Part iv—shaping the market offering chapter 14—Setting the Product and Branding Strategy

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CHAPTER 14—Setting the Product and Branding Strategy


Product is the first and most important element of the marketing mix. A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Products can be physical objects, services, people, places, organizations, and ideas. Product strategy calls or making coordinated decisions on product mixes, product lines, brands, packaging, and labeling.

A product can be considered on five levels. The core benefit is the essential use-benefit, problem-solving service that the buyer primarily buys when purchasing a product. The generic product is the basic version of the product. The expected product is the set of attributes and conditions that the buyer normally expects in buying the product. The augmented product is additional services and benefits that the seller adds to distinguish the offer from competitors. The potential product is the set of possible new features and services that might eventually be added to the offer.

All products can be classified according to their durability (nondurable goods, durable goods, and services). Consumer goods are usually classified according to consumer shopping habits (convenience, shopping, specialty, and unsought goods). Industrial goods are classified according to how they enter the production process (materials and parts, capital items, and supplies and services).

Most companies handle more than one product, and accordingly product mix can be described as possessing a certain width, length, depth, and consistency. These four dimensions are the tools for developing the company’s product strategy. The various lines making up the product mix have to be periodically evaluated for profitability and growth potential. The company’s better lines should receive disproportionate support; weaker lines should be phased down or out; and new lines should be added to fill the profit gap.

Each product line consists of product items. The product-line manager should study the sales and profit contributions of each item in the product line as well as how the items are positioned against competitors’ items. This provides information for making several product-line decisions. Line stretching involves the question of whether a particular line should be extended downward, upward, or both ways; line filling, whether additional items should be added within the present range of the line; line modernization raises the question of whether the line needs a new look and whether the new look should be installed piecemeal or all at once; line featuring, which items to feature in promoting the line; and line pruning, how to detect and remove weaker product items from the line.

Companies should develop brand policies for the individual product items in their lines. They must decide on product attributes (quality, features, design), whether to brand at all, whether to do producer or distributor branding, whether to use family brand names or individual brand names, whether to extend the brand name to new products, whether to create multiple brands, and whether to reposition any of them.

Physical products require packaging decisions to create such benefits as protection, economy, convenience, and promotion. Marketers have to develop a packaging concept and test it functionally and psychologically to make sure it achieves the desired objectives and is compatible with public policy. Physical products also require labeling for identification and possible grading, description, and promotion of the product. Sellers may be required by law to present certain minimum information on the label to inform and protect consumers.

Learning Objectives

After reading the chapter the student should understand:

  • The levels of the product

  • How a company can build and manage its product mix and product lines

  • How a company can make better brand decisions

  • How packaging and labeling can be used as a marketing tool

Chapter Outline

  1. Product and the product mix

    1. Product levels (five)—core benefit, basic product, expected product, augmented product (beyond expectations, where most competition takes place), and potential product (future augmentation possibilities)

    2. Product hierarchy—seven levels of product hierarchy: need family, product family, product class, product line, product type, brand, and item

    3. Product classifications

      1. Durability and tangibility—nondurable goods, durable goods, services

      2. Consumer-goods classification—convenience, specialty, shopping, unsought

      3. Industrial-goods classification—materials and parts, capital items, supplies and business services

    4. Product mix—a product mix (product assortment) is the set of all products and items that a particular seller offers for sale to buyers. The marketer must consider width, length, depth, and consistency

  2. Product-line decisions—a product line is a group of products that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same channels, or fall within given price ranges

    1. Product-line analysis—sales and profits of each item

      1. Sales and profits—margin differences related to core product, staples and convenience items

      2. Market profile—positioning against competitors

    2. Product-line length—a line is too short if the manager can increase profits by adding items; the line is too long if the manager can increase profits by dropping items

      1. Line-stretching

        1. Downmarket stretch—enter on the low end

        2. Upmarket stretch—enter on the high end

        3. Two-way stretch—both directions

        4. Line-filling—adding more items (live filling and just-noticeable difference)

    3. Line modernization, featuring, and pruning

      1. Updating product line to reflect current trends and themes

      2. Line-featuring—select one or a few items in the line to feature

      3. Line-pruning—when a product is depressing profits, or a company is short of production capacity

  3. Brand decisions—traditionally, market power has rested with brand-name companies.

    1. What is a brand?

      1. A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of the competition

      2. A brand has six levels of meaning (attributes, benefits, values, culture, personality, and user)

      3. Researching the position the brand occupies in the consumer mind (key concepts include word associations, personifying the brand, and brand essence

    2. Building brand identity (issues related to brand name, logo, colors tagline, and symbol)

    3. Building brands in the new economy

      1. Clarify the corporation’s basic values and build corporate brand

      2. Use brand managers to carry out the tactical work (with top management involvement)

      3. More comprehensive plans about total positive customer experiences

      4. Define the brand’s essence everywhere

      5. Use brand value as key to company strategy

      6. Measure brand-building by customer-perceived value, satisfaction, share of wallet, retention, and advocacy

    4. Brand equity—brand awareness, brand acceptability, brand preference, brand loyalty. High brand equity provides a number of competitive advantages

      1. Value of brand equity (positive differential effect of brand on the customer)

      2. Brand valuation (total financial value of the brand)

      3. Competitive advantages for high brand equity:

        1. Trade leverage in channel bargaining

        2. Higher price

        3. Line extensions easier

        4. Defense against price competition.

      4. Managing brand equity (mismanagement is a problem today in the quest for ever-increasing profits—brand loses focus)

    5. Branding challenges

      1. Branding decision: to brand or not to brand?

      2. Brand-sponsor decision

        1. Manufacturer brand, distributor brand, licensed brand name

        2. Brand ladder (customer ranking of brands)

        3. Growing power of retailer brands (price orientation)

        4. Blurring of brand identity

        5. Internet considerations

    6. Brand name decision

      1. Strategies

        1. Individual names (General Mills Bisquick)

        2. Blanket family names (Heinz and GE)

        3. Separate family names for all products (Sears Kenmore and Craftsman)

        4. Corporate name combined with individual product names (Kellogg Rice Krispies)

      2. Brand name qualities

        1. Suggest product’s benefits, product, or service category

        2. Concrete “high imagery” qualities

        3. Easy to spell, pronounce, and remember

        4. Distinctive

        5. No negative international carryover meanings

    7. Brand building tools

      1. Public relations and press releases

      2. Sponsorships

      3. Clubs and consumer communities

      4. Factory visits

      5. Trade shows

      6. Event marketing

      7. Public facilities

      8. Social cause marketing

    8. Brand strategy decision—varies based on whether: functional brand (satisfy functional need); image brand (difficult to differentiate between brands); experiential brand (consumer involvement)

      1. Line extensions—additional items in the same product category

      2. Brand extensions—existing brand name in a new product category

      3. Multibrands, new brands, and co-brands

        1. Multibrands—additional brand names in the same product category

        2. New brands—new brand names in a new product category

        3. Co-brands—two well-known brand names combine in one product offering

    9. Brand asset management (many areas beyond advertising and public relations)

    10. Brand auditing and repositioning

      1. Note brand report card

      2. Brand repositioning (changing customer preferences, competition)

  4. Packaging and labeling

    1. Packaging (all the activities of designing and producing the container for the product)

    2. Levels of material (primary, secondary, shipping package)

    3. Promotional value

      1. Self-service

      2. Consumer affluence

      3. Company and brand image

      4. Innovation opportunity

    4. Labeling

      1. Identify, grade, describe or promote the product

      2. Legal concerns for labels and packaging

  5. Summary

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