CH-10 Product Concepts – MKTG: Principles of Marketing : Book Guide

CHAPTER 10 Product Concepts This chapter begins with the learning outcome summaries, followed by a set of lesson plans for you to use to deliver the content in Chapter 10. • Lecture on page 3 • Company Clips (video) on page 4 • Group Work (for smaller sections) on page 5 Review and Assignments begin on page 6 • Review questions • Application questions • Application exercise • Ethics exercise • Video Assignment • Case Assignment Great Ideas for Teaching Marketing from faculty around the country begin on page 14 LEARNING OUTCOMES 10-1 Define the term product A product is anything, desired or not, that a person or organization receives in an exchange. The basic goal of purchasing decisions is to receive the tangible and intangible benefits associated with a product. Tangible aspects include packaging, style, color, size, and features. Intangible qualities include service, the retailer’s image, the manufacturer’s reputation, and the social status associated with a product. An organization’s product offering is the crucial element in any marketing mix. 10-2 Classify consumer products Consumer products are classified into four categories: convenience products, shopping products, specialty products, and unsought products. Convenience products are relatively inexpensive and require limited shopping effort. Shopping products are of two types: homogeneous and heterogeneous. Because of the similarity of homogeneous products, they are differentiated mainly by price and features. In contrast, heterogeneous products appeal to consumers because of their distinct characteristics. Specialty products possess unique benefits that are highly desirable to certain customers. Finally, unsought products are either new products or products that require aggressive selling because they are generally avoided or overlooked by consumers. 10-3 Define the terms product item, product line, and product mix A product item is a specific version of a product that can be designated as a distinct offering among an organization’s products. A product line is a group of closely related products offered by an organization. An organization’s product mix includes all the products it sells. Product mix width refers to the number of product lines an organization offers. Product line depth is the number of product items in a product line. Firms modify existing products by changing their quality, functional characteristics, or style. Product line extension occurs when a firm adds new products to existing product lines. 10-4 Describe marketing uses of branding A brand is a name, term, or symbol that identifies and differentiates a firm’s products. Established brands encourage customer loyalty and help new products succeed. Branding strategies require decisions about individual, family, manufacturers’, and private brands. 10-5 Describe marketing uses of packaging and labeling Packaging has four functions: containing and protecting products; promoting products; facilitating product storage, use, and convenience; and facilitating recycling and reducing environmental damage. As a tool for promotion, packaging identifies the brand and its features. It also serves the critical function of differentiating a product from competing products and linking it with related products from the same manufacturer. The label is an integral part of the package, with persuasive and informational functions. In essence, the package is the marketer’s last chance to influence buyers before they make a purchase decision. 10-6 Discuss global issues in branding and packaging In addition to brand piracy, international marketers must address a variety of concerns regarding branding and packaging, including choosing a brand-name policy, translating labels and meeting host-country labeling requirements, making packages aesthetically compatible with host-country cultures, and offering the sizes of packages preferred in host countries. 10-7 Describe how and why product warranties are important marketing tools Product warranties are important tools because they offer consumers protection and help them gauge product quality. Express warranty = written guarantee Implied warranty = unwritten guarantee TERMS brand generic product name product line depth brand equity global brand product line extension brand loyalty implied warranty product mix brand mark individual branding product mix width brand name informational labeling product modification captive brand manufacturer’s brand service mark co-branding persuasive labeling shopping product convenience product planned obsolescence specialty product express warranty private brand trademark family branding product universal product code (UPCs) product item unsought product product line warranty LESSON PLAN FOR LECTURE Brief Outline and Suggested PowerPoint Slides: Learning Outcomes and Topics PowerPoint Slides LO1 Define the term product 10-1 What Is A Product? 1: Product Concepts 2: Learning Outcomes 3: Learning Outcomes 4: What Is a Product? 5: What Is a Product? 6: What Is a Product? LO2 Classify consumer products 10-2 Types of Consumer Products 7: Types of Consumer Products 8: Types of Products 9: Types of Consumer Products 10: Types of Consumer Products LO3 Define the terms product item, product line, and product mix 10-3 Product Items, Lines, and Mixes 11: Product Items, Lines, and Mixes 12: Product Items, Lines, and Mixes 13: Exhibit 10.1: Campbell’s Product Lines and Product Mix 14: Benefits of Product Lines 15: Adjustments 16: Types of Product Modifications 17: Repositioning 18: Product Line Extension LO4 Describe marketing uses of branding 10-4 Branding 19: Branding 20: Branding 21: Benefits of Branding 22: Branding Strategies 23: Branding Strategies 24: Advantages of Manufacturer’s Brands 25: Advantages of Private Brands 26: Advantages of Captive Brands 27: Individual Brands versus Family Brands 28: Co-branding 29: Trademarks LO5 Describe marketing uses of packaging and labeling 10-5 Packaging 30: Packaging 31: Functions of Packaging 32: Labeling 33: Universal Product Codes LO6 Discuss global issues in branding and packaging 10-6 Global Issues in Branding and Packaging 34: Global Issues in Branding and Packaging 35: Global Issues in Branding 36: Global Issues in Packaging LO7 Describe how and why product warranties are important marketing tools 10-7 Product Warranties 37: Product Warranties 38: Product Warranties 39: Chapter 10 Video Suggested Homework: • The end of this chapter contains assignments for the Zappos video and for the Google case. • This chapter’s online study tools include flashcards, visual summaries, practice quizzes, and other resources that can be assigned or used as the basis for longer investigations into marketing. LESSON PLAN FOR VIDEO Company Clips Segment Summary: