Chapter 10

Product, Branding, and

Packaging Concepts
 What Is A Product?
A product is a good, a service, or an idea
received in an exchange.
– Good- Tangible physical entity
– Service- Intangible result of the application of
human and mechanical efforts to people or
objects
– Idea- Concept, philosophy, image, or issue

The product may have any combination of

the above aspects
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 The Total Product
The total product offering has a combination of three
interdependent elements (product characteristics):
1. Core product: consists of a product’s fundamental utility or
main benefit.
2. Supplemental features: provide added value or attributes
in addition to its core utility or benefit.
– Supplemental features provide installation, delivery,
training, and financing.
– These supplemental attributes are not required to make
the core product function effectively, but they help
differentiate one product brand from another.
3. Symbolic and experimental benefits: benefits based on
customers’ experiences with the product. Many products
have symbolic meaning for buyers.
When we buy a product, we really buy benefits that the
product will deliver.
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 The Total Product

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 Classifying consumer products

Consumer products are classified into four

categories according to how buyers generally
behave when buying these products:
1. Convenience Products
2. Shopping Products
3. Specialty Products
4. Unsought Products

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 1. Convenience Products

Relatively inexpensive, frequently purchased

items for which buyers exert only minimal
purchasing effort

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 Convenience Product:
Marketing Implications

• Buyers spend little planning and shopping

time to buy
• Marketed through many retail outlets
• High inventory turnover
• Low per-unit gross margins
• Little promotion effort.
• Packaging is important because they are
sold on self-service basis at the retail level
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 2. Shopping Products

Items for which buyers are willing to

expend considerable efforts in planning
and making purchases

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 Shopping Product:
Marketing Implications

• Buyers compare between alternatives (prices,

quality, services, other features)
• Purchased less frequently
• No brand loyalty
• Fewer retail outlets than convenience
• Lower inventory turnover
• Higher gross margins
• Focus on personal selling
• Channel members expect cooperation (i.e.
repair, parts, promotion, … etc.)
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 3. Specialty Products

Items with unique characteristics that

buyers are willing to expend considerable
effort to obtain.

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 Specialty Product:
Marketing Implications

• High brand loyalty (no substitutes)

• Willingness to spend much time and efforts
• Limited retail outlets
• Lower inventory turnover
• High gross margins

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 4. Unsought Products
They include:
- Products purchased to solve a sudden problem (such
as emergency medical services, car repairs,
umbrella on a day of heavy rains), or

- products of which customers are unaware (such as

new product which does multiple functions), or

- products that people do no necessarily think of

buying (i.e. life insurance).

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 Unsought Products:
Marketing Implications

Marketers must build trust with consumers through:

• Recognizable brand
• Superior product performance
• More effective informative promotion

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 Classifying Business Products
1. Installations: facilities such as buildings, factories,
major equipments and large machines (non-portable
equipment).
2. Accessory equipment: not part of final product,
such as computers, telephone and fax equipments
(Compared with major equipments, accessory items are usually
standard, much cheaper, purchased routinely with less negotiation, and
treated as expense items rather than as capital items because they are
not expected to last as long).
3. Raw materials: natural materials that become part of
the finished product (i.e. wood, minerals, chemicals).
4. Component parts: finished (processed) items ready
for assembly or need little processing. They become
part of the finished product
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 Classifying Business Products
(continued)

5. Process materials: used in production but not

identifiable, and become part of the finished product
(smoke detector, grease)

6. MRO: consumable supplies-maintenance, repair, and

operating items not part of final product. They are usually
standard items (i.e. office supplies)

7. Business services: intangible products used in

operations. They may be provided internally, or obtained
externally (outsourcing). (i.e. financial, legal, marketing
research, information technology, and catering services).
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 Product Line And Product Mix
Main concepts:
• Product Item: specific version of product among organization's
products
• Product Line: closely related product items viewed as a unit
because of marketing, technical, or end-use considerations.
• Product Mix: total group of products that an organization makes
available to customers
• Width of product mix: number of product lines in an
organization.
• Depth of product mix: average number of different products
offered in each product line (product mix / width of product mix)
• Depth of product line: number of different products in the
product line
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 Example: Product Width/Depth
Of Proctor & Gamble

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 Product Life Cycle

The progression of a product through

four stages: introduction, growth,
maturity, and decline.

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
Stage Of The
Product Life Cycle

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 Introduction Stage
The initial stage of a product’s life cycle; its first
appearance in the marketplace when sales start at zero
and profits are negative.

• During this stage, potential buyers must be made aware

of the new product’s features, uses, and advantages.

• Most new products start off slowly and seldom generate

enough sales to break even or make immediate profits.

• Risk of failure is high

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 Growth Stage
During this stage, sales rise rapidly and
profits reach a peak, then start to decline.

