Chapter 10 Product Concepts 10 1 What is a Product Product is the starting point in creating a marketing mix Product everything both favorable and unfavorable that a person receives in an exchange can be a product service or idea 10 2 Types of Consumer Products Products can be either business or consumer products depending on the buyer s intention key distinction the intended use of the product Business product a product used to manufacture other goods services to facilitate an organization s operations or to resell to other customers Consumer product a product bought to satisfy an individual s personal wants Categorizing consumer products o Convenience product a relatively inexpensive item that merits little shopping effort customer is unwilling to shop extensively wide distribution o Shopping product a product that requires comparison shopping because it is usually more expensive than a convenience product and is found in fewer stores Homogenous similar products washers dryers fridges tv s Heterogeneous different products clothing housing look for lowest priced furniture colleges o Specialty product a particular item for which customers search extensively and are very reluctant to accept substitutes o Unsought product a product unknown to the potential buyer or a known product that the buyer does not actively seek 10 3 Product Items Lines and Mixes Product item a specific version of a product that can be designated as a distinct offering among an organization s products Campbell s Cream of Chicken Soup Product line a group of closely related product items Campbell s soups Product mix all products that an organization sells Campbell s soups sauces beverages biscuits Benefits of product lines o Advertising economies provide economies of scale o Package uniformity o Standardized components o Efficient sales and distribution o Equivalent quality Product mix width the number of product lines an organization offers o Firms increase width to diversify risk and capitalize on reputation Product line depth the number of product items in a product line o Firms increase depth to attract buyers with different preferences increase sales and profits capitalize on economies of scale and even out seasonal sales patterns Product modification changing one or more of a product s characteristics o Quality modification functional modification style modification o Planned obsolescence the practice of modifying products so those that have already been sold become obsolete before they actually need replacement Repositioning o Changes consumer s perception of a brand Product line extension adding additional products to an existing product line in order to compete more broadly in the industry o Product lines can be overextended when some products in the line do not contribute to profits bc of low sales or cannibalized sales manufacturing marketing resources are allocated to slow moving products some items are obsolete bc of new products o Benefits of contracting overextended product lines resources become concentrated on important products managers no longer waste resources trying to improve bad products new product items have a greater chance of being successful 10 4 Branding Branding is used to distinguish products from the competition Brand a name term symbol design or combination thereof that identifies a seller s product and differentiates it form competitor s products Brand name that part of a brand that can be spoken including letters Brand mark the elements of a brand that cannot be spoken Purposes of branding product identification most important repeat sales words and numbers new product sales Brand equity the value of a company and brand name Global brand a brand that obtains at least 1 3 of its earnings from outside its home country is recognizable outside its home base of customers and has publicly available marketing and financial data Brand loyalty consistent preference for one brand over all others Manufacturer s brand the brand name of a manufacturer Private brand a brand name owned by a wholesaler or retailer aka store brand Captive brands a brand manufactured by a 3rd party for an exclusive retailer without evidence of that retailer s affiliation Individual branding using different brand names for different products Family branding marketing several different products under the same brand name Jack Daniel s Co branding placing 2 or more brand names on a product or its package o Ingredient branding identifies the brand of a part that makes up the product o Cooperative branding occurs when 2 brands receiving equal treatment borrow from each other s brand equity o Complementary branding products are advertised or marketed together to suggest usage Trademark the exclusive right to use a brand or part of a brand Certain sounds shapes colors designs catchy phrases and abbreviations Service mark a trademark for a service can also qualify for trademark protection Trademark rights come from use rather than registration Generic product name identifies a product by class or type and cannot be trademarked 10 5 Packaging Facilitating use and convenience Facilitating recycling and reducing environmental damage Contain and protect products Promoting products Persuasive labeling a type of package labeling that focuses on a promotional theme or logo consumer information is secondary Informational labeling a type of package labeling designed to help consumers make proper product selections and lower their cognitive dissonance after the purchase Greenwashing product or company attempts to give the impression of environmental friendliness whether or not it is environmentally friendly Universal product codes UPCs a series of thick and thin vertical lines bar codes readable by computerized optical scanners that represent numbers used to track products 10 6 Global Issues in Branding and Packaging One brand name everywhere greater identification of the product Adaptations and modifications depending on culture Different brand names in different markets 3 aspects of packaging that are important in international markets o Labeling proper translation o Aesthetics colors may have different connotations o Climate 10 7 Product Warranties Warranty a confirmation of the quality or performance of a good service Express warranty a written guarantee 100 cotton Implied warranty an unwritten guarantee that the good service is fit for the purpose for which it was sold all sales have implied warranty under the Uniform
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