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© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
10-2© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
LEARNING OBJECTIVES
Learning Objectives
How do firms adjust their product lines to changing market conditions?
Why are brands valuable to firms? How do firms implement different
branding strategies? How do a product’s packaging and label
contribute to a firm’s overall strategy?
10-3© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Air Jordan
• Moved beyond athletic endorsement to creation of entire line
• NBA fees fueled interest
• Priced at $125
Nike/Air Jordan Website
10-4© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Product Assortment and Product Line Decisions
10-5© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Product Assortment and Product Line Decisions
10-6© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Change Product Mix Breadth
• Increase Breadth
– True Religion Brand Jeans now are a lifestyle brand with apparel, belts, swimwear and fragrances
• Decrease Breadth
– Due to competitive changes, TCBY is now focusing on Yogurt.
10-7© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Change Product Mix Depth
Increase Depth Band-Aid now has
over 40 products to heal cuts.
Decrease Depth McCormick spices
eliminates dozens of products each year.
10-8© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Product Line Decisions
How is this changing the product mix?
Does it increase breadth or depth?
Is this research or advertising?
10-9© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The same types of decisions can be used for servicesThe same types of decisions can be used for services
Product Line Decisions for Services
10-10© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
A brand can use: Name, logo symbols, characters, slogans, jingles and even
distinctive packages.
A brand can use: Name, logo symbols, characters, slogans, jingles and even
distinctive packages.
Branding
Oscar Meyer Commercial
10-11© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
What Makes a Brand?
10-12© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Value of Branding for the Customer and the Marketer
10-13© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
History in Advertising
10-14© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Equity: Awareness
10-15© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Equity: Perceived Value
How do discount retailers like Target, T.J. Maxx, and H&M create value for customers?
10-16© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Equity: Brand Associations
10-17© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Equity: Brand Loyalty
Consumers are often less sensitive to price
Marketing costs are much lower
Firm insulated from the competition
10-18© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Ownership
10-19© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Ownership
10-20© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Ownership
10-21© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Naming Strategies
Corporate or family brand The Gap
Corporate and product line brands Kellogg’s Corn
Flakes
Individual lines Mr. Clean (Proctor
& Gamble)
10-22© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Extension
State Farm Website
10-23© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Dilution
10-24© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Co-branding
10-25© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Licensing
10-26© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Brand Repositioning
How is this repositioning?
10-27© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Packaging
What other packaging do you as a consumer find useful?
10-28© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Product Labeling
10-29© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
iPod Anticipation
10-30© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Within each product line, there are often multiple:
A. product categories.
B. primary packaging parts.
C. product breadth.
D. product assortment.
E. private label brands.
10-31© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Check Yourself
1. Why change product line depth?
2. What is the difference between product line breadth versus depth?
3. Why change product line breadth?
10-32© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
One of the dangers of hiring celebrities like Mel Gibson to endorse a company’s products is that when they engage in embarrassing behavior, to
the degree that they are associated with the company’s brands, their actions hurt:
A. brand equity.
B. brand awareness.
C. brand recognition.
D. corporate brand category depth.
E. all of the above.
10-33© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
1. How do brands create value for the customer and the firm?
2. What are the components of brand equity?
Check Yourself
10-34© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Which of the following is a potential benefit of brand extension?
A. It allows the perception of a brand with a quality image to be carried over to the new product.
B. It lowers marketing costs.
C. It can boost sales of the core brand.
D. The firm can spend less on creating brand awareness and associations.
E. all of the above.
10-35© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Check Yourself
1. What is the difference between manufacturer, private/label, and generic brands?
2. What is co-branding?
3. What are some advantages and disadvantages of brand extensions?
10-36© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Chianti that comes in wicker-clad bottles and tortillas that come in zip lock bags are examples of brand _____________ that differentiate these companies’
products from their competitors’ offerings.
A. names
B. slogans
C. symbols
D. characters
E. packaging
10-37© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
A brand association reflects the mental links that consumers make between a brand and its key product attributes, such as a logo, slogan, or famous personality.
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10-38© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Brand dilution occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.
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10-39© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Brand equity is the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.
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10-40© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
A brand extension refers to the use of the same brand name for new products being introduced to the same or new markets.
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10-41© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Brand licensing is a contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee.
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10-42© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Brand loyalty occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category.
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10-43© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Brand repositioning or rebranding refers to a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences.
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10-44© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Co-branding is the practice of marketing two or more brands together, on the same package or promotion.
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10-45© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Perceived value of a brand is the relationship between a product or service’s benefits and its cost.
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10-46© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Product assortment or product mix is the complete set of all products offered by a firm.
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10-47© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Product lines are groups of associated items, such as items that consumers use together or think of as part of a group of similar products.
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10-48© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Glossary
Product mix or product assortment is the complete set of all products offered by a firm.
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