Zappos Zappos discusses how the company builds its product offerings and enters into new fields. Zappos also has a limited line of private label offerings that it creates to fill a perceived gap in the market. Choosing the correct products is the starting point for Zappos to offer its great customer service and “deliver happiness.” These teaching notes combine activities that you can assign students to prepare before class, that you can do in class before watching the video, that you can do in class while watching the video, and that you can assign students to complete as assignments after watching the video class. During the viewing portion of the teaching notes, stop the video periodically where appropriate to ask students the questions or perform the activities listed on the grid. You may even want to give the students the questions before starting the video and have them think about the answer while viewing the segment. That way, students will be engaged in active viewing rather than passive viewing. PRE-CLASS PREP FOR YOU: PRE-CLASS PREP FOR YOUR STUDENTS: • Preview the Company Clips video segment for Chapter 10. This exercise reviews concepts for LO1–LO5. • Review your lesson plan. • Make sure you have all of the equipment needed to show the video to the class, including the DVD and a way to project the video. • You can also stream the video HERE • Have students review and familiarize themselves with the following terms and concepts: product; types of consumer products; product items, lines, and mixes; branding; and warranties. • Refer students to Exhibit 10.1, “Campbell’s Product Lines and Product Mix.” Encourage students to think of other companies that have multiple product lines VIDEO REVIEW EXERCISE ACTIVITY Warm Up Begin by asking students, “What is a product?” In-class Preview • Discuss the types of consumer products. • Review Exhibit 10.1 with students. Ask them to offer examples of product items and product lines from other companies, making sure they understand the difference between product items, lines, and mixes. • Discuss the difference between a product line extension and the addition of a new product line; and discuss the difference between mix width and line depth. • Review the Company Clips questions below with students and make sure they’re prepared to answer them after viewing the video. Viewing (Solutions below.) 1. What type of products does Zappos offer? Why would you classify their products as you do? 2. When Zappos began offering Couture products, it is classified as which type of move? What about working with vendors to sell more of his or her product? Follow-up Outside of class, have students create a chart or written statement that lists the items in the product and/or service lines the college or university “sells.” The chart or list should place related products and services into specific product lines, to be turned in at the following class or in discussion section. Solutions for Viewing Activities: 1. What type of products does Zappos offer? Why would you classify their products as you do? Answer: Recycline offers consumer products. Students may argue for the products as convenience or shopping products. Zappos offers a wide variety of products, including items such as flip-flops and tennis shoes, which are convenience products, but it also offers Zappos only products, as well as a number of products exclusively distributed at Zappo or their own stores, which classifies as a shopping product. 2. When Zappos began offering Couture products, it is classified as which type of decision? What about working with vendors to sell more of his or her product? Answer: Adding couture is adding a product line, which affects the product mix width or breadth. Working with vendors to sell more of their products would be considered increasing the product line depth available at Zappos. LESSON PLAN FOR GROUP WORK In most cases, group activities should be completed after some chapter content has been covered, probably in the second or third session of the chapter coverage. (See “Lesson Plan for Lecture” above.) • For “Class Activity – Brand Names,” provide the information and the questions asked by the class activity. • Applications questions 1and 2 lend themselves well to group work. For these activities, divide the class into small groups of four or five people. Each group should read the question and then use their textbooks, or any work completed previously, to perform the exercise. Then each group should discuss or present their work to the class. Class Activity – Brand Names The use of branding on the Internet has become an important topic as more consumers turn to the Internet for information and purchase. Ask students to list the five best known search engines on the Internet. They should then explain what financial impact brand recognition has for those dot coms. REVIEW AND ASSIGNMENTS FOR CHAPTER 10 REVIEW QUESTIONS 1. Although major appliances, like washers and dryers, are usually considered homogeneous shopping products, the high-efficiency front-loaders that boast many more features than standard machines are gaining in popularity. Do you think high-efficiency technology is enough to make washers and dryers heterogeneous shopping products? Explain. Answer: Yes, high-efficiency front-loaders can make washers and dryers heterogeneous shopping products. Their advanced features, energy efficiency, and unique designs create significant differences among models, leading consumers to evaluate them based on various attributes beyond basic functionality. 2. A local civic organization has asked you to give a luncheon presentation about planned obsolescence. Rather than pursuing a negative approach by talking about how businesses exploit customers through planned obsolescence, you have decided to talk about the benefits of producing products that do not last forever. Prepare a one-page outline of your presentation. Answer: Students may come up with some creative reasons for producing products that do not last forever, but economic reasons are the most compelling. The design and manufacturing effort required to make such a product would result in a product so expensive that few could afford it. Students may also raise the issue of decreased employment resulting from decreased manufacturing, production, and selling needs. In addition there is the matter of human nature—we get bored with the same old things! Outline: Benefits of Planned Obsolescence 1. Introduction • Brief definition of planned obsolescence • Overview of presentation focus: benefits 2. Innovation and Advancement • Encourages frequent updates and improvements • Drives technological progress and new features 3. Economic Benefits • Stimulates consumer spending and business growth • Creates jobs in manufacturing and retail sectors 4. Affordability