Preview Extract
Chapter Nine: Product Branding and Packaging Decisions Chapter Objectives 1. List the components of a product 2. Identify the types of consumer products 3. Explain the difference between a product mix’s breadth and a product line’s depth 4. Identify the advantages that brands provide firms and consumers 5. Summarize the components of brand equity 6. Describe the types of branding strategies used by firms 7. State how a product’s packaging and label contribute to a firm’s overall strategy Annotated Chapter Outline PowerPoint Slides Instructor’s Notes The chapter objectives and roadmap are intended to help students understand the content to be discussed. Opening Vignette: Dove Dove has taken a brand known primarily as a beauty bar (soap) and successfully extended it into many new product lines. This example illustrates brand image, brand promise, brand extension and brand equity. Ask students: How has Dove’s product line depth changed with the addition of new products? Answer: it has become considerably longer. From only soap, it now offers body wash, body lotion, shampoos, conditioners, styling aids, face care, and deodorant. Topic One: Product Components Products are interrelated and include the problem solving benefits consumers are looking for, the actual product and associated services. Marketers involved with the development, design, and sale of products think of them in an interrelated fashion. At the center is the core customer value, next is the actual product, followed by associated services. Topic Two: Types of Consumer Products This material was covered in the Consumer Behaviour chapter however applies to branding discussions as well. Consumer products are products and services used by people for their personal use. Marketers further classify these products by the way they are used and purchased. Topic Three: Product Mix and Product Line Decisions I. The Product Mix Is the Complete Set of Products Offered by a Firm. II. The Product Category Is an Assortment of Items that Customers View as Reasonable Substitutes. III. Stock Keeping Units (SKU) Are the Smallest Units Available for Inventory Control. IV. Product Lines Are Groups of Associated Items that Consumers Use Together. V. Product Mix Breadth Represents the Number of Product Lines a Firm Offers. VI. Product Line Depth Is the Number of Categories within a Product Line. This chapter uses many brands as examples. Many students may be unfamiliar with the name ConAgra, but they likely know its brands, such a Chef Boyardee, Jiffy Pop and Orville Redenbacher popcorn. All companies need to manage their brand portfolios to meet the needs of current customers. One of ConAgra’s best known and most successful brands is Healthy Choice. With its distinctive green packaging, Healthy Choice products appear throughout supermarkets. Group activity: List as many Healthy Choice products as you can think of. How many product lines do they represent? Healthy choices (http://www.healthychoice.com/products/news.jsp) has four types of meals, soups (bowls and cans), frozen novelties, bread and pasta sauces. Thus, they have five product lines. Students should understand that each item is called a stock keeping unit (SKU) and the category depth is the number of SKUs within a category. In the canned pasta category, ConAgra offers a wide range of products, or SKUs, under its Chef Boyardee brand. A. Changing product mix breadth 1. Increase breadth by adding new product lines to capture new or evolving markets, increase sales, and compete in new ventures. 2. Decrease breadth by deleting entire product lines to address changing marketing conditions or meet internal strategic priorities. Ask students: Why would a company want to increase its product mix breadth? Why would it want to decrease it? Students should comment that they would increase to capture new or evolving markets and increase sales. Decreasing might be due to changing market conditions or internal strategic priorities. B. Changing product mix depth 1. Increase depth by adding new categories within product lines to address changing consumer preferences or pre-empt competitors to boost sales. 2. Decrease depth by deleting product categories to realign resources. Ask students: What are the pros and cons of offering competing products in the same category? The primary advantage is to increase overall sales and profits. But at the same time, adding competing products can cannibalize sales of current brands. Firms must determine the net effect on sales and the overall impact on competitive products. To meet the needs of different market segments for the same product category, firms often offer competing brands. ConAgra offers three of the most popular popcorn brands, each of which is positioned slightly differently in the marketplace and carries its own unique marketing mix. C. Changing the number of SKUs To stimulate sales or react to consumer demand, some companies add or delete SKUs. Many stores add SKUs to provide a deeper assortment. They might add, for instance, more colors or sizes in a category. Ask students: What effect does this have on consumer behaviour? On financial performance? What is the effect of reducing the number of SKUs? By providing consumers with a deeper assortment, it is more likely that the store will satisfy their demand, which should result in