Main characteristics:
– Sales rise rapidly
– Profits peak, then starts to decline as more
competitors enter the market, driving prices down
and creating a need for heavy promotion
– Competitors react to the product’s success

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 Growth Stage
Marketing Strategy
At this stage, the marketer should:
– Encourage brand loyalty- stress brand benefits
– Strengthen market share
– Emphasize product’s benefits
– Use aggressive pricing (lower prices)
– Analyze production position
– Use efficient distribution system
– Ensure that Promotion costs drop as % of sales

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 Maturity Stage
During this stage, the sales curve peaks and starts to
decline, and profits continue to fall.

Main characteristics:
– Intense competition as many brands enter the market
as well as improved cost efficiency
– Competitors emphasize improvements and
differences in their products.
– Weaker competitors are squeezed out or lose
interest.
– Marketer usually adjusts marketing strategy in
response to tough competition.
– Persuasive promotion is particularly emphasized
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Maturity stage: Marketer’s objectives

Three objectives may be pursued at this stage:

1. Generate Cash Flow
2. Maintain Share of Market
3. Increase Share of Customer

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 Example: product modifications
at the Maturity Stage

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 Decline Stage
The stage of a product’s life cycle when sales
fall rapidly.

Main characteristics:
– Retail outlets with strong sales volumes are
maintained, while unprofitable outlets are
dropped out.
– Spending on promotion is usually reduced.
– Many firms lack the resources to revitalize the
product’s demand and thus leave the market.
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 Decline Stage
Marketing Strategy
• Eliminate/reposition items
• Cut promotion
• Eliminate marginal distributors
• Plan for phase out, through either Harvesting or
Divesting:
– Harvesting: gradual reduction in marketing
expenditures and a less resource-intensive marketing
mix.
– Divesting: immediate withdrawal of the product from
the market; the firm may sell the product to another
firm.
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 Product Adoption Process

The five-stage process of buyer acceptance of a

product: awareness, interest, evaluation, trial,
and adoption.

Note:
Entering the adoption process does not mean the
person will eventually adopt the product—rejection can
occur at any stage.
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 The five stages Of
Product Adoption Process
1. Awareness is when a buyer becomes aware of the
product’s existence.
2. Interest is when the buyer seeks information and is
receptive to learning about the product.
3. Evaluation is when the buyer considers the
product’s benefits and decides whether to try it.
4. Trial is when the buyer examines, tests, or tries the
product to determine if it meets his or her needs.
5. Adoption is when the buyer purchases the product
and expects to use it again whenever the need for
this product arises.
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 Adopter Categories
People do not begin the adoption process at the same time, nor do
they move through it at the same speed. They are viewed to have the
following pattern:
1. Innovators: are the first adopters of new products. They enjoy
trying new things and tend to be venturesome.
2. Early adopters: are careful choosers of new products. They
influence the behaviour of people in the remaining categories.
(They may act as opinion leaders)
3. Early majority: those who adopt new products just before the
average person. They are deliberate and cautious in trying new
products.
4. Late majority: includes skeptics who adopt new products when
they feel it is necessary.
5. Laggards: are the last adopters. They distrust new products,
and when they finally adopt the innovation, it may have been
replaced by a new product.
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 Product Adopter Categories

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 Branding: Key Terms

• Brand
– An identifying name, term, design, or symbol
– One item, family of items, or all items of a seller
• Corvette, Chevrolet, General Motors
• Brand Name
– The part of a brand that can be spoken
– Words, letters, numbers
• Union 76, NBA, 49’ers
• Brand Mark
– The part of a brand not made up of words
– Symbols or designs
• Nike swoosh, Mercedes star, McDonald’s arches
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 Branding: Key Terms (cont’d)

• Trademark
– A legal designation of exclusive use of a
brand
• Coca-Cola®, Hewlett-Packard®

• Trade Name
– Full legal name of an organization
• American Telephone and Telegraph Corporation
(AT&T)

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 Value of Branding

• For Consumers
– Helps speed consumer purchases by
identifying specific preferred products
– Provides a form of self-expression and status
– Evaluates product quality to reduce the risk of
purchase

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 Value of Branding (cont’d)

• For Marketers
– Identifies and differentiates a firm’s products
from competing products
– Helps in the introduction of new products
– Facilitates the promotion of all same-brand
products
– Fosters the development of brand loyalty
– Can create valuable intangible assets

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 Brand Loyalty: Key Terms

• Brand Equity
– The marketing and financial value associated with a
brand’s strength in a market (popularity or strength of a
brand)

• Brand Loyalty
– A customer’s favorable attitude toward a specific
brand
• Brand Recognition
– A customer’s awareness that a brand exists and is an
alternative purchase

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Major Elements of Brand Equity

Source: Adapted with the permission of The Free Press, a division of Simon & Schuster Adult Publishing Group, from Managing Brand
Equity: Capitalizing on the Value of a Brand Name by David A. Aaker. Copyright © 1991 by David A. Aaker.

