class: middle, title-slide # Marketing ## 9: Product Strategy, Branding, and Product Management ### Dennis A. V. Dittrich ### 2021 --- layout: true <div class="my-footer"> <span><img src="img/tcb-logo.png" height="40px"></span> </div> --- # Product Planning: Develop Product Objectives & Product Strategy .col-7[ What makes one product succeed while another fails? Effective product planning is guided by a continuous process of product management. A systematic and usually team-based approach to coordinating all aspects of a product’s strategy development and execution ] --- .row[.col-6[!(img09/solomon_rprc9e_fullppt_091.png) ] .col-6[## Steps to Manage Products]] ??? Firms that plan well succeed. Planning is guided by product management and is more important than ever. Product management—sometimes called brand management—is a systematic and team-based approach to coordinating all aspects of a product’s marketing mix. Product management strategies and tactics are managed by product managers or brand managers. Product management is increasingly important due to influence of technology, as firms create products that grow, reach maturity, and decline at faster and faster rates of speed. Product planning includes three steps, beginning with the development of product objectives. Effective product-related objectives must be measurable, clear, unambiguous, and feasible. They also must designate a time frame for completion. The second step involves designing product strategies that allow new or revised brands to compete successfully in the marketplace. In the final step, these strategies are translated into specific tactics as product/brand managers make specific decisions related to benefits, features, styling, branding, labeling, and packaging. Each of these topics will be expanded upon and discussed in greater details as we go through the chapter material. --- # Getting Product Objectives Right .col-7[ Clearly stated product objectives provide focus and direction. * Should support broader marketing objectives of business unit * Should be consistent with the firm’s overall mission To be effective, objectives must be: * Measureable * Clear * Realistic * Indicate a specific time frame ] ??? Product strategies encompass a variety of decisions about product benefits, and features, styling, branding, labeling, and packaging. But to what end? Well thought out objective statements provide focus and direction to product management efforts. Product objective specify how product decisions will contribute to reaching a desired market share or sales level. --- ## Objectives for Single and Multiple Products !(img09/solomon_rprc9e_fullppt_092.png) ??? When setting objectives, planners must consider the long-term implications of product decisions. They also should make certain that objectives are consistent with their knowledge of customer needs and competitive products. Objectives may focus on a single product, or on a group of products, such as a product line. Figure 9.2 illustrates different types of objectives that may be appropriate for individuals and multiple products. Practical problems encountered when setting product objectives include the following: 1. Financial objectives are often stressed at the expense of strategic objectives, as brand managers feel that senior-level managers should be responsible for strategic objectives. 2. Objectives typically focus on the short- term because performance evaluations and compensation packages reward behavior in the short term. 3. Creating product level objectives from corporate objectives can be difficult. “Changes in shareholders equity is easy for a company to calculate. It is not so easy to calculate the change in shareholders equity that can be attributed to a product or category.” (www.economicexpert.com/a/Brand:management.htm). 4. In large, multi-brand firms, the objectives of different brands may be in conflict with one another (think P&G) or with the needs of the brand itself. 5. Finally, managers typically set objectives with primary consideration and emphasis placed on optimizing their brand or product line, rather than with the goal of optimizing overall corporate performance. --- ## Objectives and Strategies for Individual Products .col-7[ Objectives and strategies for individual products: * Successful introduction of new products * Taking regional product nationwide * Breathing new life into mature products while maintaining a distinct brand personality ] ??? Strategies for individual products and the objectives these strategies seek to accomplish can be very different depending upon whether the product is new, regionally focused, or mature. New product objectives seek accomplishments that will help the product be introduced successfully. One example might be to convince an adequate number of retailers to sell the product for the manufacturer. An example of a regional product objective may be to expand distribution nationally. Another example might be to adapt the product offering (e.g., restaurant menu) to regional tastes. Finally, a key objective for a mature product may be to excite consumers about the brand. Another example may be to promote new uses for the brand. --- ## Objectives and Strategies for Multiple Products .col-7[ A product line is the firm’s total product offering designed to satisfy a single need or desire of target customers. * Product line length is determined by the number of stock keeping units (SKUs). Product line strategies: * Full-line vs. limited-line strategies * Upward, downward, or two-way line stretch * Filling