and Accessibility • Lower initial costs for consumers due to shorter product lifespans • Makes advanced technology more accessible 5. Environmental Considerations • Promotes recycling and the development of more sustainable practices • Encourages efficient resource use through newer, eco-friendly products 6. Conclusion • Summary of benefits • Positive impact on industry and consumers APPLICATION QUESTIONS 1. Form a team of four or five. Have the team determine what the tangible and intangible benefits are for a computer, a tube of toothpaste, a beauty salon, and a dentist. Answer: Computer: Tangible benefits include the storage capacity, speed, aesthetics (such as variety of colors), and the warranty. Intangible benefits include how efficient and productive the user becomes by using the computer, the service granted by the manufacturer, and the reputation of the brand. Toothpaste: Tangible benefits include the taste, the packaging, the fluoride, and whitening ability. Intangible benefits include providing healthy teeth and sex appeal. Beauty salon: Tangible benefits include the actual service (haircut and style, manicure, etc.), the atmosphere, and the cleanliness of the salon. Intangible benefits include customer service. Dentist: Tangible benefits include the amount of waiting time, how well the dentists and other professional perform their service, and the variety of services available. Intangible benefits include “bedside manner,” customer service, and efficiency. 2. Break into groups of four or five. From the list of products below, have each member of the group classify each product into the category (convenience, shopping, specialty, unsought) that they think fits best from their perspective as a consumer (i.e., if they were buying the product). Products: Coca Cola (brand), car stereo, winter coat, pair of shoes, life insurance, blue jeans, hamburgers, shampoo, canned vegetables, frozen pizza. Answer: Students’ answers will differ. They should give reasons why they have placed each product in the respective category. Factors mentioned should include shopping effort, price, planning, and regularity of purchase. Group Classification: 1. Convenience Products: • Coca Cola (brand) • Hamburgers • Shampoo • Canned vegetables • Frozen pizza 2. Shopping Products: • Car stereo • Winter coat • Pair of shoes • Blue jeans 3. Specialty Products: • None listed 4. Unsought Products: • Life insurance 3. Law & Order is a popular television show with numerous brand extensions. Do you think the brand is overextended? Explain. Answer: The effects of overextending the Law & Order brand have already begun. Because shows are available every day on at least three cable channels, ratings for the first-run primetime episodes is falling. Recently, NBC has seen rival CBS’s CSI: Crime Scene Investigation garner higher ratings. And the Law & Order show revolving around juries was stalled. At publication, there were indications that NBC might not proceed with the fourth extension of its hallmark show. 4. A local supermarket would like to introduce their own brand of paper goods (e.g., paper towels, facial tissue, etc.) to sell alongside their current inventory. The company has hired you to generate a report outlining the advantages and disadvantages of doing so. Write the report. Answer: Although students’ answers will vary, they should address some of these points. Retailers’ private-label store brands have become more popular and are increasing their share of the market at the expense of manufacturers’ national brands. If a retailer’s store brand offers good quality for a price that is lower than the national brand names, this product may well get a healthy share of the market. The retailer makes a larger margin of profit on its own store brand than manufacturers’ brands. If customers like the store brand, they will become loyal to the store. The manufacturers of the national brands must be able to convince consumers that the brand name is a symbol of quality that justifies the higher price; and they usually use advertising to do so. Report: Introducing a Store Brand of Paper Goods Advantages: 1. Increased Profit Margins: Higher profit margins on store-branded products compared to national brands. 2. Brand Loyalty: Strengthens customer loyalty by offering exclusive products. 3. Market Differentiation: Sets the supermarket apart from competitors by expanding product offerings. 4. Control Over Quality and Pricing: Greater control over product quality and pricing strategies. 5. Enhanced Store Image: Positions the store as a provider of quality and value. Disadvantages: 1. Initial Investment: Costs associated with product development, packaging, and marketing. 2. Risk of Low Sales: Potential risk if the store brand does not meet consumer expectations or preferences. 3. Management Challenges: Requires efficient inventory management and quality control. 4. Market Saturation: Potential difficulty in standing out in a crowded market with established brands. 5. Consumer Perception: Risk of negative perception if the store brand fails to match the quality of national brands. Conclusion: Introducing a store brand of paper goods can enhance profitability and customer loyalty but involves risks and initial investment. Careful planning and execution are essential for success. 5. How does Hormel use its Web site (http://www.hormel.com) to promote its products? Is the site designed more to promote the company or its brands? Check out the Spam Web site at http://www.spam.com. How do you think Hormel is able to successfully sustain this brand that is often the punch line to a joke? Answer: Hormel's Website Promotion: • Product Promotion: The Hormel website showcases various products, provides recipes, and offers product information to engage consumers and drive sales. • Brand Promotion: It emphasizes the company’s brand values and corporate identity, aiming to build a strong brand image. Spam Website: • Brand Sustainment: Hormel sustains the Spam brand through nostalgia, historical significance, and consistent quality. The website highlights Spam’s versatility, recipes, and cultural impact, helping maintain its relevance despite its reputation. 6. Find a product at home that has a distinctive package. Write a paragraph evaluating that package based on the four functions of packaging discussed in this chapter. Answer: Product: Coca-Cola Bottle Evaluation: The Coca-Cola bottle excels in the four packaging functions. Protection: Its sturdy glass or plastic material protects the contents from damage and contamination. Identification: The iconic red label with the distinctive logo makes it easily recognizable and reinforces brand identity. Convenience: The ergonomic design allows for easy handling and pouring, and the bottle shape is convenient for both chilling and storing. Communication: The label provides essential information, including ingredients and nutritional facts, while the unique design evokes a classic and familiar brand experience. 