Chapter 11: Managing Products And Brands

I. PRODUCT LIFE CYCLE

o A way to trace the stages of a product's acceptance from its introduction to its demise.
o One of the most familiar concepts in marketing
o A prevalent marketing management tool
o Refers to the life of the product category
o The time a product category spends in a stage of the product life cycle may vary from a few weeks to decades.
o Does not predict how long a product category will remain in any one stage
o A tool to help marketers understand
 where their product is now
 what may happen
 which strategies are normally appropriate.


A. Introduction Stage
Sales grow slowly Profit is minimal or negative
Create awareness Stimulate trial
High production costs Limited product models
Frequent product modification Penetration pricing
Skimming pricing Little competition
High failure rate, High marketing costs
Promotion strategy focuses on primary demand for the product category
developing product awareness Informing about product benefits.
Intensive personal selling to retailers and wholesalers is required.

B. Growth Stage
Characteristics
Sales grow at an increasing rate. Many competitors enter the market.
Large companies may acquire small pioneering firms. Profits are healthy
Promotion emphasis
heavy brand advertising Differences between brands.
Gaining wider distribution is a key goal
Toward the end of this stage
prices normally fall profits reach their peak.
Development costs have been recovered Sales volume has created economies of scale.

 C. Maturity Stage
Sales continue to increase but at a decreasing rate The marketplace is approaching saturation
 Annual models of many products An emphasis on product style rather than function
Product lines are widened or extended marginal competitors begin dropping out of the market.
D.Heavy
Declinepromotions
Stage to both the dealers and consumers are required. Prices and profits begin to fall.
 Signaled by a long-run drop in sales. Falling demand forces many competitors out of the market
The rate of decline is governed by

a. how rapidly consumer tastes change or

A few small specialty firms may still manufacture the product.
b. how rapidly substitute products are
adopted.

Strategies
Deletion. Dropping a product from the company’s product line, is the most drastic strategy.
Harvesting Company retains the product but reduces marketing support
o Promote more frequent use of the product by current customers
o Find new target markets for the product
o Find new uses for the product
o Price the product below the market
To prevent slipping into decline o Develop new distribution channels
o Add new ingredients
o Delete old ingredients
o Make a dramatic new guarantee

E. Some Dimensions of the Product Life Cycle

1. Length of the Product Life Cycle
There is no exact time that a product takes to move
consumer products usually have shorter life cycles than business products
through its life cycle
Mass communication shortens life cycles Rate of technological change shortens product life cycles.
2. Shape of the Product Life Cycle
o There are several distinctive life-cycle curves
o Each type suggests different marketing strategies
o Significant education of the customer is
required.
o Extended introductory period.

o Sales begin immediately

o Little learning is required by the consumer
o Benefits of purchase are readily
understood.
o Most often appear in women’s and men’s
clothing styles.
o Length of the cycles may be years or
decades.

o Rapid sales on introduction

o Equally rapid decline.
o Often novelties and have a short life cycle.
3. The Product Level:
Multiple life cycles (class and form) may exist.
o Entire product category or industry
Product class o Such as video game consoles and software.

o Variations within the class

Product form o Such as the computing capability of game consoles.

4. The Life Cycle and Consumers

A product diffuses, or spreads, through the population, a concept called the diffusion of innovation.
 o Eager to try new ideas and products
o Have higher incomes
Innovators 2.5%
o Better educated than noninnovators

o Much more reliant on group norms

o Oriented to the local community
Early Adopters 13.5%
o Tend to be opinion leaders.

o Collect more information

o Evaluate more brands than early adopters.
Early Majority 34% o Rely on friends, neighbors, and opinion leaders for information and
norms.

o Adopt because most of their friends have already done so.

o For them, adoption is the result of pressure to conform.
Late
34% o Are older than the others
Majority
o Tend to be below average in income and education.

o Do not rely on the norms of the group.

o Independent because they are tradition-bound
o Have the lowest socioeconomic status
Laggards 16%
o Are suspicious of new products
o Alienated from an advancing society

