Chapter 9

1. Chapter 9 Elements of Product Planning for Goods and Services www.mhhe.com/fourps

2. At the end of this presentation, you should be able to: Understand what “Product” really means. Know the key differences between goods and services. Understand what branding is and how to use it in strategy planning. Understand the importance of packaging in strategy planning. Understand the role of warranties in strategy planning.

3. At the end of this presentation, you should be able to: Know the differences among the various consumer and business product classes. Understand how product classes can help a marketing manager plan marketing strategies.

4. Product Decisions for Marketing Strategy Planning(Exhibit 9-1)

5. Product Decisions for Marketing Strategy Planning(Exhibit 9-1) Product idea Brand Package Warranty Product classes Chapter 9: Elements of Product Planning for Goods & Services Chapter 10: Product Management & New Product Development

6. Product Quality and Customer Needs

7. Relative Quality

8. Goods and/or Services Are the Product(Exhibit 9-2) Canned soup, steel pipe, paper towels Restaurant meal, cell phone, automobile tune-up Satellite radio, hair styling, postal service 100% physical good emphasis 100% service emphasis Blend of physical good and service

9. Differences in Goods and Services Devoted to erasing stereotypes

10. Whole Product Lines Must Be Developed Too

11. Product Assortment, Product Line or Individual Product? © 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

12. Branding Is Strategy Decision(Exhibit 9-3)

13. Conditions Favorable to Branding Product quality and good value and easy to maintain Easy to label and identify by brand or trademark Dependable, widespread availability is possible Key Issues Favorable shelf or display space within stores Market price can be high enough to make branding effort profitable Economies of scale; costs should drop and profits should increase

14. Brand Preference Brand Recognition Brand Non-Recognition Brand Rejection Achieving Brand Familiarity Is Not Easy Brand Insistence

15. Brand Familiarity After bathing about a billion babies…

16. The Right Brand Name Can Help Build Equity Short & Simple Easy to Spell & Read Easy to Recognize & Remember Easy to Pronounce Can Pronounce in Only One Way Can Pronounce in All Languages Suggests Product Benefits Meets Packaging/Labeling Needs No Undesirable Imagery Always Timely Adapts to Any Advertising Medium Legally Available for Use

17. A Good Brand Name? © 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

18. Protecting Brand Names & Trademarks Lanham Act—determines marks and brand names that can be protected You Must Protect Your Own—if becomes a generic descriptive word for a product category, protection is lost Counterfeiting Is Accepted In Some Cultures, especially in developing nations

19. What Kind of Brand to Use? Family Brand (e.g., Sunkist) Licensed Brand Brand Choices Generic “Brand” Individual Brand (e.g., General Mills—Bisquick, Gold Meal Flour)

20. Licensing © 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

21. Manufacturer Brands created by producers Dealer Brands or private brands Battle of the Brands • Also called private brands or store brands • Created/owned by intermediaries • Create higher margins for dealers • Also called national brands • Created/owned by producers • Develop demand across many markets Who Should Do the Branding?

22. Checking Your Knowledge • Target’s “Cherokee” brand of men’s clothing is available • only at Target stores. The brand provides a low-cost • alternative to other men’s fashions available at department • stores and via catalogs. The Cherokee brand is a(n): • manufacturer brand. • dealer brand. • licensed brand. • national brand. • generic brand.

23. The Strategic Importance of Packaging Packaging Can Enhance the Product Packaging Sends a Message Packaging Can Lower Distribution Costs UPC Codes Speed Handling

24. What Is Socially Responsible Packaging? Packaging Can Hurt Environment Consumer Evaluation of Eco Impacts; consumers often don’t know Socially Responsible Packaging Issues Ethical Decisions Remain (e.g., downsized products; dealer branded products package to look similar to manufacturer brands Federal Fair Packaging and Labeling Act; clearly labeled in easy-to-understand terms

25. Checking Your Knowledge • Heinz has a new ketchup bottle that has the cap on the • bottom, instead of the top. The bottle uses gravity to help • the consumer get every last drop of ketchup out of the • bottle. The cap is also designed to pour cleanly, so that • dried ketchup does not accumulate around the opening. • This new bottle demonstrates how packaging can: • promote product. • protect the product. • lower distribution costs. • incorporate UPC codes. • enhance product usage.

26. Warranty Policies Are a Part of Strategy Planning Magnuson-Moss Act—must provide clearly in writing Promises in Writing May Improve Marketing Mix; company stands behind the product Support May Be Costly Service Guarantees; specific levels of satisfaction and expectations

27. Checking Your Knowledge • McDonald’s announced that at select locations, if drive- • through customers do not get exactly what they want within • two minutes of placing the order, their next meal will be • free. This promise by McDonald’s is a good example of • a(n): • service guarantee. • warranty. • unit price. • limited warranty. • no-fault insurance policy.

28. Consumer Products Business Products Product Classes Help Plan Marketing Strategy

29. Consumer Product Classes Staples Convenience Products Impulse Products Emergency Products Homogeneous Shopping Products Shopping Products Heterogeneous Shopping Products Specialty Products New Unsought Products Unsought Products Regular Unsought Products

30. One Product May Be Seen Several Ways (CONVENIENCE VS. SHOPPING GOOD)

31. Checking Your Knowledge • Jack White wanted to purchase a new dress shirt. He went • to a local department store, toured the men’s department, • and thought all the brands looked about the same. He • decided to buy the store brand shirt, because it was • the cheapest. For Jack, the new shirt was a(n): • convenience product. • heterogeneous shopping product. • specialty product. • homogeneous shopping product. • impulse product.

32. Interactive Exercise: Business Product Classes

33. Business Products Are Different Derived Demand Inelastic Industry Demand; change in price doesn’t have effect on the quantity ordered Tax Treatments Differ; expense vs. capital items

34. Business Product Classes – How They Are Defined Accessories; short lived capital items Raw Materials; unprocessed expense items Installations; important capital items Business Product Classes Component Parts & Materials; expense items that become a part of the final product Professional Services MRO Supplies

35. Study Question 1 Which of the following is a "product"?  A. a used carB. a bus rideC. a haircutD. a dental examE. all of the above

36. Study Question 2 Which of the following would NOT be favorable to successful branding? A. The product offers superior customer valueB. Product quality fluctuates due to variations in raw materialsC. Dependable and widespread availabilityD. Economies of scale in productionE. Favorable shelf locations are available

37. Study Question 3 Carl refuses to buy Billy Goat brand of beer, his attitude toward this brand is called _____.  A. brand rejection.B. brand familiarity.C. brand non-recognition.D. brand recognition.E. brand positioning.

38. Study Question 4 Good packaging:  A. Can make a product easier or safer to use.B. Can be an important promotional tool.C. Can lower distribution costs.D. Can make products easier to handle and display.E. All of the above.

39. Study Question 5 Which of the following would be a convenience product for most consumers?  A. Gold jewelryB. ButterC. Stereo TVsD. Dress shoesE. Bicycles