out or contracting a product line Cannibalization is a risk ] ??? Most large firms such as P&G sell a set of related products, and strategic decisions often affect two or more of these products simultaneously. This is typical in product lines. A product line might include different brands that satisfy the same basic need, but which appeal to different groups of consumers. Dawn and Joy are two brands of dish washing liquid. Alternately, a product line might contain different configurations of a particular brand. For example, Tide is available in a liquid and powder form, both of which are available with Bleach or without. The Tide product line contains a number of other variations as well. The product line length is equal to the number of separate items that comprise the product line. Full-line strategy targets many customer segments, while a limited-line strategy with only a few variations may help improve the firm’s image as a specialist. Additional product strategies may actively seek to expand or contract the product line. Extending the product line would require that brand managers develop new brands to tap needs currently unmet by the firm. One method of extending the product line is to stretch it upwards, by adding a high-end or premium brand that either contains more features, or is of higher quality. Alternately, when economic times are tough, a firm may choose to stretch the line downward by stripping a product of features or developing a “budget” brand. Before stretching the line in this fashion, it’s important for marketers to consider whether adding a low-priced product entry can damage the image of existing brands. It wouldn’t make sense for Rolex to add a low-priced watch and distribute it through K-Mart for example, because doing so would be detrimental to the image of the Rolex brand name, and thus all brands carrying that name. The filling out strategy adds new sizes or styles not previously available, while the contraction strategy reduces the number of items in a line by eliminating one or more that are unprofitable. Before expanding a product line upward, downward, or via a filling strategy, firms must carefully evaluate the degree to which cannibalization is a risk. A new product cannibalizes an existing brand when it steals sales from a product that is already part of the product line. --- # Product Mix Strategies .row[ .col-7[ A product mix is the total set of products a firm offers for sale. Product mix strategies * Width of product mix must be considered. * Product lines in mix usually have some things in common. ] .col-5[ !(img09/solomon_rprc9e_fullppt_093.jpg) ] ] ??? The product mix is the total set of products a firm offers for sale. Developing a product mix strategy requires consideration of the product mix width, meaning the number of different product lines supported by a firm. For example, Avon’s product line includes fashion jewelry, household items, and of course, cosmetics. It’s typical for a manufacturer to develop a mix of product lines that have something in common. --- ## Ethical / Sustainable Decisions in the Real World .col-7[ Kimberly Clark made great strides toward going green but how green is green enough? “Pure and Natural” diapers are a “super-premium diaper that includes natural and organic materials and ingredients to provide gentle protection for new babies, as well as initial steps toward environmental improvements without sacrificing performance.” .question[ Can you think of any examples of "greenwashing," in which firms deceptively promote the perception that an organization's products, aims, or policies are environmentally friendly? Should marketers be allowed to promote a product to consumers as “green” or “natural” if they know that such claims are only partially accurate? ] ] ??? * The instructor may ask students to list the advantages of Kimberly Clark aggressively pushing green as a positioning strategy.? * Are students familiar with the concept of “greenwashing,” in which firms deceptively promote the perception that an organization's products, aims, or policies are environmentally friendly? Can they think of any other examples of such practices? --- .row[ .col-7[ ## Quality as a Product Objective: TQM and Beyond Product quality is often a key objective. A philosophy of total quality management (TQM) can help companies achieve quality objectives. ### Quality Guidelines ISO 9000 * Standards for quality management ISO 14000 * Standards for environmental management Six Sigma methodology * Process allows no more than 3.4 defects per million units (getting it right 99.997% of the time) ] .col-5[ !(img09/solomon_rprc9e_fullppt_094.jpg) ] ] ??? Product objectives often focus on product quality, especially when marketing objectives seek higher sales or market share increases. Product quality is defined as the overall ability of a product to satisfy customer’s expectations. Total quality management (TQM) initiatives can help a firm to achieve quality objectives. TQM is defined as company-wide dedication to the development, maintenance, and continuous improvement of all aspects of the company’s operations. As such, it promotes the attitude among employees that everyone serves customers and that their job is to maximize customer satisfaction, both internally, among employees (internal customers), and externally among those who buy the product. Uniform ISO quality standards exist to offer guidance. Many firms worldwide seek quality guidelines that can guide TQM efforts. The International Organization for Standardization developed such guidelines for Europe in 1987. Named the ISO 9000, these guidelines established voluntary quality management standards. In 1996, the ISO created the ISO 14000 guidelines, which concentrate on environmental management. Despite the fact that these standards apply to European businesses, U.S. companies must comply with these standards if they hope to sell products to firms in these companies. The Sigma Six method helps firms to improve the quality of their products so that defects are reduced to only 3.4 out of every million units produced. The five-step process can also be applied to services. --- # Product Quality !