CH-10 Product, Branding, and Packaging Concepts – Foundations of Marketing : Book Guide

Chapter 10 Product, Branding, and Packaging Concepts TEACHING RESOURCES QUICK REFERENCE GUIDE Resource Location Purpose and Perspective IRM, p. 227 Lecture Outline IRM, p. 229 Discussion Starters IRM, p. 242 Class Exercises IRM, p. 245 Chapter Quiz IRM, p. 248 Semester Projects IRM, p. 250 Answers to Issues for Discussion and Review IRM, p. 251 Answers to Marketing Applications IRM, p. 256 Answers to Internet Exercise IRM, p. 258 Answers to Developing Your Marketing Plan IRM, p. 259 Comments on Video Case 10 IRM, p. 261 PowerPoint Slides Instructor’s website Note: Additional resources may be found on the accompanying student and instructor websites at www.cengagebrain.com. PURPOSE AND PERSPECTIVE This chapter covers fundamental concepts relating to (1) defining the concept of a product, (2) consumer and business product classification schemes, (3) product mix and product line concepts, (4) product life cycles, (5) product adoption processes, and (6) the reasons some products fail. The chapter starts by seeking to help students understand what constitutes a product. It then goes on to classify products and to examine the concepts of product item, product line, and product mix and understand how they are connected. Next, it discusses the product life cycle and how marketers’ roles and messages will change at the different stages of the product life cycle. After this, the chapter describes different categories of consumers based on how quickly they adopt new products. Then the chapter goes on to examine why some products fail while others succeed. Many real-world examples are presented to illustrate product concepts. The chapter proceeds by defining and discussing branding, packaging, and labeling. It discusses the value of branding and then moves on to discuss brand loyalty, which includes three levels: brand recognition, brand preference, and brand insistence. Brand equity, types of brands (manufacturer, private distributor, and generic), and brand name selection are also covered. It deals with methods of protecting brands, covering such issues as trademarks and preventing a brand from becoming perceived as generic. This section also examines branding strategies—individual branding, family branding, and brand extensions. The strategies of co-branding and brand licensing and their advantages and disadvantages are also covered. Next, it examines major packaging issues including the functions of packaging, packaging strategies, and various types of packaging. The chapter ends with a discussion of labeling, including legal labeling requirements. LECTURE OUTLINE I. What is a Product? A. A product is a good, a service, or an idea received in an exchange. 1. It can be either tangible or intangible and includes functional, social, and psychological utilities or benefits. 2. It also includes supporting services, such as installation, guarantees, product information, and promises of repair or maintenance. B. It is helpful to think of a total product offering as having three interdependent elements—the core product itself, its supplemental features, and its symbolic or experiential benefits (Figure 10.1). 1. The core product consists of its fundamental utility or main benefit and usually addresses a fundamental need of the consumer. 2. Supplemental features provide added value or attributes in addition to its core utility or benefit. a. Supplemental products also can provide installation, delivery, training, and financing. b. These supplemental attributes are not required to make the core product effectively function, but they help differentiate one product brand from another. 3. Customers also receive benefits based on their experiences with the product. a. In addition, many products have symbolic meaning for buyers. b. Some stores capitalize on this value by striving to create a special experience for customers. c. When buyers purchase a product, they are really buying the benefits and satisfactions they think the product will provide. II. Classifying Products A. Products fall into two general categories: 1. Products purchased to satisfy personal and family needs are consumer products. 2. Those bought to use in a firm’s operations, to resell, or to make other products are business products. B. Consumer Products 1. Consumers buy products to satisfy their personal wants. 2. The most widely accepted approach to classifying consumer products is based on characteristics of consumer buying behavior. 3. It divides products into four categories—convenience, shopping, specialty, and unsought products. 4. Marketers think in terms of how buyers generally behave when purchasing a specific item. C. Convenience Products 1. Convenience products are relatively inexpensive, frequently purchased items for which buyers exert only minimal purchasing effort. 2. The buyer spends little time planning the purchase or comparing available brands or sellers. 3. A convenience product normally is marketed through many retail outlets. 4. Because sellers experience high inventory turnover, per-unit gross margins can be relatively low. 5. Producers of convenience products expect little promotional effort at the retail level and thus must provide it themselves with advertising and sales promotion. 6. Packaging and displays are also important because many convenience items are available only on a self-service basis at the retail level, and thus the package plays a major role in selling the product. D. Shopping Products 1. Shopping products are items for which buyers are willing to expend considerable effort in planning and making the purchase. 2. Buyers spend much time comparing stores and brands with respect to prices, product features, qualities, services, and perhaps warranties. 3. Shopping products require fewer retail outlets than convenience products. 4. Because shopping products are purchased less frequently, inventory turnover is lower, and marketing channel members expect to receive higher gross margins. 5. Although large sums of money may be required to advertise shopping products, an even larger percentage of resources are likely to be used for personal selling. 6. The producer and the marketing channel members usually expect some cooperation from one another with respect to providing parts and repair services and performing promotional activities. E. Specialty Products 1. Specialty products possess one or more unique characteristics, and generally buyers are willing to expend considerable effort to obtain them. 2. Buyers actually plan the purchase of a specialty product; they know exactly what they want and will not accept a substitute. 3. Specialty products are often distributed through a limited number of retail outlets. 4. Like shopping products, they are purchased infrequently, causing lower inventory turnover and thus requiring relatively high gross margins. a. However, just because specialty products are purchased less frequently does not necessarily make them less profitable. F. Unsought Products 1. Unsought products are products purchased when a sudden problem must be solved, products of which customers are unaware, and products that people do not necessarily of purchasing. 2. Emergency medical services and automobile repairs are examples of products needed quickly to solve a problem. G. Business Products 1. Business products are usually purchased on the basis of an organization’s goals and objectives. 2. Business products can be classified into seven categories according to their characteristics and intended uses— installations; accessory equipment; raw materials; component parts; process materials; maintenance, repair, and operating (MRO) supplies; and business services. H. Installations 1. Installations include facilities, such as office buildings, factories, and warehouses, and major equipment that are nonportable. 2. Normally, installations are expensive and intended to be used for a considerable length of time. 3. Marketers of installations frequently must provide a variety of services, including training, repairs, maintenance assistance, and may even aid in financing such purchases. I. Accessory Equipment 1. Accessory equipment does not become a part of the final physical product but is used in production or office activities. 2. Compared with major equipment, accessory items usually are much cheaper, purchased routinely with less negotiation, and treated as expense items rather than as capital items because they are not expected to last as long. 3. Sellers do not have to provide the multitude of services to support the equipment. J. Raw Materials 1. Raw materials are the basic natural materials that actually become part of a physical product. 2. Raw materials include minerals, chemicals, agricultural products, and materials from forests and oceans. K. Component Parts 1. Component parts become a part of the physical product and are either finished items ready for assembly or products that need little processing before assembly. 2. Buyers purchase component parts according to their own specifications or industry standards. a. They expect the parts to be of a specified quality and delivered on time so that production is not slowed or stopped. L. Process Materials 1. Process materials are used directly in the production of other products. 2. However, unlike component parts, process materials are not readily identifiable. 