Common reasons for resisting a product in the introduction stage are

usage barriers product is incompatible with existing habits
value barriers product provides no incentive to change
risk barriers physical, economic, or social
psychological barriers cultural differences or image.
Product Characteristics and the Rate of Adoption
o The degree of difficulty involved in understanding and using a new product.
Complexity o Slows diffusion.

o The degree to which the new product is consistent with existing values and product
knowledge, past experiences, and current needs.
Compatibility
o Incompatibility slows diffusion.
 o The degree to which a product is perceived to be superior to existing substitutes.
Relative advantage o Speeds diffusion

o The degree to which the benefits and other results of using a new product can be observed
by others and communicated to target customers.
Observability
o Speeds diffusion

o is the degree to which a product can be tried on a limited basis.

Trialability o Speeds diffusion

Marketing Implications of the Adoption Process

o Word-of-mouth communication
Two types of communication aid the
o Marketing to consumers
diffusion process
The effectiveness of different messages and appeals depends on the type of adopter targeted.

II. MANAGING THE PRODUCT LIFE CYCLE

A. Role of a Product Manager
o Product manager is responsible for marketing products through the successive stages of their life cycles.
o Product (or brand) manager manages the marketing efforts for a close-knit family of products or brands.
o Three ways to manage:
 modify the product
 modify the market
 reposition the product.

B. Modify the Product

o Altering a product’s characteristic to try to increase and extend the product’s sales.
 quality
 performance
 appearance,

C. Modify the Market Market

modification strategies o Finding new users.
involve: o Increasing use among existing users.
 o Creating new use situations.

D. Reposition the Product

Product repositioning o Changing the place a product occupies in a consumer’s mind relative to competitive products.
o Reposition a product by changing one of four marketing mix elements.
 
Four factors that trigger a repositioning action are:
Reacting to a Competitor’s o Competitor’s position is adversely affecting sales and market share.
Position.
o Repositioning a product allows it to reach a new market.
Reaching a New Market.

o Changing consumer trends can also lead to repositioning a product.

o For example, consumer interest in “functional foods” that offer health and dietary benefits beyond
Catching a Rising Trend.
nutrition inspired repositioning of oatmeal.

o adding value to the product (or line)

o Additional features
Trading up
o Higher quality materials.

Changing the Value Offered. o Reducing the number of features

o Lower quality
o Lower price.
Trading down
o Reducing the content of packages without changing package size and maintaining the
package price.

III. BRANDING AND BRAND MANAGEMENT

Branding Decisions
A name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors'
Brand
products.
Brand
That part of the brand that can be spoken..
name
Brand mark The element of the brand that cannot be spoken, such as symbols
Trade name commercial, legal name under which a company does business.
Trademarks
Legal term indicating the owner's exclusive right to use the brand or part of the brand.
o Failure to protect trademarks may make product
names generic.
o All of the products below were trademarked.
o Some still are!
Phrases, Abbreviations, Symbols, Shapes and Color combinations may also
qualify for trademark protection.
o aspirin
The MARK has to be used continuously to be protected
o formica®
Rights to a trademark continue for as long as it is used.
o sheetrock®
Others are prohibited from using the brand without permission. o band-aid®
A service mark performs the same functions for service businesses. o kerosene
Lanham Act of 1946 protects Trademarks o styrofoam®
o dry ice
1. Sets severe penalties for trademark infringement. o magic marker®
2. The injured party can sue for triple damages and recovery of any
o trampoline
profit.
o dumpster®
o nylon
Generic product name identifies a product by class or type and cannot be
o vaseline®
trademarked
o escalator
o ping-pong®
o yo-yo

Benefits of Branding
The brand allows the product to be differentiated from others and serves as an indicator of quality to
Identification
consumers
Encourages repeat sales
Facilitates New Product
Because a familiar brand is more quickly accepted by consumers.
Introduction
o product counterfeiting has been a growing problem.
o Counterfeit products can steal sales from the original manufacturer or hurt the company’s reputation.