(img09/solomon_rprc9e_fullppt_095.png) ??? Figure 9.3 summarizes the many meanings of product quality. Different customer expectations, such as durability, versatility, and precision, are important for different types of products, though all should satisfy needs. Some customers value reliability, while others value ease of use. Regardless, it is important to recognize that each of these factors contributes to the level and consistency of product quality. --- # Use Product Objectives # to Decide on a Product Strategy .col-7[ Product management systematically guides product strategy development and execution. Process begins with clear product objectives. Objective setting underlies product line/mix decisions and quality management efforts. .question[ How can you apply criteria for effective objective setting to attainment of your personal career and educational goals? ] ] ??? DISCUSSION NOTE: * Instructor should revisit criteria for effective objectives: measurable, clear, realistic, and time-specific. * The criteria for effective product objective setting may also be useful for setting individual goals. * As part of an in-class assignment, the teacher can ask students to develop educational and/or career objectives with these criteria (measureable, clear, realistic, and time-specific) in mind. --- ## Marketing throughout the Product Life Cycle .row[.col-7[ Many products have long lives, while others are fads that are “here today, and gone tomorrow.” The **product life cycle** (PLC) is a useful way to explain how market response and marketing activities change over the life of a product. !(img09/solomon_rprc9e_fullppt_097.png) ] .col-5[ .col-10[ !(img09/solomon_rprc9e_fullppt_096.jpg) ] .question[ Can you think of products that you have purchased in the past that were part of fads? Embarrassing? Can you think of goods and services that you regularly use that were similarly purchased by you parents and grandparents? ] ]] ??? Figure 9.4 helps marketers understand how a product changes over its lifetime. The model suggests that products go through four distinct stages from birth to death—introduction, growth, maturity, and decline. Sales and profits vary with each stage as shown here. Understanding the product life cycle is important because different strategies are appropriate at different stages of the product’s life. --- # Introduction Phase of PLC .row[.col-7[ New products that are offshoots of well-known brands have an advantage. Many products never make it out of the introduction phase due to low awareness. * As many as 95% of new products ultimately fail! * Effective advertising and promotion is essential. ] .col-5[!(img09/solomon_rprc9e_fullppt_097.png)]] ??? In 2009, the five most memorable new products were KFC’s Grilled Chicken, McDonald’s McCafé, the Beatles Rock Band video game, the Blackberry Storm, and the “Snuggie” blanket. DISCUSSION NOTE: *Are students surprised by the 95% failure rate figure? --- ## Growth, Maturity, and Decline Stages of the PLC .row[.col-7[ Growth stage of the PLC * The product is accepted and sales rapidly increase. Maturity stage of the PLC * Typically longest phase * Sales peak while profit margins narrow. Decline stage of the PLC * Sales decrease as customer needs change. .question[ How would you improve ketchup or salad dressing to maintain consumer interest in the product? ] ] .col-5[!(img09/solomon_rprc9e_fullppt_097.png)]] ??? ## Growth stage of the PLC: The product is accepted by the marketplace, and sales increase rapidly during the growth stage of the PLC. Marketers’ key objective is to encourage brand loyalty by convincing consumers of the brand’s superiority. Firms often introduce product variations to attract market segments with different needs and to increase market share. Advertising and sales promotions are especially important to this phase of the life cycle, and price competition may begin to develop between different brands. ## Maturity phase of the PLC: For brands that make it past introduction, maturity is usually the longest phase of the PLC. Sales are at their peak, but the high level of competition often results in price competition and frequent sales promotion, which narrow profit margins. Firms monitor consumer trends and adapt existing products, or bring out new variants, to keep pace with changing consumer needs. Other aspects of the marketing mix may be altered as well. ## Decline phase of the PLC: A steady decrease in sales and profits characterizes the decline phase of the PLC. Often the root cause of declining sales is product obsolescence forced by new technology, or a radical change in consumer needs. The goal of the firm is to remain profitable, and marketers typically must decide whether to stay in the game or phase out a product. A phase out can occur in stages until existing inventory runs out, or the firm can have a fire sale and dump inventory immediately. Firms that decide to keep a product in decline attempt to maximize their profit by minimizing costs: very little investment in advertising or other forms of marketing communications are undertaken. The e-commerce marketplace has extended the life of many products that would have otherwise died without advertising support. --- ## Marketing Mix Strategies throughout the PLC .col-11[ !