increased sales. But adding SKUs is expensive. The effect of reducing SKUs is just the opposite. Answer: A Topic Four: Branding Brand identification takes many forms. Ask students: How many of you can sing the Oscar Meyer jingle? Student will get a kick out of the YouTube ad (always check before class). It is the one of the original 1965 Oscar Meyer ads. Group activity: Compare the positioning of two Chevrolet brands (e.g. Corvette, Aveo, Impala, and Malibu). Why does Chevrolet have so many competing brands in the same category? Each brand is aimed at a different target market. Aveo starts around $10,000 while a Corvette coup starts at $45,000. Group activity: Identify a brand that you recognize primarily by each of these elements. Brand Name: Most brands. Jingles: Be all you can be – Army URLs: www.eBay.com Logos & Symbols: Nike Swoosh Slogans Nike- Just Do It. Characters: Quaker, KFC, McDonalds. The Value of Branding for Customers and Marketers A. Brands facilitate purchasing because consumer recognition facilitates quick decisions. B. Brands can establish loyalty over time and with continued use. C. Brands minimize competition because of their loyal customers. D. Brands reduce marketing costs; well-known brands can largely sell themselves. E. Brands are assets that firms must protect through trademarks and copyrights. F. Brands influence market value and the firm’s bottom line. Group activity: Have students pick a well-established brand. Have them provide examples of how the brand provides value. For example, consider eBay. The brand facilitates instant recognition, consumers are avidly loyal, which reduces competition from other online auctions and reduces expensive marketing ads. The brand is a valuable asset that they protect through copyrights, and directly affects their profits. Answer D Topic Five: Branding Overview & Brand Equity Branding Includes Brand Equity, Brand Ownership Strategies and Brand Name Strategies. Brand Equity Consists of Four Concepts: Awareness, Perceived Value, Associations and Loyalty. Assets and liabilities linked to a brand can add to or subtract from the value provided by the product or service. Brand equity is an important concept that can both help and hinder. For example, customers dislike some brands because of the firm’s actions or their negative perceptions. Nike has been the target of many labour activists, which causes some consumers to refuse to purchase or wear Nike products. Mattel’s brand equity was hurt when it recalled over 19 million toys because of lethal magnets and lead paint. Additional slides follow to further elaborate on brand equity, brand ownership strategies and brand naming strategies. Brand Equity A. Brand awareness measures how many consumers in a market are familiar with the brand and have an opinion about it. Remind students what they have learned about consumer behaviour. When consumers recognize a need, they begin with an internal search, during which they consider any brand they already know. If consumers are not aware of the brand, they simply will not purchase it. B. Perceived value represents the relationship between a product’s or service’s benefits and its cost. Consumers report looking for and purchasing more organic products for a variety of reasons, such as concerns about health, the environment, and safety. Organic products often cost more but are perceived as more valuable by some because they mitigate these concerns. C. Brand associations reflect the mental links consumers make between a brand and its key product attributes, such as its 1. Logo. 2. Slogan. 3. Brand personality, which refers to human characteristics people associate with the brand’s symbolic or self-expressive meaning. In this billboard ad Kristen Davis, Charlotte from “Sex in the City”, offers her classical good looks to reflect the brand personality of Weatherproof outerwear. Firms sometimes develop a personality for the brand – as if it were human. Ask students what brands have personalities – they might mention McDonald’s and Pepsi (young). Consumers develop links between brands and their own identity. Some brands are just “not for them.” Ask students: How many of you proudly wear Abercrombie & Fitch clothing? How many choose never to wear this brand? How do you perceive this brand’s message? Answer B D. Brand loyalty occurs when a consumer buys the same brand’s product or service repeatedly rather than buying from multiple suppliers. Brand loyalty provides the firm with high value. State Farm has built their brand equity by having loyal customers. Ask students: Once you have chosen an insurance company or a bank, how likely is it that you will switch? How likely is it that you will switch due to an increase in price? Is it important for the firm to spend a lot of money marketing to you, a loyal customer? Do you pay much attention to ads or direct mail pieces from competition? To further illustrate brand loyalty, ask students: would you leave a store if your particular brand were not in stock? When you order a Sprite in a restaurant and the server asks, “Is 7-Up okay?” do you say no? Topic Six: Branding Ownership & Strategies I. Brand Ownership Takes Several Forms. A. Manufacturer or national brands are owned and managed by the manufacturer; most U.S. brands are manufacturer brands. B. Private label or store brands are owned and managed