3. As with component parts, process materials are purchased according to industry standards or the purchaser’s specifications. M. MRO Supplies 1. MRO supplies are maintenance, repair, and operating items which facilitate an organization’s production and operations but do not become part of the finished product. 2. MRO supplies are commonly sold through numerous outlets and are purchased routinely. N. Business Services 1. Business services are the intangible products many organizations use in their operations. 2. They include financial, legal, marketing research, information technology, and janitorial services. 3. Firms must decide whether to provide their own services internally or obtain them from outside the organization. a. The decision depends on the costs associated with each alternative and how frequently the services are needed. III. Product Line and Product Mix A. Marketers must understand the relationships among all the products of their organization to coordinate the marketing of the total group of products. B. A product item is a specific version of a product that can be designated as a distinct offering among an organization’s products. C. A product line is a group of closely related product items that are considered to be a unit because of marketing, technical, or end-use considerations. D. To develop the optimal product line, marketers must understand buyers’ goals if they hope to come up with. E. A product mix is the composite group of products an organization makes available to customers. 1. The width of product mix is measure by the number of product lines a company offers. 2. The depth of product mix is the average number of different product items offered in each product line. IV. Product Life Cycles and Marketing Strategies A. A product life cycle has four major stages—introduction, growth, maturity, and decline (Figure 10.3). B. As a product moves through its cycle, the strategies relating to competition, pricing, distribution, promotion, and market information must be evaluated periodically and possibly changed. C. Introduction 1. The introduction stage of the product life cycle begins at a product’s first appearance in the marketplace, when sales start at zero and profits are negative. 2. Profits are below zero because initial revenues are low, and the company generally must cover large expenses for product development, promotion, and distribution. 3. Potential buyers must be made aware of new-product features, uses, and advantages. a. Two difficulties may arise at this point: (1) Sellers may lack the resources, technological knowledge, and marketing know-how to launch the product successfully. (2) The initial product price may have to be high to recoup expensive marketing research or development costs. 4. Most new products start off slowly and seldom generate enough sales to bring immediate profits. a. As buyers learn about the new product, marketers should be alert for product weaknesses and make corrections quickly to prevent the product’s early demise. b. Marketing strategy should be designed to attract the segment that is most interested in the product. D. Growth 1. During the growth stage, sales rise rapidly; profits reach a peak and then start to decline. 2. This stage is critical to a product’s survival because competitive reactions to the product’s success during this period will affect the product’s life expectancy. 3. Profits begin to decline late in the growth stage as more competitors enter the market, driving prices down and creating the need for heavy promotional expenses. 4. As sales increase, management must support the momentum by adjusting the marketing strategy. a. The goal is to establish and fortify the product’s market position by encouraging brand loyalty. 5. Gaps in geographic market coverage should be filled during the growth period. a. As a product gains market acceptance, new distribution outlets usually become easier to obtain. 6. Promotion expenditures may be slightly lower than during the introductory stage but are still substantial. a. As sales increase, promotion costs should drop as a percentage of total sales. E. Maturity 1. During the maturity stage, the sales curve peaks and starts to decline and profits continue to fall. 2. This stage is characterized by intense competition as many brands are now in the market. a. Competitors emphasize improvements and differences in their versions of the product. b. Weaker competitors are squeezed out of the market. 3. During the maturity phase, the producers who remain in the market are likely to change their promotional and distribution efforts. a. Advertising and dealer-oriented promotions are typical during this stage of the product life cycle. 4. Because many products are in the maturity stage of their life cycles, marketers must know how to deal with these products and be prepared to adjust their marketing strategies. a. To increase the sales of mature products, marketers may suggest new uses for them. 5. As customers become more experienced and knowledgeable about products during the maturity stage (particularly about business products), the benefits they seek may change as well, necessitating product modifications. 6. During the maturity stage, marketers actively encourage resellers to support the product. a. Resellers may be offered promotional assistance in lowering their inventory costs. 7. Maintaining market share during maturity can requires moderate, and sometimes large, promotional expenditures. 8. Advertising messages focus on differentiating a brand from the field of competitors, and sales promotion efforts may be aimed at both consumers and resellers. F. Decline 1. During the decline stage, sales fall rapidly. a. When this happens, the marketer considers pruning items from the product line to eliminate those not earning a profit. b. The marketer also may cut promotion efforts, eliminate marginal distributors, and finally, plan to phase out the product. 2. In this stage, marketers must determine whether to eliminate the product or try to reposition it to extend its life. a. Usually a declining product has lost its distinctiveness because similar competing or superior products have been introduced. 3. During a product’s decline, outlets with strong sales volumes are maintained and unprofitable outlets are eliminated. a. Spending on promotion efforts is usually reduced considerably. V. Product Adoption Process A. Figure 10.4 details the product adoption process; the stages of the product adoption process are as follows. 1. Awareness—individuals become aware that the product exists and have little information about it and are not concerned about obtaining more. 2. Interest—consumers are motivated to get information about the product’s features, uses, advantages, disadvantages, price, or location. 3. Evaluation—individuals consider whether the product will satisfy certain criteria that are crucial to meeting their specific needs. 4. Trial—individuals use or experience the product for the first time, possibly by purchasing a small quantity, taking advantage of free samples, or borrowing the product from someone. 5. Adoption—individuals choose a specific product when they need a product of that general type. a. Entering the adoption process does not mean that the person will eventually adopt the product; rejection may occur at any stage, including the adoption stage. B. When an organization introduces a new product, people do not begin the adoption process at the same time, nor do they move through it at the same speed. C. Depending on the length of time it takes them to adopt a new product, consumers fall into one of five major adopter categories: 1. Innovators—the first adopters of new products; they enjoy trying new things and tend to be venturesome. 2. Early adopters—choose new products carefully and are viewed as “the people to check with” by those in the remaining adopter categories. 3. Early majority—adopt new products just prior to the average person; they are deliberate and cautious in trying new products. 4. Late majority—quite skeptical of new products but eventually adopt them because of economic necessity or social pressure. 5. Laggards—last to adopt new product, are oriented toward the past; they are suspicious of new products, and when they finally adopt the innovation, it may have been replaced by a new product. VI. Branding A. A brand is a name, term, symbol, design, or other feature that identifies one seller’s good or service as distinct from those of other marketers. 1. A brand name is the part of a brand that can be spoken, including letters, words, and numbers. a. A brand name is often a product’s only distinguishing characteristic. 2. The element of a brand that is not made up of words—often a symbol or design—is a brand mark. 3. A trademark is a legal designation indicating that the owner has exclusive use of the brand or part of that brand and that others are prohibited by law from using it. 4. A trade name is the full legal name of an organization rather than the name of a specific product. B. Value of Branding 1. Brands help buyers identify specific products that they do and do not like, which, in turn facilitates the purchase of items that satisfy their needs and reduces the time required to purchase the product. a. When a customer is unable to judge a product’s quality, a brand may symbolize a certain quality level to the customer, and in turn, the person lets that perception of quality represent the quality of the item. b. A brand helps to reduce a buyer’s perceived risk of purchase. c. A psychological reward may come from owning a brand that symbolizes status. 