7. List the countries to which Levi Strauss & Co. markets through its Web site, http://www.levi.com/. How do the product offerings differ between the United States and European selections? Answer: Levi Strauss markets in the United States, Canada, Europe/South Africa (38 countries), Asia/Pacific (Japan, Korea, Australia, New Zealand, and Taiwan), and Latin America (Argentina, Brazil, Colombia, Chile, Mexico, Paraguay, Peru, Uruguay, Venezuela, and Central American countries). Levi’s offers different products in the European markets than in the United States; a couple of examples include the offering of Levi’s Engineered jeans and Red Tab jeans in France. Europe uses different sizes, and the styles are also slightly different. 8. Land’s End and L.L. Bean are renowned for their product guarantees. Find and read the exact wording of their guarantees on their Web sites. Do you think a company could successfully compete against either without offering the same guarantee? Answer: All other things being equal, it would be very difficult for a company to compete head-to-head with either Land’s End or L.L.Bean without offering the same comprehensive guarantee. In fact, Land’s End is now owned by Sears Roebuck, the originator of the lifetime guarantee with its Craftsman tool brand. Students may disagree, saying that it would be easy to compete with either company if a firm offered a slightly varied product mix. One example they may cite is Eddie Bauer, which has generally followed the Land’s End/L.L. Bean format with success. APPLICATION EXERCISE What is your favorite brand of sandwich cookie? If you’re like most Americans, chances are it’s Oreo. In fact, Oreos are so popular that many people think Oreo was the original sandwich cookie. But they’re wrong. Sunshine first marketed its Hydrox sandwich cookie in 1908. Hydrox thrived until 1912, when Nabisco (now part of Kraft) launched Oreo. With Nabisco’s superior distribution and advertising, Hydrox was soon outmatched. By 1998, Hydrox sales totaled $16 million, while Oreo’s revenues were at $374 million. Hydrox has been purchased by Keebler (subsequently purchased by Kellogg), whose elves are trying to give the cookie a major facelift. You are part of the Keebler team deciding what to do with the Hydrox brand. Activities 1. Can you re-create Hydrox through a name change? What kind of brand name could go head-to-head with Oreo? (Most people unfamiliar with Hydrox think it is a cleaning product.) Make a list of three to five possibilities. 2. How can you package your renewed sandwich cookie to make it more attractive on the shelf than Oreo? What about package size? Draft a brief packaging plan for the new Hydrox (or whatever name you chose). 3. Can you modify the original formula to make something new and more competitive? Will a brand extension work here? Why or why not? Purpose: To show students how important branding can be to product success. Students try to relaunch the Hydrox cookie brand (the original chocolate sandwich cookie) by investigating branding issues, including brand name and brand mark, determining the role of packaging, and assessing the feasibility of brand extensions. Setting It Up: This exercise will work best in teams or as a group project. It could also serve as the basis for a marketing plan project. This exercise was inspired by the following Great Idea in Teaching Marketing: Alice Griswold Clarke College THE OREO DEBATE This exercise can be effectively used in the chapters relating to “product” as it deals with issues pertaining to brands (national versus private), packaging, brand loyalty, and image. I come to class with three packages of chocolate sandwich cookies—Oreo, Hydrox, and a private-label brand. I then ask the students which brand is their favorite. Invariably, most of the class chooses the Oreo cookie. At this point, we launch into a taste test where each student selects one cookie from each package and “blindly” tastes them. Most are able to identify the Oreo cookie, but struggle to differentiate between the other two. I then ask them which is the “original” sandwich cookie. Oreo is always the answer, which is incorrect. The Sunshine Hydrox cookie first came on the market in 1908, and thrived until 1912 when Nabisco launched the remarkably similar Oreo. Given Nabisco’s marketing superiority (distribution and advertising), Hydrox never had a chance. In 1998 sales of Hydrox totaled $16 million against Oreo’s $374 million. Hydrox, now owned by the Keebler elves, is undergoing a major facelift: • New name - Keebler Droxies. What did the Hydrox name mean? It came from a mix of hydrogen and oxygen to signify pure ingredients, but consumer research studies revealed it sounded more like a cleaning fluid. • Updated packaging • Reformulated cookie • Differentiated selling point—“the original cookie” won't work, nobody believes it. Not only does Hydrox face a huge challenge trying to catch up to Oreo but they face challenges from the private label cookies with their improved quality and lower price. Price comparisons will show the private label at almost half the price of Oreo with Hydrox somewhere in between. Recently, Oreo has dropped their price to be more competitive. Packaging comparisons show all three packages using the same blue tones, so as to perhaps confuse the customer. This exemplifies the stimulus generalization concept in consumer behavior studies. Students enjoy this exercise because it allows them to personally test a favorite product, and apply numerous marketing and consumer behavior concepts as well. ETHICS EXERCISE A product that a potential buyer knows about but is not actively seeking is called an unsought product. Is the marketing of unsought products unethical? Discuss your answer in terms of the AMA Code of Ethics, found at http://www.marketingpower.com. 1. Is the marketing of unsought products unethical? Discuss your answer in terms of the AMA Code of Ethics, found at http://www.marketingpower.com. Answer: Marketing unsought products is not unethical, because consumers may have needs and wants that they themselves have not yet identified. Marketing of new-to-the world products (discussed in Chapter 10) is one such situation. Before the invention of the personal computer and the marketing of it as a consumer good, consumers were unaware of the product. Although it was an unsought product, consumers were relatively quick to embrace it once it was marketed. The AMA Code of Ethics does not prevent the marketing of unsought products. VIDEO ASSIGNMENT: Zappos 1. Zappos sells all four categories of consumer products. A. True B. False Answer: B While Zappos sells some convenience products (some beauty products fall into this category), a lot of shopping products (most shoes and clothing fall into this category), and some specialty items (couture items), Zappos does not sell unsought products. As Steve explains, buyers are looking for the products that will sell and keep the category going—which would not apply to unsought products. 