by retailers. C. Generic products are sold without brand names, typically in commodities markets. Unlike Europe, where store brands such as Tesco (U.K. grocery chain) were extremely popular, in the United States, few store brands had achieved such status and were often considered inferior to manufacturer or national brands. In Canada, many store brands are well established, such as Kenmore, Mastercraft and Presidents’ Choice. Private-label brands, also called store brands, house brands, or own brands, are products developed by retailers. Some manufacturers prefer to make only private-label merchandise because the costs of developing and marketing a manufacturer’s brand are prohibitive. President’s Choice is a popular store brand in Canada that has also found acceptance in the U.S. II. Name Brands and Product Lines. A. The corporate or family brand benefits the individual brands associated with the family name. B. Corporate and product line brands use a combination of the corporate and product brand names. C. Individual brands identify each product individually. Branding exists on multiple levels, and firms choose strategically how to brand their products. The names they assign their products reflect this strategic choice. Marriott gives its individual brands unique names, all tied together by the phrase “by Marriott,” like Fairfield Inns by Marriott. Ask students: What is the benefit of this type of naming strategy? Answer C Backwoods Brewery in Vancouver has sold its beer to local restaurants and bars for a decade. Taking note of whacky wine names like Fat Bastard and Cat’s Pee on a Gooseberry Bush, the company recently rebranded its beer as Dead Frog. The goal was to create a fun name in a category that has been very conservative. “Dead Frog”, while irreverent, is memorable and appeals to a younger demographic. III. Brand Extensions Offer Advantages and Risks. A. An extension uses the same brand name for new products introduced in the same or new markets and can benefit the brand in several ways. 1. The brand name is already well established and possibly known for its high quality. 2. Marketing costs are lower because consumers already know and understand the brand. 3. The resulting synergy between the two products can increase overall sales. 4. The extension may boost sales of the parent brand because new adopters may now try the parent brand. B. However, potential risks of expansions exist as well. 1. Brand dilution can adversely affect consumer perceptions of the core brand’s perceived attributes. 2. Marketers must carefully evaluate the fit between the product class of the core brand and the extension. 3. Firms should evaluate consumer perceptions of the core brand’s attributes and seek extensions with similar attributes. 4. Firm should refrain from extending the brand name to too many products. 5. Firms should consider whether the brand extension can achieve sufficient distance from the core brand. Extending the equity of a brand to new products makes sense sometimes. But with over 30 (and counting) Oreo extensions created over the years—not including the infamous Oreo Fun Barbie doll licensed to Mattel—you have to wonder just how relevant the exposure is and is the consumer marketplace flat out oversaturated? Group activity: Think further about the Healthy Choice brand. How has ConAgra been able to extend this brand? What other extensions might it consider? The next slide shows some of Healthy Choice brand extensions. Additional possibilities for ConAgra could include ice-creams and fruit juices. A brand is only as good as its last extension. Many firms try to take their brands just one more step, only to find the extension hurts rather than helps the parent brand. For example, McDonald’s agreed to license a McKids line of clothing, but the line was not as successful as it had hoped it would be. Ask students: In terms of this slide, what do you think McDonald’s did wrong? IV. Cobranding Markets Multiple Brands with the Same Package or Promotion. Cobranding benefits the participating brands by attracting the consumers of one brand to the others. Remind students of the FedEx/Kinko’s example. The synergy between these two brands helped ensure a successful cobranding effort. V. Brand Licensing Involves a Contractual Arrangement. A. One firm allows another to use its brand name, logo, symbols, and/or characters. B. The user provides the brand owner with a negotiated fee in exchange. Think about the products that feature the Lacoste alligator or the Harley-Davidson logo. NASCAR has recently licensed Canadian Tire to produce a range of products for the automotive aftermarket such as NASCAR batteries and windshield wiper fluid. Ask students: Why can these brands be extended in so many directions? Answer: These brands have a strong mystique and a loyal following, and are therefore likely to buy their brand extensions. Topic Seven: Packaging I. Consumers See the Exterior Packaging. A. Packaging provides consumers convenience in terms of storage, use, and consumption. B. Packaging helps consumers identify the brand they prefer. II. Packaging Contains: A. The UPC label used by retail scanners appears on secondary packaging. B. Consumers can use the package itself to find additional information that may not be available on the exterior package. Although often overlooked as a marketing