2. Sellers benefit from branding because each company’s brands identify its products, which makes repeat purchasing easier for customers. a. Branding facilitates promotional efforts because the promotion of each branded item indirectly promotes all other similarly branded items. b. To the extent that buyers become loyal to a specific brand, the company’s market share for that product achieves a certain level of stability, allowing the firm to use its resources more efficiently and to attract repeat customers. 3. There is a cultural dimension to branding. a. Most brand experiences are individual, and each consumer confers his or her own social meaning onto brands. b. The term cultural branding has been used to explain how a brand conveys a powerful myth that consumers find useful in cementing their identities. 4. It is important to recognize that because a brand exists independently in the consumer’s mind, it is not directly controlled by the marketer. a. Every aspect of a brand is subject to a consumer’s emotional involvement, interpretation, and memory. C. Brand Equity 1. Brand equity is the marketing and financial value associated with a brand’s strength in a market. 2. Besides the actual proprietary brand assets, such as patents and trademarks, four major elements underlie brand equity—brand name awareness, brand loyalty, perceived brand quality, and brand associations (Figure 10.5). 3. Being aware of a brand leads to brand familiarity, which in turn results in a level of comfort with the brand. a. A familiar brand is more likely to be selected than an unfamiliar brand because the familiar brand often is viewed as more reliable and of more acceptable quality. 4. Brand loyalty is a customer’s favorable attitude toward a specific brand. a. If brand loyalty is strong enough, customers may purchase this brand consistently when they need a product in that product category. b. Development of brand loyalty in a customer reduces his or her risks and shortens the time spent buying the product. c. The degree of brand loyalty for products varies from one product category to another. d. There are three degrees of brand loyalty: (1) Brand recognition occurs when a customer is aware that a brand exists and views it as an alternative to purchase if his or her brand is unavailable or if the other available brands are unfamiliar. (2) Brand preference is a stronger degree of brand loyalty; a customer definitely prefers one brand over competitive offerings and will purchase the brand if available; however, if the brand is not available, the customer will accept a substitute brand rather than expending additional effort finding and purchasing the preferred brand. (3) When brand insistence occurs, a customer strongly prefers a specific brand, will accept no substitute, and is willing to spend a great deal of time and effort to acquire that brand. e. Brand loyalty is an important component of brand equity because it reduces a brand’s vulnerability to competitors’ actions. f. Brand loyalty allows an organization to keep its existing customers and avoid spending significant resources to gain new ones. 5. Customers associate a particular brand with a certain level of overall quality. a. A brand name may be used as a substitute for actual judgment of quality. 6. The set of associations linked to a brand is another key component of brand equity. a. These types of brand associations contribute significantly to the brand’s equity. b. Brand associations sometimes are facilitated by using trade characters. 7. Although difficult to measure, brand equity represents the value of a brand to an organization. D. Types of Brands 1. Manufacturer brands are initiated by producers and ensure that producers are identified with their products at the point of purchase. a. A manufacturer brand usually requires a producer to become involved in distribution, promotion, and to some extent pricing decisions. 2. Private distributor brands (also called private brands, store brands, or dealer brands) are initiated and owned by resellers—wholesalers or retailers. a. The major characteristic of private brands is that the manufacturers are not identified on the products. b. Retailers and wholesalers use private distributor brands to develop more efficient promotion, generate higher gross margins, and change store images. c. Private distributor brands give retailers or wholesalers freedom to purchase products of a specified quality at the lowest cost without disclosing the identity of the manufacturer. d. Sales of private labels now account for one out of every four product items sold in supermarkets, drugstores, and mass merchandisers, totaling some $93 billion of retail business. e. Supermarket private brands are popular globally, too. 3. Generic brands indicate only a product category and do not include the company name or other identifying terms. a. Generic brands are usually sold at lower prices than comparable branded items. b. Although at one time generic brands may have represented as much as 10 percent of all retail grocery sales, today they account for less than one-half of 1 percent. E. Selecting a Brand Name 1. Marketers consider several factors in selecting a brand name. a. The name should be easy for customers to say, spell, and recall. b. The brand name should indicate the product’s uses and special characteristics in a positive way the product’s uses and special characteristics; negative or offensive references should be avoided. c. To set it apart from competing brands, the brand should be distinctive. d. If a marketer intends to use a brand for a product line, that brand must be compatible with all products in the line. e. A brand should be designed so that it can be used and recognized in all types of media. 2. Brand names can be created from single or multiple words, numbers, letters, or combinations of these. a. To avoid terms that have negative connotations, marketers sometimes use fabricated words that have no meaning. b. Brand names can be created internally by the organization. (1) Sometimes a name is suggested by individuals who are close to the development of the product. (2) Some organizations have committees that participate in brand-name creation and approval. (3) Large companies that introduce numerous new products annually are likely to have a department that develops brand names. (4) At times, outside consultants and companies that specialize in brand-name development are used. F. Protecting a Brand 1. A marketer should design a brand so that it can be protect easily through registration. 2. Generic brands are not protectable; surnames and descriptive, geographic, or functional names are difficult to protect. 3. Although registration protects trademarks domestically for ten years, and trademarks can be renewed indefinitely, a firm should develop a system for ensuring that its trademarks are renewed as needed. 4. To protect its exclusive rights to a brand, a company must ensure that the brand is not likely to be considered an infringement on any brand already registered with the U.S. Patent and Trademark Office. 5. A marketer should guard against allowing a brand name become a generic term used to refer to a general product category because generic terms cannot be protected as exclusive brand names. a. To keep a brand name from becoming a generic term, the firm should spell the name with a capital letter and use it as an adjective to modify the name of the general product class. b. Including the word brand just after the name is also helpful. c. The firm can also indicate that the brand is a registered trademarked by using the symbol ®. 6. Marketers trying to protect their brands also must contend with brand counterfeiting. a. Annual losses caused by counterfeit products are estimated at between $200 billion and $250 billion for U.S. businesses, and possibly as much as $600 billion for businesses globally. 7. The purpose of the Trademark Law Revision Act (1988) is to increase the value of the federal registration system for U.S. firms relative to foreign competitors and to protect consumers from counterfeiting, confusion, and deception. G. Branding Policies 1. Before establishing branding policies, a firm must decide whether to brand its products at all. a. If a company’s product is homogeneous and is similar to competitors’ products, it may be difficult to brand in a way that will generate brand loyalty. b. Raw materials are hard to brand because of the homogeneity of these products and their physical characteristics. 2. If a firm chooses to brand its products, it may use individual branding, family branding, or a combination. a. Individual branding is a policy of naming each product differently. (1) A major advantage of individual branding is that if an organization introduces an inferior product, the negative images associated with it do not contaminate the company’s other products. (2) An individual branding policy may also facilitate market segmentation when a firm wishes to enter many segments of the same market; separate, unrelated names can be used, and each brand can be aimed at a specific segment. b. When using family branding, all of the firm’s products are branded with the same name or at least part of the name. (1) Family branding means that the promotion of one item with the family brand name promotes the firm’s other products. 