lruln/McGrau-Hl||

The McGrau-Hl|| Comanles, lnc., 2000

MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
lruln/McGrau-Hl||
C H A P T E R T W E L V E
MANAGING PRODUCTS
AND BRANDS
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
AFTER READING THIS CHAPTER YOU SHOULD
BE ABLE TO:
W Explain the product life cycle (PLC) concept
and relate a marketing strategy to each stage.
W Recognize the differences in PLCs for various
products and their implications for marketing
decisions.
W Understand alternative approaches to
managing a product`s PLC.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
AFTER READING THIS CHAPTER YOU SHOULD
BE ABLE TO
W Describe elements of brand personality and
brand equity and the criteria for the good
brand name.
W Explain the rationale for alternative branding
strategies employed by companies.
W Understand the benefits of packaging and
warranties in the marketing of a product.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -AA Gatorade: The Active Thirst AA Gatorade: The Active Thirst- -Quencher Quencher
W The Gatorade brand commands more than 80 of the $1.5
billion U.S. sports drink market.
W Today Gatorade is the official sports drink of Major League
Baseball, the National Football League, the National
Basketball Association and the National Hockey League.
W Gatorade sales have been built via more flavors, multiple
package sizes and forms, including glass and plastic bottles
and aluminum cans.
W Distribution has been expanded to include convenience stores
and supermarkets followed by vending machines and
fountain service.
W Consistent advertising has effectively conveyed the product`s
benefits and links with athletic competition.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -BB The Product Life Cycle Concept BB The Product Life Cycle Concept
W Products, like people, have been viewed
as having a life cycle.
W The concept of the product life cycle
describes the stages a new product goes
through in the marketplace:
introduction, growth, maturity, and
decline.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -1 How stages of the product life cycle relate to a firm`s 1 How stages of the product life cycle relate to a firm`s
marketing objectives and marketing mix actions marketing objectives and marketing mix actions
Marketing
objective
Marketing
objective
Gain
Awareness
Gain
Awareness
Stress
differentiation
Stress
differentiation
Maintain
brand loyalty
Maintain
brand loyalty
Harvesting,
deletion
Harvesting,
deletion
Competition Competition None None Growing Growing Many Many Reduced Reduced
Product Product One One More versions More versions
Full
product line
Full
product line
Best sellers Best sellers
Price Price
Skimming or
penetration
Skimming or
penetration
Gain share, deal Gain share, deal
Defend share,
profit
Defend share,
profit
Stay profitable Stay profitable
Promotion Promotion Inform, educate Inform, educate
Stress
competitive
differences
Stress
competitive
differences
Reminder
oriented
Reminder
oriented
Minimal
promotion
Minimal
promotion
Place
(distribution)
Place
(distribution)
Limited Limited More outlets More outlets
Maximum
outlets
Maximum
outlets
Fewer outlets Fewer outlets
Stage of the product life cycle
S
a
l
e
s

r
e
v
e
n
u
e
o
r

p
r
o
f
i
t
Introduction Growth Maturity Decline
+
0
-
Total industry
sales revenue
Total industry profit
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -A A Primary Demand Ad for Coffee A A Primary Demand Ad for Coffee
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -2 Product Life Cycle for the stand alone FAX machine for 2 Product Life Cycle for the stand alone FAX machine for
business use: 1970 business use: 1970- -1999 1999
1970 1975 1980 1982 1984 1986 1988 1990 1992 1994 1996 1997 1998 1999
$7.0
6.0
5.0
4.0
3.0
2.0
1.0
S
a
I
e
s

(
$
b
i
I
I
i
o
n
)
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -CC Will the Internet bury the Familiar Fax? CC Will the Internet bury the Familiar Fax?
W Technical substitution often causes
the decline stage in the PLC.
W Will the Internet and E-mail replace
FAX machines?
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -DD Some Dimensions of the PLC DD Some Dimensions of the PLC-- --Length Length
1. Consumer products have shorter
PLCs than industrial products.
2. Mass communication informs
consumers faster and shortens PLCs.
3. Products affected by technological
change tend to have shorter PLCs.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -EE Some Dimensions of the PLC EE Some Dimensions of the PLC-- --Shape Shape
1. High learning product
2. Low learning product
3. Fashion product
4. Fad product
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -3 Alternative Product Life Cycles 3 Alternative Product Life Cycles
Time Time
B. Low Iearning product
Time
A. High Iearning product
Time
D. Fad product C. Fashion product
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -BB Product life cycle for wine coolers Product life cycle for wine coolers
iIIions
of DoIIars
$1500
$1000
$500
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Source: Figure drawn from Wine and Liqour Handbook statistics.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -C Recording industry product form life cycles C Recording industry product form life cycles
Source: Figure drawn from Recording Industry Association of America statistics.
M
i
l
l
i
o
n
s