(img09/solomon_rprc9e_fullppt_098.png) ] ??? ## Introduction stage: Slow growth occurs for newly introduced product as the company’s key objective is to get first-time buyers to try product. The firm does not usually make a profit during this stage. A great deal of money is spent on marketing communications which create awareness for the product and where it can be found. The initial pricing strategy may set a high price more quickly to recover R&D expenditures, or a low price to encourage greater sales and market penetration. It’s impossible to know how long any product will spend in the introduction or any other stage of the product life cycle. The product characteristics discussed in the previous chapter (relative advantage, complexity, compatibility, etc.) influence the rate of adoption. Also, the amount of money that a manufacturer is willing to invest in the product’s start-up can shorten or prolong the introduction stage. And of course, unfortunately, many products never make it out of the introduction, and lack of a budget for marketing communications is often the problem. --- # Product Life Cycles Phases .col-7[ PLC framework a useful tool to think about how marketing tactics change over time. * Sometimes hard to know when a product passes from one stage to the next. * Some companies are now using social media to bring products “back from the dead.” .question[ Up to 95% of new products ultimately fail. What are some implications of this statistic for marketers? ] ] ??? Instructor should point out that the PLC framework is a generalization. Some products do not move evenly through the stages. As illustrated in “The Cutting Edge” feature, companies are using social media to bring back products that had been terminated for various reasons. DISCUSSION NOTE: * There are several implications that students may uncover. Two key ideas are: 1. Given the challenges in successfully bringing new products to market, marketers should have a clear understanding of what their best consumers truly value in current successful products. Conversely, why are non-customers not purchasing their goods and services? Need for effective product management 2. Low awareness is a recipe for product failure. Effective marketing communications, especially during introductory phase, are essential. --- # Branding and Packaging: ## Create Product Identity .col-7[ .question[ What do you think of when you hear the word “Disney?” ] Disney achieved its strong identity through decades of great branding. .question[ Do you know of any examples of brands that used to be very positive but have been marred recently by events that create negative emotions? ] ] ??? Branding provides the recognition factors products need to succeed in the marketplace. The branding process creates an identity and personality for the product that helps to set it apart from the competition. Of course, the brand name itself is a major consideration in any branding strategy. Brand marks such as the Nike Swoosh and trade characters like the Keebler Elves are part of the branding process. Logos are also brand marks. DISCUSSION NOTE: * The instructor should ask students to list the words that immediately come to mind when they hear the word “Disney.” * The Disney brand name evokes positive emotions, with themes centered around fun, playfulness, family, and casting day-to-day cares out the window. * The instructor should ask students why they believe the Disney brand creates such consistently, strong and positive associations.? * Students may be asked to provide other examples of brands that evoke strong emotions. * Students may also be asked to provide examples of brands that used to be very positive but have been marred recently by events that create negative emotions. --- # What’s in a Name (or a Symbol)? .col-7[ .question[ Identify some of your favorite brand names. List reasons for selecting these brand names. ] A “good” brand name: * maintains relationships with customers. * positions a product by: 1. portraying an image or 2. describing how the product works. * is easy to say, spell, read, and remember. * fits the target market, product benefits, customer’s culture, and legal requirements. ] ??? Good brand names are used to build relationships with customers from the cradle to the grave. For this reason, it is extremely rare for a brand to change it’s name because the constancy of brand name is important. Brand names often help to position products via the image the name portrays or by describing how the brand works or what it actually is, such as “Weedeater.”