quiz
Chapter 6 Product and Brand Strategy
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Product Definition
Physical entity or service that is offered to the buyer
Tangible product
Tangible product along with whole cluster of services that accompany it
Extended product
Includes the essential benefits the buyer expects to receive
Generic product
Sum of the physical, psychological, and sociological satisfactions the buyer derives from purchase, ownership, and consumption
Product
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Product Classification
Useful as an analytical device to assist in planning marketing strategy and programs
Criteria for classification
End use or market
Degree of processing or physical transformation
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Product Classification
Agricultural products and raw materials
Goods grown or extracted from the land or sea
Organizational goods
Purchased by business firms for the purpose of running the business
Raw materials and semi finished goods
Major and minor equipment
Parts which become a part of a finished good
Supplies that do not become a part of a finished good
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Product Classification
Consumer goods
Convenience goods - Purchased frequently with minimum effort
Shopping goods - Purchased after some time and energy are spent comparing various offerings
Specialty goods - Unique in some way for which consumer makes special purchase effort
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Organizational Goods
Demand is attributed as derived
Purchased directly from the original source with few middlemen
Subject to multiple-purchase influence
Market is concentrated geographically
Vertical market: Limited number of buyers
Horizontal market: Product purchased by all types of firms in different industries
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Product Quality
Quality: Degree of excellence or superiority that an organization’s product possesses
Encompasses both the tangible and intangible aspects of a firm’s products or services
Total-quality management (TQM) - Organization wide commitment to satisfying customers by improving business processes
ISO 9000 - Standardized approach for evaluating a supplier’s quality system
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Product Value
What the customer gets in exchange for what the customer gives
Encompasses quality and price
Customer’s perception of value depends on:
Degree to which the product meets his or her specifications
Price that he or she will have to pay to acquire the product
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Product Mix
Full set of products offered for sale by an organization
Described by:
Width: Number of individual product lines offered by the organization
Depth: Average number of products in each product line
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Product Line
Group of products that share common characteristics, distribution channels, customers, or uses
Reasons why organizations offer varying products within a given product
Potential customers rarely agree on a single set of specifications regarding their ideal product
Customers prefer variety and dynamics of competition lead to multiproduct lines
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Product Line
To reach a decision on product line additions, organizations need to evaluate whether:
Total profits will decrease
Quality/Value associated with current products will suffer
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Branding
Brand: Name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers
Trademark - Legal term for brand
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Branding Strategies
Line extension: Uses a well-known brand name to enter into a new market segment
Brand extension: Uses a current brand name to enter a completely different product class
Franchisee extension: Organization’s attachment of the corporate name to a product to enter either a new market segment or a different product class
Called family branding
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Branding Strategies
Dual branding: Two or more branded products are integrated
Multibranding: Assigns different brand names to each product
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Multibranding Strategy
Advantages
Firm can distance products from other offerings it markets
Image of one product is not associated with other products the company markets
Products can be targeted at specific market segments
Should the products fail, the probability of failure impacting on other company products is minimized
Disadvantages
No consumer brand awareness
Significant amounts of money must be spent familiarizing customers with new brands
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Brand Equity
Set of assets or liabilities linked to the brand that add or subtract value
Value of assets depends upon results of marketplace’s relationship with the brand
Determined by the consumer on the basis of consumer’s assessment of the:
Product
Company that manufactures and markets
Variables that impact on the product
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Figure 6.1 - Elements of Brand Equity
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Packaging
Helps differentiate homogeneous products
Helps create new attributes of value in a brand
Can make products urgently saleable
Things to consider while making packaging decisions
Consumer
Cost
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Figure 6.2 - Product Life Cycle
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Product Life Cycle
Decisions to be taken when sales decline
Dropping or altering the product
Seeking new uses for the product or new markets
Continuing with more of the same
Limitations
Length of time a product will remain in each stage is unknown
Not all products go through the product life cycle in the same way
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Variations of the Life Cycle
Fashion: Accepted and popular products that go through a repetitive cycle of popularity, lost popularity, and regained popularity
Fads: Product that experiences an intense but often very brief period of popularity
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Product Adoption and Diffusion
Not all customers immediately purchase a product in the introductory stage of the product life cycle
Majority of sales occur after the product has been available for awhile
Diffusion of innovation - Spread of a product through the population
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Figure 6.3 - Adopter Categories
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Adopter Categories
First to buy a new product
Innovators
Buy the product if the experience of innovators is favorable
Early adopters
Avoid risks and make purchases carefully
Early majority
Avoid risks and are cautious and skeptical about new ideas
Late majority
Reluctant to make changes and are comfortable with traditional products
Laggards
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Product Audit
Marketing management technique whereby the company’s current product offerings are reviewed
To ascertain whether each product should be continued as is, improved, modified, or deleted
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Deletions
Occur when too many products are fighting for too little shelf space
Product audit helps in detecting sick products and then buries them
Factors to be considered during deletion
Sales trends
Profit contribution
Product life cycle
Customer migration patterns
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Product Improvement
Product audit helps ascertain if a product requires altering
Product altering involves changing:
Attributes - Product features, design, package, and so forth
Marketing dimensions - Pricing, promotion strategy, and channels of distribution
Product audit works as a management device for controlling product strategy
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Benchmarking
Process of measuring products, services, and practices against those of the toughest competitors or renowned leaders
Assists companies in:
Boosting product quality
Developing more user-friendly products
Improving customer order processing activities
Shortening delivery lead times
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Organizing for Product Management
Marketing-manager system: One person is responsible for overseeing an entire product line with all of the functional areas of marketing
Popular in organizations with line of similar products or one dominant line
Brand-manager system: Manager focuses on a single product or a very small group of new and existing products
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Organizing for Product Management
Criticism of Brand manager system
Brand managers:
Have difficulty because they do not have authority commensurate with their responsibilities
Often pay inadequate attention to new products
Are more concerned with their own brand’s profitability than with the profitability of all of the organization’s brands
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Organizing for Product Management
Successful new products requires the cooperation of teams
Cross-functional teams: Teams requiring membership and cooperation of all the various functional departments in the organization to create successful new products
Venture teams: Cross-functional teams responsible for all of the tasks involved in the development of a new product
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Requirements for the Effective Use of Cross-Functional Teams
Commitment of top management and provision of clear goals
Trust among members
Cross-functional cooperation
Time and training
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