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Chapter 9.docx

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BUSI 2208
Irfan Butt

Chapter 9 – Product, Branding and Packaging Decisions Product - Anything that is of value to a consumer and can be offered through a voluntary marketing exchange. All create value for consumers in their respective competitive marketing arenas...  Goods  Services  Ideas – Lectures, philosophy, scientific theory etc.  Organizations – Canadian Blood Services  People - Jay-Z other marketable personalities and celebrities  Communities – Facebook, MySpace, Twitter Product Assortment/Mix- The complete set of all products offered by a firm Product Lines – Groups of associated items, such as those that consumers can use together or think of as part of a group of similar products. Colgate-Palmolive’s lines include oral care, personal care, household care etc. Product Category – An assortment of items that the consumer sees as reasonable substitutes for one another – for example the oral care product line consists of several categories such as toothpaste, floss, whitening, toothbrushes etc. Brand – The name, term, design symbol or any other feature that identifies one sellers goods or services as distinct from those of other sellers. Nike, Apple, HP etc. Product line Breadth – The number of product lines or variety offered by the firm Product line Depth – The number of categories within each product line. Stock Keeping Units (SKU’s) – Individual items within each product category, the smallest unit available for inventory control. Each product or offering within the category has a unique SKU. Changing Product mix Breadth  Increase – Firms will often add new product lines to capture new or evolving markets, increase sales, and compete in new areas. For example Porsche released the Cayenne after learning that 40% of its customers purchased a SUV as their second vehicle.  Decrease – Sometimes firms find it necessary to delete entire product lines to address changing market conditions or meet internal strategic priorities. Changing Product mix Depth  Increase – Firms may add new product lines to address changing consumer preferences or pre- empt competitors while boosting sales. A firm might also add new products to its product lines in order to service new target segments  Decrease – From time to time its necessary to delete product categories to realign resources. Not taken lightly because substantial money has been allocated to build these products brands and value etc. Firms do this to eliminate unprofitable items and refocus marketing efforts on more profitable items. Changing Number of SKUs – very common to add or delete number of product offerings or SKUs in existing categories to stimulate sales or react to consumer demand. Fashion retailers change number and type of SKU’s seasonally. Product Line Decisions for Services – Most strategies used to make product line decisions for physical goods can also be applied to services. Branding – provides a way for a firm to differentiate its product offerings from those of its competitors and can be used to represent he name of a firm and its entire product assortment, one product line, or a single item. Logos, Symbols, slogans, jingles, unique packaging, characters, URLs etc.  Facilitate in Purchasing – Brands are often easily recognized by consumers and because they signify a certain quality level and contain familiar attributes, brands help consumers make quick decisions. Enable customers to differentiate one firm or product from another  Establish Loyalty – Over time and continued use consumers learn to trust certain brands and their product offerings. Many consumers become extremely loyal to brands  Protect from Competition and Price Competition – Brands are more established in the marketplace and have a more loyal customer base, neither competitive pressure on price or retail level competition is threatening to a brand  Reduce Marketing Costs – Firms with well known brands can spend relatively less on marketing costs because the brand sells itself  Brands are Assets – Brands can be legally protected through trademarks and copyrights and thus constitute a unique ownership for a firm  Impact Market Value – Well known brands can have direct impact on bottom line. Brand Equity – The set of assets and liabilities linked to a brand that add or subtract from the value provided by the product or service. Like physical possessions brands are built and managed over time to increase their value and profitability. Firms spend millions promoting brands throughout their life cycle. Experts look at 4 aspects to determine a brand’s equity...  Brand Awareness – Measures how many consumers in a market are familiar with the brand and what it stands for or represents. This is created through repeated exposures of the various brand elements. (logo, jingle etc.) The more aware the customers are the easier their decision making process  Perceived Value – The relationship between a product or services perceived benefits and costs. Usually use competing products as basis for comparison. Mostly based on what individual consumer or targeted consumers value, some value luxury while others low cost.  Brand Associations – The mental link that consumers make between a brand and its key product attributes such as logo, slogan or celebrity endorser. Firms attempt to create specific associations for their brands with positive consumer emotions such as happiness, friendship, fun etc. o Brand Personality – A set of human characteristics associated with a brand which has a symbolic or self-expressive meaning for consumers.  Brand Loyalty – Occurs when a consumer buys the same brands product or service repeatedly over time rather than buying from multiple suppliers with offerings in the same category. Loyal
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