tool, packaging helps determine the success of a product. In some instances, such as Coca-Cola or Aunt Jemima Maple Syrup, the package has become synonymous with the brand. Even small firms benefit from good packaging and labelling. Quaker Coffee’s packaging conveys its value proposition to the marketplace. Its labels communicate roast qualities and bakery labels state “baked fresh.” Sales increased 400% as a result of the redesigned packaging. Ask students: What packages are so distinct that they help make the brand successful? Possible answers are: some bottled waters such as Perrier, Altoids, and Tiffany’s turquoise box Weston Bakeries and William Neilson are the first consumer products marketers to be awarded the distinction of displaying the ParticipACTION logo and website on their packaging. Weston will use the ParticipACTION symbol across Canada (excluding Quebec) on Wonder+ bread products. Neilson Dairy will feature the symbol on its 1% and 2% four-litre bagged milk products in Ontario. Case-in-Point Series This slide sets up the Case in Point that follows. Topic Five: Product Labelling I. The Purpose of Labels. A. Labels provide information the consumer needs for decision and consumption. B. More than just a sticker, the product label provides a communication tool. II. Legal Restrictions on Labels. A. Many labelling requirements stem from various laws. B. Federal agencies, industry groups, and consumer watchdogs carefully monitor product labels. Label information is determined by regulations, and labelling rules vary from country to country. Certain terms convey specific meanings, such as “natural,” “organic,” “made in Canada,” and products must meet specific tests before placing such terms on their label. Group activity: Look at the label of a snack or drink you may have brought to class. What information does it provide? How does it support the marketing of this item? Chapter Ten: Services: The Intangible Product Chapter Objectives 1. Identify how marketing a service differs from marketing a product and apply the principles of intangibility, inseparability, inconsistency and inventory 2. Explain why it is important for service marketers to understand and manage customer expectations 3. Describe strategies that firms can use to help employees provide better service 4. Summarize three service recovery strategies Annotated Chapter Outline PowerPoint Slides Instructor’s Notes The chapter objectives and roadmap are intended to help students understand the content to be discussed. Opening Vignette: 1-800 Got Junk By focusing on great customer service, 1-800 Got Junk establish a superior reputation in the junk removal business. It hires great people and treats them well which allows the company to deliver an exceptional customer experience. Employees are encouraged to submit suggestions which help keep them motivated. Service is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed. Customer service refers to the human or mechanical activities firms undertake to help satisfy their customers’ needs and wants. In a service economy, firms compete on how well they provide service to their customers. Ask students: Describe your last outstanding and horrible customer service experiences. How did it affect your attitude toward the firm? How did it affect your purchase behaviour? Increasing service orientations in developed economies, and the decline of manufacturing, has occurred because 1. Production is cheaper elsewhere. 2. Household maintenance activities are more specialized. 3. People place a high value on convenience and leisure. According to Theodore Levitt, all products are services. Ask students: What does this statement mean? When you purchase products, do you also purchase the services associated with the product? Like what? Remind students about how environments influence marketing. As economic, technological, and sociocultural environments change, so do demands for services. Group activity: Examine some key changes in each of these environments that have led to greater demands for service. Some potential responses include automation, women in the workplace, new trade realities, or shipping and transportation improvements. Answer C Topic One: Services Marketing Differs from Product Marketing This graph sets up the following discussion; if you wish to shorten this presentation, simply review these differences. The next slides go into greater detail. I. Services Marketing Is Intangible. A. Services cannot be touched, tasted, or seen like a product. B. Marketers must offer cues to help customers experience and perceive the service more positively, such as 1. A good atmosphere in which to experience the service. 2. Symbols and images to promote and sell services. 3. Images that reinforce the benefit or value that a service provides. Consumers use cues to judge the service quality of dentists, including the quality of the furnishings, whether magazines are current, and diplomas on the wall. Group activity: Think about the cues you use to assess the quality of a service. Choose a particular service (e.g., auto repair, medical care, insurance) and list several cues the provider could use to indicate quality. II. Production and Consumption Are Inseparable. A. Unlike products, services are consumed at the moment they are produced. B. Consumers cannot test a service; so many providers offer warranties or guarantees to reduce their risk. When staying at a hotel, you can’t test it out before you stay. Some hotels offer satisfaction guarantees to lower risk. Ask students what other kinds of products can they not test before? Some of them might say delivery in which case it is funny to show this YouTube ad. The ad (always check before class) is for FedEx and was one of their best superbowl ads ever. III. Services Are Variable. A. Humans provide services, so variability is inevitable. B. To reduce variability, firms can 1. Conduct extensive training of employees. 