. For example, many brand names use symbolism to imply that a product contains beneficial attributes or certain characteristics. For example, consider the following brand names and what they imply about the product’s characteristics: Eagle Claw Fishhooks: association—hooks fish deeply and doesn’t let go. Perhaps the PPT author watched too many episodes of Wild Kingdom as a child, but “Eagle claw” evokes vivid mental imagery of an Eagle swooping down, grabbing a fish out of the water with its claws, and flying away into the great blue beyond. Jaguar: association—exotic, sleek, dangerous, and wild. All positive attributes for a high-end sports car. However, some brand names can also provide negative cues. Unfortunately, this can sometimes happen when small business people decide to brand their business using their last name. Would you want to do business with “Crook’s” Locksmith company? Brand names need to be easy to say, so consumers don’t feel self-conscious asking for the product. Making the name easy to spell, read, and remember is also important. Visual impact is important as this helps names be memorable. Incorporating the name into a logo (brand mark) that appears in ads, package designs, and websites also aids in creating memorability. For many packaged goods companies good brands also need to be short, so they can be prominently displayed on the product’s package. Finally, good brand names must fit the target market, fit the product’s benefits, fit the customer’s culture, and fit legal requirements. --- # Trademarks .col-7[ **Trademark** is the legal term for a brand name, brand mark, or trade character. * Trademarks legally registered by a government obtain protection for exclusive use in that country. * ® is the trademark symbol used in the U.S. * Common-law protection Visit the [U.S. Patent and Trademark Office (USPTO](http://www.uspto.gov/main/trademarks.htm) ] ??? DISCUSSION NOTE: Discuss the implications of other U.S. trademarks in other countries. How easy is it to protect a U.S. trademark in, say China? How enforceable is the protection of a trademark in a foreign country? --- # Why Brands Matter .col-7[ A brand is a lot more than just the product it represents. * Strong brands build emotional connections with customers. **Brand equity** refers to a brand’s value to its organization over and above the value of the generic version of the product. * Brand equity provides competitive advantage. * Brand equity results in brand loyal consumers and attachment. ] ??? A brand is a lot more than just the product it represents—the best brands build an emotional connection with customers which in turn contributes to the brand’s equity. Brand equity refers to a brand’s value to its organization over and above the value of the generic version of the product. Therefore, brands with strong equity create competitive advantage for the firm by enabling the firm to: 1. hold onto a larger share of the market and 2. sell their products at prices with higher profit margins. How is this possible? High equity brands—especially those that build an emotional attachment with customers—benefit from highly loyal customers who are strongly attached to the brand. Brand loyal customers are far less likely to respond to sales or promotional efforts offered by competitors. Without the need to compete on the basis of price, the manufacturer of a high equity brand can charge higher prices and limit sales promotion offers. --- # Brand Meaning .col-7[ Strong brands forge lasting bonds with customers based on brand meaning. * **Brand meaning** encompasses the beliefs and associations a consumer has about the brand. Today, brand meaning builds virally as people spread its story online. * Through **brand storytelling**, marketers seek to engage consumers with compelling stories about brands. ] ??? Recall that brand meaning stems from the beliefs and associations a consumer has about the brand. With the increasingly popularity of social networking and all forms of digital communication, marketers are using brand storytelling as a method of building brand meaning. This technique can be particularly effective as brand stories spread virally online from person to person. Products with strong brand equity provide brand extension opportunities for marketers, in which new products can be introduced and sold under the same brand name. The new product will attract customers immediately, just because of the name, and the marketers may be able to price it higher than would if introducing an entirely new brand that consumers don’t know. Touchstone films are targeted at older audiences and often feature more adult content in terms of language and sexual situations that is not appropriate for young children. When Disney decided to expand their movies beyond those targeting young children, they realized the importance of creating a sub-brand that could be marketed separately from existing Disney films, and the Touchstone film brand was born. --- # Characteristics of World Class Brands .col-7[ 1. The brand excels at delivering the benefits customers desire. 2. The brand stays relevant. 3. The pricing strategy is based on consumer’s perceptions of value. 4. The brand is properly positioned. 5. The brand is consistent. 6. The brand portfolio and hierarchy make sense. 7. The brand coordinates a full repertoire of marketing activities to build equity. 8. The brand’s managers understand what the brand means to consumers. 9. The brand is given proper support. 10. The company monitors sources of equity. ] --- # Brand Extensions and Sub-Branding .row[ .col-7[ Products with strong brand equity provide exciting opportunities for marketers. * **Brand extensions** arise from a firm leveraging brand equity to sell new products using the same brand name. ] .col-5[ .question[ How would you expand the Pepsi brand? ] ]] .row[ .col-7[ * **Sub-branding** occurs when a firm creates a secondary brand to help differentiate a product line (e.g., Virgin Mobile, Virgin Atlantic, Virgin Galactic). ] .col-5[ .question[ Do you know of any examples of successful brand extensions or sub-branding efforts? What about unsuccessful ones? ] ]] ??? Strong brand equity provides a resource that marketers can use to increase market share as well as expand into new markets. Brand extensions and sub-branding are related approaches. DISCUSSION NOTE: What are the implications for the original brand if a brand extension or sub-brand fails to live up to the quality of the original brand? --- ## Branding Strategies .col-11[ !