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Chapter 9

Chapter 9 BU352.docx

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Department
Business
Course
BU352
Professor
Dave Ashberry
Semester
Fall

Description
BU352 Chapter 9 – Product, Branding, and Packaging Decisions Week 6 Complexity of Products and Types of Products Complexity of Products -There is more to a product than its physical characteristics or its basic service function -Core customer value – the basic problem-solving benefits that consumers are seeking -Marketers convert core customer value into an actual product -Attributes such as the brand name, feature/design, quality level, and packaging are considered -Associated services- the nonphysical attributes of the product, including product warranties, financing, product support, and after-sale service -The amount of associated services varies depending on the product -When developing or changing a product, marketers start with the core customer value to determine what their potential customers are seeking Types of Products -Consumer products- products and services used by people for their personal use Speciality Products/Services -Products or services toward which customers show such a strong preference that they will expend considerable effort to search for the best suppliers Shopping Products/Services -Products or services, such as furniture, apparel, fragrances, appliances, and travel alternatives, for which consumers will spend a fair amount of time comparing alternatives Convenience Products/Services -Those products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase Unsought Products/Services -Products 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 -Product lines – groups of associated items, such as those that consumers use together or 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 -A product mix reflects the breadth and depth of a company’s product lines -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 (SKUs) – individual items within each product category; the smallest unit available for inventory control -The decision to expand or contract product lines and categories depends on the several industry-, consumer- and firm level factors -When firms add new lines to their product mix, they often earn significant sales and profits -Adding unlimited numbers of new products can have adverse consequences – too much variety in the product mix is often too costly to maintain, and too many brands may weaken the firm’s brand reputation BU352 Chapter 9 – Product, Branding, and Packaging Decisions Week 6 Change Product Mix Breadth Increase Breadth -Firms often add new product lines to capture new or evolving markets, increase sales, and compete in new venues Decrease Breadth -Sometimes it is necessary to delete entire product lines to address changing market conditions or meet internal strategic priorities Change Product Line Depth -Firms occasionally either add to or delete from their product line depth Increase Depth -Firms may add new products within a line to address changing consumer preferences or pre-empt competitors while boosting sales Decrease Depth -From time to time, it is necessary to delete product categories to realign resources -The decision to delete products is never taken lightly -Generally, substantial investments have been made to develop the brand and manufacture the product Change Number of SKUs -A very common and ongoing 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 -Many of the strategies used to make product line decisions for physical products can also be applied to services Branding -A company lives or dies on brand awareness -Consumers can’t buy products that they don’t know exist -Branding provides a way for a firm to differentiate its product offerings from those of its competitors and can be used to represent the name of a firm and its entire product mix Value of Branding for the Customer and the Marketer Brands Facilitate Purchasing -Brands are often easily recognized by consumers and, because hey signify a certain quality level and contain familiar attributes, brands help consumers make quick decisions Brands Establish Loyalty -Over time and with continued use, consumers learn to trust certain brands Brands Protect from Competition and Price Competition -Strong brands are somewhat protected from competition and price competition Brands Reduce Marketing Costs -Firms with well-known brands can spend relatively less on marketing costs than firms with little-known BU352 Chapter 9 – Product, Branding, and Packaging Decisions Week 6 brands because the brand sells itself -Ex. Lulu Lemon Brands are Assets -Brands are also assets that can be legally protected through trademarks and copyrights and thus constitute a unique ownership for the firm Brands Impact Market Value -Having well-known brands 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 -Brands are assets the firm can build, manage, and harness over time to increase its revenue, profitability, and overall value -Experts look at 4 aspects of a brand to determine its equity: brand awareness, perceived value, brand associations, and brand loyalty Brand Awareness -Brand awareness – measure show many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm’s communications to consumers The more aware or familiar customers are with a brand, the easier their decision-making process will be -Marketers create brand awareness through repeated exposures of the various brand elements in the firm’s communications to consumers Perceived Value -Perceived value – the relationship between a product or service’s benefits and its cost -Customers usually determine the offering’s value in relationship to that of its close competitors -Good marketing raises customers’ quality perceptions relative to price; thus, it increases perceived value Brand Associations -Brand associations- the mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality -These brand associations often result from a firm’s advertising and promotion efforts -Brand personality – refers to a set of human characteristics associated with a brand, which has symbolic or self-expressive meanings for consumers -Brand personality elements includ
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