3. Branding policy is influenced by the number of products and product lines the company produces, the characteristics of its target markets, the number and types of competing products available, and the size of the firm’s resources. H. Brand Extension 1. A brand extension occurs when a firm uses one of its existing brands to brand a new product in a different product category. 2. A brand extension should not be confused with a line extension. a. A line extension refers to using an existing brand on a new product in the same product category, such as new flavors or sizes. 3. Marketers share a common concern that if a brand is extended too many times or extended too far away from its original product category, the brand can be significantly weakened. a. Research has found that a line extension into premium categories can be an effective strategy to revitalize a brand, but the line extension needs to be closely linked to the core brand. I. Co-Branding 1. Co-branding is the use of two or more brands on one product. a. Marketers employ co-branding to capitalize on the brand equity of multiple brands. b. The brands used for co-branding can be owned by the same company. 2. Effective co-branding capitalizes on the trust and confidence customers have in the brands involved. a. The brands should not lose their identities and it should be clear to customers which brand is the main brand. 3. It is important for marketers to understand that when a co-branded product is unsuccessful, both brands are implicated in the product failure. 4. To gain customer acceptance, the brands involved must represent a complementary fit in the minds of buyers. J. Brand Licensing 1. A popular branding strategy involves brand licensing, an agreement in which a company permits another organization to use its brand on other products for a licensing fee. 2. The advantages of licensing range from extra revenues and low-cost or free publicity to new images and trademark protection. 3. The major disadvantages are a lack of manufacturing control, which could hurt the company’s name, and bombarding consumers with too many unrelated products bearing the same name. VII. Packaging A. Packaging involves the development of a container and a graphic design for a product. B. A package can be a vital part of a product, making it more versatile, safer, and easier to use. C. Like a brand name, a package can influence customers’ attitudes toward a product and so affect their purchase decisions. D. Packaging Functions 1. Packaging materials serve the basic purpose of protecting the product and maintaining its functional form. a. The packaging should prevent damage that could affect the product’s usefulness and this lead to higher costs. 2. Packaging offers convenience to consumers. a. The size or shape of a package may relate to the product’s storage, convenience of use, or replacement rate. 3. Packaging promotes a product by communicating its features, uses, benefits, and image. a. Sometimes a reusable package is developed to make the product more desirable. 4. As they develop packages, marketers must take many factors into account. a. One major consideration is cost; in recent years, buyers have shown a willingness to pay more for improved packaging, but there are limits. b. Marketers should consider how much consistency is desirable among an organization’s package designs. (1) No consistency may be the best policy, if a firm’s products are unrelated or aimed at vastly different target markets. c. To promote an overall company image, a firm may decide that all packages should be similar or include one major element of the design; this approach is called family packaging. (1) Sometimes it is used only for lines of products. d. A package’s promotional role is an important consideration. (1) To develop a package that has definite promotional value, a designer must consider size, shape, texture, color, and graphics. e. Beyond the obvious minimal limitation that the package must be large enough to hold the product, a package can be designed to appear taller or shorter. (1) Light-colored packaging may make a package appear larger, whereas darker colors may minimize the perceived size. f. Packaging must also meet the needs of resellers; wholesalers and retailers consider whether a package facilitates transportation, storage, and handling. E. Packaging and Marketing Strategies 1. Packaging can be a major component of a marketing strategy. a. A new cap or closure, a better box or wrapper, or a more convenient container size may give a product a competitive advantage. 2. Marketers should view packaging as a major strategic tool, especially for convenience products. 3. At times, a marketer changes a package or labeling because the existing design is no longer in style, especially when compared with the packaging of competitive products. b. A package may be redesigned because new product features need to be highlighted or because new packaging materials have become available. c. An organization may also decide to change a product’s packaging to make the product safer or more convenient to use. d. A product’s packaging can also be changed to make it easier to handle in the distribution channel. 4. Marketers also use innovative or unique packages that are inconsistent with traditional packaging practices to make the brand stand out from its competitors. a. Unusual packaging sometimes requires expending considerable resources, not only on package design but also on making customers aware of the unique package and its benefit. 5. Multiple packaging can also be an implemented in a firm’s packaging strategy. a. Rather than packaging a single unit of a product, marketers sometimes use twin-packs, tri-packs, six-packs, or other forms of multiple packaging. VIII. Labeling A. Labeling is very closely interrelated with packaging and is used for identification, promotional, informational, and legal purposes. 1. Labels can be small or large relative to the size of the product and carry varying amounts of information. 2. A label can be part of the package itself or a separate feature attached to the package. 3. Information presented on a label may include the brand name and mark, the registered trademark symbol, package size and content, product features, nutritional information, potential presence of allergens, type and style of the product, number of servings, care instructions, directions for use and safety precautions, the name and address of the manufacturer, expiration dates, seals of approval, and other facts. 4. Labels can facilitate the identification of a product by displaying the brand name in combination with a unique graphic design. 5. By drawing attention to products and their benefits, labels can strengthen an organization’s promotional efforts. 6. Labels may contain promotional messages such as the offer of a discount or a larger package size at the same price, or information about a new or improved product feature. 7. Several federal laws and regulations specify information that must be included on labels of certain products. a. Garments must be labeled with the name of the manufacturer, country of manufacture, fabric content, and cleaning instructions. b. Label on nonedible items must include both safety precautions and directions for use. c. The Nutrition Labeling Act of 1990 requires the FDA to review food labeling and packaging, focusing on nutrition content, label format, ingredient labeling, food descriptions, and health messages. (1) Any food product for which a nutritional claim is made must have nutrition labeling that follows a standard format. (2) Food product labels must state the number of servings per container, serving size, number of calories per serving, number of calories derived from fat, number of carbohydrates, and amounts of specific nutrients such as vitamins. B. Of concern to many manufacturers are the Federal Trade Commission’s (FTC) guidelines regarding “Made in U.S.A.” labels, a growing problem owing to the increasingly global nature of manufacturing. 