(img09/solomon_rprc9e_fullppt_099.png) ] ??? The benefits associated with creating a successful brand are so important that branding decisions should not be taken lightly. In fact, marketers spend a great deal of time and effort trying to determine which branding strategy approaches are best used by a firm. Figure 9.6 illustrates the different branding strategies from which marketers may choose. Each is described in more detail in the following slides. --- .row[.col-7[ # Individual vs. Family Brands Family brand strategy is when product items share a common brand name. Family brands such as Campbell’s provides an umbrella under which multiple products can be effectively marketed. ] .col-5[ !(img09/solomon_rprc9e_fullppt_0910.jpg) ]] ??? One of the most important decisions a marketer must make is to decide whether to use a separate, unique brand for each item in the product line—called an individual brand strategy,—or whether multiple items should be marketed under the same family brand name. Campbell’s and Sunbeam are two companies that use a family branding strategy. Individual brands may be better when it is important to clearly and concisely communicate what the consumer can expect from the product. Family branding strategies provide instant equity for new products if the family brand is strong. However, having too many brands sometimes leads to the various product items becoming undifferentiated in the eyes of the consumer through poor positioning strategy or poor implementation. General Motors ran into difficulties with this very thing, and the Chevy, Pontiac, Saturn, Cadillac, Buick, Hummer, and Saab brands sometimes cannibalized one another (e.g., in the mid-size sedan product category). --- # National and Store Brands .col-7[ National brands are those produced and marketed by a manufacturer. Store (or private label) brands are those which are offered by a retail store or chain under an exclusive trade name. * Costco: Kirkland’s * Wal-Mart: Sam’s Choice .question[Others?] .question[ How do you perceive the relative quality of these store brands compared to national brands? ] ] ??? Retailers are increasingly introducing their own brands to compete with those marketed by national manufacturers. Retailer owned brands are called store brands, or private label brands, compete with national brands by offering lower prices, and continue to gain popularity with consumers. In fact, one study cited in an article on brandchannel.com predicted that the global market share of store brands could reach 50% by 2025. This is double the 25% market share of private brands found in the United States, according to Consumer Reports magazine. The popularity of store brands is clearly influenced by economic factors. Recessions lead many consumers to buy store brands, resulting in market share gains for private labels. For example, one study found that in 2010, 84% of U.S. shoppers bought store brands, of whom 93% indicated they would keep buying store brands even after the economy recovers. Not only do consumers accept store brands, but they also trust them. According to a study by market research firm Mintel, 44% of consumers believe that the quality of store brands has improved over the past five years. Furthermore, Food Navigator-USA reports that "in 2010 market research repeatedly showed that store brands were retaining market share, and some have speculated that increased quality and innovation in the sector is changing consumer perception.” --- # Generic Brands .col-7[ Generic brands is a strategy in which products are not branded and are sold at lowest price possible. * Typically packaged in white with black letters that only names the product itself (“Green Beans”) ] ??? Generic branded products have fallen out of favor over the years, but prior to the introduction of store brands, generic products presented a low-cost alternative to national brands. Generic products are sold in white packages with black letter names that just describe the product itself, for example “Salt” or “Sugar.” In essence, generic products aren’t branded at all—they complete solely on the basis of price. They are a legitimate alternative to both national and store brands, particularly for price-conscious consumers and during uncertain economic times. Wal-Mart is disrupting retail pharmacy industry by widely distributing some type of generic prescriptions, such as basic antibiotics. --- # Licensing .col-7[ **Licensing** is when one firm sells to another firm the right to use a brand name for a specific purpose for a specific period of time. ] ??? Licensing is a branding strategy in which one firm sells to another the rights to use a brand name for a specific purpose and for a specific period of time. The firm buying the licensing rights gains instant recognition and a short cut to building brand equity. For instance, TGI Fridays licensed Jack Daniels “bourbon” name for use in many of its menu items. Also, movies typically offer licensing agreements to outside firms, such as toy manufacturers, amusement parks, and clothing companies. --- .row[.col-7[ # Cobranding **Cobranding**: Two brands agree to work together to market a new product **Ingredient branding**: Branded materials become “component parts” of other branded products. .question[ Do you know of any examples of cobranding and ingredient branding? ] ] .col-5[ !