Some Branding Concepts

o The value of company and brand names.
o the added value a given brand name gives to a product beyond the functional benefits provided.
Brand Equity o Often represented by the premium a consumer will pay for one brand over another when the functional benefits
provided are identical
Brand
Consistent preference for one brand over all others. Leads to repeat purchases.
Loyalty
Brand
important to developing brand loyalty
Identity
A brand so dominant in consumers' minds that they think of it immediately when a product category, use situation, product
Master Brand
attribute, or customer benefit is mentioned.
A. Brand Personality and Brand Equity
Brand Equity has two distinct advantages:
1. Brand equity provides a competitive advantage.
2. Consumers are often willing to pay a higher price for a product with brand equity.

1. Creating Brand Equity

o Brand equity is created by marketing programs
o Forge strong, favorable, and unique consumer associations and experiences with a brand
o Sequential four-step building process:

1. Develop positive brand awareness and an association in consumer’s minds with a product class or need to give a brand an identity.
2. Establish a brand’s meaning in the minds of consumers.
3. Elicit the proper consumer responses to a brand’s identity and meaning.
4. Attention to how consumers think and feel about a brand.
5. Create a consumer-brand resonance evident in an intense, active loyalty relationship between consumers and the brand.

2. Valuing Brand Equity

o Brand equity is a financial advantage for the brand owner.
o Established brands are considered intangible assets.
o Can appreciate in value when effectively managed
o Can lose value when not managed properly.

B. Licensing
o Licensing is a contractual agreement whereby a company allows another firm to use its brand name, patent, trade secret, or other
property for a royalty or a fee...
o Licensing also assists companies in entering global markets with minimal risk.

C. Picking a Good Brand Name

A good brand name should o Describe product benefits.
o Be memorable, distinctive, and positive.
o Fit the company or product image.
o Have no legal or regulatory restrictions.
 o Be simple and emotional.
o Be carefully checked for prior impressions or
undesirable images in different languages and cultures..

D. Branding Strategies

1. Manufacturer Branding.
o Use one name for all its products.
o Called blanket branding strategy
Multiproduct branding
o Called family branding strategy.

o Makes possible line extensions

o Subbranding combines a family brand with a new brand.
o Allows for brand extension
 Using a current brand name to enter a completely different product class.
 Too many uses for one brand name can dilute the meaning.
o Co-branding
  The use of a combination of brand names to enhance the perceived value of a product
 May be used to identify product ingredients or components.
 May be used when two organizations wish to collaborate to offer a product.
 Adds value to products that are generally perceived to be homogeneous shopping goods.

o giving each product a distinct name.

multibranding
o Use when each brand is intended for a different market segment.
o Has become more complex in the global marketplace.
o Promotional costs are higher with multibranding.
o Euro-branding,
 Use the same brand name for the same product across all countries in the European Union.
 Makes Pan-European advertising and promotion programs possible.

2. Private Branding.
o Often called private labeling or reseller branding
o Use the brand name of a wholesaler or retailer.

Manufacturer's Brands vs. Private Brands

Advantages of Advantages of
Manufacturer's Brands Private Brands
to retailers or wholesalers to retailers or wholesalers
o Higher gross margin
o Can enhance retailer's image o Manufacturer can not
o can carry lower inventory discontinue
o manufacture gets the blame for o ties consumer to dealer
problems o ties salespeople to dealer
o dealer controls marketing mix

Disadvantages (risks) of Disadvantages (risks) of

Manufacturer Brands Private brands to
retailers or wholesalers retailers or wholesalers
o Higher marketing costs
o Must buy in large quantities
o Lower margins o Dealer gets the blame for
problems
o risk of lower perceived quality
 3. Mixed Branding.
o A compromise between manufacturer and private branding
o A firm markets products under its own name and that of a reseller
o The segment attracted to the reseller is different from the manufacturer’s own market.

