Category And Brand Management, Product Identification, And New Product Development

Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Part 4: Product DecisionsPart 4: Product Decisions

11.11. Product and Service Product and Service StrategiesStrategies

12.12. Category and Brand Category and Brand Management, Product Management, Product Identification, and New-Identification, and New-Product DevelopmentProduct Development


Chapter 12 Chapter 12

Category and Brand Category and Brand Management, Management,

Product Product Identification, and Identification, and

New-Product New-Product DevelopmentDevelopment

12-3Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter ObjectivesChapter Objectives

1. Explain the benefits of category and brand management.

2. Identify the different types of brands.

3. Explain the strategic value of brand equity.

4. Discuss how companies develop strong identities for their products and brands.

5. Identify and briefly describe each of the four strategies for new-product development.

6. Describe the consumer adoption process.

7. List the stages in the process for developing new products.

8. Explain the relationship between product safety and product liability.


Managing Brands for Competitive Managing Brands for Competitive AdvantageAdvantage

Branding is the process of creating that identity. Buyers respond to branding by making repeat

purchases because they identify the item with the name of its producer.

Brand:Brand: name, term, sign, symbol, design, or some combination that identifies the products of a firm while differentiating them from the competition’s


Brand Loyalty Brand Loyalty Brand recognitionBrand recognition: Consumer awareness

and identification of a brand.

Brand preferenceBrand preference: Consumer reliance on previous experiences with a product to choose that product again.

Brand insistenceBrand insistence: Consumer refusals of alternatives and extensive search for desired merchandise.


Types of BrandsTypes of Brands

Generic productGeneric product: item characterized by plain label, with no advertising and no brand name

Manufacturers’ brand or National BrandManufacturers’ brand or National Brand: brand name owned by a manufacturer or other producer

Private brandsPrivate brands: brand name placed on products marketed by wholesalers and retailers


Captive brandsCaptive brands: national brands that are sold exclusively by a retail chain

Family brandFamily brand: brand name that identifies several related products

Individual brandIndividual brand: unique brand name that identifies a specific offering within a firm’s product line and that is not grouped under a family brand


Brand equityBrand equity: added value that a respected, well-known brand name gives to a product in the marketplace.Brand equity increases the likelihood that

consumers will recognize the firm’s product when they make purchase decisions

A strong brand equity can contribute to buyers’ perceptions of product quality

Branding can also reinforce customer loyalty and repeat purchases


Brand EquityBrand EquityThe Young &

Rubicam Model:Brand Asset

Valuator

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The Role of Category and Brand ManagersThe Role of Category and Brand ManagersBrand managerBrand manager: Marketing professional

charged with planning and implementing marketing strategies and tactics for a brand

Category managementCategory management: Product management system in which a category manager—with profit and loss responsibility—oversees a product line.

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Product IdentificationProduct Identification

Brand nameBrand name: part of a brand consisting of words or letters that form a name that identifies and distinguishes a firm’s offering from those of its competitors

Brand markBrand mark: symbol or pictorial design that identifies a product

Generic nameGeneric name: branded name that has become a generically descriptive term for a class of products (e.g., nylon, aspirin, kerosene, and zipper)

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TrademarkTrademark: legal protection which confers the exclusive right to user brand name, trade mark, and any slogan or product name abbreviation

Trade DressTrade Dress: visual cues used in branding to create an overall lookThe distinctive shape of Philips light bulbs and

the McDonald’s arches provide an example of trade dress

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Developing Global Brand Names and Developing Global Brand Names and Trademarks Trademarks Potentially an acute problem for

international marketersAn excellent brand name or symbol in one

country may prove disastrous in anotherTrademarks that are effective in their home

countries may fare less well in other cultures

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PackagingPackaging

A package serves three major objectives:Protection against damage, spoilage, and

pilferageAssistance in marketing the productCost effectiveness

LabelingLabelUniversal Product Code (UPC)

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Brand extensionBrand extension: application of a popular brand name to a new product in an unrelated product category

Line extensionsLine extensions refers to new sizes, styles, or related products

Brand licensingBrand licensing: practice allowing other companies to use a brand name in exchange for a payment

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New Product PlanningNew Product Planning

As a firm’s offerings enter the maturity and decline stages of the product life cycle, it must add new items to continue to prosperAlternative Product Development Strategies

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Product Development StrategiesProduct Development StrategiesProduct positioning: consumers’

perceptions of a product’s attributes, uses, quality, and advantages and disadvantages in relation to those of competing brands

Cannibalization: a loss of sales of the current product due to competition from a new product in the same line

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The Consumer Adoption ProcessThe Consumer Adoption Process

Adoption process: Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again.AwarenessInterestEvaluationTrialAdoption or rejection

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Consumer innovatorConsumer innovator: People who purchase new products almost as soon as the products reach the market

Diffusion processDiffusion process: Process by which new goods or services are accepted in the marketplace

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Figure 12.8Figure 12.8Categories of Adopters Based on Relative

Times of Adoption

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Identifying Early AdoptersIdentifying Early AdoptersSubstantial benefits may be obtained by

locating the likely first buyers of new products (innovators and early adopters)

Suggestions for modifying the product may be obtained from these individuals

Acceptance or rejection of the innovation by innovators and early adopters can help forecast sales

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Rate of Adoption DeterminantsRate of Adoption DeterminantsCharacteristics of a product innovation that

influence its adoption rate include:Relative advantageCompatibilityComplexityPossibility of trial useObservability

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Organizing for New Product Development Organizing for New Product Development New-Product Committees

New-Product Departments

Product Managers

Venture TeamsTask forces

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New Product Development ProcessNew Product Development Process

New product development process: six stages through which new product ideas progress before being introduced to the overall market

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Idea GenerationIdea GenerationNew product ideas come from many sources including:Sales force, Customers, Employees, R&D

specialists, The competition, Suppliers, Retailers, Independent inventors

ScreeningScreeningScreening separates ideas with commercial potential from those that cannot meet company objectivesChecklists of development standards can

be helpful at this stage

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Business AnalysisBusiness AnalysisThe business analysis consists of assessing the new product’s market potential, growth rate, likely competitive strengths, and compatibility of the proposed product with organizational resources Concept testing

DevelopmentDevelopmentConverting an idea into a physical productRequires interaction among many of the firm’s

departmentsPrototypes may go through many changes

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Test MarketingTest MarketingTest marketing: Introduction of a trial version of a new product supported by a complete marketing campaign to a selected city of television coverage areaSome firms skip this stage, moving directly to

full-scale commercialization

CommercializationCommercializationIn this stage, the firm establishes marketing strategies, and funds outlays for production and marketingThe sales force, marketing intermediaries and

potential customers are acquainted with the new product

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Product Safety and LiabilityProduct Safety and Liability

Product LiabilityProduct Liability: responsibility of manufacturers and marketers for injuries and damages caused by their products

Category And Brand Management, Product Identification, And New Product Development

Business

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