(img09/solomon_rprc9e_fullppt_0911.jpg)]] ??? Cobranding helps both partners when combining the two brands provides more recognition than either enjoys alone. Ingredient branding is a variation of cobranding in which the presence of a key ingredient in the focal product is highlighted. The practice of ingredient branding has two main benefits. First, it attracts customers to the host brand because the ingredient brand is familiar and has a strong reputation. Second, the ingredient brand’s firm can sell more of its product. --- ## Packages and Labels: Branding’s Little Helpers .row[.col-10[ !(img09/solomon_rprc9e_fullppt_0912.png) ] .col-2[ A package is the covering or container for a product. Serves both functional and communication purposes * Branding * UPC codes ] ] ??? Figure 9.7 illustrates the various functions of packaging. Packages represent the cover or container for a product. Implemented correctly however, good packaging can create a competitive advantage for the brand. Obviously, packaging provides utilitarian benefits, such as protecting the product during transit and facilitating consumer’s handling of the product (easy pour spout) as well its storage (package shape and size). However, the package can also help to communicate the brand’s personality via the use of color, words, shapes, designs, and pictures. The package also supplies important information, such as nutritional information, ingredients, benefits, recipes, directions, warnings, toll-free phone numbers, and the UPC code. --- # Design Effective Packaging .row[.col-7[ Effective packaging design entails many decisions * How are other products in category packaged and displayed? * Copycat packaging Effective packaging also considers: * Choice of packaging material and the image it projects * Environmental impact of packaging * Shape and color influences on image * Graphic information to be portrayed ] .col-5[ !(img09/solomon_rprc9e_fullppt_0913.jpg)]] ??? Effective packaging considers a variety of factors, including packaging of other brands in same product category. National marketers want their package to standout on the shelf and be differentiated from competition. On the other hand, some store brands attempt to mimic a national brand’s package as closely as is legally possible. DISCUSSION NOTE: * Some store brands opt for copycat packaging, mimicking the look of the national branded product they want to knock off. * Walgreen’s is a master of such copycat packaging—look on any shelf in its medicinal categories and you will see a Walgreen’s brand proudly merchandised on the shelf right next to the leading national brand in that category, with the package design and colors so similar that you have to look carefully to discern what you are actually buying. In addition to the packaging of other brands in the same product category, marketers must consider the choice of packaging material, and evaluate it with respect to the image that material projects. For example, plastic is often perceived as cheap—not the best packaging choice for a brand attempting to establish an elite brand image. As sustainability becomes more important to both consumers and the corporate world, the environmental impact of different packaging choices will become increasingly important. Is the package made of recycled materials? Is it biodegradable? Does it use less packaging materials? Of course the environmental impact must be balanced against consumer needs and desires. As the text mentions, refill pouches had a relatively short life, as the majority of consumers didn’t like having to transfer the refill liquid into the existing spray bottle or container. The shape and colors used on the package can be very helpful in creating brand meaning. Curved shapes are feminine, square and angular shapes are masculine. White communicates purity, while green is associated with health, vegetables, and a minty flavor. Graphics can be used to show the results of using the product, the type of person who should be purchasing the product, or the product itself. Many marketers use the VIEW model to evaluate the resulting package. VIEW is an acronym which stands for the four basis elements of the model: * V = Visibility: the package’s ability to stand out on the shelf and to attractive attention. Visibility is somewhat dependent upon the brands that the product is placed next to on the shelf. * I = Information: the presence or absence of warnings, directions, nutritional information, product information, UPC code, recipes, or any other written information. * E = Emotional appeal: Similar to brand names, product packages have the ability to function as perceptual or surrogate cues in that they may suggest that specific attributes or benefits are provided by the brand. Color, in particular, is helpful in this regard. Reflective gold and silver colorings create a prestigious look for the brand; green connotes healthiness and is often used in food packaging; red is a color that can be associated with romance, spiciness, or certain flavors (strawberry, tomato, etc.). Other package elements contribute to a product’s emotional appeal as well. Curved packaging, such as perfume bottles, are feminine in nature. Wooden packaging materials (cologne stoppers, for example), are more masculine in nature. * W = Workability: Workability from the perspective of the retailer details issues such as whether the package fits easily