1. The FTC requires that “all, or virtually all”, of a product’s components be made in the United States if the label says “Made in U.S.A.” 2. Although the FTC recently considered changing its guidelines to read “substantially all,” it rejected the idea and maintains the “all or virtually all” standard. DISCUSSION STARTERS Discussion Starter 1: Blendtec ASK: Have you ever watched a product demonstration on infomercial? Do you think they are an effective way to demonstrate product benefits? For the makers of the Blendtec blender, demonstration videos help to drive their success. A series of videos of their product blending items consumers would never think of putting into a blender increased sales a remarkable 43 percent. The “Will It Blend?” video series is one of the most popular series on You Tube. http://www.willitblend.com Discussion Starter 2: What Is A Product? ASK: Do you think people buy products or the ideas of the product? In essence, are products ideas? This may sound like a strange question, but according to some sources, consumers often buy or don’t buy products because of the idea of the product and not the product itself. In the clip from the Frontline episode “The Persuaders,” researchers are seeking to understand how people feel about various products, to “get inside their heads,” and determine the deeper meanings products convey to consumers. http://www.pbs.org/wgbh/pages/frontline/shows/persuaders ASK: Is Rapaille correct? Do people buy products because of some unconscious trigger? Are consumers irrational? Students should base their opinions on information in the clip. Discussion Starter 3: Identifying the Innovators ASK: How do organizations find innovators in the marketplace? Organizations often identify innovators by conducting observational research. Organizations that specialize in trend identification in the marketplace have trained observers who scour malls, schools, and other locations in search of innovators. One such organization, Look-Look, was featured in the PBS Frontline episode “The Merchants of Cool.” People at Look-Look engage in what they term “cool hunting”. Although Look-Look is no longer in business, the documentary shows how they worked to find innovators. http://www.pbs.org/wgbh/pages/frontline/shows/cool/etc/hunting.html Discussion Starter 4: Virtual Branding ASK: Have you ever played a virtual reality game, such as the SIMS or Second Life? Increasingly, consumers are interacting with virtual reality sites. As more and more consumers visit these sites, marketers have found ways to use these sites to build or support brands. ASK: What is the benefit of marketing in virtual worlds? Virtual worlds allow firms to interact with consumers in new ways. This allows consumers to see brands outside of their usual places. This presentation shows a variety of brands and how they appear in Second Life (www.secondlife.com). http://www.youtube.com/watch?v=tEGHJuCbGdo&feature=related Discussion Starter 5: Brand Equity ASK: What firm do you think is consistently in the top 10 global brands based on brand value? The answer is Coca-Cola. In 2013, Coca-Cola was ranked 5th for brand value on Millward Brown’s Top 100 Global Brands. The sheer size and magnitude of Coca-Cola makes it a difficult brand to dislodge. http://www.millwardbrown.com/BrandZ/Top_100_Global_Brands.aspx ASK: What do you think contributes to Coca-Cola’s ability to remain on top of such lists? Coca-Cola’s global presence is clearly the most important factor. Other elements are a globally recognized brand name, brand symbol, colors, logos, and a host of brand images (polar bears, etc.), all uniquely associated with Coca-Cola. This YouTube video combines some of these brand symbols, along with some iconic music to demonstrate the breadth of the Coke brand. http://www.youtube.com/watch?v=9RFhKppBh8M&feature=related Discussion Starter 6: Packaging Matters ASK: Do you think you can judge a product by the package? Often a unique package can have dramatic impact on a product’s appeal and, thus, on its sales. Every year a host of organizations give awards for the products with best package. In this video the Glass Packaging Institute awards its highest honor, the Clear Choice Award, to The Boston Beer Company for the packaging of its Samuel Adams Barrel Room Collection line of beers. The bottle design helped increase the profile of the line, increase its sales, and set it apart from the competition. http://www.youtube.com/watch?v=am5iGmqBuGw&feature=player_embedded#! CLASS EXERCISES Class Exercise 1: The Product Life Cycle The goal of this exercise is for students to apply the product life cycle to existing products. In what stages of the product life cycle are the following products? Question Answer 1. Landline telephones decline 2. Digital display watches decline 3. Blue jeans maturity 4. Laptop computers maturity 5. DVD players maturity 6. Wine coolers decline 7. Streaming videos growth 8. Tablet computers growth 9. Compact discs decline 10. Palm handhelds growth 11. Skateboards maturity 12. Mobile homes maturity 13. Bottled water maturity 14. Fur coats decline 15. Peanut butter Maturity Class Exercise 2: Product Classification Step 1: Fill in the following table with examples for each product classification category. Product Classification Example Convenience Product Shopping Product Specialty Product Unsought Product Step 2: List the steps in the consumer decision-making model (see Figure 6.1). Step 3: How are product classification and consumer decision-making related? What does the consumer’s level of involvement have to do with each of these? Class Exercise 3: Similarities between Products Recommended as a group activity Often organizations deliver a wide variety of products and services with the same brand name. These product lines generally have something in common which unifies the offerings. In this exercise, examine the underlying similarities across diverse product and service lines. Step 1: Think about Disney. Then brainstorm the product lines which carry the Disney name. Step 2: Categorize your list into categories which make sense to your group participants. Step 3: Identify similarities across all product lines. Step 4: What is Disney’s product? Class Exercise 4: Functions of Packaging The purpose of this exercise is to reinforce an understanding of brand components and policies and the functions of packaging. Prompts for students: 1. Look at the nearest snack food wrapper or soft drink container and identify the a. brand name. b. brand mark. c. trademark. d. trade name. 2. Using the wrapper or container, explain how packaging performs three functions: protection, convenience, and communication. 3. Is the manufacturer of the product using individual branding, family branding, or brand extensions? 4. You work for a firm that is introducing a new chocolate candy bar that contains an extra amount of caffeine. Develop a brand name that a. is easy for customers to say, spell, and recall. b. positively suggests uses and special characteristics. c. indicates major product benefits. d. can be protected easily through registration. Answers: 1. Students often get these components mixed up, particularly the first two. Coke cans offer a good chance to explain the difference between the brand name Coca-Cola and the script design that makes up the brand mark. The students will usually note the trademark registration ®. The trade name—the official name of the company—is marked on the back of the can. The fact that “Coke” is referred to generically may also bring up the point that firms spend a great deal of resources to retain brand name rights. 2. Replaceable caps (on 16-oz. drinks) help preserve taste; airtight containers and expiration dates help ensure freshness. Package sizes are generally produced in amounts that meet individual consumer needs (e.g., 2-oz. candy bars; 12-oz. drinks, five sticks of gum) for appropriate prices. A production orientation might only produce one size, for instance. Most students are so accustomed to the packages of these items that they rarely recognize the role of communication. Effective packaging reinforces successful promotional campaigns by reminding consumers of the benefits and image produced by advertisements at the point of purchase. 3. Coca-Cola products are good examples of the use of individual branding and brand extensions, although students may be unaware that besides Coke, many bottlers also produce other soft drinks that do not carry the Coke brand name. Examples are Fresca and Barq’s Root Beer. Some candy bars may provide examples of family branding (Nestlé or Hershey’s). 4. Usually, students will violate one of these guidelines, which points to why some consulting firms now specialize in developing new company or brand names. Class Exercise 5: Packaging and Brand Success In this chapter you have learned about the various elements that contribute to building brands, including packaging. Consider the following brands—Oreo, Altoids, The Gap, and Absolut Vodka. Discuss the following questions in relation to each brand: 1. What elements have contributed to the success of the brand? 2. What role did packaging play in the brand’s success? 3. How have the owners of these brands built brand families around these core products? Student responses to these questions will vary. Make sure they discuss all elements of packaging, not just promotions of labeling (for example, the durability of the Altoid tin). Class Exercise 6: Brand Equity Recommended as a group activity In this chapter you were introduced to the concept of brand equity. In this exercise you will explore what contributes to, and devalues, brand equity. Step 1: Choose five brands (include one undesirable brand) that all members of your group are familiar with. Step 2: List all positive brand associations that group members have with each brand. Now list all negative associations that group members have with each brand. Step 3: Rank the chosen brands in order to most preferable to least preferable. How often do members of the group consume the most preferable brand? Do any members of the group consider themselves brand loyal consumers? If so, why? What benefit do they receive from the brand? Step 4: Does any member of the group possess negative feelings for any of the named brands? What is this negative evaluation based on? How does this negativity influence purchase and use decisions? What, if anything, could the brand do to overcome this negativity? CHAPTER QUIZ 1. An example of a convenience product is a. stereo equipment. b. gasoline. c. a motorcycle. d. a bicycle. e. athletic shoes. 2. Price strategies become more mixed during the __________ stage of the product life cycle. a. growth b. maturity c. decline d. introduction e. late introduction 3. People who enjoy trying new products and are often the first to do so are known as a. early adopters. b. the early majority. c. market mavericks. d. innovators. e. laggards. 