2. Micromarket. 3. Automate services. 4. Employ the Internet to reduce both online and in-store sale variability. Many students work in service professions. Ask students: How have your employers attempted to reduce service variability? Do these programs work? What else could your employer do to reduce variability? In many industries, consumers have taken roles in the final production process; ATMs, self-service gas stations, and self-service restaurants all shift labour to the consumer, and yet many consumers consider these technologies actually improve customer service. Technology can reduce inconsistency of service delivery. Answer B IV. Services Are Perishable. A. They cannot be stored for future use. B. This aspect poses significant challenges for marketers. Each of the pictured services is perishable, because as soon as the plane/ship departs, the date ends, or the meal is served, there is no possibility of changing. Services can’t be stored in inventory for future use. Unsold seats or rooms are lost revenue. Topic Two: Providing Great Service: The Gaps Model This slide sets up the discussion that follows and can be used as the basis for a shorter discussion. I. Define the Knowledge Gap. A. The knowledge gap reflects the difference between customers’ expectations and the firm’s perceptions of those expectations. B. To understand consumer expectations, firms must recognize that expectations 1. Are based on knowledge and experience. 2. Vary according to the type of service. 3. Vary depending on the situation. Many doctors believe they should be evaluated on the basis of their credentials and find consumers’ interest in wait times, friendliness of staff, and waiting room décor frustrating. Ask students: What can doctors do to close this knowledge gap? Higher education often gets accused of being customer unfriendly. How can a university close the knowledge gap and thus improve service quality and outcomes? II. Evaluate Service Quality. A. Customers often have trouble determining how well a service meets or exceed their expectations. B. The building blocks of service quality are 1. Reliability. 2. Responsiveness. 3. Assurance. 4. Empathy. 5. Tangibles. Ask students: What are your expectations of the service provided by these two businesses. Will there be price differences? In what circumstances would you stay at each property? Class activity. Tell students: Assume you are expecting an important package from UPS. A delivery attempt was made, but you didn't hear the door bell, and missed it. You call the customer service line and they tell you not to worry, and that one of your options is to pick up the package at the terminal that evening. You tell them that you need the package before noon. So, they arrange for you to meet the delivery truck close to your house. You are delighted when you spot the clean brown UPS truck exactly where it is supposed to be. The friendly driver greets you by name, gets your package and you are on your way. Ask the students: Which of the service building blocks of customer service applies to each aspect of this scenario? Answer D III. Use Marketing Research to Understand Customers. A. Research provides a means to understand consumers’ service expectations and service quality perceptions. B. Research can take several forms: 1. Voice of the customer (VCO) programs collect customer inputs and integrates them into managerial decisions. 2. The zone of tolerance defines the area between customers’ desired service and the minimum level of acceptable service. Consumers often have a range of acceptable outcomes. Discuss the example of a hotel room: You prefer a king bed but will accept two queen beds; you will not, however, accept a room without towels or a lumpy mattress. Therefore, you have defined your zone of tolerance for hotels. Go to the Toolkits on the OLC. Click on Zone of Tolerance analysis. Work through one of the three problems provided. The other two could be assigned to students to do. Class exercise: Have students evaluate the zone of tolerance for the food service options on campus. This exercise forces students to think about the five service quality dimensions. It will also reinforce the idea that if a firm is above the zone, particularly on an unimportant dimension, they are probably spending too much. At the same time, if it is below the zone, its service is substandard. Being substandard on an important dimension is potentially a devastating problem. Apple Genius Bar Ask students – what are your expectations when you buy a computer? How can they be exceeded? Students will mention their basic expectations in terms of fast performance and reliability. It might be challenging for them to figure out how to make it better. Topic Three: Strategies for Providing Better