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Chapter 9

ADM2320 Chapter 9

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Marzena Cedzynski

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Chapter 9 Product, Branding, and Packaging Decisions Complexity of Products and Types of Products Complexity of Products  Core customer values: the basic problem-solving benefits that consumers are seeking. o “What are customers looking for?” o Marketers convert these values into an actual product. o Brand name o Quality level o Features/design o Packaging  Associated services (or augmented product): the nonphysical attributes of the product. o Product warranties o Product support o Financing o After-sale service Types of Products  Consumer products: products and services used by people for their personal use.  Marketers further classify these products by the way they are used and purchased: o Specialty Products/Services: customers show a strong preference that they will expend considerable effort to search for best suppliers. o Shopping Products/Services: customers will spend a fair amount of time comparing alternatives. (Furniture, apparel, fragrances) o Convenience Products/Services: consumers are not willing to spend any effort to evaluate prior to purchase. o Unsought Products/Services: consumers either do not normally think of buying, or do not know about. Product Mix and Product Line Decisions  Product mix: the complete set of all products offered by a firm. o Product lines: groups of associated items, such as those that consumers use together of think of as part of a group of similar products.  Product category: an assortment of items that the customer sees as reasonable substitutes for one another.  Brand: the name, term, design, symbol, or any other features that identify one seller’s good or service as distinct from those of other sellers.  Product mix breadth: the number of product lines, or variety, offered by the firm.  Product line depth: the number of products within a product line.  Stock keeping units: individual items within each product category; the smallest unit available for inventory control.  The decision to expand product lines and categories depends on several industry-, customer-, and firm-level factors.  Firms expand their product lines (breadth) when it is relatively easy to enter a specific market and/or when there is a substantial market opportunity.  Adding unlimited numbers of new products can have adverse consequences. o Too costly to maintain o Too many brands may weaken the firm’s brand reputation Change Product Mix Breadth  Increased Breadth: Firms often add new product lines to capture new or evolving markets, increasing sales, and compete in new ventures.  Decreased Breadth: Sometimes it is necessary to delete entire product lines to address changing market conditions or meet internal strategic priorities. Change Product Line Depth  Increased Breadth: Firms may add new products within a line to address changing consumer preferences or pre-empt competitors while boosting sales. A firm may also add new products to its product line to serve new target segments.  Decreased Breadth: It may be necessary to delete product categories to realign resources. Change Number of SKUs  A very common activity for many firms is the addition or deletion of SKUs in existing categories to stimulate sales or react to consumer demand. Product Line Decisions for Services  Very similar to product line decisions for physical products. o Ex: a bank – business/consumer accounts represent product lines. Branding  Branding provides a way for a firm to differentiate its product offerings from those of its competitors  Branding can also be used to represent the name of the firm and its entire product mix, one product line, or a single item. Value of Branding for the Customer and the Marketer  Brands Facilitate Purchasing: brands are often easily recognized by consumers and can help consumers make quick decisions.  Brands Establish Loyalty: consumers learn to trust certain brands.  Brands Protect from Competition and Price Competition: strong brands are more established in the market and have a loyal customer base, neither competitive pressures on price nor retail-level competition is a threat.  Brands Reduce Marketing Costs: firms with well-known brands can spend relatively less on marketing costs than firms with little-known brands because the brand sells itself.  Brands Are Assets: brands are an asset that can be legally protected through trademarks and copyrights.  Brands Impact Market Value: having a well-known brand can have a direct impact on the company’s bottom line. Brand Equity  Brand equity: the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service .  Experts look at four aspects of a brand to determine its equity: o Brand awareness  Measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements, in the firm’s communications to consumers.  Matters most for products that are bought without much thought.  Also for infrequently purchased items  Marketers create brand awareness through r
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