CHAPTER 12 Developing and Managing Brand and Product Categories

MANAGING BRANDS FOR

COMPETITIVE ADVANTAGE
Brand Name, term, sign, symbol, design, or some
combination that identifies the products of one firm
while differentiating them from the competitions.
Brands have a powerful influence on consumer behavior.
CHAPTER 12 Developing and Managing Brand and Product Categories
BRAND LOYALTY
Measured in three stages:
Brand recognition Consumer awareness and identification of a
brand.
Brand preference Consumer reliance on previous experiences
with a product to choose that product again.
Brand insistence Consumer refusal of alternatives and extensive
search for desired merchandise.
CHAPTER 12 Developing and Managing Brand and Product Categories
BRAND LOYALTY
Measured in three stages:
Brand recognition Consumer awareness and identification of a
brand.
Brand preference Consumer reliance on previous experiences
with a product to choose that product again.
Brand insistence Consumer refusal of alternatives and extensive
search for desired merchandise.
TYPES OF BRANDS
Brands classified in a number of ways.
Generic products Products characterized by plain labels, no advertising,
and the absence of brand names.
CHAPTER 12 Developing and Managing Brand and Product Categories
Manufacturers Brands versus Private Brands
Manufacturers brand Brand name owned by a manufacturer or other
producer.
Examples: Sony, Pepsi, Dell.
Private brandsbrands offered by wholesalers and retailers.
Account for one of every five items sold in the United States.
Captive Brands
National brands sold exclusively by a retail chain.
Example: Targets sale of products by Michael Graves.
Family and Individual Brands
Family brand Single brand name that identifies several related products.
Individual branduniquely identifies the item itself.
CHAPTER 12 Developing and Managing Brand and Product Categories
BRAND EQUITY
Brand equity Added value that a respected,
well-known brand name gives to a product in
the marketplace.
Strong brand equity
Increases likelihood customers will recognize
firms product or product line.
Can contribute to buyers perceptions of
product quality.
Can reinforce customer loyalty and repeat purchases.
Facilitates expansion into international markets.
Built sequentially on four dimensions: differentiation, relevance, esteem,
and knowledge.
CHAPTER 12 Developing and Managing Brand and Product Categories
THE ROLE OF CATEGORY AND BRAND
MANAGEMENT
Category management Product management system
in which a category managerwith profit and loss
responsibilityoversees a product line.
Help retailers category buyer maximize sales for the
whole category, not just particular manufacturers product.
Also identify opportunities for growth, set performance
targets, and create marketing strategy.
CHAPTER 12 Developing and Managing Brand and Product Categories
PRODUCT IDENTIFICATION
Products identified in the marketplace by brand names, symbols, and
distinctive packaging.
Choices about how to identify products are a major strategic decision.
BRAND NAMES AND BRAND MARKS
Brand name Part of a brand consisting of words or letters that form a
name that identifies and distinguishes a firms offerings from those of its
competitors.
Brand marksymbol or pictorial design that distinguishes a product.
Effective brand names are easy to pronounce, recognize, and remember.
Should give buyers correct connotation of products image and qualify for
legal protection.
Brand name loses protection when class of products generally comes to be
known by that name. Examples include nylon, kerosene, and zipper.
CHAPTER 12 Developing and Managing Brand and Product Categories
TRADEMARKS
Trademark Brand for which the owner claims exclusive legal protection.
Protecting Trademarks
Gives firm exclusive legal right to use brand name, brand mark, and any
slogan name or product name appreciation.
Example: Former Beatles and their representatives sued Apple Computer,
claiming its iPod product violated the trademarks for Apple Corps, the
Beatles record label.
Firms can also seek protection for packaging elements and product
features.
Trade Dress
Visual cues in branding that create an overall look.
Examples: McDonalds golden arches, Merrill Lynchs bull.
CHAPTER 12 Developing and Managing Brand and Product Categories
DEVELOPING GLOBAL BRAND NAMES AND
TRADEMARKS
An excellent name or symbol in one country may be a poor choice in
another.
Some sounds are common to most languages, such as o, k, and short a, so
names such as Coca-Cola and Texaco tend to work well worldwide.
PACKAGING
Can powerfully influence buyers decisions.
Many companies conduct research to develop and evaluate packaging.
Protection Against Damage, Spoilage, and Pilferage
Protection against damaging was original purpose of packaging.
Packaging can help overcome consumer fears of tampering.
CHAPTER 12 Developing and Managing Brand and Product Categories
Assistance in Marketing the Product
Many firms use biodegradable and recyclable materials to respond to
consumer preferences.
Packaging must help product capture the shoppers attention.
Can enhance convenience for buyers.
Example: Squeezable bottles of honey and ketchup.
Cost-Effective Packaging
Packaging cost must be reasonable.
CHAPTER 12 Developing and Managing Brand and Product Categories
Labeling
Label carries an items brand name or symbol, the name and address of the
manufacturer or distributor, information about the products composition and
size, and recommended uses.