4. A group of closely related product items that are related because of marketing, technical, or end-use considerations is a product a. category. b. dimension. c. extension. d. line. e. mix. 5. Choosing appropriate colors for packaging best serves to enhance the __________ function of packaging. a. convenience b. safety c. cost effectiveness d. protection e. promotional 6. The type of brand that has seen a significant decrease in popularity in recent decades is a. generic. b. manufacturer. c. private label. d. distributor. e. store brand. 7. Which of the following is not a result of General Mills' use of the Pillsbury Doughboy? a. It helps build brand loyalty. b. It helps consumers connect the packages to the brand. c. It contributes to brand equity. d. It makes the products more expensive. e. It helps the consumer identify the product in the store. 8. The Nike swoosh that is prominent on all of the firm’s packaging, products, and advertising is a a. trade character. b. brand. c. trade name. d. brand mark. e. brand design. Answers to Chapter Quiz 1. b; 2. b; 3. d; 4. d; 5. e; 6. a; 7. d; 8. d. SEMESTER PROJECTS 1. You Are Your Product In Chapter 10 we learned about various ways organizations and consumers conceive of products and services. In this exercise, you will define your product and look at ways to improve your product to make it more desirable to your target market. Step 1: Define your product. What are the unique elements of your product, you? Step 2: What benefit would a customer (aka: employer) obtain by purchasing (hiring) your product? Step 3: What steps can you take now to improve your product and make it more attractive to the market? 2. In the last exercise you worked on defining your product, looking at possible modification and extensions to your product. In this exercise you will look at developing a branding strategy for your product. Step 1: Define any signature elements of your brand. Some possible examples are nicknames, brand symbols such as some object you are identified with, a unique first or last name, etc. Step 2: What will be the core values of your brand? Will you build your brand on integrity or quality or reliability? Will you build your brand on creativity or innovativeness or ease? Step 3: How will you demonstrate these core values to your consumers? How will you package your product to demonstrate these core values? ANSWERS TO ISSUES FOR DISCUSSION AND REVIEW 1. Is a personal computer sold at a retail store a consumer product or a business product? Defend your answer. The classification of products into the business or consumer class depends on the buyer’s purpose and intent. If a personal computer is purchased for a consumer’s home use, it is a consumer product. If it is purchased for a business office, it is an industrial or business product. 2. How do convenience products and shopping products differ? What are the distinguishing characteristics of each type of product? Convenience products (milk, pay telephones, and gasoline) are purchased at the closest retail facility. Shopping products (clothing and furniture) are purchased after comparisons and alternatives have been evaluated. Distinguishing characteristics include frequency of purchase, time of consumption, searching time, margins, and product adjustment. Convenience products rank lower than shopping products in terms of searching time, margins, adjustment, and time of consumption. Convenience products also are replaced more often than shopping products. 3. How does an organization’s product mix relate to its development of a product line? When should an enterprise add depth to its product lines rather than width to its product mix? Product mix is the composite of products an organization sells. The product line includes a group of products closely related in terms of marketing, technical, or end-use considerations. For example, toothpaste is a product Procter & Gamble sells; Gleem II and Crest are the two brands in the product line. A firm should add depth to the product line when there is greater opportunity to profit by building on current marketing expertise and consumers’ acceptance in a particular market. Launching new products to add to the marketing mix may require new marketing channels, promotion, pricing techniques, and production facilities. Many firms have expanded by increasing the width of product mixes and depth of product lines. 4. How do industry profits change as a product moves through the four stages of its life cycle? During the introduction stage, profits are negative. The firm should break even as the growth stage is reached, and profits should rapidly increase. The highest profit-to-sales ratio is reached during late growth. Profits decline during maturity and usually drop further during the decline stage. 5. What are the stages in the product adoption process, and how do they affect the commercialization phase? The stages of the product adoption process are the stages buyers must go through before they accept a product. • The first stage is awareness, when the buyer becomes aware of the product. • The second stage is interest, when the buyer seeks information and is receptive to learning about the product. • The third stage is evaluation, when the buyer considers the product’s benefits and decides whether to try it. • The fourth stage is trial, when the buyer examines, tests, or tries the product to determine if it meets his or her needs. • The fifth stage is adoption, when the buyer purchases the product and can be expected to use it again whenever the need arises for this general type of product. This adoption model has several implications when a new product is being launched. First, the company must promote the product to create widespread awareness of its existence and its benefits. At the same time, marketers should emphasize quality control and provide solid guarantees to reinforce buyer opinion during the evaluation stage. Finally, production and physical distribution must be linked to patterns of adoption and repeat purchases. 6. How does branding benefit consumers and marketers? Brands aid buyers by helping them identify specific products that they like and do not like, which in turn facilitates the purchase of items that satisfy individual needs. A brand also helps a buyer evaluate the quality of products, especially when the person lacks the ability to judge a product’s characteristics. Brands identify a seller’s products, which facilitates repeat purchases by consumers. To the extent that buyers become loyal to a specific brand, the firm’s market share for that product achieves a certain level of stability. A stable market share places a firm in a position to use its resources more efficiently. When a firm develops some degree of customer loyalty for a brand, it can charge a premium price for the product. Branding helps an organization introduce a new product that carries the name of one or more of its existing products. Branding facilitates promotional efforts because each branded product indirectly promotes all the firm’s other products that are similarly branded. 7. What is brand equity? Identify and explain the major elements of brand equity. Brand equity is the marketing and financial value associated with a brand’s strength in the market. Four major elements underlie brand equity—brand name awareness, brand loyalty, perceived brand quality, and brand associations. • Being aware of a brand leads to brand familiarity, resulting in increased levels of comfortableness with the brand. Customers are more likely to choose familiar brands over unfamiliar ones. • Brand loyalty allows an organization to keep its existing customers, and loyal customers reassure potential new ones. • Customers associate a certain level of perceived overall quality with a brand. A brand name can even substitute for actual judgment of quality when customers are themselves unable to make quality judgments about products and rely on the brand as an indicator of quality. • The final component of brand equity is the set of associations linked to a brand. Positive associations contribute significantly to a brand’s equity. 8. What are the three major degrees of brand loyalty? Brand loyalty is the customer’s favorable attitude toward a specific brand. The three levels of brand loyalty are brand recognition, brand preference, and brand insistence. • Brand recognition, the mildest form of brand loyalty, exists when a customer is aware that the brand exists and views it as an alternative to purchase. • Brand preference, a stronger degree of brand loyalty, exists when a customer definitely prefers one brand over competitive offerings; however, if the brand is not available, the customer will accept a substitute. • Brand insistence, the strongest degree of brand loyalty, exists when a customer not only strongly prefers a specific brand, but will not accept a substitute. 