Service The Standards Gap Dictates Service Standards. IV. To achieve their service goals through training, firms must set specific, measurable goals based on customers’ expectations and involve employees in setting goals. If managers display a commitment to service quality, they can demand the same attitudes from everyone in the organization. Quality service requires constant investments in training and monitoring. Similar to any other strategic element, service quality flows from the top down. Rewards and incentives must be in place to support service quality commitments. Ask students: What types of incentives work best to make service employees buy in to their firm’s service standards? Answer B V. The Delivery Gap Indicates How to Deliver Service Quality. This slide again sets up the following discussion, which you may omit if you prefer to focus just on these dimensions. A. Empowerment means allowing service employees to make decisions about service provision. Frontline employees must be able to solve customer problems. Ask students: The last time you returned something to a store, did the person waiting on you process the return, or did he or she need to get a manager’s approval? Which do you prefer? B. Provide support and incentives 1. Managers and coworkers should provide emotional support to service providers. 2. Service providers require instrumental support, the systems and equipment necessary to deliver service properly. 3. Managers must be consistent throughout the organization. 4. Reward employees for excellent service. If the firm has just a paper commitment to service quality, it will not happen. Systems must support the service providers and allow them to do their job and exceed customer expectations. Ask students: What types of incentives do you believe would best motivate UPS delivery drivers? Of course they will say money. This could lead to an interesting discussion about how intrinsic rewards like recognition plaques can mean as much or more than money. C. Technology has changed the way firms do business with other businesses and customers. Technology has become an increasingly important method for facilitating the delivery of services. RFIDs (radio frequency identification devices) are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products. Another way to use technology in the service delivery process is with a retail store assistant (RSA). An RSA can be a kiosk or a device attached to the customer’s shopping cart. Instead of bringing a shopping list to the store, a customer can swipe a loyalty card or enter a phone number at an RSA. Any information the customer has entered online from home will show up on the customer’s profile. Ask Students what new technologies they have seen at retailers? VI. The Communications Gap Suggests Ways to Communicate the Service Promise. A. To manage the communications gap, firms must manage customer expectations. B. That means promising only what they can deliver, or perhaps even a little less. Many people have never stayed in a five-star hotel, but they know what level of service quality they expect. Often, such expectations develop in response to the promises made in promotional materials provided by the firm. Many firms over promise and under deliver; WestJet Airlines attributes its success to under promising and over delivering instead. Topic Four: Service Recovery This slide sets up the following discussion and can be used instead of the more detailed discussion that follows. I. Listen to the Customer. Group activity: Think about the last time you called a firm about a service issue. How were you treated? What determined your level of satisfaction with the result? Sometimes, just having someone who listens and tries to understand the issue is sufficient. According to a recent airline study, if the airline provides a reason for delays, travelers are less annoyed by the service interruption. II. Find a Fair Solution. A. Distributive fairness refers to customers’ perceptions of the benefits they receive compared with the costs they must expend. B. Procedural fairness refers to their perceptions of the fairness of the process used to resolve complaints. Even if they eventually receive a solution that seems fair, when consumers must work hard to achieve it, their low procedural fairness perceptions may cause them to believe that they are being punished for receiving bad service. Ask students: How can service firms enhance both distributive and procedural fairness simultaneously? By establishing firm policies, such as the “Customer Bill of Rights” adopted by Jet Blue. (http://www.jetblue.com/about/ourcompany/promise/index.html) This statement details what type of service the firm should provide as well as the remedies that will be offered in case of service failure. This statement allows consumers to understand how and when they will be compensated for service failures. Answer C III. Resolve Problems Quickly. A. The longer a resolution takes, the more irritated customers become. B. With more time, they have more opportunities to tell others about the problem. By compounding a service failure with long delays in correcting it, the firm creates a hostile customer. Remind students about the strong influence of negative word of mouth. Instructor Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9780071320382, 9780070984929