onto the retail shelf and whether multiple units can be stacked upon one another, as well as whether the package actually protects the product. Workability from the customer viewpoint relates to whether the package will fit in cabinets or in the refrigerator (the 3-liter Coke failed for this reason), and whether it is easy to use (wine in a box comes with a spigot; plastic juice containers are safer for children to use; Ziploc linings in everything from cereal to hotdogs keep products fresh longer). ??? # Labeling Regulations .col-7[ Fair Packaging and Labeling Act (1966): * Federal legislation aimed at making labels more helpful to consumers by providing useful information. Nutrition Labeling and Education Act (1990) * Law requires food labels to state how much fat, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in each product serving. ] ??? The Federal Fair Packaging and Labeling Act of 1966 controls package communication and labeling in the United States. Their legislation attempts to make labels more helpful to consumers by forcing marketers to provide useful information. The Nutrition Labeling and Education Act of 1990 forced food marketers to make a number of changes to how they label products, and since 1994, the FDA has required food labels to state how much fat, trans fat, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in each product serving. As of 2006, labels must also include the amount of trans fat contained by the food in recognition of the fact that this causes bad cholesterol. --- # Branding and Packaging .col-7[ Branding and packaging decisions play an essential role in shaping how consumers view a product. * While there are many types of decisions to be made, each should conform with the overall product strategy and needs of target markets. .question[ Have you ever mistakenly purchased the wrong brand due to copy-cat packaging? ] .question[ Is it fair for retailers like Walgreens and Wal-Mart to use copycat packaging on store branded products? Can national brand manufacturers do anything to prevent or discourage it? ] ] --- .row[ .col-7[ !(img09/solomon_rprc9e_fullppt_0914.png) ] .col-5[ ## Organize for Effective Product Management Product strategies are only as effective as the managers that create them and carry them out. In larger firms, various types of managers may be involved in the process: * Brand managers * Product category managers * Market managers ] ] ??? Management of existing products differs according to the size of the firm. In small firms, a single marketing manager typically handles product management as well as the entire marketing function. But depending upon market conditions larger firms may have a number of managers who perform different functions. Brand managers coordinate all marketing activities for the brand, including positioning, target market identification, research, distribution, sales, etc. Some firms, such as Proctor and Gamble, have changed the duties of their brand managers so that the brand manager works in conjunction with a cross-functional team of individuals from sales, logistics, etc. Thus the new brand manager acts almost as an internal consultant. Unfortunately, the brand managements system of product management can be counterproductive when brand managers within a firm compete against others for resources, or overuse promotional tools such as coupons in an attempt to boost sales in the short term. Such efforts often damage the brand’s equity and may hurt the overall profitability of the firm. Product category managers are responsible for multiple items, not just a single brand. These individuals must coordinate the mist of product lines within the general product category, and ultimately are responsible for deciding whether new products are warranted based on consumer needs, or whether a given product line should be contracted via the elimination of a brand. Firms that use a market manager structure organize by customer groups as opposed to brands or product lines. This type of organization is most useful when firms offer a variety of products that serve the needs of a wide range of customers. --- # Organize for New Product Development .col-7[ Launching new products is so important; many firms pay special attention to the introductory phase of the PLC Within larger companies, cross-functional teams are formed by enlisting specialists from different areas. * Skunk works: venture teams located away from traditional company offices ] ??? Launching new products is a critical activity in many firms. Often venture teams are used as part of the new product development process. In new product development, venture teams are composed of members that commit so deeply to the new product that they function independent of other departments, and stick with the new product venture team until the product is successfully commercialized, or fails and is abandoned. Venture teams typically report to higher-level corporate officers. Sometimes their offices aren’t even located in the corporate building, but instead may be found at a remote location, colorfully called a “Skunks works.” The use of venture teams is most appropriate when one or more of the following situations is present: *If the new product being developed is one that falls outside of the firm’s existing businesses; *The firm is developing industrial products that are highly dependent upon technology; and/or *The new product is such that it will require more time, effort, and money to develop than most divisional or departmental managers are willing to devote.