2. When Steve discusses the “buyer for outdoor” and the “buyer for running,” what does he mean? A. These are the people responsible for determining how people buy these items from Zappos. B. These are the people who determine the product mix for each of these categories. C. These are the people who buy products that have been modified specifically for Zappos. D. These are the people who decide when to reposition their category. Answer: B Buyers decide the product mix (both width and depth) for their category—it is likely up to Steve and other, higher management, to decide if a category needs to be repositioned or contracted. 3. Zappos offers consumers and brands things that traditional stores may not. Which of the following is true? A. Zappos offers specialty products at a steep discount to consumers, while helping brands grow their equity through awareness. B. Zappos use of captive brands allows companies to branch into new areas with minimal risk to their other brands. Customers benefit from captive brands because they get high quality without always paying the highest price. C. Zappos offers consumers the ability to compare shopping products with the one-stop shopping of convenience products, while offering brands the ability to leverage their brand equity while still being available in a wide product mix. D. Zappos offers a unique co-branding strategy for its vendors that allows them to brand with zappos and give customers access to more brands than possible in a shoe store. Answer: C The size and scope of Zappos offerings give consumers the chance to compare many shopping products and convenience products, while offering brands the ability to leverage their brand equity while still being available in a wide product mix. 4. Zappos wide calf boot is part of the Zappos A. private brand B. manufacturer’s brand C. family brand D. trademark Answer: A Steve called the wide-calf boot part of Zappos private label, which is another term for a private brand. 5. Manufacturing a wide calf boot is which kind product modification? A. style modification B. functional modification C. quality modification D. brand extension Answer: B The wide calf boot took the boot style and increased its versatility for women with wider calves, making this a functional modification. 6. The Zappos brand relies on its excellent customer service across all its businesses to do what? A. Create brand loyalty B. Increase awareness of the brand name C. Create a family brand D. Offer an explicit warranty Answer: A Zappos customer service is seen as the best way to create customer loyalty, no matter what business Zappos enters. CASE ASSIGNMENT: Google In May 2012, Arizonian entrepreneur David Elliott sued Google Inc. to have the Internet advertising and search giant stripped of its eponymous trademark. Elliott claimed that the word Google had become a generic term meaning simply “to search on the Web,” and like thermos, aspirin, and zipper, it should no longer belong to any one company. As evidence of this, Elliott’s lawyer, Richard M. Wirtz, cited the American Dialect Society’s decision to declare the verb google the word of the decade for 2000 to 2009. Elliott’s legal action against Google came only after the tech company filed—and won—a trademark infringement lawsuit against Elliott himself. In the suit, Google claimed that 750 Internet sites registered to Elliott used the term Google illegally. All 750 Web sites, featuring domain names such as googledonaldtrump.com and googlegaycruises.com were forfeited to Google. According to paid Content blogger Jeff John Roberts, Elliott's countersuit won't succeed as long as “Google can show that consumers still associate the word with the company.” Chris Matyszczyk, "Man Sues to Make 'Google' Ordinary Word," CNET, May 27, 2012, http://news.cnet.com/8301-17852_3-57442273-71/man-sues-to-make-google-ordinary-word/ (Accessed March 26, 2013); Jeff John Roberts, "Man Sues to Have 'Google' Declared a Generic Word," paid Content, May 25, 2012, http://paidcontent.org/2012/05/25/man-sues-to-have-google-declared-a-generic-word/ (Accessed March 26, 2013). TRUE/FALSE 1. Because it does not cost any money to use Google’s search engine, this service is not a product. Answer: False A product is anything that a person receives in an exchange. While using Google, the consumer exchanges her willingness to view advertisements and share personal data. 2. Because it is used by businesses, Google’s search engine is not a consumer product. Answer: False Google’s search engine can be classified as either a consumer product or a business product. 3. Unless David Elliott’s lawsuit succeeds, Google will own the rights to its trademark as long as the company continues using it. Answer: True 4. Even though he cannot currently use the term “google,” David Elliott can use the logo for Google’s Chrome Internet browser however he likes without fear of legal action. Answer: False Trademark laws cover shapes, ornamental colors, and designs, so Google’s trademark extends over the Chrome logo. 5. None of Google’s products come with a warranty, so consumers should use its products at their own risk. Answer: False All sales have an implied warranty under the Uniform Commercial Code. MULTIPLE CHOICE 1. Google’s search engine is relatively inexpensive, and consumers all over the world use it regularly without much planning. Google’s search engine is a: A. Convenience product. B. Shopping product. C. Specialty product. D. Unsought product. E. None of these—search engines aren’t products. Answer: A A convenience product is a relatively inexpensive item that merits little shopping effort—that is, a consumer is unwilling to shop extensively for such an item. 2. While originally known solely for its search engine, Google has ventured into turn-by-turn navigation, a music subscription service, smartphone hardware, and more. In short, Google has: A. Increased brand loyalty. B. Repositioned its brand. C. Become a global brand. D. Diversified its product mix. E. Practiced planned obsolescence. Answer: D An organization’s product mix includes all the products it sells. 3. David Elliott’s lawsuit against Google hinges on the fact that he believes “google” has become a: A. Business product. B. Product item. C. Informational label. D. Generic product name. E. Captive brand. Answer: D A generic product name identifies a product by class or type and cannot be trademarked. 