Labels are both promotional and informational.
Subject to legal restrictions.
Universal Product Code (UPC)numerical bar codes printed on packages.
Reduce labor costs and improve inventory control.
Radio-frequency identification (RFID) tagselectronic chips that carry
encoded product identification.
May one day replace some functions of UPC codes.
CHAPTER 12 Developing and Managing Brand and Product Categories
BRAND EXTENSIONS
Brand extension Strategy of attaching a popular brand name to a new
product in an unrelated product category.
Development by Mattel of Barbie-branded high-end clothing and
accessories for women from their teens through their 30s.
BRAND LICENSING
Authorizing other companies to use a firms brand name.
Brands owner receives royalties, typically four to eight percent of
wholesale revenues.
Can hurt a brand if the licensed product is poor quality or ethically
incompatible with the brand.
Another risk is overextending the brand.
CHAPTER 12 Developing and Managing Brand and Product Categories
NEW-PRODUCT PLANNING
Firms must add new products in order to continuing prospering as other
items reach the later stages of the product life cycle.
PRODUCT DEVELOPMENT STRATEGIES
CHAPTER 12 Developing and Managing Brand and Product Categories
Product positioningrefers to consumers perceptions of a products
attributes, uses, quality, and advantages and disadvantages relative to
competing brands.
Market developmentconcentrates on finding new markets for existing
products.
Product developmentintroduction of new products into identifiable or
established markets.
Product diversificationfocuses on developing entirely new products for
new markets.
Firms must avoid cannibalizationintroducing a new product that
adversely affects sales of existing products.
CHAPTER 12 Developing and Managing Brand and Product Categories
CONSUMER ADOPTION PROCESS
Adoption process Stages that consumers go through in learning about a
new product, trying it, and deciding whether to purchase it again.
Consumers go through five stages:
Awarenessindividuals first learn of the new product, but they
lack full information about it.
Interestpotential buyers begin to seek information about it
Evaluationthey consider the likely benefits of the product.
Trialthey make trial purchases to determine its usefulness.
Adoption/rejectiondecide whether to use the product regularly.
Example: Schick gave away samples of its Quattro razor to move buyers
through the evaluation and trial stages.
CHAPTER 12 Developing and Managing Brand and Product Categories
ADOPTER CATEGORIES
Consumer innovators People who purchase new products almost as
soon as the products reach the market.
Diffusion process Process by which new goods or services are accepted
in the marketplace.
CHAPTER 12 Developing and Managing Brand and Product Categories
IDENTIFYING EARLY ADOPTERS
Firms who reach early buyers can treat them as a test market.
Tend to be younger, have higher social status, are better educated, and
enjoy higher incomes than other consumers.
Rate of Adoption Determinants
Relative advantageincreases the products adoption rate.
Compatibilityinnovation consistent with the values and experiences of
potential adopters.
Complexitydifficulty understanding the innovation can slow the speed of
acceptance.
Possibility of trial usecan accelerate the rate of adoption.
Observabilityobserving an innovations superiority increase the adoption
rate.
CHAPTER 12 Developing and Managing Brand and Product Categories
ORGANIZING FOR NEW PRODUCT DEVELOPMENT
Firms must be organized so personnel can stimulate and coordinate new-
product development.
New-Product Committees
Most common arrangement for new-product development.
Primarily review and evaluate others new product plans rather than
develop their own.
Tend to move slowly and conservatively in large companies.
New-Product Departments
Encourage innovation as a full-time activity.
Department head typically has substantial authority.
CHAPTER 12 Developing and Managing Brand and Product Categories
Product Managers
Another term for a brand manager; supports the marketing strategies of an
individual product or product line.
Set prices, develop advertising and sales promotion programs, and work
with sales representatives in the field.
Most consumer-goods companies have adopted a category management
structure, as discussed earlier in the chapter.
Venture Teams
Gathers a group of specialists from different areas of an organization to
work together in developing new products.
Has a flexible lifespan.
CHAPTER 12 Developing and Managing Brand and Product Categories
THE NEW-PRODUCT DEVELOPMENT PROCESS
Firms must usually generate dozens of ideas to produce one successful
product.
New products have an 80 percent failure rate.
CHAPTER 12 Developing and Managing Brand and Product Categories
PRODUCT SAFETY AND LIABILITY
Manufacturers must design their products to protect users from harm.
Product liabilityresponsibility of manufacturers and marketers for
injuries and damages caused by their products.
Example: Poison Prevention Packaging Act, which requires drug
manufacturers to put product in child-resistant packaging.
Consumer Product Safety Commission has jurisdiction over most
consumer product categories.
Food and Drug Administration approves food, medications, and health-
related devices.
Liability lawsuits are increasing domestically and internationally.
To counter increased litigation and legislation, some companies sponsor
voluntary improvements in safety standards.
Safety planning and testing can be an effective marketing tool.