiesStrategies
12.12. Category and Brand Category and Brand Management, Product Management, Product Identification, and New-Identification, and New-Product DevelopmentProduct Development
Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 12 Chapter 12
Category and Brand Category and Brand Management, Management,
Product Product Identification, and Identification, and
New-Product New-Product DevelopmentDevelopment
12-3Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter ObjectivesChapter Objectives
1. Explain the benefits of category and brand management.
2. Identify the different types of brands.
3. Explain the strategic value of brand equity.
4. Discuss how companies develop strong identities for their products and brands.
5. Identify and briefly describe each of the four strategies for new-product development.
6. Describe the consumer adoption process.
7. List the stages in the process for developing new products.
8. Explain the relationship between product safety and product liability.
12-4Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Managing Brands for Competitive Managing Brands for Competitive AdvantageAdvantage
Branding is the process of creating that identity. Buyers respond to branding by making repeat
purchases because they identify the item with the name of its producer.
Brand:Brand: name, term, sign, symbol, design, or some combination that identifies the products of a firm while differentiating them from the competition’s
12-5Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Brand Loyalty Brand Loyalty Brand recognitionBrand recognition: Consumer awareness
and identification of a brand.
Brand preferenceBrand preference: Consumer reliance on previous experiences with a product to choose that product again.
Brand insistenceBrand insistence: Consumer refusals of alternatives and extensive search for desired merchandise.
12-6Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Types of BrandsTypes of Brands
Generic productGeneric product: item characterized by plain label, with no advertising and no brand name
Manufacturers’ brand or National BrandManufacturers’ brand or National Brand: brand name owned by a manufacturer or other producer
Private brandsPrivate brands: brand name placed on products marketed by wholesalers and retailers
12-7Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Captive brandsCaptive brands: national brands that are sold exclusively by a retail chain
Family brandFamily brand: brand name that identifies several related products
Individual brandIndividual brand: unique brand name that identifies a specific offering within a firm’s product line and that is not grouped under a family brand
12-8Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Brand equityBrand equity: added value that a respected, well-known brand name gives to a product in the marketplace.Brand equity increases the likelihood that
consumers will recognize the firm’s product when they make purchase decisions
A strong brand equity can contribute to buyers’ perceptions of product quality
Branding can also reinforce customer loyalty and repeat purchases
12-9Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Brand EquityBrand EquityThe Young &
Rubicam Model:Brand Asset
Valuator
12-10
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The Role of Category and Brand ManagersThe Role of Category and Brand ManagersBrand managerBrand manager: Marketing professional
charged with planning and implementing marketing strategies and tactics for a brand
Category managementCategory management: Product management system in which a category manager—with profit and loss responsibility—oversees a product line.
12-11
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Product IdentificationProduct Identification
Brand nameBrand name: part of a brand consisting of words or letters that form a name that identifies and distinguishes a firm’s offering from those of its competitors
Brand markBrand mark: symbol or pictorial design that identifies a product
Generic nameGeneric name: branded name that has become a generically descriptive term for a class of products (e.g., nylon, aspirin, kerosene, and zipper)
12-12
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TrademarkTrademark: legal protection which confers the exclusive right to user brand name, trade mark, and any slogan or product name abbreviation
Trade DressTrade Dress: visual cues used in branding to create an overall lookThe distinctive shape of Philips light bulbs and
the McDonald’s arches provide an example of trade dress
12-13
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Developing Global Brand Names and Developing Global Brand Names and Trademarks Trademarks Potentially an acute problem for
international marketersAn excellent brand name or symbol in one
country may prove disastrous in anotherTrademarks that are effective in their home
countries may fare less well in other cultures
12-14
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PackagingPackaging
A package serves three major objectives:Protection against damage, spoilage, and
pilferageAssistance in marketing the productCost effectiveness
LabelingLabelUniversal Product Code (UPC)
12-15
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Brand extensionBrand extension: application of a popular brand name to a new product in an unrelated product category
Line extensionsLine extensions refers to new sizes, styles, or related products
Brand licensingBrand licensing: practice allowing other companies to use a brand name in exchange for a payment
12-16
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New Product PlanningNew Product Planning
As a firm’s offerings enter the maturity and decline stages of the product life cycle, it must add new items to continue to prosperAlternative Product Development Strategies
12-17
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Product Development StrategiesProduct Development StrategiesProduct positioning: consumers’
perceptions of a product’s attributes, uses, quality, and advantages and disadvantages in relation to those of competing brands
Cannibalization: a loss of sales of the current product due to competition from a new product in the same line
12-18
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The Consumer Adoption ProcessThe Consumer Adoption Process
Adoption process: Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again.AwarenessInterestEvaluationTrialAdoption or rejection
12-19
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Consumer innovatorConsumer innovator: People who purchase new products almost as soon as the products reach the market
Diffusion processDiffusion process: Process by which new goods or services are accepted in the marketplace
12-20
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Figure 12.8Figure 12.8Categories of Adopters Based on Relative
Times of Adoption
12-21
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Identifying Early AdoptersIdentifying Early AdoptersSubstantial benefits may be obtained by
locating the likely first buyers of new products (innovators and early adopters)
Suggestions for modifying the product may be obtained from these individuals
Acceptance or rejection of the innovation by innovators and early adopters can help forecast sales
12-22
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Rate of Adoption DeterminantsRate of Adoption DeterminantsCharacteristics of a product innovation that
influence its adoption rate include:Relative advantageCompatibilityComplexityPossibility of trial useObservability
12-23
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Organizing for New Product Development Organizing for New Product Development New-Product Committees
New-Product Departments
Product Managers
Venture TeamsTask forces
12-24
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New Product Development ProcessNew Product Development Process
New product development process: six stages through which new product ideas progress before being introduced to the overall market
12-25
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Idea GenerationIdea GenerationNew product ideas come from many sources including:Sales force, Customers, Employees, R&D
specialists, The competition, Suppliers, Retailers, Independent inventors
ScreeningScreeningScreening separates ideas with commercial potential from those that cannot meet company objectivesChecklists of development standards can
be helpful at this stage
12-26
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Business AnalysisBusiness AnalysisThe business analysis consists of assessing the new product’s market potential, growth rate, likely competitive strengths, and compatibility of the proposed product with organizational resources Concept testing
DevelopmentDevelopmentConverting an idea into a physical productRequires interaction among many of the firm’s
departmentsPrototypes may go through many changes
12-27
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Test MarketingTest MarketingTest marketing: Introduction of a trial version of a new product supported by a complete marketing campaign to a selected city of television coverage areaSome firms skip this stage, moving directly to
full-scale commercialization
CommercializationCommercializationIn this stage, the firm establishes marketing strategies, and funds outlays for production and marketingThe sales force, marketing intermediaries and
potential customers are acquainted with the new product
12-28
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Product Safety and LiabilityProduct Safety and Liability
Product LiabilityProduct Liability: responsibility of manufacturers and marketers for injuries and damages caused by their products