4. Which of the following functions of packaging does Google not have to worry about regarding online services such as search? A. Packaging allows consumers to associate a new product with a family of other products. B. Packaging promotes products and differentiates them from competitors. C. Packaging protects goods as they move through the distribution channel. D. Packaging makes products easier and more convenient to use. E. Packaging can be used to segment markets. Answer: C While Google’s online products are not tangible, and thus do not need to be protected as they move through the distribution channel, their packaging (often taking the form of Web site design) still serves a number of functions. 5. While this—Google’s high degree of awareness, perceived quality, and brand loyalty among customers—has stemmed from the company’s success, it also contributed to David Elliott’s position that Google should lose its trademark: A. Brand equity. B. Brand worth. C. Brand value. D. Brand merit. E. Brand benefit. Answer: A The term brand equity refers to the value of a company or brand name. GREAT IDEAS FOR TEACHING CHAPTER 10 Jon M Shapiro, Northeastern State University Michael C Murphy, Langston University PRODUCT POSITIONING FOR THE PRODUCT MANAGER: A CAPSTONE EXPERIENCE FOR AN INTRODUCTION TO MARKETING CLASS The objective of this activity is to encourage beginning students to think about product positioning, its components, and its strategic implications. Pedagogically, we believe that the right mix of theory and experiential learning increases student interest and enriches their learning experience. This ongoing, sequential project can be introduced within the first few weeks of class, regardless of the student’s knowledge-base, or the topical sequencing within a given textbook. Initially, students are directed to choose a product category that they find interesting. There are two constraints: 1) the product must be sold in traditional (non-cyber) retail settings, and 2) the number of competing brands should not exceed seven. The rationale for these constraints follows. Regarding constraint 1, brick and mortar channels better allow the beginning student to touch the product and fully examine differences among key attributes. In terms of constraint 2, limiting the competitors to seven is more manageable, allows for a richer and more focused analysis, and avoids complicating perceptual mapping. Additionally, if students are unable to find product categories with such low degrees of competition, encourage them to focus upon a subcategory (e.g., herbal tea instead of tea). What products do students pick and why? The key thing is that if they find a category relevant to their life (ideally, something that they use and enjoy), they will likely exhibit more passion and do a more in-depth analysis. Based on experience, we find that food products such as peanut butter, salsa, and frozen pizza work well; however, anything the student is interested will suffice. The initial assignment requires the student to choose a retail setting and to record his or her observations regarding the product category. We provide a handout with basic threshold positioning dimensions to analyze such as: pricing, shelf space/positioning, labeling, packaging, and point-of-purchase promotion. The initial journal serves as a first attempt at analysis. Then, after each element of the marketing mix (the 4Ps) is covered, the student revisits the retailer for further observation and integrates the newly learned concepts into the journal. The final capstone paper requires the student to construct at least two perceptual maps. The end product includes the product descriptions, a justification of the map axes (why these salient attributes were selected), and a description of the perceptual map. For many students, developing perceptual maps is very challenging. Students often struggle because it requires inferring, based solely on observation (not research), what consumers believe distinguishes products. To attenuate this difficulty, we provide model papers from past students. Generally, this coupled with assisting them with their draft versions, results in a highly enjoyable and rich learning experience. Michael Luthy, Bellarmine University THE SEARCH FOR THE PERFECT PACKAGE In most Principles of Marketing courses, the subject of consumer product packaging is discussed, at least in passing, as part of the product umbrella in the marketing mix. Some instructors address it in discussions of the bundle of benefits concept, the rationale that ultimately serves consumers’ interests. However the subject is broached, an alternative to the standard treatment of asking students what makes for good packages is to give them an example that the instructor has selected as the best consumer product package in existence and ask them to come up with reasons why. The product package in question is for the banana. Separating the class into teams of two to four students, giving each a banana, and then tasking them with coming up with as many reasons as they can to support your contention generates a healthy competition and can lead to some interesting rationales. Below are some of the many reasons they make come up with: • Protects the product from damage • Attracts attention because of bright color • Informs consumer of freshness through color change as it ages • Easy to carry product (grip in hand, backpack, briefcase) • Easy open • Re-sealable (to some degree) • Code number on label allows for automated checkout • Biodegradable • Instantly recognizable what the product is • Package size accurately depicts amount of product within • Package contains a single serving portion • Package doubles as a holder for product (no napkin needed) • Other uses: compost, practical jokes From these reasons, the instructor can then generalize, perhaps by bringing into the discussion the VIEW model (visibility, information, emotional appeal, workability), rules for package evaluation. The ultimate goal is to change the way students look at the world outside of the classroom and acknowledge the role that other disciplines and perspectives can play in problem solving. James S. Cleveland, Sage College of Albany DISCUSSION BOARD TOPICS TO ENCOURAGE PARTICIPATION Discussion board questions provided to students to encourage them to engage in thinking and writing about the content of the Principles of Marketing course usually take the form of a provocative statement to which students are asked to respond. An example of this would be “All PR is good PR.” Discussion topics such as this one are abstract and often require that the instructor provide an initial reply to show students what is expected of them in their own replies. For students with limited work experience, this approach may be quite appropriate. For adult students with extensive experience as employees and consumers, however, the abstract nature of such topics can be frustrating. I have developed, therefore, a series of discussion board questions to use with experienced, adult students. These questions are designed to encourage them to use their experiences as employees and consumers as doorways to better understand the course material, and to make their own responses more interesting to themselves and to the other students in the class who will read and comment on them. Each question has three parts: 1. First, there is a sentence or two from the students’ textbook introducing the topic. By using the text author’s own words, students are enabled to locate relevant material in the text more easily, the text content is reinforced, and confusion resulting from use of variant terms or expressions is minimized. 