Chapter 10 Everything both favorable and unfavorable that a person receives in an exchange What is a Product Tangible good Service Idea Types of Consumer Products Convenience product A relatively inexpensive item that merits little shopping effort Gum Shopping Product A product that requires comparison shipping because it is usually more expensive and found in fewer stores Clothing Specialty Product A particular item for which consumers search extensively and are reluctant to accept substitutes A Rolex Unsought product A product unknown to the potential buyer or a known product that the buyer does not actively seek A casket Tombstone Life insurance Product Item Product Line Product Mix A speci c version of a product that can be designated as a distinct offering among an organization s products Part of a product line A group of closely related product items All products that an organization sells of 1 13 Bene ts of Product Lines Advertising Economies Package Uniformity Standardization Components Ef cient Sales and Distribution Equivalent Quality Adjustments to Product Items Lines and Mixes 1 Product modi cation 2 Product repositioning 3 Product line extension or contraction 1 Types of Product Modi cations Functional Modi cation ex iPhone 5c 5s 6 6 plus Style Modi cation ex Toyota Camry ex iPhone 5c 5s 6 6 plus Quality Modi cation ex Using better materials in production Gorilla or sapphire glass instead of regular glass Planned Obsolescence is the practice of modifying products so those that have already been sold become obsolete before they actually need replacement 2 Repositioning Why reposition established brands Changing demographics Declining sales Changes in social environment 3 Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry ex Budweiser Bud Light Bud Light Lime LimaRita This could lead to overextension Some products have low sales or cannibalize sales of other items Resources are disproportionately allocated to slow moving products Items have become obsolete because of new product entires of 2 13 The part of a brand that can be spoken including letters words and numbers The elements of a brand that cannot be spoken The value of a company and brand names A brand where at least a third of the earnings come from outside its home country What is a Brand Brand Name Brand Mark Brand Equity Global Brand Bene ts of Branding Product identi cation Repeat sales New product sales Branding Strategies Branded House All sub brands use the same master brand and only differentiate in their descriptions ex Google House of Brands Consists of various brands that each operate independently and obtain separate market share and pro ts ex P G Hybrid Combination of the two Enjoys advantages of both but requires higher brand management standards and more resource inputs ex Coca Cola and GE There are two main types of brands Manufacturer s vs Private Brands Within those two there are three subgroups Individual family and combination brands Individual Using different brand names for different products ex P G Family Several different products under the same brand name differentiated in Combination Combining individual and family brands ex Coca Cola their descriptions ex Heinz of 3 13 Manufacturer s Brands vs Private Brands vs Captive Brands Manufacturer s brand The brand name of a manufacturer Sony Private Brand Trader Joe s Captive Heavy consumer ads by manufacturers Attracts new customers A brand name owned by a wholesaler or a retailer Also known as a private label or store brand Winn Dixie branded products Earns higher pro t margin on own brand Less pressure to mark down price because brands are exclusive Manufacturer can come a direct competitor or drop a brand Ties a customer to the retailer Wholesalers and retailers have no control over distribution of to retailer reseller manufactures brands A brand manufactured by a third party for an exclusive retailer without evidence of that retailer s af liation Insignia or Dinex are associated with Best Buy Sold exclusively at the chain Can ask price similar to or even higher than the manufacturer s brand Co Branding Strategies Ingredient branding Ex International delight coffee creamers using name brands like Coldstone and Cinnabon in their creamer Cooperative branding Brands share a promotion Ex Rolex rolex products featured on the ad They don t have a rolex store so their ads tend to endorse stores that do sell the Complementary Branding Brands marketed together to suggest the bene ts of using both Ex Nike and having the chip that would go in your shoe and connect to your iPod and track your exercise of 4 13 New Product Lines Moleskine Notebooks then branching out to travel bags and device cases covers Chapter 11 Diffusion Process Product Life Cycles Categories of New Products New to the world First of its kind Ex Smart watch Inline skates Introductory stage is focused on education Product Line Additions Ex Doritos Locos Tacos Bud Light Lime Improvements or Revisions Ex Gain laundry detergent bottle design improvement Repositioned Products Ex Mustang being repositioned for a younger demographic New Product Success Factors Long term commitment Company speci c approach Capitalize on experience Establish an environment Spread of New Products ex rollerblades PDAs TVs Diffusion is the process by which the adoption of an innovation spreads Categories of Adopters Innovators Cutting edge of buying technology More education and gets information from scienti c resources Have to be the rst to have something and are usually self con dent of 5 13 Early adopters Product has been out for a little while and it s starting to catch on 13 5 Relies a little more on group norms as adoption starts to increase Early majority 34 starts to weigh pros and cons and relies a lot on word of mouth Late majority Product has been in the marketplace for a while More than half the market has been saturated 34 Your friends already have it so you should too Lower income lower education more skepticism and usually an older market Laggards 16 Not motivated my marketing tactics Heavily in uenced by tradition and past purchases they ve made Product Characteristics and the Rate of Adoption Complexity Compatibility Relative advantage Observability Trialability Marketing Implications of the Adoption Process Communication from two sources aids the diffusion process 1 Word of mouth 2 Direct from marketer of 6 13