o
f

u
n
i
t
s

s
o
l
d
650
600
550
500
450
400
350
300
250
200
150
100
50
0
1
9
8
9
1
9
9
1
1
9
9
3
1
9
9
5
1
9
8
7
1
9
7
7
1
9
7
9
1
9
8
1
1
9
8
3
1
9
8
5
1
9
7
5
1
9
7
3
Albums
Cassettes
Compact
disks
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -FF Some Dimensions of the PLC FF Some Dimensions of the PLC-- --Product Level Product Level
1. Product brand -- the specific version of a
product offered by a particular company
2. Product class -- refers to the entire product
category or industry such as video games
3. Product form -- pertains to variations
within the product class
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -4a Video game life cycles by product class, product form, 4a Video game life cycles by product class, product form,
and brand and brand
1987 1989 1991 1993 1995 1997 1999 (est.)
8-bit machines
16-bit machines
32-/64-bit machines
Product form
Product cIass
TotaI
A. Video game Iife cycIe by product cIass and product form (worIdwide)
40
30
20
10
0
W
o
r
I
d
w
i
d
e

s
a
I
e
s

(
m
i
I
I
i
o
n
s

o
f

u
n
i
t
s
)
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -4b Video game life cycles by product class, product form, 4b Video game life cycles by product class, product form,
and brand and brand
$4
3
2
1
0
1994 1995 1996 1997 1998 1999 (est.)
Nintendo
Sony
Sega
B. Advanced video game Iife cycIe by brand (United States)
U
.
S
.