2. Second, there is a reference to text pages the students should review before proceeding. Since the goal of the exercise is for students to apply the course content to their own experiences, reviewing the content first is important. 3. Third, there is a request for the students to think about or remember some specific situation in their experiences to which they can apply the text material, and a question or questions for them to address in their replies. Here are additional such discussion board questions developed for Chapter 10 of MKTG10. Each is written to fit the same text cited above but could easily be rewritten and revised to fit another text. Series A 1. A consumer product is bought to satisfy an individual’s personal wants. Although there are several ways to classify them, the most popular approach includes these four types: convenience products, shopping products, specialty products, and unsought products. 2. Review the descriptions of these types in section 10-2 in your text. 3. Then describe products you have purchased recently that represent each type. What made them that type for you? Series B 1. A group of closely related product items is a product line. 2. Review the material on product items, lines, and mixes in section 10-3 of your text. 3. Then describe the product mix sold by your employer and what product lines it includes. Are the product lines shallow or deep? Is the product mix narrow or wide? Explain your answers. Deborah Reed Scarfino, William Jewell College PACKAGING EGG-CITEMENT This topic concerns a packaging challenge that requires the student to use three main objectives of packing successfully. 1. Each student must creatively package a raw egg using cost effective materials. (Special consideration is given to recycling materials easily and cheaply found.) 2. The package must protect the egg from damage. 3. It must assist in marketing the product in some way. The product is a raw egg with the likeness of Elvis Presley on it. This is a limited number production item that Elvis fans worldwide will be interested in having in their collections. The student is the packaging engineer consultant of this decorative and very special item that sells for $175.00. Consumer collectors value the product more in its original package and will be interested in displaying it. It must survive mail order delivery. The delivery survival is tested by dropping the entire package from a third-floor classroom window at the beginning of class. Students collect their own package after “the toss” and open it in front of the class while verbally presenting their creative concept. This presentation will include trivia facts and their personal research of “The King” that are included in their packaging concept. Special details that demonstrate some unique knowledge of interest to Elvis fans add to its value. The interior package must assist in selling the item and help to justify its price. Note: This can be a messy class. Most concepts survive the toss and the students enjoy the fun and sharing of their wacky ideas. A few will wonder, “Why Elvis?” There is a lot of fun information and seemingly limitless ideas that come from his many song hits and high profile lifestyle, but any celebrity could work as well perhaps. My students look forward to the challenge and it becomes a memorable project assignment regardless of the toss outcome. Robert J. Brake, Concordia University RESEARCHING FOOD PRODUCTS WE LOVE TO HATE Since my students needed to experience some real hands-on learning earlier in the Marketing Management course, I created what became an entertaining research project, assigned after we examined product concepts and new-product development. The class was divided into three- or four-member teams, each assigned to explore a food or beverage most people love to hate. The five products originally chosen were: 1) Spam (Hormel’s WWII sumptuous repast that is now a cult favorite in America); 2) Twinkies (Hostess’s shortcake spinoff characterized by intriguing ingredients like beef fat, lard, and lecithin, and the shelf-life of gravel); 3) Fig Newtons (Nabisco’s 1891 concoction that is America’s third most popular cookie); 4) Kraft’s Tang (the astronauts’ favorite fake, sweet, orange-flavored drink); and 5) Sandoz’s Ovaltine (the favorite of Captain Midnight and Little Orphan Annie). My students were given just two weeks to discover everything they could about their product—with minimal guidelines from me. They were expected to apply textbook, lecture, and handout materials whenever possible. Although it was initially a voluntary project, the “dreaded foods” project is now a regular assignment in Business 366. I vary the products from term to term, substituting products like White Castle burgers, Oreos, Mystic Mints, anything by Mrs. Paul’s, and KFC. At the end of the two-week preparation period, students present a 10–15 minute “show” about their product. They also submit a 10–15 page group paper, discussing their findings and citing the resources used. The students had a great time! They used the Internet, 800 numbers, interviews with store managers, library books and articles, trade journals, food industry materials, store customers’ opinions (they developed some questionnaire design skills), and, in one case, a student’s parents, who live thirty miles from the Austin, MN Hormel plant. (They sent me a much-coveted Spam T-shirt.) Students displayed an awareness of concepts like utility, product differentiation, and line extension, as well as pricing, placement, and promotion. They brought product samples to class, creating a bizarre combination of taste treats and a critical need for Rolaids. The Spam group recited Haiku and demonstrated why the pig-parts favorite is the butt of so many jokes. Students got some real, informal, hands-on research experience, they had fun and entertained their classmates, they worked on a team, and received extra credit. Robert D. Winsor, Loyola Marymount University