Mark 3000 1st Edition Lecture 10 Outline of Last Lecture I Step 4 Analyzing Data and developing insights II Step 5 Action plan and implementation III Emerging technology and ethics of using customer information IV Product V Product Issues VI Branding Current Lecture I Brand and Line extensions II Packaging III Product Mix IV New Product Development Brand and Line extensions Brand extension refers to the use of same brand name in a different product line Line Extension is the use of the same brand name within the same product line and represents an increase in a product line s depth Advantages to using the same brand name 1 Since the brand name is already well established firm has to spend less in developing consumer brand awareness 2 If either the original brand or extension has strong consumer acceptance it will carry on to the other 3 When brand extensions are used for complementary goods lays chips and dip then synergy exists between the 2 products and can increase sales Brand dilution occurs when the brand extension adversely affects consumer perceptions about the attributes core brand is believed to hold Ex Colgate creating frozen food which failed Brand Licensing contractual agreement between firms whereby one firms allows the other to use its brand name logos etc for a fee Brand Repositioning rebranding refers to a strategy in which marketers change a brand s focus to target new markets or realign brand s core emphasis with changing market preferences These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Packaging Primary package the packaging that the consumers use from which they seek convenience Secondary package wrapper or exterior carton that contains the primary package and provides UPC label and provides information about the product Functions of Packaging 1 Contain the product 2 Promote the product 3 Add Value for the customer 4 Provide Information 5 Facilitate Recycling Product Mix complete set of all products and services provided by a firm Constantly changing Consumers adopt products at different speeds Products remain viable for different time periods Product Line Group of associated items that consumers tend to use together or think of as part of a group of similar products or services Breadth Number of product lines Ex Kellogg s has cereals cookies breakfast snacks and frozen food Depth Number of categories within a product line Ex Within Kellogg s Cereal there is Apple jacks Froot loops etc Too much breadth can be costly to maintain and too many brands may weaken firm s reputation Firms may increase depth to address changing consumer preferences Firms may decrease depth to eliminate unprofitable products Firms may decrease breadth in order to address market conditions or meet internal strategic priorities Firms may increase breadth in order to capture new or evolving markets New Product Development Innovation the process by which ideas are transformed into new products and services that help the firm grow Only 3 of new products succeed Why are new products introduced Changing needs of customers important to effectively satisfy the changing needs of new and current customers Market situation without new products value of firm will decline as products become saturated Managing risk through diversity create a broader portfolio or products to diversify their risk and enhance firm value better than a single product Fashion cycles in industries that depend on fashion new products are the source of most sales revenue Improving business relationships improve relationships with suppliers in order to effectively sell the product o When Kraft was not selling lemonade Capri sun they found that was because it was stored at the bottom of the pallet they the introduced Chimney stacks and the sales increased by 162 How are they developed and introduced 1 Idea generation Development of viable new product ideas a Internal research and development firm s own department in which scientists work to solve complex problems and develop new ideas b R D Consortia Firms using groups of other firms to explore new ideas or obtain solutions for developing new products c Licensing For many technological products firms buy rights to use technology from other research firms through a licensing agreement d Customer Input listening to the customer i Lead users innovate product users who modify exiting products according to own needs e Competitor s products Looking at the product of competitors i Reverse Engineering involves taking apart a product analyzing it and creating improved product f Brainstorming groups working together to generate ideas g Outsourcing Firms tend to look at other firms when designing new products 2 Concept Testing Concept statement is presented to potential buyers to obtain reactions a Testing the new product idea among a set of potential customers b Financial analysis c Reviewed for safety and legal issues 3 Product Development Development of prototypes and the product a Develop prototype b Alpha testing Tests whether the product will perform according to its design and whether it satisfies the need for which it was intended i Testing in a controlled setting such as a lab c Beta testing Uses potential customers examine the product in a real use setting to determine its functionality i Testing with consumers 4 Market testing Testing the actual products in a few test markets a Premarket testing customers exposed in lab surveyed and then firms make the decision b Test marketing mini product launch more expensive market demand is estimated 5 Product Launch Full scale commercialization of the product a Set up relationships with retailers and also complete other elements of the marketing mix promotion place price b Promotion i Trade promotions advertising to wholesalers ii Introductory price promotions limited time discount on product to give retailers incentive to try the product iii Trade show buyers who choose to be exposed to products and services offered by potential suppliers in an industry c Place Make sure that the product is available for sale when the customer wants it at the stores where the customer is expecting to find it d Price Decide what price to sell to consumers on the basis of the factors i MSRP Price manufacturers suggest retailers to sell the merchandise at 6 Evaluation of results Analysis of performance of new product and making appropriate