s
a
I
e
s
,

i
n
c
I
u
d
i
n
g

h
a
r
d
w
a
r
e

a
n
d

s
o
f
t
w
a
r
e

(
$

b
i
I
I
i
o
n
)
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -GG Factors Affecting the Diffusion of an Innovation GG Factors Affecting the Diffusion of an Innovation
1. Usage barriers -- the product is not compatible
with existing habits.
2. Value barriers -- the product provides no
incentive to change.not that much better.
3. Risk barriers -- risk can be physical, social or
economic/financial.
4. Psychological barriers -- which can be the result
of cultural differences or image.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -5 Five categories and profiles of product adopters 5 Five categories and profiles of product adopters
Laggards:
Fear of debt, neighbors
and friends are
information sources
Laggards:
Fear of debt, neighbors
and friends are
information sources
Early adopters:
Leaders in social setting,
slightly above average
education
Early adopters:
Leaders in social setting,
slightly above average
education
Late majority:
Skeptical, below average
social status
Late majority:
Skeptical, below average
social status
Innovators:
Venturesome, higher
educated, use multiple
information sources
Innovators:
Venturesome, higher
educated, use multiple
information sources
Early majority:
Deliberate, many
informal social contacts
Early majority:
Deliberate, many
informal social contacts
Time
Innovators
2.5
Early adopters
13.5
Early majority
34
Late majority
34
Laggards
16
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -HH Concept Check HH Concept Check
1. Advertising plays a major role in the _____
stage of the PLC, and _____ plays a major
role in maturity.
2. How do high learning and low learning
products differ?
3. What does the life cycle for a fashion
product look like?
??
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -II The Product (Brand) Manager II The Product (Brand) Manager
W Product Managers: manage the marketing efforts for
a close-knit family of products or brands.
W Responsibilities of the Product/Brand Manager:
W developing and executing a marketing program
for the product line described in an annual
marketing plan;
W approving ad copy, media selection, and
package design; and
W a role in planning, implementing, and
controlling marketing strategy.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -11 Product Modification 11 Product Modification
W Product Modification involves altering a product`s
characteristic, such as its quality, performance, or
appearance, to try to increase and extend the
product`s sales.
W Changing a product`s characteristics to give the
sense of a revised product can be accomplished by:
W new features
W new package
W new scents, etc.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -KK Market Modification KK Market Modification
Market Modification strategies are utilized
when a company tries to:
1. Increase a product`s use among
existing customers,
2. create new use situations, or
3. find new customers.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -LL Repositioning the Product LL Repositioning the Product
W Product repositioning is changing the place a
product occupies in a consumer`s mind relative to
competitive products.
W A firm can reposition a product by changing one or
more of the four marketing mix elements (product,
place/distribution, price, promotion).
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -MM Four Factors that trigger product repositioning MM Four Factors that trigger product repositioning
Product Repositioning can be triggered by:
W reacting to a competitor`s position
W reaching a new market
W catching a rising trend
W changing the value offered
trading up
trading down...can be via downsizing
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -NN Concept Check NN Concept Check
1. How does a product manager help manage
a product`s life cycle?
2. What does ~creating new use situations
mean in managing a product`s life cycle?
3. Explain the difference between trading up
and trading down in repositioning.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -OOa Branding OOa Branding
W Branding involves an organization using a
name, phrase, design, symbols,or combination
of these to identify its products and distinguish
them from those of competitors.
W A brand name is any word, ~device (design,
sound, shape, or color), or combination of these
used to distinguish a seller`s goods or services.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -OOb Branding OOb Branding - - continued continued
W A trade name is a commercial, legal name
under which a company does business. For
example, the Campbell Soup Company is the
trade name of that firm.
W A trademark identifies that a firm has legally
registered its brand name or trade name so the
firm has its exclusive use, thereby preventing
others from using it.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -6 Examples of well 6 Examples of well- -known trademarks, brand names, and known trademarks, brand names, and
trade names trade names
Brand name that
can be spoken
Big Mac hamburger
Levi`s jeans
TeIlon plastic
Betty Crocker cake
mix
Macintosh computer
Brand name that
cannot be spoken
Trade name/
legal name/
of organization
Campbell Soup Co.
Compaq Corp.
Ford Motor Co.
Kellogg Co.
Ralston Purina Co.
Trademark, brand name, or trade name
registered with the U.S. Patent and Trademark Office
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -E Definition of Brand Equity E Definition of Brand Equity
Brand Equity is . . . . Brand Equity is . . . .
The added value a given brand
provides a product beyond the
functional benefits provided..
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -F Four criteria for picking a good brand name F Four criteria for picking a good brand name
Fit the company or product image Fit the company or product image
A good
brand name
should . . . .
A good
brand name
should . . . .
Describe product benefits Describe product benefits
Be memorable, distinctive, and
positive
Be memorable, distinctive, and
positive
Have no legal restrictions Have no legal restrictions
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -7 Alternative branding strategies 7 Alternative branding strategies
Multiproduct
branding
strategy
Sunbeam makes:
Sunbeam irons
Sunbeam
toasters
Sunbeam
crockware
Toro makes:
Toro
snowblowers
Toro lawn
mowers
Toro garden
hoses
Multiproduct
branding
strategy
Sunbeam makes:
Sunbeam irons
Sunbeam
toasters
Sunbeam
crockware
Toro makes:
Toro
snowblowers
Toro lawn
mowers
Toro garden
hoses
Multibranding
strategy
Anheuser-Busch
makes:
Budweiser
Busch
Michelob
Wurtburger
Hofbrau
Procter &
Gamble makes:
Tide
Cheer
Ivory Snow
Oxydol
Multibranding
strategy
Anheuser-Busch
makes:
Budweiser
Busch
Michelob
Wurtburger
Hofbrau
Procter &
Gamble makes:
Tide
Cheer
Ivory Snow
Oxydol
Private
branding
strategy
A&P has:
Ann Page
canned goods
Ann Parker
bakery goods
Eight O`Clock
coffee
Sears has:
Kenmore
appliances
Craftsman
tools
Private
branding
strategy
A&P has:
Ann Page
canned goods
Ann Parker
bakery goods
Eight O`Clock
coffee
Sears has:
Kenmore
appliances
Craftsman
tools
Mixed
branding
strategy
Michelin
makes:
Michelin tires
Sears tires
Epson makes
printers as:
Epson
IBM
Mixed
branding
strategy
Michelin
makes:
Michelin tires
Sears tires
Epson makes
printers as:
Epson
IBM
Generic
branding
strategy
Dog food
Peanut butter
Green beans
Paper towels
Aspirin
Cola
Generic
branding
strategy
Dog food
Peanut butter
Green beans
Paper towels
Aspirin
Cola
Branding strategy Branding strategy
Manufacturer branding strategy Manufacturer branding strategy
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -G Line and Brand Extension G Line and Brand Extension
Line extension . . . . Line extension . . . .
The use of a current brand to enter a new
market segment in its product class
The use of a current brand to enter a new
market segment in its product class
Brand extension . . . . Brand extension . . . .
The use of a current brand name to enter a
completely different product class
The use of a current brand name to enter a
completely different product class
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -PP Other Branding Strategies PP Other Branding Strategies
W Private Branding is when a manufacturer`s product is
sold under the brand name of a wholesaler or retailer.
W Mixed Branding is a compromise between private and
manufacturer branding. It is where a firm markets
products under its own name and that of a reseller
because the segment attracted to the reseller is
different than their own market.
W Generic Branding is when there is no branding, no
identification other than the contents of the product.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -QQ Packaging QQ Packaging
W Packaging is the component of a product that refers
to any container in which it is offered for sale and on
which information is communicated.
W To a great extent, the customer`s first exposure to a
product is the package.
W Packaging is expensive and an important part of
marketing strategy.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -RR Benefits of Packaging RR Benefits of Packaging
Benefits of Packaging:
W communication benefits -- the information on the
package that is communicated to the consumer, such
as directions on how to use, composition of the
product, warnings and other information necessary
to satisfy legal requirements of product disclosure.
W functional benefits -- such as convenience, protection,
or storage.
W perceptual benefits -- which can connote status,
economy, and/or product quality.
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -H Warranty forms H Warranty forms
Limited-coverage warranty Limited-coverage warranty
Full warranty Full warranty
Express warranty Express warranty
Implied warranty Implied warranty
Extent of
coverage
Extent of
coverage
Extent of
formality
Extent of
formality
lruln/McGrau-Hl||
The McGrau-Hl|| Comanles, lnc., 2000
MARKETING, 6/e MARKETING, 6/e
BERKOWITZ KERIN HARTLEY RUDELIUS
PP12 PP12- -SS Concept Check SS Concept Check
1. How does a generic brand differ from a
private brand?
2. Explain the role of packaging in terms of
perception.
3. What is the difference between
an expressed and an implied
warranty?