4. Generic Branding.
o a no-brand product that competes on price.
o Low cost, no frills
o Popular in late 1970's
o 30%-40% cheaper than national brands
o 20%-25% cheaper than store brands
o good market share in some categories

IV. PACKAGING AND LABELING

o any container in which it is offered for sale and on which label information is conveyed.
Packaging component

o Integral part of the package

o Typically identifies
 the product or brand
 Who made it
Label
 Where and when it was made
 How it is to be used
 Package contents and ingredients.

A. Creating Customer Value through Packaging and Labeling

Packaging Functions
1. spoila
ge
2. tamp
Packaging
Contain and Protect ering
Promotes
Products 3. childr
Products
en
4. Theft
Facilitate Recycling o Convenience and utility of the package can differentiate a product from the
Reduce Environmental Damage competition
Facilitate Storage o Last opportunity to influence shoppers before they buy.
o Brand Image is often closely linked to packaging 
Facilitate Use
o Are easy to
 ship
Wholesalers  store
&  stock on shelves.
Retailers o Protect the product
want
o Prevent spoilage or breakage
packages that
o Extend shelf life.

o Easy to handle
Consumers want
o Easy to open
packages
o Easy To reuse
that are

Packaging is often used to segment markets, particularly

by offering different sizes for different segments.
1. Communication Benefits.
o Label information 
o Packaging can also have brand equity benefits, as in the case of L’eggs.

2. Functional Benefits.
o Convenience
o Product protection
o Storage.
o Consumer protection

3. Perceptual Benefits.
o Create perception in the consumer’s mind.
o Can connote
 status
 economy
 product quality.

B. Global Trends in Packaging

 1. Environmental Sensitivity
o The amount, composition, and disposal of packaging material continue to receive much attention.
o European countries have been trendsetters in packaging guidelines and environmental sensitivity.
o U.S. firms marketing in the EU have responded to these guidelines and ultimately benefited consumers outside the EU as well.
o Firms are using life-cycle analysis (LCA) to examine the environmental effects of their packaging at every stage from raw
material sources and production through distribution and disposal.

2. Health and Safety Concerns

o A majority of U.S. and European consumers believe that companies should make sure products and packages are safe, regardless
of the cost.
o New packaging technology to extend shelf life (the time a product can be stored) and prevent spoilage is being developed with
special applications for less-developed countries.

C. Labeling
o Focuses on a promotional theme or logo
Persuasive labeling o Information for the consumer is secondary.

o  
o Helps consumers in making proper product
selections
Informational labeling o Helps lower cognitive dissonance
o May include care and use information
o may explain construction figures

o Introduced in 1974
Universal Product Codes
o Many Retailers will not stock products without
(UPC)
Nutrition Labeling and Education Act of 1990
o Requires detailed nutritional information on most food packages
o Establishes standards for health claims on food packaging.

V. PRODUCT WARRANTY
o A warranty is a statement indicating the liability of the manufacturer for product deficiencies.
 o There are various types of product warranties with different implications for manufacturers and customers.
o Warranties are important in light of increasing product liability claims.
o This issue is hotly contested between companies and consumer advocates.

Warranty Strategy
o A protection and information device for consumers.
Product Warranties
o Guarantees the quality or performance of a good or service.
Warranty
o made in writing
Express Warranty
o has no limits of noncoverage.
full warranty
o specifically states the bounds of coverage
limited-coverage warranty o areas of noncoverage.

o Unwritten guarantee that a good or service is fit for the purpose for which it was
sold.
Implied Warranty o All sales have an implied warranty under the Uniform Commercial Code.
o Often assign responsibility for product deficiencies to the manufacturer.

Magnuson-Moss o Manufacturer that promises a full warranty must meet certain minimum
Warranty standards.
Federal Trade o A limited warranty must be conspicuously promoted by the manufacturer
Commission o Otherwise a full warranty is assumed.
Improvement Act
http://www.scribd.com/doc/24274558/Product-Life-Cycle