9. Compare and contrast manufacturer brands, private distributor brands, and generic brands. Manufacturer brands are initiated by producers and ensure that producers are identified with their products at the point of sale. These brands usually require a producer to become involved in distribution, promotion and, to some extent, pricing decisions. Manufacturer brands include Green Giant, Apple Inc., and Levi’s jeans. Private distributor brands are initiated and owned by resellers or retailers and do not identify the manufacturer or producer. Private brands are used to develop more efficient promotion, generate higher gross margins, and improve store images. These brands include IGA (Independent Grocers’ Alliance), Sears’ Craftsman and Kenmore, and Wal-Mart’s “Sam’s Choice” beverages and snacks. A generic brand indicates only the category of the product (such as aluminum foil, tissue, or peanut butter) and does not include the company name or manufacturer. Generic brands are usually sold at lower prices than are comparable brand names. 10. Identify the factors a marketer should consider in selecting a brand name. When selecting a brand name, marketers must consider a number of factors. The brand name should be easy to say, spell, and remember. To avoid consumer confusion, brands should be compatible with those of other products in the product line. Choosing a name that suggests the product’s uses and special characteristics as well as indicating the product’s major benefits is important. Marketers try to select a brand that is distinctive enough to set it apart from competitors but avoids negative or offensive implications. Finally, marketers strive to choose a brand that can be used and recognized in all types of media. Because service brands are usually the same as the company name, service marketers do not always have the flexibility to choose a brand that meets all of the above criteria. 11. What is co-branding? What major issues should be considered when using co-branding? Co-branding is the use of two or more brands on one product. Marketers employ co-branding to capitalize on the brand equity of multiple brands. The brands used for co-branding can be owned by the same company or by different companies. Some issues to consider when using co-branding are that the brands not lose their identities, and it should be clear to customers which brand is the main brand. It is important for marketers to understand that when a co-branded product is unsuccessful, both brands are implicated in the product failure. To gain customer acceptance, the brands involved must represent a complementary fit in the minds of buyers. Co-branding can help an organization differentiate its products from those of its competitors. By using the product development skills of a co-branding partner, an organization can create a distinctive product. Co-branding can also take advantage of the distribution capabilities of co-branding partners. 12. Describe the functions a package can perform. Which function is most important? Why? A package can perform several functions, including protection, economy, convenience, and promotion. • First, packaging materials are needed to protect the product or to maintain it in functional form. The package should effectively reduce damage that could affect the product’s usefulness and increase costs (economy). • Second, consumers may be concerned with convenience. • Third, packaging can promote a product by communicating its features, uses, benefits, and image. 13. What are the main factors a marketer should consider when developing a package? When making packaging decisions, marketers must take into account a variety of issues. Cost is a critical consideration when developing a package. Some available processes and designs are very expensive, so before making packaging decisions, marketers engage in research to determine how much customers are willing to pay for packages. Because packaging must comply with the Food and Drug Administration’s packaging regulations, marketers make sure that packages are tamper resistant. When new technology is developed or new legislation is passed, marketers modify packages to protect consumers and comply with the law. Another consideration is how much consistency of packaging there should be among the various products an organization markets. If products are aimed at different target markets, marketers may opt for no consistency, but if the desire is to promote an overall company image, a firm may package all of its products in a similar way, an approach known as family packaging. A package’s promotional role is an important consideration because packages inform potential buyers about the product’s content, features, uses, advantages, and hazards along with creating a product image. Marketers try to choose features that enhance a package’s promotional value. The size and shape of a package must lend itself to easy handling by wholesalers and retailers, or they may refuse to carry the product. Finally, marketers must consider the issue of environmentally responsible packaging, attempting to balance concern for the environment with consumers’ preference for convenience. 14. In what ways can packaging be used as a strategic tool? Because a package has the potential for giving a product a competitive edge, marketers often regard packaging as an important strategic tool. Altering a package can make a product more convenient or safer, promote a new feature, or assist product repositioning. A secondary-use package, one that can be reused for purposes other than its initial use, can stimulate sales. Because certain product categories are characterized by recognizable types of packaging, an organization often uses these traditional shapes and colors when introducing a brand in one of those categories to facilitate easy recognition by potential buyers. Sometimes an innovative package design attracts consumers by distinguishing a brand from its competitors, resulting in increased sales. For certain types of products, multiple packaging is used to increase demand. This strategy is based on the belief that if consumers have more of a product at home, they will use more and want more. In addition, multiple packs can make products easier to handle and simplify special price offers. Handling-improved packaging facilitates distribution and shelving, making a product more attractive to those who handle and sell it. 15. What are the major functions of labeling? Marketers use labeling in a variety of ways. By highlighting the brand with an eye-catching graphic design, the label can facilitate product identification. Labels serve a descriptive function, specifying the product’s source, contents, major features, use, and care. For certain products, labels can be strictly informative, furnishing specific product grade, nutritional content, and number of servings. Through the use of attention-getting graphics, labels also serve a valuable promotional function. ANSWERS TO MARKETING APPLICATIONS 1. Choose a familiar clothing store. Describe its product mix, including its depth and width. Evaluate the mix and make suggestions to the owner. Students’ answers will vary based on the clothing stores they choose. The width of product mix is measured by the number of product lines a company offers. The depth of product mix is the average number of different products offered in each product line. Students should support their suggestions to the owner. 2. Tabasco pepper sauce is a product that has entered the maturity stage of the product life cycle. Name products that would fit into each of the four stages: introduction, growth, maturity, and decline. Describe each product and explain why it fits in that stage. Students’ answers will vary based on the products they choose, but their responses should include the following explanations for product life cycles: • Introduction—a product’s first appearance in the market, when sales start at zero and profits are negative • Growth—sales rise rapidly, profits reach a peak, and then they start to decline • Maturity—sales curve peaks and starts to decline and profits continue to fall • Decline—sales fall rapidly 3. Generally buyers go through a product adoption process before becoming loyal customers. Describe your experience in adopting a product you now use consistently. Did you go through all the stages of the process? Students’ answers will vary based on their experiences, but they should go through some of the following stages of the product adoption process. • Awareness—the buyer becomes aware of the product. • Interest—the buyer seeks information and is receptive to learning about the product. • Evaluation—the buyer considers the product’s benefits and decides whether to try it. • Trial—the buyer examines, tests, or tries the product to determine if it meets his or her needs. • Adoption—the buyer purchases the product and can be expected to use it again. 4. Identify two brands for which you are brand insistent. How did you begin using these brands? Why do you no longer use other brands? Student responses will vary depending on the brands. Popular examples may include Apple products or Google products. Encourage students to connect their explanations to the buying decision process discussed in Chapter 7. 5. General Motors introduced the subcompact Geo with a name that appeals to a world market. Invent a brand name for a line of luxury sports cars that also would appeal to an international market. Suggest a name that implies quality, luxury, and value. Students should be creative and be able to support their answers. 6. For each of the following product categories, choose an existing brand. Then, for each selected brand, suggest a co-brand and explain why the co-brand would be effective. a. Cookies b. Pizza c. Long-distance telephone service d. A sports drink Co-branding is the use of two or more brands on one product. Marketers employ co-branding to capitalize on the brand equity of multiple brands. Effective co-branding capitalizes on the trust and confidence customers have in the brands involved. Students should be creative with their responses. 