FIGURE 13.1

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Brand Loyalty: Key Terms (cont’d)

• Brand Preference
– The degree of brand loyalty in which a
customer prefers one brand over competitive
offerings
• Brand Insistence
– The degree of brand loyalty in which a
customer strongly prefers a specific brand
and will accept no substitute

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 Types of Brands

• Manufacturer Brands
– Brands initiated by producers
• Private Distributor Brands
– Brands initiated and owned by resellers
• Dealer brands, private
brands, store brands
• Generic Brands
– Brands indicating only the product category

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 Selecting a Brand Name

• The name should:

– be easy to say, spell, and recall.
– indicate the product’s major benefits.
– suggest the product’s major uses and special
characteristics.
– be distinctive, setting it apart
from competing brands.
– be compatible with all products
in line.
– be designed for use and recognition
in all types of media.

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 Protecting a Brand

• Degree of brand • Surnames and

protection through descriptive,
registration geographic, or
functional names are
–Fanciful Most
also difficult to
protect.
–Arbitrary
• Registration with the
–Suggestive U.S. Patent and
Trademark Office
–Descriptive protects a brand for
ten years with
Least
–Generic indefinite renewals.
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 Branding Policies

• Individual Branding
– A policy of naming each product differently
– Avoids stigmatizing all products due to a
failed product
• Family Branding
– Branding all of a firm’s products with the
same name
– Promotion of one item also promotes all other
products

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 Branding Policies (cont’d)

• Brand-Extension Branding
– Using an existing brand name for an
improved or new product
– Provides support for new products through
established brand name and image

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 Co-Branding

• Using two or more brands on one product to

capitalize on the brand equity (customer
confidence and trust) of multiple brands
• Brands involved must represent a
complementary fit in the minds of consumers.
• Helps differentiate a firm’s product from those of
its competitors
• Helps take advantage of distribution capabilities
of co-branding partners

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 Brand Licensing

• An agreement whereby a company permits

another organization to use its brand on other
products for a licensing fee
• Advantages
– Low-cost and/or free publicity
– Revenues from royalty fees
• Disadvantages
– Lack of manufacturing control
– Creating too many unrelated products
– Licensing arrangements can fail

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 Packaging

• Involves the development of a container and a

graphic design for a product
• Packaging Functions
– Protect the product from
damage
– Offer convenience to
consumers
– Prevent waste and make
storage easier
– Promote the product by
communicating its features,
uses, benefits, and image

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 Major Packaging Considerations

• Cost of Packaging
– Limited consumer willingness to pay for better
packaging
• Tamper-Resistant Packaging
– FDA regulations and consumer
safety concerns
• Family Packaging
– Similar packaging for all of a
firm’s products or packaging
that has one common design A
A
element
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 Major Packaging Considerations (cont’d)

• Promotional Role (Informing the Consumer)

– Verbal and nonverbal
symbols
– Size, shape, texture, color,
and graphics
• Reseller Needs
– Transportation, storage,
and handling
• Environmentally Responsible
– Biodegradable and recyclable

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Packaging and Marketing Strategy

• Altering the Package

– To update style and to meet increased competition
– To highlight new features
– To take advantage of new packaging materials
– To make the product safer or easier to use
– To reduce packaging costs
• Secondary-Use Packaging
– Reusable packaging adds customer value
• Category-Consistent Packaging
– Packaging reflects customer expectations for the
expected appearance of products in a category

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Packaging and Marketing Strategy (cont’d)

• Innovative Packaging
– Unique features or ways of packaging that make a
product more distinct from its competitors
• Multiple Packaging
– Bundling multiple units of a product together to
encourage usage and to increase demand
• Handling-Improved Packaging
– Packaging that has been changed
to facilitate product handling in the
distribution channel

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 Criticisms of Packaging

• Lack of functionality
– Leak, difficult to open/close/seal, hard-to-use
designs
• Safety
– Sharp edges, broken glass, health hazards
• Deceptive
– Shape, size, colors mask true nature of
product
• Cost of packaging
– What customers prefer is costly
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 Labeling

• Labeling
– Providing identifying, promotional, legal, or
other information on package labels
• Universal Product Code (UPC)
– A series of electronically
readable lines identifying
a product and containing
inventory and pricing
information

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 Labeling (cont’d)

• Purposes of Labels
– Help identify the product
• Display brand name and unique graphics
– Support promotional efforts for the product
• Coupons, discounts, product features
– Provide legally required labeling information
• Fair Packaging and Labeling Act of 1966
• Nutrition Labeling Act of 1990

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 Labeling (cont’d)

• Purposes of Labels (cont’d)

– “Green Labeling” issues
• Labeling packaging as made of recyclable
materials
– Provide information on product origin
(i.e. “Made in the USA”)

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