IMPLEMENTING PRODUCT POSITIONS: A PERCEPTUAL PICNIC This demonstration is designed to illustrate the marketing mix strategies used in product positioning through a fun and involving approach. In addition, students learn that although positions are typically interpreted through product attributes, consumer behavior is actually determined by individuals’ perceptions of these attributes. For this demonstration, the following beverages should be brought to class: 1. Orange-flavored soda (any popular brand) 2. Fruit-flavored Perrier brand sparkling water 3. Any flavor of Ozarka brand carbonated beverage 4. Any flavor of Clear American brand carbonated beverage 5. Snapple brand fruit-flavored beverage 6. Fruitopia brand fruit-flavored beverage (made by the Coca-Cola Company) 7. Orange juice (any popular brand) 8. Sunny Delight brand citrus punch (made by Proctor and Gamble) If possible, all beverages should be in bottles of roughly the same size, and these bottles should be in a box which conceals them from the view of students. In addition, bring a container of ice and enough disposable cups for all class members. Once the above materials are assembled, the exercise can be performed in four steps. I. The demonstration should begin by placing the bottle of orange-flavored soda at one end of a long table or desk at the front of the classroom. A brief history of the soft drink industry can be noted, if desired. Next, place the bottle of Perrier at the other end of the table and initiate a brief discussion of the positioning strategy used to introduce this brand to the market (by differentiating it from traditional soft drinks and targeting an older, more “sophisticated” market). Now, walk to the middle or back of the classroom and hand the bottle of Ozarka sparkling water to any student. Ask this student to promptly place this bottle in its “proper” position on the table in consideration of its attributes. Invariably, this student will place the Ozarka bottle nearest to the Perrier bottle. At this point, the stage is set for an explanation of the strategy used by the Ozarka. to position its brand as a “very good tasting” version of sparkling water. Note the following elements of the marketing mix used in this positioning strategy: the shape of the bottle (similar to that of Perrier); the name (foreign sounding); the product description and labeling (“sparkling spring water with citrus essence” [note European spelling]); the price (expensive, similar to Perrier); and its retail shelf location (near Perrier and other waters, and far away from ordinary sodas). Next, give the Clear American bottle to another student and ask this person to place it on the table nearest the brand to which it is most similar. At this point, ask the students how many calories both Ozarka and Clear American have while considering the vast difference in flavor. Point out the potential consumer confusion and positional “disequilibrium” created in the beverage market by the introduction of Clear American, which is very sweet. Finally, note to students that Clear American’s actual attributes are equivalent to those of a conventional fruit-flavored soda. Positioned as a sparkling water, Clear American is altogether superior in taste to its competitors. As a soda however, it is overpriced and somewhat less flavorful than substitute brands. Ask students how successful they believe this brand would have been if positioned as a soda rather than as a sparkling water. II. Continue this demonstration with the remaining beverages. Observe that Fruitopia, which is heavily promoted using a fruit theme (as in the name), actually contains only 10% fruit juice. Similarly, Sunny Delight, which is packaged and labeled in a manner nearly identical to that of orange juice (“enriched citrus beverage”), contains only 5% juice. III. Summarize by noting how consumer perceptions become more important than actual attributes in positioning a product, as perceptions are what actually drive purchase and consumption behavior. IV. Conclude by opening beverages and consuming. A fun and thought-provoking time is guaranteed for all. Part 3, Ch. 10, Product Concepts: Why L.L.Bean’s crazy return policy might work in its favor. L.L.Bean takes a non-traditional approach to its product warranties. Every L.L.Bean product has a “100 percent satisfaction guarantee,” which means the company vows that its customers will be 100 percent satisfied with a product. If a customer isn’t satisfied, he or she can send the product back to L.L.Bean for a repair, replacement, or refund—no questions asked. Over the years, L.L.Bean customers have shared their stories of using the company’s return policy. People have returned 15-year-old sweaters, ripped shirts, muddy boots, and well-worn backpacks. Each time, L.L.Bean has replaced the item for free or credited the customer with a refund. It can be expensive for L.L.Bean to honor its return policy. Some customers may abuse the system by returning an old coat or backpack every few years to get a new one. The company is also vulnerable to a product failure, which would trigger mass returns of one item. In fact, some of L.L.Bean’s competitors that once had similar return policies have now amended them to protect their businesses. However, L.L.Bean representatives say the company values its policy, because it allows L.L.Bean to provide the best service and products possible to its customers. As for the potential abuse, L.L.Bean’s position is a simple one: The company trusts its customers. If a customer believes a product does not meet his or her expectations of that product, then L.L.Bean will make it right. There’s an added benefit to placing high emphasis on customer satisfaction. When L.L.Bean customers feel valued and cared for, they tell their friends and family about that experience. That generates goodwill toward the brand. Some L.L.Bean customers even become brand advocates who promote L.L.Bean and its products to potential customers. Sources: Bobkoff, D., “What Happens When Stores Let Customers Return Whatever They Want?” National Public Radio, September 25, 2013, http://www.npr.org/sections/money/2013/09/25/223787129/what-happens-when-a-store-lets-customers-return-whatever-they-want. Connor, A., “How L.L. Bean Makes Its Iconic Boots,” Gear Patrol.com, July 14, 2015, http://gearpatrol.com/2015/07/14/l-l-bean-makes-iconic-boots/. McAvoy, K., “L.L. Bean Customer Service Gets It Right on Second Try,” Spendmatters.com, February 13, 2015, http://spendmatters.com/2015/02/13/l-l-bean-customer-service-gets-right-second-try/. L.L. Bean Satisfaction Guarantee. Retrieved from http://www.llbean.com/customerService/aboutLLBean/guarantee.html. Solution Manual for MKTG: Principles of Marketing Charles W. Lamb, Joe F. Hair, Carl McDaniel 9781305631823, 9781285860145, 9781337116800