7. Identify a package that you believe is inferior. Explain why you think the package is inferior, and discuss your recommendations for improving it. Students’ answers will vary. They should refer to the purposes of packaging (product protection; customer convenience; and promotion of image, key features, and benefits) when providing their criticisms and solutions. 8. It is helpful to think of a total product offering as having a combination of three interdependent elements: the core product itself, its supplemental features, and its symbolic or experiential value. For example, Southwest Airlines does not just offer safe passage to your destination (core product). It also offers two free checked bags (supplemental product offerings) and tries to create a fun environment to emphasize its culture of “luv” (experiential product offerings). Use the following matrix to list the core products, supplemental benefits, and experiential benefits for the four different companies. Core Products Supplemental Benefits Experiential Benefits BMW Automobiles BMW car care products The status associated with driving a BMW Starbucks High-quality coffee beverages Privileges associated with using a Starbucks card Standardized service and stylish, inviting stores McDonald’s Fast food Happy Meals, free Wi-Fi, drive-through facilities Speed of delivery, consistent quality Whole Foods Organic foods Catering and holiday orders Feelings of health and wellness ANSWERS TO INTERNET EXERCISE Goodyear In addition to providing information about the company’s products, Goodyear’s website helps consumers find the exact products they want and will even direct them to the nearest Goodyear retailer. Visit the Goodyear site at www.goodyear.com. 1. How does Goodyear use its website to communicate information about the quality of its tires? The Goodyear website provides information on the features and benefits of each tire and allows for side-by-side comparisons for each vehicle. Goodyear also includes a section on every tire page entitled “Why Goodyear is the right choice” that explains the company’s legacy and how tires are manufactured. The company also provides general information including checklists for how to purchase quality tires. 2. How does Goodyear’s website demonstrate product design and features? Each tire page lists its features and benefits as well as the benefits of buying tires from Goodyear. Goodyear has developed symbols for tire features such as sport performance, fuel-efficiency, or all-weather tires so that consumers know important information at a glance. The website also indicates which tires are recommended for particular vehicles. 3. Based on what you learned at the website, describe what Goodyear has done to position its tires. Students’ answers will vary based on their personal interpretations. In general, Goodyear has positioned itself as a brand that is knowledgeable, cares about consumers, and wants them to buy the best quality tires, and those quality tires are made by Goodyear. ANSWERS TO DEVELOPING YOUR MARKETING PLAN The information obtained from these questions should assist you in developing various aspects of your marketing plan found in the Interactive Marketing Plan exercise at www.cengagebrain.com. 1. Using Figure 10.2 as a guide, create a matrix of the current product mix for your company. This matrix will vary a great deal from one student to the next. This matrix should show the width and depth of the products offered by the company that produces their product—the number of columns listed is the width. The matrix should display columns of different product categories—the number of products in each of these categories is the depth. 2. Discuss how the profitability of your product will change as it moves through each of the phases of the product life cycle. No product is profitable right away. During the introduction stage, sales will start at zero and profits will be negative because of promotional and distribution expenses. Companies can spend years and millions of dollars rolling out a new product. If the product survives the introduction stage, the growth stage comes next. It is characterized by rapid increases in sales. Profits peak during this stage and start to decline as competitors enter the market, taking market share and driving down prices. If many competitors enter the market during this stage, it may shorten the life cycle of the product. During the maturity stage, sales peak and start to decline, while profits continue to decline. Products in this stage have intense competition. Promotional and marketing efforts will have to be altered during this stage, and oftentimes the products will have to be changed to more closely fit the needs of customers. Many products stay in the maturity phase for a very long time. Finally, products in the decline stage will experience rapidly falling sales. Marketers may have to discontinue underperforming products, cut promotion efforts, or eliminate some distributors. A marketer can justify maintaining a product if it contributes to profits or enhances the overall product mix. 3. Create a brief profile of the type of consumer who is likely to represent each of the product adopter categories for your product. The product adopter categories are innovators, early adopters, early majority, late majority and laggards. The following is a general description of each of these categories. The answers will vary slightly with different products. Innovators like to try new things and tend to be adventurous. They are the first to adopt a new product. Early adopters are not as ready to try new products as the innovators, but they remain ahead of the mainstream. They choose products carefully and are viewed as in-the-know by the remaining adopter categories. People in the early majority adopt a new product just prior to the average person; they are deliberate and cautious in trying new products. Those in the late majority are skeptical of new products but eventually adopt them because of reasons like economic necessity or social pressure. The laggards are the last to adopt a new product. They tend to be suspicious of new products to the point where, when they do adopt the innovation, it may already have been replaced by a new product. 4. Discuss the factors that could contribute to the failure of your product. How will you define product failure? The answers to this question will vary depending on the product. However, factors like not developing the right marketing mix, not targeting the best market, or excessive competition are possible factors. COMMENTS ON VIDEO CASE 14: NEW BELGIUM BREWS UP STRONG BRAND EQUITY Summary New Belgium Brewing Company started on a bike trip through Belgium and has become one of the most successful craft breweries in the United States. New Belgium has built its remarkable success on great products, a fun brand image, and a strong commitment to sustainability and quality. This case should help students recognize that even relatively small businesses can build strong brands by staying focused on the firm’s values and philosophies. Questions for Discussion 1. What has New Belgium Brewing done to increase brand recognition and brand preference? New Belgium Brewing has used a variety of methods to increase brand recognition and preference. For example, its specially-designed watercolor labels and packaging showcase the brand with a touch of nostalgia and instant recognition. Its sponsorships and philanthropy also increase brand recognition and, through association with causes, help to build brand preference on the basis of a company that cares about people and the planet. In addition, New Belgium Brewing’s advertising and social media activities communicate the brand and what it stands for. 2. How is New Belgium Brewing using packaging to support its brand image? New Belgium essentially uses a family branding policy in that each beer carries the New Belgium brand name in addition to the product item name. The beer labels are each different (different product name, ingredients, graphic art), but are all similar in appearance and overall design, making it relatively easy to recognize a New Belgium label on a cooler shelf. The nostalgic watercolor images help reinforce the New Belgium brand’s image, reputation for quality, and sense of joy and fun in making and enjoying the product. 3. Assess New Belgium’s brand equity in terms of awareness, quality, associations, and loyalty. New Belgium Brewing has high brand awareness, thanks to years of word-of-mouth communications by satisfied customers and its various communications campaigns. The company works hard to communicate the high quality of its craft-brewed beers, available only in selected areas. This sets the brand apart from beers that are mass-produced and available in wide distribution. New Belgium Brewing also uses packaging, labeling, communications, and sponsorships to reinforce brand associations with old-fashioned goodness and with good causes, which strengthens the brand. Finally, the company enjoys high brand loyalty and has been able to use this strength to spread the brand message to new customers through new media. Solution Manual for Foundations of Marketing William M. Pride, O. C. Ferrell 9781305361867, 9781305405769, 9780357033760